<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 9, 1996
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
BLUE BIRD BODY COMPANY
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
GEORGIA 3713 58-0813156
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
--------------------------
3920 ARKWRIGHT ROAD
MACON, GEORGIA 31210
(912) 757-7100
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
--------------------------
BLUE BIRD CORPORATION
(Exact name of Co-Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE NOT APPLICABLE 13-3638126
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
3920 ARKWRIGHT ROAD
MACON, GEORGIA 31210
(912) 757-7100
(Address, including zip code, and telephone number, including
area code, of Co-Registrant's principal executive offices)
--------------------------
BOBBY G. WALLACE
VICE PRESIDENT,
TREASURER AND SECRETARY
BLUE BIRD CORPORATION
3920 ARKWRIGHT ROAD
MACON, GEORGIA 31210
(912) 757-7100
(Address, including zip code, and telephone number, including
area code, of agents for service of process)
--------------------------
COPIES OF ALL COMMUNICATIONS TO:
ANDREW R. BROWNSTEIN, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NEW YORK 10019
(212) 403-1000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement is declared effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE
TO BE REGISTERED REGISTERED PER NOTE OFFERING PRICE
<S> <C> <C> <C>
10 3/4% Senior Subordinated Notes Due 2006, Series B
(1).................................................... $100,000,000 99.695% $99,695,000
Guarantee of the 10 3/4% Senior Subordinated Notes Due
2006, Series B (3)(4).................................. $0 0% $0(2)
<CAPTION>
TITLE OF EACH AMOUNT OF
CLASS OF SECURITIES REGISTRATION
TO BE REGISTERED FEE
<S> <C>
10 3/4% Senior Subordinated Notes Due 2006, Series B
(1).................................................... $30,210.58
Guarantee of the 10 3/4% Senior Subordinated Notes Due
2006, Series B (3)(4).................................. $0
</TABLE>
(1) This Registration Statement covers both the prospectus filed hereby in
connection with the exchange offer for the Exchange Notes and the prospectus
filed hereby in connection with certain market-making activities by
affiliates of the Registrant.
(2) Estimated solely for the purpose of determining the registration fee.
(3) Calculated pursuant to Rule 457.
(4) Pursuant to Rule 457(n), no registration fee is required with respect to the
guarantee.
--------------------------
THE REGISTRANT AND THE CO-REGISTRANT (THE "REGISTRANTS") HEREBY AMEND THIS
REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANTS 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>
EXPLANATORY NOTE
This Registration Statement contains a Prospectus relating to the offer (the
"Exchange Offer") to exchange an aggregate of up to $100,000,000 principal
amount of 10 3/4% Senior Subordinated Notes due 2006, Series B (the "Exchange
Notes") of Blue Bird Body Company, for an identical face amount of the issued
and outstanding 10 3/4% Senior Subordinated Notes due 2006 (the "144A Notes"
and, together with the Exchange Notes, the "Notes") together with separate
Prospectus pages relating to certain market-making transactions with respect to
the Exchange Notes which may be carried out by Merrill, Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"). The complete Prospectus for the Exchange
Offer follows immediately after this Explanatory Note. Following such Prospectus
are certain pages of the Prospectus relating to the market-making transactions,
which include an alternate cover page, an alternate "AVAILABLE INFORMATION"
section, an alternate "USE OF PROCEEDS" section (which is also to be included in
the "PROSPECTUS SUMMARY"), a new paragraph captioned "Trading Market for the
Notes" to be inserted in the section captioned "RISK FACTORS" in lieu of the
paragraph captioned "Absence of Public Market for the Notes", an alternate "PLAN
OF DISTRIBUTION" section, an alternate "LEGAL MATTERS" section and an alternate
back cover page. All other pages of the Prospectus for the Exchange Offer are to
be used in the Prospectus relating to the market-making transactions.
<PAGE>
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 ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 9, 1996
PRELIMINART PROSPECTUS
OFFER TO EXCHANGE
ALL OUTSTANDING
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
[LOGO]
FOR ANY AND ALL OF THE OUTSTANDING
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006
OF
BLUE BIRD BODY COMPANY
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED.
Blue Bird Body Company, a Georgia corporation (the "Company"), hereby
offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal" and, together with this Prospectus, the "Exchange Offer"), to
exchange an aggregate of up to $100,000,000 principal amount of 10 3/4% Senior
Subordinated Notes due 2006, Series B (the "Exchange Notes") which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a registration statement of which this Prospectus forms a part, for
an identical face amount of the issued and outstanding 10 3/4% Senior
Subordinated Notes due 2006 (the "144A Notes" and, together with the Exchange
Notes, the "Notes") of the Company from the Holders (as defined herein) thereof
in integral multiples of $1,000. As of the date of this Prospectus, there are
$100,000,000 aggregate principal amount of the 144A Notes outstanding. The terms
of the Exchange Notes are identical in all material respects to the 144A Notes,
except that the Exchange Notes have been registered under the Securities Act,
and therefore will not bear legends restricting their transfer and will not
contain certain provisions providing for an increase in the interest rate
payable on the 144A Notes under certain circumstances relating to the
Registration Rights Agreement (as defined herein), which provisions will
terminate as to all of the Notes upon the consummation of the Exchange Offer.
The Exchange Notes will be obligations of the Company evidencing the same
indebtedness as the 144A Notes, and will be entitled to the benefits of the same
indenture. See "The Exchange Offer."
Interest on the Exchange Notes will be payable semi-annually in arrears on
May 15 and November 15 of each year, commencing May 15, 1997. The Exchange Notes
will be redeemable at the option of the Company, in whole or in part, at any
time on or after November 15, 2001, at the redemption prices set forth herein,
together with accrued and unpaid interest to the date of redemption. In
addition, on or prior to November 15, 1999, the Company may redeem up to 25% of
the originally issued Exchange Notes, at a price of 110.75% of the principal
amount thereof, together with accrued and unpaid interest to the redemption
date, with the net proceeds of a Public Equity Offering (as defined herein),
PROVIDED that not less than $75 million in principal amount of Exchange Notes is
outstanding immediately after giving effect to such redemption. Upon the
occurrence of a Change of Control Triggering Event (as defined herein), each
holder of Exchange Notes will, subject to the limitations described herein, have
the right to require the Company to purchase all or a portion of such holder's
Exchange Notes at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase. See
"Description of the Exchange Notes."
The Exchange Notes will represent unsecured senior subordinated obligations
of the Company and will be subordinated in right of payment to all existing and
future Senior Indebtedness (as defined herein) of the Company. The Exchange
Notes will be guaranteed (the "BBC Guarantee") on an unsecured senior
subordinated basis by Blue Bird Corporation ("BBC"), which owns all of the
capital stock of the Company. As of September 28, 1996, on a PRO FORMA basis
after giving effect to the Recapitalization (as defined herein), the Company
would have had approximately $181.3 million of Senior Indebtedness outstanding.
In addition, at September 28, 1996, after giving effect to the Recapitalization,
the aggregate amount of indebtedness and other liabilities of subsidiaries of
the Company to which holders of Notes are structurally subordinated would have
been approximately $63 million (which were composed principally of liabilities
of the Company's special purpose lease financing subsidiary).
(COVER TEXT CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS," BEGINNING ON PAGE 13, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
------------------------
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 DECEMBER , 1996.
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
<PAGE>
The Company will accept for exchange any and all validly tendered 144A Notes
on or prior to the Expiration Date (as defined herein). Tenders of 144A Notes
may be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date; otherwise such tenders are irrevocable. The Exchange Offer is
not conditioned upon any minimum principal amount of 144A Notes being tendered
for exchange. For certain conditions to the Exchange Offer, see "The Exchange
Offer--Conditions."
The 144A Notes were issued and sold on November 19, 1996 in a transaction
not registered under the Securities Act in reliance upon the exemption provided
in Section 4(2) of the Securities Act. In general, the 144A Notes may not be
offered or sold unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act.
The Exchange Notes are being offered hereby in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement. The
Company has agreed to pay the expenses of the Exchange Offer. Based on
interpretations by the staff of the Securities and Exchange Commission (the
"Commission") set forth in no-action letters issued to third parties, the
Company believes that the Exchange Notes issued pursuant to the Exchange Offer
in exchange for 144A Notes may be offered for resale, resold or otherwise
transferred by any Holder thereof (other than any such Holder that is an
"affiliate" of the Company within the meaning of Rule 405 promulgated under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act, PROVIDED that such Exchange Notes are acquired
in the ordinary course of such Holder's business and such Holder does not intend
to participate and has no arrangement or understanding with any person to
participate in the distribution of such Exchange Notes. In some cases, certain
broker-dealers may be required to deliver a prospectus in connection with the
resale of such Exchange Notes.
This Prospectus, as it may be amended or supplemented from time to time, may
be used by a broker-dealer in connection with any resale of Exchange Notes
received in exchange for such 144A Notes where such 144A Notes were acquired by
such broker-dealer for its own account as a result of market-making activities
or other trading activities (other than 144A Notes acquired directly from the
Company). The Company has agreed that, for a period of 180 days after the date
of this Prospectus, it will make this Prospectus available to any broker-dealer
for use in connection with any such resale.
Prior to this Exchange Offer, there has been no public market for the 144A
Notes or Exchange Notes. If a market for the Exchange Notes should develop, the
Exchange Notes could trade at a discount from their principal amount. The
Company does not intend to list the Exchange Notes on any securities exchange
nor does the Company intend to apply for quotation of the Exchange Notes through
the NASDAQ System. Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") has indicated to the Company that it intends to make a market in the
Notes, but is not obligated to do so and such market-making activities may be
discontinued at any time. As a result, no assurance can be given that an active
trading market for the Exchange Notes will develop. If Merrill Lynch conducts
any market-making activities, it may be required to deliver a "market-making
prospectus" when effecting offers and sales in the Exchange Notes.
The Exchange Notes issued pursuant to this Exchange Offer will be issued in
the form of Global Exchange Notes (as defined herein), which will be deposited
with, or on behalf of, The Depository Trust Company (the "Depository" or "DTC")
and registered in its name or in the name of Cede & Co., its nominee. Beneficial
interests in the Global Exchange Notes representing the Exchange Notes will be
shown on, and transfers thereof will be effected through, records maintained by
the DTC and its participants. Notwithstanding the foregoing, 144A Notes held in
certificated form will be exchanged solely for Certificated Exchange Notes (as
defined herein). After the initial issuance of the Global Exchange Notes,
Certificated Exchange Notes will be issued in exchange for the Global Exchange
Notes only on the terms set forth in the Indenture (as defined herein). See
"Description of the Exchange Notes" and "Book-Entry, Delivery and Form."
2
<PAGE>
AVAILABLE INFORMATION
The Company and BBC have jointly filed with the Commission a Registration
Statement on Form S-4 (together with all amendments, exhibits, schedules and
supplements thereto, the "Registration Statement" or "Exchange Offer
Registration Statement") under the Securities Act with respect to the Exchange
Notes being offered hereby and the related BBC Guarantee. This Prospectus, which
forms a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement. For further information
with respect to the Company, BBC, the Exchange Notes and the related BBC
Guarantee offered hereby, reference is made to the Registration Statement.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and, where such contract or other
document is an exhibit to the Registration Statement, each such statement is
qualified in all respects by the provisions in such exhibit, to which reference
is hereby made. Copies of the Registration Statement may be examined without
charge at the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the web site maintained by the
Commission (http://www.sec.gov.) and at the Commission's Regional Offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of all or any portion of the Registration Statement can be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
Pursuant to a contractual obligation to the purchasers of the Old Notes (as
defined herein), the Company was, prior to November 19, 1996, subject to certain
of the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and, in accordance therewith, filed periodic
reports and other information with the Commission.
The Company is not currently subject to the informational requirements of
the Exchange Act. Upon completion of the Exchange Offer, the Company will be
subject to the informational requirements of the Exchange Act, and, in
accordance therewith, will file periodic reports and other information with the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of any
material so filed, in addition to periodic reports and other information
previously filed with the Commission pursuant to the above-described contractual
obligation of the Company, can be obtained from the Public Reference Section of
the Commission, upon payment of certain fees prescribed by the Commission.
In addition, pursuant to the Indenture covering the Notes, the Company has
agreed to file with the Commission, and provide to the Holders, the annual
reports and the information, documents and other reports otherwise required
pursuant to Section 13 of the Exchange Act. Such requirements may be satisfied
through the filing and provision of such documents and reports which would
otherwise be required pursuant to Section 13 of the Exchange Act in respect of
the Company.
UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
3
<PAGE>
FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS CONTAINED IN THIS PROSPECTUS UNDER "PROSPECTUS SUMMARY,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND "BUSINESS," IN ADDITION TO CERTAIN STATEMENTS CONTAINED
ELSEWHERE IN THIS PROSPECTUS, ARE "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND ARE THUS
PROSPECTIVE. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS, UNCERTAINTIES
AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE MOST
SIGNIFICANT OF SUCH RISKS, UNCERTAINTIES AND OTHER FACTORS ARE DISCUSSED UNDER
THE HEADING "RISK FACTORS," BEGINNING ON PAGE 13 OF THIS PROSPECTUS, AND HOLDERS
OF 144A NOTES ARE URGED TO CAREFULLY CONSIDER SUCH FACTORS.
4
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS.
UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES IN THIS PROSPECTUS TO THE
"COMPANY" OR "BLUE BIRD" REFER TO BLUE BIRD BODY COMPANY AND ITS SUBSIDIARIES
AND REFERENCES TO "BBC" REFER TO BLUE BIRD CORPORATION, WHICH OWNS ALL OF THE
COMMON STOCK OF THE COMPANY. AS USED HEREIN, THE "FISCAL YEAR" OF THE COMPANY IS
THE 52- OR 53-WEEK PERIOD ENDING ON THE SATURDAY NEAREST OCTOBER 31 OF SUCH
YEAR. UNLESS OTHERWISE INDICATED, ANNUAL MARKET SHARE AND OTHER DATA INCLUDED
HEREIN REFER TO THE APPLICABLE FISCAL YEAR OF THE COMPANY.
THE COMPANY
The Company is the leading manufacturer of school buses in North America.
Approximately 79% of the Company's net sales in fiscal 1995 were derived from
sales of school bus products. The Company also manufactures the Q-Bus and
Commercial Shuttle ("CS"), which target purchasers of medium-sized buses for
commercial uses, and two luxury recreational vehicle ("RV") models, the
Wanderlodge and the Blue Bird Motor Coach ("BMC"). Commercial and recreational
vehicles accounted for approximately 14% and 7%, respectively, of the Company's
fiscal 1995 net sales. The Company manufactures both quality steel bus bodies
for mounting on chassis manufactured by third parties and complete bus units
(body and chassis). Chassis generally consist of frames with engines,
transmissions, drive trains, axles, wheels, power steering, brakes and fuel
cells. The Company markets its products primarily through a network of
approximately 63 independent distributors, which resell the products to
customers, including municipalities, states, transportation contracting
companies, churches and other independent organizations. Through its special
purpose lease financing subsidiary, Blue Bird Capital Corporation ("Blue Bird
Capital"), the Company provides lease financing alternatives, principally to
tax-exempt customers of its school bus products. Management believes that
providing a variety of alternative leasing packages to its customers creates a
significant competitive advantage for the Company. For the 12-month period ended
July 27, 1996, the Company had $544.1 million in net sales and $61.1 million in
EBITDA (as defined herein).
Purchasers of school buses are categorized into two ownership groups: (i)
public (consisting of states and school districts); and (ii) private (consisting
of independent transportation contracting companies and other private entities).
In the United States, approximately 78% of the estimated 410,000 school buses
currently in operation are publicly owned, with the remainder being privately
owned. Management estimates that deliveries of school buses in North America in
fiscal 1995 totaled approximately 30,600 units. In addition, management
estimates that the market demand for the types of school bus and commercial bus
products that the Company manufactures and sells to countries outside of North
America totaled approximately 3,500 units in fiscal 1995. In fiscal 1995, the
Company sold 12,250 school bus units and estimates that it had approximately 40%
market share in the $1.3 billion North American market for school buses.
The Company's business strategy is to continue to utilize its leading market
position in the school bus market as a platform from which to expand its product
offerings. The Company will continue to focus on its core school bus business,
while seeking to expand its commercial bus product offerings to various markets,
including the shuttle bus market, the smaller urban bus market and the "line
haul" or inter-city coach market. Within the school bus market, the Company will
continue to emphasize sales to distributors, as opposed to states and large
transportation contracting companies, reflecting its belief that the former
market provides greater growth and profit opportunities. The Company will also
seek to expand its international bus sales, particularly in developing
countries.
THE RECAPITALIZATION
On November 19, 1996, the Company completed an overall recapitalization
pursuant to which the Company refinanced approximately $90 million (as of
September 28, 1996) of its indebtedness and paid a
5
<PAGE>
special cash dividend to BBC of $201.4 million (the "Blue Bird Dividend") on all
shares of its common stock, $.10 par value per share ("Blue Bird Common Stock").
Immediately after the declaration of the Blue Bird Dividend, the Board of
Directors of BBC declared a special cash dividend and made payments in the
aggregate amount of $201.4 million on all shares of its common stock, $.01 par
value per share ("BBC Common Stock") and in respect of options to purchase BBC
Common Stock (collectively, the "BBC Distribution" and, together with the Blue
Bird Dividend, the "Distribution"). Holders of BBC options received cash
payments and were not required to exercise their options to receive their PRO
RATA portion of the BBC Distribution, nor were they entitled to any antidilution
adjustment to the exercise price for their options.
As part of the Recapitalization, holders of $50 million aggregate principal
amount (or 100%) of the Company's then outstanding 11 3/4% Senior Subordinated
Notes due 2002, Series B (the "Old Notes") ("Selling Holders") sold their Old
Notes to the Company for aggregate payments (including accrued interest) of
approximately $56.1 million. The Company's then-existing bank credit agreement
(the "Old Credit Agreement"), under which $40 million of indebtedness was
outstanding at September 28, 1996, was replaced and refinanced by an amended and
restated credit agreement (the "New Credit Agreement"), which provides for,
among other things, aggregate availability of $255 million, including $175
million of Term Facilities (as defined herein) and an $80 million of Revolving
Facility (as defined herein). In addition, the Company offered and sold
$100,000,000 aggregate principal amount of 144A Notes (the "144A Note
Offering"). Proceeds from the 144A Note Offering, borrowings under the New
Credit Agreement and cash on hand were used to fund the retirement of the Old
Notes, the refinancing of the Old Credit Agreement and the Distribution, and to
pay related fees and expenses. The 144A Notes Offering, the retirement of the
Old Notes, the replacement of the Old Credit Agreement with the New Credit
Agreement and the Distribution are collectively referred to herein as the
"Recapitalization." See "The Recapitalization."
The Company's principal executive offices are located at 3920 Arkwright
Road, Macon, Georgia 31210 and its telephone number is (912) 757-7100.
THE 144A NOTE OFFERING
<TABLE>
<S> <C>
The 144A Notes............... The 144A Notes were sold by the Company in the 144A Note
Offering on November 19, 1996, and were subsequently resold
to Qualified Institutional Buyers (as defined herein)
pursuant to Rule 144A under the Securities Act and to
institutional investors that are Accredited Investors (as
defined herein) in a manner exempt from registration under
the Securities Act.
Registration Rights
Agreement.................. In connection with the 144A Note Offering, the Company
entered into the Registration Rights Agreement, which grants
Holders of the 144A Notes certain exchange and registration
rights. The Exchange Offer is intended to satisfy such
exchange and registration rights, which generally terminate
upon the consummation of the Exchange Offer.
</TABLE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered........... $100,000,000 aggregate principal amount of its 10 3/4%
Senior Subordinated Notes due 2006, Series B.
The Exchange Offer........... $1,000 principal amount of the Exchange Notes in exchange
for each $1,000 principal amount of 144A Notes. As of the
date hereof,
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
$100,000,000 aggregate principal amount of 144A Notes are
outstanding. The Company will issue the Exchange Notes to
Holders on or promptly after the Expiration Date. The terms
of the Exchange Notes are substantially identical in all
material respects (including principal amount, interest rate
and maturity) to the terms of the 144A Notes for which they
may be exchanged pursuant to the Exchange Offer, except that
the Exchange Notes are freely transferrable by holders
thereof (other than as provided herein), and are not subject
to any covenant regarding registration under the Securities
Act. See "The Exchange Offer." Other than compliance with
applicable federal and state securities laws, including the
requirement that the Registration Statement be declared
effective by the Commission, there are no material federal
or state regulatory requirements to be complied with in
connection with the Exchange Offer.
Interest Payments............ The Exchange Notes will bear interest from November 19,
1996, the date of issuance of the 144A Notes that are
tendered in exchange for the Exchange Notes (or the most
recent Interest Payment Date (as defined herein) to which
interest on such 144A Notes has been paid. Accordingly,
Holders of 144A Notes that are accepted for exchange will
not receive interest on the 144A Notes that is accrued but
unpaid at the time of tender, but such interest will be
payable on the first Interest Payment Date after the
Expiration Date.
Minimum Condition............ The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of 144A Notes being tendered for
exchange.
Expiration Date.............. 5:00 p.m., New York City time, on , 1997 unless the
Exchange Offer is extended, in which case the term
"Expiration Date" means the latest date and time to which
the Exchange Offer is extended.
Exchange Date................ The date of acceptance for exchange of the 144A Notes will
be the first business day following the Expiration Date.
Withdrawal Rights............ Tenders may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. See "The Exchange
Offer-- Withdrawal of Tenders."
Acceptance of 144A Notes and
Delivery of Exchange
Notes...................... The Company will accept for exchange any and all 144A Notes
which are properly tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer."
Conditions to the Exchange
Offer...................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See "The
Exchange Offer-- Conditions."
Procedures for Tendering 144A
Notes...................... To tender in the Exchange Offer, a Holder must complete,
sign and date the accompanying Letter of Transmittal, or a
facsimile thereof,
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
have the signatures therein guaranteed if required by
instruction 4 of the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal, or such
facsimile, together with the 144A Notes and any other
required documentation to the Exchange Agent (as defined
herein) at the address set forth herein prior to 5:00 p.m.,
New York City time, on the Expiration Date. See "The
Exchange Offer-- Procedures for Tendering" and "Plan of
Distribution." By executing the Letter of Transmittal, each
Holder will represent to the Company that, among other
things, the Holder or the person receiving such Exchange
Notes, whether or not such person is the Holder, is
acquiring the Exchange Notes in the ordinary course of
business and that neither the Holder nor any such other
person intends to participate or has any arrangement or
understanding with any person to participate in the
distribution of such Exchange Notes. In lieu of physical
delivery of the certificates representing 144A Notes,
tendering Holders may transfer 144A Notes pursuant to the
procedure for book-entry transfer as set forth under "The
Exchange Offer--Procedures for Tendering."
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose 144A Notes are registered in the
name of a broker, dealer, commercial bank, trust company or
other nominee and who wishes to tender in the Exchange Offer
should contact such registered holder promptly and instruct
such registered holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to tender on such
beneficial owner's own behalf, such beneficial owner must,
prior to completing and executing the Letter of Transmittal
and delivering the 144A Notes, either make appropriate
arrangements to register ownership of the 144A Notes in such
beneficial owner's name or obtain a properly completed bond
power from the registered holder. The transfer of registered
ownership may take considerable time. See "The Exchange
Offer--Procedures for Tendering."
Guaranteed Delivery
Procedures................. Holders of 144A Notes who wish to tender their 144A Notes
and whose 144A Notes are not immediately available or who
cannot deliver their 144A Notes, the Letter of Transmittal
or any other documents required by the Letter of Transmittal
to the Exchange Agent (or comply with the requirements for
book-entry transfer) prior to the Expiration Date must
tender their 144A Notes according to the guaranteed delivery
procedures set forth in "The Exchange Offer-- Guaranteed
Delivery Procedures."
Federal Income Tax
Consequences............... The issuance of the Exchange Notes to Holders pursuant to
the terms set forth in this Prospectus will not constitute
an exchange for federal income tax purposes. Consequently,
no gain or loss would be recognized by Holders upon receipt
of the Exchange Notes. See "Certain U.S. Federal Income Tax
Consequences."
Use of Proceeds.............. There will be no proceeds to the Company from the exchange
of 144A Notes pursuant to the Exchange Offer.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
Exchange Agent............... The Chase Manhattan Bank is serving as exchange agent (the
"Exchange Agent") in connection with the Exchange Offer. See
"The Exchange Offer--Exchange Agent."
</TABLE>
SUMMARY OF TERMS OF EXCHANGE NOTES
The form and terms of the Exchange Notes are the same as the form and terms
of the 144A Notes (which they replace) except that (i) the Exchange Notes have
been registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof, and (ii) the holders of Exchange Notes
generally will not be entitled to further registration rights under the
Registration Rights Agreement, which rights generally will be satisfied when the
Exchange Offer is consummated. The Exchange Notes will evidence the same debt as
the 144A Notes and will be entitled to the benefits of the Indenture. See
"Description of the Exchange Notes."
<TABLE>
<S> <C>
Securities Offered........... $100,000,000 aggregate principal amount of 10 3/4% Senior
Subordinated Notes due 2006, Series B.
Maturity Date................ November 15, 2006.
Interest Payment Dates....... Interest on the Exchange Notes will be payable semi-annually
in arrears on May 15 and November 15 of each year,
commencing May 15, 1997.
Optional Redemption.......... The Exchange Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after
November 15, 2001, at the redemption prices set forth
herein, together with accrued and unpaid interest, if any,
to the date of redemption. See "Description of the Exchange
Notes--Optional Redemption."
In addition, on or prior to November 15, 1999, the Company
may redeem up to 25% of the originally issued Notes, at a
price of 110.75% of the principal amount thereof, together
with accrued and unpaid interest to the redemption date,
with the net proceeds of a Public Equity Offering; PROVIDED
that not less than $75 million in principal amount of Notes
is outstanding immediately after giving effect to such
redemption.
Change of Control Triggering
Event...................... Upon the occurrence of a Change of Control Triggering Event,
each holder of Exchange Notes will have the right to require
the Company to purchase all or a portion of such holder's
Exchange Notes at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest,
if any, thereon to the date of purchase. See "Description of
the Exchange Notes--Change of Control Triggering Event."
Ranking...................... The Exchange Notes will represent unsecured senior
subordinated obligations of the Company and will be
subordinated in right of payment to all existing and future
Senior Indebtedness of the Company. As of September 28,
1996, on a PRO FORMA basis, after giving effect to the
Recapitalization, the Company would have had approximately
$181.3 million of Senior Indebtedness. In addition, at
September 28, 1996 after giving effect to the
Recapitalization, the aggregate amount of indebtedness and
other liabilities of subsidiaries of the Company to
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
which Holders of Notes are structurally subordinated would
have been approximately $63 million (which was composed
principally of liabilities of the Company's special purpose
lease financing subsidiary).
Exchange Note Guarantee...... The Exchange Notes will be guaranteed on an unsecured senior
subordinated basis by BBC, which owns all of the outstanding
capital stock of the Company.
Certain Covenants............ The Indenture pursuant to which the 144A Notes were issued
and the Exchange Notes will be issued contains certain
covenants, including, among others, covenants with respect
to the following matters: (i) limitation on indebtedness;
(ii) limitation on restricted payments; (iii) limitation on
certain transactions with affiliates; (iv) disposition of
proceeds of asset sales; (v) limitation on liens; (vi)
limitation on other senior subordinated indebtedness; (vii)
limitation of guarantees by subsidiaries; and (ix)
limitation on dividends and other payment restrictions
affecting subsidiaries. See "Description of the Exchange
Notes--Certain Covenants."
Exchange Offer; Registration
Rights..................... In the event that applicable law or interpretations of the
staff of the Commission do not permit the Company to effect
the Exchange Offer, or if certain Holders of the 144A Notes
are not permitted to participate in, or do not receive the
benefit of, the Exchange Offer, the Registration Rights
Agreement provides that the Company and the Guarantor (as
defined herein) will use all reasonable efforts to cause to
become effective a shelf registration statement (the "Shelf
Registration Statement") with respect to the resale of the
144A Notes and to keep such Shelf Registration Statement
effective until three years after the Issue Date (as defined
herein) or such shorter period ending when all the 144A
Notes have been sold thereunder. The interest rate on the
144A Notes is subject to increase under certain
circumstances if the Company and the Guarantor are not in
compliance with their obligations under the Registration
Rights Agreement. See "Exchange Offer; Registration Rights."
Absence of a Public Market
for the Notes.............. The Exchange Notes will be new securities for which there is
currently no established trading market. Although Merrill
Lynch has informed the Company that they currently intend to
make a market in the Exchange Notes, they are not obligated
to do so and any such market-making may be discontinued at
any time without notice, at their sole discretion.
Accordingly, there can be no assurance as to the development
or the liquidity of any market for the Exchange Notes. The
Company does not intend to apply for listing of the Exchange
Notes on any securities exchange or for quotation through
the NASDAQ National Market or any other quotation system.
</TABLE>
RISK FACTORS
See "Risk Factors" beginning on page 13 for a discussion of certain factors
which should be considered by participants in the Exchange Offer.
10
<PAGE>
SUMMARY FINANCIAL DATA
Set forth below is certain summary historical consolidated financial
information for BBC as of and for the fiscal years 1995, 1994 and 1993 and as of
and for the nine months ended July 27, 1996 and July 29, 1995. The summary
historical consolidated financial information of BBC and subsidiaries as of and
for the full fiscal years indicated were derived from the financial statements
of BBC and its subsidiaries which were audited by Arthur Andersen LLP,
independent accountants ("Arthur Andersen"). The data for the nine months ended
July 27, 1996 and July 29, 1995 and the historical balance sheet data as of
September 28, 1996 are unaudited but, in the opinion of BBC's management,
reflect all adjustments necessary for a fair presentation of the results of
operations for such periods. The PRO FORMA information is unaudited. The results
for the nine months ended July 27, 1996 may not be indicative of the results to
be expected for the year ending November 2, 1996 because, among other things,
Blue Bird's business is seasonal, with the majority of sales occurring in the
third and fourth quarters. The PRO FORMA other financial data and ratios are
based on the summary historical consolidated financial information for BBC,
adjusted to give effect to the Recapitalization as if it occurred on October 29,
1994. The PRO FORMA balance sheet data is based on the summary historical
consolidated financial information for BBC, adjusted to give effect to the
Recapitalization as if it occurred on September 28, 1996. The summary historical
financial information set forth below should be read in conjunction with the
consolidated financial statements of BBC and the notes thereto included
elsewhere in this Prospectus, see "Index to Consolidated Financial Statements,"
as well as "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEAR ENDED
------------------------ -------------------------------------
<S> <C> <C> <C> <C> <C>
JULY 27, JULY 29, OCTOBER 28, OCTOBER 29, OCTOBER 30,
1996 1995 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales..................................... $ 346.1 $ 319.5 $ 517.4 $ 476.2 $ 413.5
Cost of goods sold............................ 287.4 264.1 430.6 392.9 340.5
----------- ----------- ----------- ----------- -----------
Gross profit.................................. 58.7 55.4 86.8 83.3 73.0
Selling, general and administrative expenses.. 31.5 29.5 39.8 39.0 36.3
Amortization of goodwill and noncompete
agreements.................................. 2.8 3.7 4.7 5.6 5.6
----------- ----------- ----------- ----------- -----------
Operating income.............................. 24.4 22.2 42.3 38.7 31.1
Interest income............................... 5.3 3.0 4.6 4.1 2.9
Interest expense.............................. (12.8) (14.0) (18.5) (17.4) (18.2)
Other income, net............................. .5 .4 .1 .2 .7
----------- ----------- ----------- ----------- -----------
Income before income taxes.................... 17.4 11.6 28.5 25.6 16.5
Provision for income taxes.................... 6.8 4.9 11.6 10.2 6.9
----------- ----------- ----------- ----------- -----------
Net income before extraordinary item.......... $ 10.6 $ 6.7 $ 16.9 $ 15.4 $ 9.6
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
OTHER FINANCIAL DATA AND RATIOS:
EBITDA(a)..................................... $ 37.1 $ 33.3 $ 57.3 $ 54.2 $ 46.4
Adjusted EBITDA (b)........................... 33.4 31.4 54.4 51.5 44.6
Capital expenditures.......................... 2.6 2.8 3.6 8.6 1.1
Ratio of Adjusted EBITDA to Adjusted Cash
Interest Expense (b)........................ 4.2x 3.1x 4.1x 3.9x 3.1x
Pro forma ratio of Adjusted EBITDA to Adjusted
Cash Interest Expense (b)(c)................ 1.5x 1.9x
Ratio of earnings to fixed charges(d)......... 2.2x 1.6x 2.5x 2.4x 1.9x
Pro forma deficiency of earnings to fixed
charges(c)(d)(e)............................ -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 28, 1996
------------------------
<S> <C> <C> <C> <C> <C>
HISTORICAL PRO FORMA
----------- -----------
<CAPTION>
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.......................................... $ 65.8 $ 59.6(f)
Total assets............................................. 395.4 385.3(g)
Total long-term debt, excluding current maturities....... 119.9 308.8(h)
Redeemable common stock, net............................. 20.4 11.5(i)
Stockholders' equity (deficit)........................... 123.1 (56.0)(j)
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
11
<PAGE>
- --------------------------
(a) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
represents the sum of income before income taxes plus interest expense
(including amortization of debt issue costs), depreciation and amortization.
EBITDA is presented here to provide additional information about the
Company's ability to meet its future debt service, capital expenditure and
working capital requirements. EBITDA is not a measure of financial
performance under generally accepted accounting principles ("GAAP") and
should not be considered as an alternative either to net income as an
indicator of the Company's operating performance, or to cash flows as a
measure of the Company's liquidity.
(b) Adjusted EBITDA and Adjusted Cash Interest Expense exclude interest income
and interest expense (which includes amortization of debt issue costs),
respectively, associated with the Company's lease financing activities.
These activities have been conducted principally by Blue Bird Capital since
October 1995. The associated interest expense of Blue Bird Capital is
incurred under the LaSalle Credit Facility (as defined herein), which is
recourse only against Blue Bird Capital. Blue Bird Capital will be treated
as an "Unrestricted Subsidiary" under the Indenture. Adjusted Cash Interest
Expense also excludes the amortization of debt issue costs which is included
in interest expense.
(c) Presented on a PRO FORMA basis as though the Recapitalization had occurred
at the beginning of the periods presented. In making the PRO FORMA
calculation of Adjusted EBITDA to Adjusted Cash Interest Expense, the
following additional adjustments have been made: (i) Adjusted EBITDA
excludes the impact of the one-time compensation charge of $16.1 million
related to that portion of the Distribution paid to management optionholders
and is therefore deemed compensation expense and (ii) PRO FORMA Adjusted
Cash Interest Expense excludes the interest expense of $2.9 million related
to the $25 million of Old Notes repaid for the fiscal year ended October 28,
1995. On a PRO FORMA basis, Adjusted Cash Interest Expense would have been
$22.5 million and $28.9 million for the nine months ended July 27, 1996 and
the fiscal year ended October 28, 1995, respectively.
(d) For the purpose of computing the ratios of earnings to fixed charges,
"earnings" consists of operating income before income taxes and fixed
charges, and "fixed charges" consists of interest expense and the portion of
rental expense deemed representative of the interest factor.
(e) On a PRO FORMA basis after giving effect to the Recapitalization for the
nine months ended July 27, 1996 and fiscal year ended October 28, 1995, the
deficiency of the earnings to fixed charges was $12.7 million and $4.8
million, respectively.
(f) Reflects (i) the receipt of gross proceeds from the 144A Note Offering of
($99.7 million), borrowings under the Term Facility of the New Credit
Agreement ($175 million) and borrowings under the Revolving Facility of the
New Credit Agreement ($3.6 million); (ii) the retirement of indebtedness
(including accrued interest) under the Old Credit Agreement ($40 million)
and the Old Notes ($52.7 million); (iii) the payment of fees and expenses
associated with the Recapitalization ($9.1 million) and the costs (including
premium) associated with the retirement and amendment of the Old Notes ($3.4
million); (iv) the payment of the Distribution ($201.4 million); (v) the
proceeds from the repayment of the Management Notes (as defined herein) from
the BBC Distribution to the management shareholders ($3.8 million); and (vi)
the tax benefits associated with the Recapitalization ($14.9 million). At
July 27, 1996, the Company's cash balance was $5.3 million. The cash balance
at September 28, 1996 was $24.5 million and was $43 million immediately
prior to the Recapitalization. See "Capitalization."
(g) Reflects all of the items discussed in footnote (f) above; the write off of
the debt issue costs related to the indebtedness being retired ($1.9
million) and the capitalization of debt issue costs for the 144A Note
Offering and the New Credit Agreement ($9.1 million).
(h) Reflects the incremental borrowings necessary to effect the
Recapitalization.
(i) Redeemable common stock represents 720,000 issued and outstanding shares of
BBC Common Stock purchased by members of management (the "Management
Investors"), primarily in conjunction with the 1992 Acquisition (as defined
herein). The Management Investors have the right, prior to the earlier of an
initial public offering of equity securities of BBC or the tenth anniversary
of the Stockholders' Agreement (as defined herein), to put these shares to
BBC in the event of their disability, involuntary termination not for cause,
retirement (as such terms are defined in the Stockholders' Agreement), or
death for a fair value price (as defined in the Stockholders' Agreement).
The redeemable stock of BBC was recorded at fair value on the date of
issuance. The excess of the fair value price over the original fair value is
being accreted by periodic charges to retained earnings. The amounts
recorded in the balance sheets represent the estimated maximum amount
payable if all Management Investors met the specified criteria and exercised
their put rights.
(j) Reflects (i) the Distribution, net of tax benefit ($188.6 million); (ii)
the adjustment to the fair value of the redeemable common stock ($12.7
million); (iii) the costs associated with the retirement and amendment of
the Old Notes, net of tax benefit ($2 million); and (iv) the write-off of
the debt issue costs related to the indebtedness being retired, net of tax
benefit ($1.2 million).
12
<PAGE>
RISK FACTORS
HOLDERS OF 144A NOTES SHOULD CONSIDER CAREFULLY, IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS, THE FOLLOWING FACTORS BEFORE DECIDING
TO TENDER 144A NOTES IN THE EXCHANGE OFFER. THE RISK FACTORS SET FORTH BELOW ARE
GENERALLY APPLICABLE TO THE 144A NOTES AS WELL AS THE EXCHANGE NOTES.
LEVERAGE AND DEBT SERVICE
As a result of the Recapitalization, the Company is highly leveraged. At
September 28, 1996, on a PRO FORMA basis, after giving effect to the
Recapitalization, the aggregate total outstanding indebtedness of the Company
would have been approximately $336.5 million and the stockholders' deficit would
have been $56 million. See "Capitalization." On a PRO FORMA basis after giving
effect to the Recapitalization, for fiscal 1995 and the nine-month period ended
July 27, 1996, the deficiency of the earnings to fixed charges was $4.8 million
and $12.7 million, respectively. Furthermore, at September 28, 1996, after
giving effect to the Recapitalization, the Company had the ability to borrow an
additional $120.9 million under credit facilities to which it or Blue Bird
Capital are parties. The New Credit Agreement provides, among other things, that
the Company is obligated to prepay the lenders thereunder out of its free cash
flow after satisfying certain mutually agreed upon fixed charge obligations. See
"Description of Debt Facilities--Senior Bank Financing." The Company's ability
to make scheduled payments of principal of or interest on, or to refinance, its
indebtedness (including the Notes) depends on its future operating performance,
which to a certain extent is subject to economic, financial, competitive and
other factors beyond its control.
The degree to which the Company is leveraged could have important
consequences to the holders of the Notes, including: (i) the Company's increased
vulnerability to adverse general economic and industry conditions; (ii) the
Company's ability to obtain additional financing for future working capital,
capital expenditures, acquisitions, general corporate purposes or other purposes
may be limited; (iii) the dedication of a substantial portion of the Company's
cash flow from operations to the payment of principal of and interest on
indebtedness, thereby reducing the funds available for operations and future
business opportunities; and (iv) the Company's increased vulnerability to higher
interest rates as a result of the fact that its borrowings under the New Credit
Agreement are at variable rates of interest. In addition, all of the
indebtedness incurred in connection with the New Credit Agreement matures prior
to the maturity of the Notes. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations-- Liquidity and Capital
Resources."
SUBORDINATION
The payment of principal, premium, if any, and interest on the Exchange
Notes will be subordinated in right of payment to the prior payment in full to
all existing and future Senior Indebtedness of the Company, including
indebtedness incurred under the New Credit Agreement. As of September 28, 1996,
after giving effect to the Recapitalization, the Company would have had
approximately $181.3 million of Senior Indebtedness and the ability (subject to
applicable conditions) to borrow up to an additional $76.4 million of Senior
Indebtedness under the New Credit Agreement. In addition, the claims of holders
of Exchange Notes will be effectively subordinated to the claims of creditors
(including trade creditors) of the Company's subsidiaries. The foreign and lease
finance operations of the Company are conducted primarily through subsidiaries
of the Company. The claims of creditors of such subsidiaries effectively will
have priority with respect to the assets and earnings of such subsidiaries over
the claims of the Company and its creditors, including holders of the Exchange
Notes. At September 28, 1996, after giving effect to the Recapitalization, the
aggregate amount of indebtedness and other liabilities of the Company's
subsidiaries would have been approximately $63 million (which were composed
principally of liabilities of the Company's special purpose lease financing
subsidiary), and the Company's subsidiaries had the ability to borrow an
additional $44.5 million. See "Description of Debt Facilities." In addition, the
Company's Canadian subsidiary, Canadian Blue Bird Coach Ltd. ("Canadian Blue
Bird"), may borrow funds from the Company and issue a senior promissory note
secured by the real and personal property of Canadian Blue
13
<PAGE>
Bird, which would be pledged to the lenders under the New Credit Agreement as
security. In effect, holders of Exchange Notes will also be structurally
subordinated to any claims by the lenders under the New Credit Agreement in
respect of such secured note. Subject to certain restrictions, exceptions and
financial tests set forth in its debt instruments, the Company and its
subsidiaries may also incur additional indebtedness in the future which ranks
prior to claims of holders of the Exchange Notes.
The subordination provisions of the Indenture provide that, upon any payment
or distribution of the Company's assets to creditors upon any dissolution,
winding-up, liquidation, reorganization, bankruptcy, insolvency, receivership or
other proceedings relating to the Company, whether voluntary or involuntary,
holders of the Senior Indebtedness will be entitled first to receive payment in
full of all amounts due thereon before the holders of Exchange Notes will be
entitled to receive any payment with respect to the Exchange Notes. In the event
of any default in the payment in respect of any Senior Indebtedness, no payment
with respect to the Exchange Notes may be made by the Company unless and until
such default has been cured or waived. In addition, upon the occurrence of any
other default entitling the holders of Designated Senior Indebtedness (as
defined herein) to accelerate the maturity thereof and receipt by the trustee
under the Indenture of written notice of such occurrence from such holders, no
payment in respect of the Exchange Notes may be made by the Company for a
maximum of 179 days. See "Description of the Exchange Notes--Subordination."
BBC will guarantee the Exchange Notes on an unsecured senior subordinated
basis. Currently, BBC conducts no business other than holding the capital stock
of the Company and has no significant assets other than the capital stock of the
Company. The BBC Guarantee will be subordinated in right of payment to the
guarantee provided by BBC under the New Credit Agreement. The Indenture contains
no restrictions on the activities of BBC. See "Description of the Exchange
Notes--Note Guarantees." Therefore, there are not expected to be any resources
to support the BBC Guarantee that would be incremental to those to which holders
of the Exchange Notes will already have access as direct creditors of the
Company. Under certain circumstances, subsidiaries of the Company may be
required to guarantee the Exchange Notes, in which case, claims in respect of
such guarantee would be subordinated in right of payment to Guarantor Senior
Indebtedness (as defined in the BBC Guarantee) in the same manner as the
Exchange Notes are subordinated to Senior Indebtedness.
RESTRICTIVE COVENANTS AND ASSET ENCUMBRANCES
The New Credit Agreement contains certain financial and other covenants,
including covenants requiring the Company to maintain certain financial ratios
and restricting the ability of BBC and its subsidiaries to incur indebtedness or
to create or suffer to exist certain liens. The amortization schedule and
mandatory prepayment provisions under the New Credit Agreement also require that
significant portions of indebtedness thereunder be repaid prior to maturity in
2003. The ability of the Company to comply with such provisions may be affected
by events beyond its control. Should the Company be unable to comply with the
financial or other restrictive covenants under the New Credit Agreement at any
time in the future there can be no assurance that the lenders would agree to any
necessary amendments or waivers. In such a case, the failure to obtain
amendments or waivers could have a material adverse effect upon the Company and
its ability to meet its obligations in respect of the Exchange Notes. A failure
to make any required payment under the New Credit Agreement or to comply with
any of the financial and operating covenants included in the New Credit
Agreement could result in an event of default thereunder, permitting the lenders
to accelerate the maturity of the indebtedness under the New Credit Agreement
and to foreclose upon their collateral, and, depending upon the action taken by
such lenders, delaying or precluding payment of principal of, premium, if any,
or interest on the Exchange Notes. Such an acceleration could also result in the
acceleration of the other indebtedness of the Company and its subsidiaries which
contain cross-acceleration or cross-default provisions. See "Description of Debt
Facilities." The Indenture also has certain covenants which, if not complied
with, would result in an Event of
14
<PAGE>
Default (as defined herein) thereunder permitting holders of the Exchange Notes,
under certain circumstances, to accelerate the Exchange Notes. Any such Event of
Default or acceleration could also result in an event of default or acceleration
of other indebtedness of the Company. In addition, the obligations of the
Company under the New Credit Agreement will be secured by substantially all of
the Company's assets. In the event of an event of default under the New Credit
Agreement, the lenders under the New Credit Agreement would be entitled to
exercise the remedies available to a secured lender under applicable law.
Therefore, in addition to being entitled to the benefits of the subordination
provisions contained in the Indenture, the secured lenders will have a prior
claim on the assets of BBC and its subsidiaries securing their indebtedness. If
the lenders under the New Credit Agreement accelerate the maturity of the Senior
Indebtedness thereunder there can be no assurance that the Company will have
sufficient assets to satisfy its obligations under the Exchange Notes. In
addition, other indebtedness of the Company and its subsidiaries that may be
incurred in the future may contain financial or other covenants more restrictive
than those applicable to the New Credit Agreement or the Exchange Notes. See "--
Subordination."
Blue Bird Capital entered into a Loan Agreement, dated October 18, 1995, as
amended and restated on March 29, 1996 (as so amended and restated, the "LaSalle
Credit Agreement") with LaSalle National Bank, as agent for itself and other
lenders ("LaSalle"). Revolving loans under the LaSalle Credit Agreement (the
"LaSalle Credit Facility") are used to finance the lease financing operations of
Blue Bird Capital. The LaSalle Credit Agreement contains financial and other
covenants, including covenants requiring Blue Bird Capital to maintain certain
financial ratios and restricting the ability of Blue Bird Capital to incur
indebtedness or to create or suffer to exist certain liens. The LaSalle Credit
Agreement also requires that certain amounts of indebtedness thereunder be
repaid by specified dates. A failure to make any required payment under the
LaSalle Credit Agreement or to comply with any of the financial and operating
covenants included therein could have a material adverse effect on the Company
and its ability to meet its obligations in respect of the Exchange Notes. See
"Description of Debt Facilities-- LaSalle Credit Agreement," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business--Leasing."
The Company's indebtedness under the New Credit Agreement will bear interest
at rates that will fluctuate with changes in certain prevailing interest rates
(although such rates may be fixed for limited periods of time). The New Credit
Agreement may require the Company to enter into interest rate protection
arrangements with respect to a portion of the lenders' commitments under each of
the term loan facilities thereunder. The indebtedness of Blue Bird Capital under
the LaSalle Credit Facility also bears interest at rates that will fluctuate
with changes in certain prevailing interest rates (although such rates may be
fixed for limited periods of time). See "Description of Debt Facilities."
PRODUCT LIABILITY CLAIMS AND INSURANCE COVERAGE
The Company is subject to various product liability claims for personal
injuries and other matters allegedly relating to the use of products
manufactured or sold by it. The Company is also subject to recalls of its bus
products from customers to cure manufacturing defects or in the event of a
failure to comply with applicable regulatory standards. In August 1996, the
National Highway Traffic Safety Administration (the "NHTSA") announced its
determination that approximately 11,500 school buses were not in compliance with
federal requirements for fuel systems. Of the affected buses, 11,300 were Blue
Bird Type D (as defined herein) models in which the chassis were manufactured by
the Company, which failed crash tests when fuel tanks were punctured upon
impact. The Company is currently evaluating the scope of the proposed product
recall with the NHTSA as a result of the NHTSA's non-compliance determination.
If all 11,300 buses were to be recalled, management estimates that the cost of
repairs required to be paid by the Company to bring the vehicles into compliance
would not be material. However, manufacturing defects or the failure to comply
with applicable regulatory standards can also serve as the basis for a variety
of claims
15
<PAGE>
from customers of the Company and bus passengers who use the Company's products.
As such, there can be no assurance as to the ultimate outcome of this matter.
Management considers product liability litigation to be in the ordinary
course of its business. The ultimate outcome of the claims, or potential future
claims, against it cannot presently be determined and the amount of the
Company's product liability insurance coverage with respect to such claims
varies from year to year. While the Company believes that any losses and
expenses (including defense costs) resulting from such claims will be within the
applicable insurance coverage and financial statement reserves established to
cover retention liability and defense costs and other related expenses, there
can be no assurance that this will be true or that the amount of losses and
expenses relating to any claim or claims will not have a material adverse effect
on the Company and thereby on the ability of the Company to meet its obligations
in respect of the Notes. While the Company expects to continue to be able to
obtain adequate insurance coverage at acceptable rates, there can be no
certainty that such coverage will ultimately be available to the Company at
acceptable rates or at all, that future rate increases might not make such
insurance uneconomical for the Company to maintain, that current levels of
deductibles will continue to be available, or that the Company's insurers will
be financially viable if and when payment of a claim is required. The inability
of the Company to obtain adequate insurance coverage at acceptable rates is
likely to have a material adverse effect on the Company. In addition, the
running of statutes of limitations for personal injuries to minor children
typically is suspended during the children's legal minority. Therefore, it is
possible that accidents causing injuries to minor children on school buses may
not give rise to lawsuits until a number of years later. See "Business--Legal
Proceedings."
For a discussion of other contingent liabilities, including potential
environmental liabilities, see "Business--Environmental Matters" and note 11 to
the Notes to Audited Consolidated Financial Statements included elsewhere in
this Prospectus.
GOVERNMENTAL REGULATION
The Company's products must satisfy certain standards applicable to vehicles
established by the NHTSA. Certain of its products must also satisfy
specifications established by other federal, state and local regulatory
agencies, primarily dealing with safety standards applicable to school buses.
The cost of compliance with existing regulations results in an incremental cost
of doing business to the Company and the cost of compliance with future
regulations cannot be predicted with any degree of certainty and may
significantly affect the Company's operations. Further, a substantial change in
any such regulation could have a significant impact on the business of the
Company. In addition, the scheduled effectiveness in 1998 of more restrictive
United States Environmental Protection Agency ("EPA") emissions standards may
impact upon the Company's operations. See "--Product Liability Claims and
Insurance Coverage" and "Business--Government Regulation."
LIMITED NUMBER OF CHASSIS SUPPLIERS
In general, buses consist of a body mounted on a chassis, which includes the
bus engine. A substantial portion of the units sold by the Company are Type C
(as defined herein) buses for which the Company does not manufacture a chassis.
The Company offers an "integrated" Type C bus by purchasing a chassis pursuant
to the GM Chassis Agreement (as defined herein) and assembling it with the
Company's Type C bus body. In addition, the Company sells Type C bus bodies for
assembly on non-GM chassis. Because of the importance of the Type C bus to the
Company, obtaining an adequate supply of chassis could thus become critical to
the Company's ability to compete in the school bus market.
There are only three major chassis manufacturers in the United States:
General Motors Corporation ("GM"), Ford Motor Company ("Ford") and Navistar
International Corporation ("Navistar"). Navistar, which accounts for
approximately 60% of the chassis market, recently purchased AmTran of Illinois,
Inc. ("AmTran"), a bus manufacturer that is one of the Company's major
competitors. Since its acquisition of
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AmTran, Navistar has continued to make its chassis available to AmTran's
competitors as well as to school districts and other purchasers who wish to
combine Navistar chassis with other bus bodies, such as those made by the
Company. There can be no assurance that Navistar will continue to make its
chassis available to purchasers other than AmTran.
On May 6, 1991, the Company entered into a chassis supply agreement (the "GM
Chassis Agreement") with GM to secure a steady supply of chassis. This agreement
may be terminated by GM or by the Company upon two years' notice to the other
party. There can be no assurance that GM will not terminate the GM Chassis
Agreement. If the GM Chassis Agreement were to be terminated or if, for any
reason, GM were to (i) cease manufacturing chassis or (ii) cease selling them to
the Company and/or school districts and other customers who combine GM chassis
with Blue Bird bodies, there also can be no assurances that (i) Blue Bird would
be able to purchase sufficient quantities of chassis from Navistar and the
remaining suppliers to fill orders or (ii) school districts or other customers
would continue to order bodies from Blue Bird if such customers cannot be
assured of being able to obtain chassis. If the Company were required to
manufacture more chassis for its own use, it would likely materially effect its
future results of operations and, potentially, its profitability.
FRAUDULENT CONVEYANCE RISKS
The incurrence by the Company of indebtedness, including indebtedness
incurred under the New Credit Agreement and the Notes, the proceeds of which
will be used, in part, to pay the Blue Bird Dividend to fund the BBC Dividend,
is subject to review under relevant federal and state fraudulent conveyance
statutes in a bankruptcy, reorganization or rehabilitation case or similar
proceeding or a lawsuit by or on behalf of unpaid creditors of the Company.
Under these fraudulent conveyance statutes, if a court were to find that, at the
time the Notes were issued, (i) the Company issued the Notes with the intent of
hindering, delaying or defrauding current or future creditors or (ii) (a) the
Company received less than reasonably equivalent value or fair consideration for
issuing the Notes and (b) the Company (1) was insolvent or was rendered
insolvent by reason of the Recapitalization and related transactions, including
the incurrence of the indebtedness related thereto, (2) was engaged in a
business or transaction for which its assets constituted unreasonably small
capital, (3) intended to incur, or believed that it would incur, obligations
beyond its ability to pay as such obligations matured (as the foregoing terms
are defined in or interpreted under the fraudulent conveyance statutes) or (4)
was a defendant in an action for money damages, or had a judgment for money
damages docketed against it (if, in either case, after final judgment the
judgment is unsatisfied), such court could subordinate the Notes to presently
existing and future indebtedness of the Company (in addition to the Senior
Indebtedness to which the Notes are expressly subordinated) or take other action
detrimental to the holders of the Notes, including invalidating the Notes.
In addition, the BBC Guarantee which applies to the Notes, is subject to
review under relevant federal and state fraudulent conveyance statutes. Under
these fraudulent conveyance statutes, if a court were to find that, at the time
the BBC Guarantee was given, (i) BBC guaranteed the Notes with the intent of
hindering, delaying or defrauding current or future creditors or (ii) (a) BBC
received less than reasonably equivalent value or fair consideration for
guaranteeing the Notes, and (b) BBC (1) was insolvent or was rendered insolvent
by reason of such guarantee, (2) was engaged in a business or transaction for
which its assets constituted unreasonably small capital, (3) intended to incur,
or believed that it would incur, obligations beyond its ability to pay as such
obligations matured (as the foregoing terms are defined in or interpreted under
the fraudulent conveyance statutes), or (4) was a defendant in an action for
money damages, or had a judgment for money damages docketed against it (if in
either case, after final judgment the judgment is unsatisfied), such court could
subordinate the claim under the BBC Guarantee to presently existing and future
indebtedness of BBC (in addition to the Guarantor Senior Indebtedness to which
the BBC Guarantee is expressly subordinated) or take other action detrimental to
the holders of the Notes, including invalidating the BBC Guarantee.
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The measures of insolvency for purposes of the foregoing considerations will
vary depending upon the law that is being applied in any such proceeding.
Generally, however, Blue Bird or BBC would be considered insolvent if (i) the
sum of their debts, including contingent liabilities, were greater than the fair
saleable value of all of their assets at a fair valuation or if the present fair
market value (or fair saleable value) of their assets were less than the amount
that would be required to pay their probable liability on their existing debts,
including contingent liabilities, as they become absolute or mature or (ii) they
were incurring obligations beyond their ability to pay as such obligations
mature or become due.
BBC believes that at the time of the issuance of the BBC Guarantee and upon
consummation of the Recapitalization, BBC was (i) neither insolvent nor rendered
insolvent thereby, (ii) in possession of sufficient capital to meet its
obligations as the same mature or become due and to operate its business
effectively, and (iii) incurring debts within its ability to pay as the same
mature or become due. Blue Bird believes that upon consummation of the
Recapitalization and upon the issuance of the Notes, Blue Bird will (i) be (a)
neither insolvent nor rendered insolvent thereby, (b) in possession of
sufficient capital to run its business effectively, and (c) incurring debts
within its ability to pay as the same mature or become due and (ii) will have
sufficient assets to satisfy any probable money judgment against it in any
pending action. In reaching these conclusions, BBC and Blue Bird relied upon
various valuations and cash flow estimates which necessarily involve a number of
assumptions, including choices of methodology and assumptions based on economic,
market, financial and other conditions. No assurance can be given, however, that
the assumptions and methodologies chosen by BBC and Blue Bird would be adopted
by a court or that a court would concur with such conclusions as to their
solvency.
CONTROL BY MLCP; CHANGE OF CONTROL
BBC holds all of the capital stock of the Company and, in turn, is owned by
affiliates (the "ML Entities") of Merrill Lynch Capital Partners, Inc. ("MLCP"),
certain directors of BBC and the Company and certain members of management of
the Company, who together acquired the Company in a leveraged buyout transaction
in 1992 (the "1992 Acquisition"). The ML Entities own approximately 91% of the
BBC Common Stock, with certain directors of BBC and the Company and management
of the Company owning the balance. The interests of MLCP as equity holders of
BBC may differ from the interests of holders of Exchange Notes and, as such,
conflicts of interests between the ML Entities and holders of Exchange Notes may
arise. See "Ownership of Capital Stock."
There can also be no assurance that the ML Entities will continue to control
BBC. A "change of control," as defined in various agreements, including the New
Credit Agreement, would impose substantial financial obligations on the Company
and would require the Company to refinance substantial amounts of its
indebtedness. A change of control would be an Event of Default under the New
Credit Agreement, permitting the lenders under the New Credit Agreement to
exercise remedies, and would, under certain additional circumstances, require
the Company to make an offer to purchase all of the outstanding Exchange Notes
under the Indenture. The inability to repay indebtedness under the New Credit
Agreement, if accelerated, or to purchase all of the Exchange Notes, would also
constitute an Event of Default under the Indenture. See "Description of Debt
Facilities" and "Description of the Exchange Notes-- Change of Control
Triggering Event." In addition, a number of the Company's compensation
arrangements may require it to make cash payments following a change of control.
See "Certain Relationships and Related Transactions" and "Management--Executive
Compensation." No assurance can be given that the Company will be able to comply
with all of its obligations under its various agreements in the event of a
change of control or to refinance any of these or other obligations that might
become due by the reason of these provisions. Thus, in the event the Company was
unable to meet its obligations, there may not be any resources available to meet
claims for payment on the Exchange Notes.
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LACK OF PRIOR MARKET FOR THE EXCHANGE NOTES
The Exchange Notes are being offered to the Holders of the 144A Notes. The
144A Notes were offered and sold in November 1996 to a small number of
"Qualified Institutional Buyers" and "Accredited Investors" (as defined in Rule
144A and Rule 501(a) (1), (2), (3) or (7) under the Securities Act,
respectively) and are eligible for trading in the Private Offerings, Resale and
Trading through Automatic Linkages ("PORTAL") Market.
The Exchange Notes will constitute a new class of securities with no
established trading market. Although the Exchange Notes will generally be
permitted to be resold or otherwise transferred by nonaffiliates of the Company
without compliance with the registration requirements under the Securities Act,
the Company does not intend to apply for a listing of the Exchange Notes on any
securities exchange or to arrange for the Exchange Notes to be quoted on the
NASDAQ National Market or other quotation system. As a result, there can be no
assurance as to the liquidity of markets that may develop for the Exchange
Notes, the ability of the holders of the Exchange Notes to sell their Exchange
Notes or the price at which such holders would be able to sell their Exchange
Notes. If such markets were to exist, the Exchange Notes could trade at prices
that may be lower than the initial market values thereof depending on many
factors, including prevailing interest rates and the markets for similar
securities. Although there is currently no market for the Exchange Notes,
Merrill Lynch has advised the Company that it currently intends to make a market
in the Exchange Notes. However, Merrill Lynch is not obligated to do so, and any
market-making with respect to the Exchange Notes may be discontinued at any time
without notice. In addition, if Merrill Lynch conducts any market-making
activities in respect of the Exchange Notes, it may be required to deliver a
"market-making prospectus" when effecting offers and sales in the Exchange
Notes, because of the equity ownership of affiliates of Merrill Lynch. The ML
Entities in the aggregate hold approximately 91% of the BBC Common Stock. For so
long as a market-making prospectus is required to be delivered, the ability of
Merrill Lynch to make a market in the Exchange Notes may, in part, be dependent
on the ability of the Company to maintain a current market-making prospectus.
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes for 144A Notes pursuant to the Exchange Offer
will be made only after timely receipt by the Exchange Agent of such 144A Notes,
a properly completed, duly executed Letter of Transmittal and all other required
documents. Therefore, Holders desiring to tender their 144A Notes in exchange
for Exchange Notes should allow sufficient time to ensure timely delivery. The
Company is under no duty to give notification of defects or irregularities with
respects to the tenders of 144A Notes for exchange. Any 144A Notes that are not
tendered or are tendered but not accepted will, following the consummation of
the Exchange Offer, continue to be subject to the existing restrictions upon
transfer thereof and, upon consummation of the Exchange Offer, the registration
rights under the Registration Rights Agreement generally will terminate. In
addition, any Holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale. Each broker-dealer that receives Exchange Notes for
its own account in exchange for 144A Notes, where such 144A Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "The Exchange Offer."
RESTRICTIONS ON TRANSFER
The 144A Notes were offered and sold by the Company in a private offering
exempt from registration pursuant to the Securities Act and have been resold
pursuant to Rule 144A under the Securities Act and to a limited number of other
institutional Accredited Investors. As a result, the 144A Notes may not be
reoffered or resold by purchasers except pursuant to an effective registration
statement under the
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Securities Act, or pursuant to an applicable exemption from such registration,
and the 144A Notes are legended to restrict transfer as aforesaid. Each Holder
(other than any Holder who is an affiliate or promoter of the Company) who duly
exchanges 144A Notes for Exchange Notes in the Exchange Offer will receive
Exchange Notes that are freely transferable under the Securities Act. Holders
who participate in the Exchange Offer should be aware, however, that if they
accept the Exchange Offer for the purpose of engaging in a distribution, the
Exchange Notes may not be publicly reoffered or resold without complying with
the registration and prospectus delivery requirements of the Securities Act. As
a result, each Holder accepting the Exchange Offer will be deemed to have
represented, by its acceptance of the Exchange Offer, that it acquired the
Exchange Notes in the ordinary course of business and that it is not engaged in,
and does not intend to engage in, a distribution of the Exchange Notes. If
existing Commission interpretations permitting free transferability of the
Exchange Notes following the Exchange Offer are changed prior to consummation of
the Exchange Offer, the Company will use its best efforts to register the 144A
Notes for resale under the Securities Act. See "Prospectus Summary--The Exchange
Offer" and "Exchange Offer; Registration Rights."
The 144A Notes currently may be sold pursuant to the restrictions set forth
in Rule 144A under the Securities Act or pursuant to another available exemption
under the Securities Act without registration under the Securities Act. To the
extent that 144A Notes are tendered and accepted in the Exchange Offer, the
trading market for the untendered and tendered but unaccepted 144A Notes could
be adversely affected.
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THE EXCHANGE OFFER
THE FOLLOWING DISCUSSION SETS FORTH OR SUMMARIZES WHAT THE COMPANY BELIEVES
ARE THE MATERIAL TERMS OF THE EXCHANGE OFFER, INCLUDING THOSE SET FORTH IN THE
LETTERS OF TRANSMITTAL DISTRIBUTED WITH THIS PROSPECTUS. THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE DOCUMENTS
UNDERLYING THE EXCHANGE OFFER, COPIES OF WHICH ARE FILED AS EXHIBITS TO THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART, AND ARE INCORPORATED
BY REFERENCE HEREIN.
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
In connection with the sale of 144A Notes pursuant to the Purchase Agreement
dated November 13, 1996 (the "Purchase Agreement"), between the Company, BBC,
and the purchasers of 144A Notes (the "Buyers"), the Buyers became entitled to
the benefits of a Registration Rights Agreement dated as of November 19, 1996
(the "Registration Rights Agreement").
Under the Registration Rights Agreement, the Company and BBC must use their
best efforts to (a) file a registration statement in connection with a
registered exchange offer within 60 days after November 19, 1996, the date the
144A Notes were issued (the "Issue Date"), (b) cause such registration statement
to become effective under the Securities Act within 120 days of the Issue Date
and (c) cause such registered exchange offer to be consummated within 150 days
after the Issue Date. Within the applicable time periods, the Company and BBC
will endeavor to register under the Securities Act all of the Exchange Notes
pursuant to a registration statement under which the Company will offer each
Holder of 144A Notes the opportunity to exchange any and all of the outstanding
144A Notes held by such Holder for Exchange Notes in an aggregate principal
amount equal to the aggregate principal amount of 144A Notes tendered for
exchange by such Holder. Subject to limited exceptions, the Exchange Offer being
made hereby, if commenced and consummated within such applicable time periods,
will satisfy those requirements under the Registration Rights Agreement. In such
event, the 144A Notes would remain outstanding and would continue to accrue
interest, but would not retain any rights under the Registration Rights
Agreement. Holders of 144A Notes seeking liquidity in their investment would
have to rely on exemptions to registration requirements under the securities
laws, including the Securities Act. A copy of the Registration Rights Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The term "Holder" with respect to the Exchange Offer means
any person in whose name the 144A Notes are registered on the books of the
Company or any other person who has obtained a properly completed bond power
from the registered holder.
Because the Exchange Offer is for any and all 144A Notes, the number of 144A
Notes tendered and exchanged in the Exchange Offer will reduce the principal
amount of 144A Notes outstanding. Following the consummation of the Exchange
Offer, Holders who did not tender their 144A Notes generally will not have any
further registration rights under the Registration Rights Agreement, and such
144A Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such 144A Notes could be adversely
affect. The 144A Notes are currently eligible for sale pursuant to Rule 144A
through the PORTAL System. Because the Company anticipates that most Holders of
144A Notes will elect to exchange such 144A Notes for Exchange Notes due to the
absence of restrictions on the resale of Exchange Notes under the Securities
Act, the Company anticipates that the liquidity of the market for any 144A Notes
remaining after the consummation of the Exchange Offer may be substantially
limited. See "Description of the Exchange Notes--Registration Rights."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal, the Company will accept all 144A
Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount
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of Exchange Notes in exchange for each $1,000 principal amount of outstanding
144A Notes accepted in the Exchange Offer. Holders may tender some or all of
their 144A Notes pursuant to the Exchange Offer.
The form and terms of the Exchange Notes are the same as the form and terms
of the 144A Notes except that (i) the Exchange Notes have been registered under
the Securities Act and hence will not bear legends restricting the transfer
thereof and (ii) the holders of the Exchange Notes generally will not be
entitled to certain rights under the Registration Rights Agreement, which rights
generally will terminate upon consummation of the Exchange Offer. The Exchange
Notes will evidence the same debt as the 144A Notes and will be entitled to the
benefits of the Indenture.
Holders of 144A Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer.
The Company shall be deemed to have accepted validly tendered 144A Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
of 144A Notes for the purposes of receiving the Exchange Notes from the Company
and delivering Exchange Notes to such Holders.
If any tendered 144A Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted 144A Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders of 144A Notes who tender in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of 144A Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Exchange Offer shall remain open for acceptance for a period of not less
than 30 days after notice is mailed to Holders (the "Exchange Period"). The
Expiration Date will be 5:00 p.m., New York City time, on , 1997,
unless the Company, in its sole discretion, extends the Exchange Offer, in which
case the Expiration Date will be the latest business day to which the Exchange
Offer is extended.
In order to extend the Expiration Date, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the record
Holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. Such
announcement may state that the Company is extending the Exchange Offer for a
specified period of time.
The Company reserves the right (i) to delay accepting any 144A Notes, to
extend the Exchange Offer or to terminate the Exchange Offer and not accept 144A
Notes not previously accepted if any of the conditions set forth under
"--Conditions" shall have occurred and shall not have been waived by the
Company, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent, or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the Holders of such
amendment and the Company will extend the Exchange Offer for a period of five to
ten business days, depending upon the significance of the amendment and the
manner of disclosure to Holders, if the Exchange Offer would otherwise expire
during such five to ten business day period.
Without limiting the manner in which the Company may choose to make public
announcement of any extension, amendment or termination of the Exchange Offer,
the Company shall have no obligation to
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publish, advertise, or otherwise communicate any such public announcement, other
than by making a timely release to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from November 19, 1996, payable
semiannually on May 15 and November 15 of each year at the rate of 10 3/4% PER
ANNUM. Accordingly, Holders of 144A Notes that are accepted for exchange will
not receive interest that is accrued but unpaid on the 144A Notes at the time of
tender, but such interest will be payable in respect of the Exchange Notes
delivered in exchange for such 144A Notes on the first Interest Payment Date
after the Expiration Date.
PROCEDURES FOR TENDERING
Only a Holder of 144A Notes may tender such 144A Notes in the Exchange
Offer. To tender in the Exchange Offer, a Holder must complete, sign and date
the Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by instruction 4 of the Letter of Transmittal, and mail
or otherwise deliver such Letter of Transmittal or such facsimile, together with
the 144A Notes and any other required documents, to the Exchange Agent prior to
5:00 p.m., New York City time, on the Expiration Date. Delivery of the 144A
Notes may be made by book-entry transfer in accordance with the procedures
described below. Confirmation of such book-entry transfer must be received by
the Exchange Agent prior to the Expiration Date.
The tender by a Holder of 144A Notes and the acceptance thereof by the
Company will constitute an agreement between such Holder and the Company in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
THE METHOD OF DELIVERY OF 144A NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR 144A NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT SUCH TENDER FOR SUCH HOLDERS.
Any beneficial holder whose 144A Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial holder wishes to
tender on his own behalf, such beneficial holder must, prior to completing and
executing the Letter of Transmittal and delivering his 144A Notes, either make
appropriate arrangements to register ownership of the 144A Notes in such
holder's name or obtain a properly completed bond power from the registered
holder. The transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act (an "Eligible Institution") unless the 144A Notes
tendered pursuant thereto are tendered (i) by a registered holder who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. In the event that signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, such
guarantee must be by an Eligible Institution.
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If the Letter of Transmittal is signed by a person other than the registered
holder of any 144A Notes listed therein, such 144A Notes must be endorsed or
accompanied by appropriate bond powers and a proxy which authorizes such person
to tender the 144A Notes on behalf of the registered holder, in each case signed
as the name of the registered holder or holders appears on the 144A Notes with
the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any 144A Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Company understands that the Exchange Agent will make a request promptly
after the date of this Prospectus to establish accounts with respect to the 144A
Notes at the DTC for the purpose of facilitating the Exchange Offer, and subject
to the establishment thereof, any financial institution that is a participant in
the DTC may make book-entry delivery of the 144A Notes by causing the DTC to
transfer such 144A Notes into the Exchange Agent's account with respect to the
144A Notes in accordance with the DTC's procedures for such transfer. Although
delivery of the 144A Notes may be effected through book-entry transfer into the
Exchange Agent's account at the DTC, a Letter of Transmittal properly completed
and duly executed with any required signature guarantee and all other required
documents must in each case be transmitted to and received or confirmed by the
Exchange Agent at its address set forth below on or prior to the Expiration
Date, or, if the guaranteed delivery procedures described below are complied
with, within the time period provided under such procedures. Delivery of
documents to the DTC does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered 144A Notes and withdrawal of the tendered 144A
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all 144A Notes not properly tendered or any 144A Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular 144A Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including, the instructions
in the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of 144A Notes
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of 144A Notes,
nor shall any of them incur any liability for failure to give such notification.
Tenders of 144A Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any 144A Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such Holder by the Exchange Agent to the tendering Holders of 144A Notes, unless
otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their 144A Notes and (i) whose 144A Notes are not
immediately available, or (ii) who cannot deliver their 144A Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent (or comply
with the procedures for book-entry transfer) prior to the Expiration Date, may
effect a tender if:
a. the tender is made through an Eligible Institution;
b. prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail
24
<PAGE>
or hand delivery) setting forth the name and address of the holder of the
144A Notes, the certificate or registration number or numbers of such 144A
Notes and the principal amount of 144A Notes tendered, stating that the
tender is being made thereby, and guaranteeing that, within five business
days after the Expiration Date, the Letter of Transmittal (or facsimile
thereof) together with the certificate(s) representing the 144A Notes to be
tendered in proper form for transfer (or a confirmation of book-entry
transfer of such 144A Notes into the Exchange Agent's account at the
Depository) and any other documents required by the Letter of Transmittal
will be deposited by the Eligible Institution with the Exchange Agent; and
c. such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered 144A Notes in proper form for transfer (or a confirmation of
book-entry transfer of such 144A Notes into the Exchange Agent's account at
the Depository) and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within five business days
after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of 144A Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of 144A Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at the address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the 144A Notes to be withdrawn (the "Depositor"),
(ii) identify the 144A Notes to be withdrawn (including the certificate or
registration number(s) and principal amount of such 144A Notes, or, in the case
of notes transferred by book-entry transfer, the name and number of the account
at the DTC to be credited), (iii) be signed by the Depositor in the same manner
as the original signature on the Letter of Transmittal by which such 144A Notes
were tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee (as defined herein) with
respect to the 144A Notes register the transfer of such 144A Notes into the name
of the Depositor withdrawing the tender and (iv) specify the name in which any
such 144A Notes are to be registered, if different from that of the Depositor,
(v) include a statement that such Holder is withdrawing his election to have
such 144A Notes exchanged. All questions as to the validity, form and
eligibility (including time of receipt) of such withdrawal notices will be
determined by the Company, whose determination shall be final and binding on all
parties. Any 144A Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no Exchange Notes will be issued
with respect thereto unless the 144A Notes so withdrawn are validly retendered.
Any 144A Notes which have been tendered but which are not accepted for payment
will be returned to the Holder thereof without cost to such Holder as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn 144A Notes may be retendered by following one of the
procedures described under "--Procedures for Tendering" at any time prior to the
Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or to exchange Exchange Notes for, any 144A
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such 144A Notes, if:
(i) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
25
<PAGE>
(ii) any governmental approval has not been obtained, which approval the
Company shall, in its reasonable judgment, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable judgment that any of the
conditions are not satisfied, the Company may (i) refuse to accept any 144A
Notes and return all tendered 144A Notes to the tendering Holders, (ii) extend
the Exchange Offer and retain all 144A Notes tendered prior to the expiration of
the Exchange Offer subject, however, to the rights of Holders to withdraw such
144A Notes (see "--Withdrawals of Tenders") or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
144A Notes which have not been withdrawn. If such waiver constitutes a material
change to the Exchange Offer, the Company will promptly disclose such waiver by
means of a prospectus supplement that will be distributed to the registered
Holders, and, depending upon the significance of the waiver and the manner of
disclosure to the registered Holders, the Company will extend the Exchange Offer
for a period of five to ten business days if the Exchange Offer would otherwise
expire during such five to ten business-day period.
EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
<TABLE>
<CAPTION>
BY MAIL, HAND OR OVERNIGHT
DELIVERY:
<S> <C> <C>
The Chase Manhattan Bank
55 Water Street
Room 234
North Building
New York, New York 10041
Attention: Carlos Esteves
FACSIMILE TRANSMISSION:
(212) 638-7375
(212) 344-9367
CONFIRM BY TELEPHONE:
(212) 638-0828
Carlos Esteves
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone or in person by officers and regular employees of
the Company, BBC and their affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company, however, will
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith and pay other registration expenses, including fees and
expenses of the Trustee, filing fees, blue sky fees and printing and
distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of 144A Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or 144A Notes for principal
26
<PAGE>
amounts not tendered or accepted for exchange are to be delivered to, or are to
be registered or issued in the name of, any person other than the registered
holder of the 144A Notes tendered, or if tendered 144A Notes are registered in
the name of any person other than the person signing the Letter of Transmittal,
or if a transfer tax is imposed for any reason other than the exchange of 144A
Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering Holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the 144A
Notes, which is the aggregate principal amount of the 144A Notes, as reflected
in the Company's accounting records on the date of exchange. Accordingly, no
gain or loss for accounting purposes will be recognized in connection with the
Exchange Offer. The expense of the Exchange Offer will be amortized over the
term of the Exchange Notes.
RESALE OF THE EXCHANGE NOTES
Under existing Commission interpretations, the Exchange Notes would, in
general, be freely transferable after the Exchange Offer by any holder of such
Exchange Notes (other than any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 of the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities Act,
PROVIDED that such Exchange Notes acquired pursuant to the Exchange Offer are
obtained in the ordinary course of such holder's business, and such holder does
not intend to participate, and has no arrangement or understanding to
participate in the distribution of such Exchange Notes. Any holder who tenders
into the Exchange Offer with the intention to participate, or for the purpose of
participating, in a distribution of the Exchange Notes may not rely on the
position of the staff of the SEC enunciated in EXXON CAPITAL HOLDINGS
CORPORATION (available May 13, 1988) or MORGAN STANLEY & CO., INCORPORATED
(available June 5, 1991) or similar interpretive letters, but rather must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction. In addition, any such resale
transaction should be covered by an effective registration statement containing
the selling security holders information required by Item 507 of Regulation S-K
of the Securities Act.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for 144A Notes, where such 144A Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Company has agreed, for period for 180 days after consummation of the Exchange
Offer, to make available a prospectus meeting the requirements of the Securities
Act to any such broker-dealer for use in connection with any resale of any
Exchange Notes acquired in the Exchange Offer. A broker-dealer which delivers
such a prospectus to purchasers in connection with such resales will be subject
to certain of the civil liability provisions under the Securities Act and will
be bound by the provisions of the Registration Rights Agreement (including
certain indemnification rights and obligations).
By tendering in the Exchange Offer, each Holder will represent to the
Company, among other things, (i) the Exchange Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of its business, (ii)
neither the holder nor any such other person has an arrangement or understanding
with any person to participate in the distribution of the Exchange Notes and
(iii) the holder and any such other person acknowledge that if they participate
in the Exchange Offer for the purpose of distributing the Exchange Notes (a)
they must, in the absence of an exemption therefrom, comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the Exchange Notes and cannot rely on the
no-action letters referenced above and (b) failure to comply with such
requirements
27
<PAGE>
in such instance could result in such holder incurring liability under the
Securities Act for which such holder is not indemnified by the Company. Further,
by tendering in the Exchange Offer, each holder that may be deemed an
"affiliate" (as defined in Rule 405 of the Securities Act), of the Company will
represent to the Company that such holder understands and acknowledges that the
Exchange Notes may not be offered for resale, resold, or otherwise transferred
by that Holder without registration under the Securities Act or an exemption
therefrom.
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the staff of the Commission with respect to
resales of the Exchange Notes without compliance with the registration and
prospectus delivery requirements of the Securities Act. Merrill Lynch has
indicated to the Company that it intends to effect offers and sales of the
Exchange Notes, acting as principal or agent, in market-making transactions at
negotiated prices related to prevailing market prices at the time of sale. If
Merrill Lynch conducts any market making activities, it may be required to
deliver a "market-making prospectus" when effecting offers and sales in the
Exchange Notes because of the equity ownership of MLCP and its affiliates of the
Company. MLCP is an affiliate of Merrill Lynch. MLCP and its affiliates in the
aggregate hold approximately 90% of the Blue Bird Common Stock.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Company will have
fulfilled one of its obligations under the Registration Rights Agreement, and
Holders of 144A Notes who do not tender their 144A Notes generally will not have
any further registration rights under the Registration Rights Agreement or
otherwise. Accordingly, any Holder that does not exchange such Holder's 144A
Notes for Exchange Notes will continue to hold the untendered 144A Notes and
will be entitled to all the rights and limitations applicable thereto under the
Indenture, except to the extent that such rights or limitations, by their terms,
terminate or cease to have further effectiveness as a result of the Exchange
Offer.
The 144A Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such 144A Notes
may be resold only (i) to the Company (upon redemption thereof or otherwise),
(ii) pursuant to an effective registration statement under the Securities Act,
(iii) so long as the 144A Notes are eligible for resale pursuant to Rule 144A
under the Securities Act, to a Qualified Institutional Buyer in a transaction
meeting the requirements of Rule 144A, (iv) outside the United States to a
foreign person pursuant to the exemption from the registration requirements of
the Securities Act provided by Regulation S thereunder, (v) pursuant to an
exemption from registration under the Securities Act provided by Rule 144
thereunder (if available) or (vi) to an Accredited Investor in a transaction
exempt from the registration requirements of the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United States
or other applicable jurisdiction. See "Risk Factors--Restrictions on Transfer."
OTHER
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. Holders are urged to consult their
financial and tax advisors in making their own decision on what action to take.
The Company may in the future seek to acquire untendered 144A Notes, to the
extent permitted by applicable law, in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. The Company has
no present plans to acquire any 144A Notes that are not tendered in the Exchange
Offer or to file a registration statement to permit resales of any untendered
144A Notes.
In any state where the Exchange Offer does not fall under a statutory
exemption to the blue sky rules, the Company has filed the appropriate
registrations and notices, and has made the appropriate requests, to permit the
Exchange Offer to be made in such state.
28
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE EXCHANGE OFFER
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "IRS") will not take a contrary view, and
no ruling from the IRS has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to Holders. Certain Holders of the 144A Notes (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations and persons who are not citizens or residents of the United
States) may be subject to special rules not discussed below. Each Holder of a
144A Note should consult his, her or its own tax advisor as to the particular
tax consequences of exchanging such Holder's 144A Notes for Exchange Notes,
including the applicability and effect of any state, local or foreign tax laws.
The issuance of the Exchange Notes to Holders of the 144A Notes pursuant to
the terms set forth in this Prospectus will not constitute an exchange for
United States federal income tax purposes. Consequently, no gain or loss would
be recognized by Holders of the 144A Notes upon receipt of the Exchange Notes,
and ownership of the Exchange Notes will be considered a continuation of
ownership of the 144A Notes. For purposes of determining gain or loss upon the
subsequent sale or exchange of the Exchange Notes, a Holder's basis in the
Exchange Notes should be the same as such Holder's basis in the 144A Notes
exchanged therefor. A Holder's holding period for the Exchange Notes should
include the Holder's holding period for the 144A Notes exchanged therefor. The
issue price, original issue discount inclusion and other tax characteristics of
the Exchange Notes should be identical to the issue price, original issue
discount inclusion and other tax characteristics of the 144A Notes exchanged
therefor.
See also "Description of Certain Federal Income Tax Consequences of an
Investment in the Exchange Notes."
29
<PAGE>
THE RECAPITALIZATION
On November 19, 1996, the Company consummated the Recapitalization which
included the 144A Note Offering, the retirement of the Old Notes, the
replacement and refinancing of the Old Credit Agreement with the New Credit
Agreement and the Distribution. As part of the Recapitalization, the Board of
Directors of the Company declared the Blue Bird Dividend and the Board of
Directors of BBC declared the BBC Distribution. Holders of BBC options received
cash payments on an as-exercised basis and were not required to exercise their
options to receive their PRO RATA portion of the BBC Distribution, nor were they
entitled to any antidilution adjustment to the exercise price for their options.
Selling Holders of approximately $50 million principal amount (or 100%) of the
outstanding Old Notes sold their Old Notes to the Company, subject to certain
conditions, and consented to certain amendments to the indenture governing the
Old Notes for aggregate payments (including repayment of principal) of
approximately $56.1 million, which included accrued and unpaid interest (as of
September 28, 1996). The Old Credit Agreement was replaced and refinanced by the
New Credit Agreement, which provided for aggregate availability of $255 million,
including $175 million of Term Facility and an $80 million Revolving Facility.
See "Use of Proceeds."
The following table sets forth the cash sources and uses of funds for the
Recapitalization.
<TABLE>
<CAPTION>
AMOUNT
-------------------
<S> <C>
(DOLLARS IN
MILLIONS)
SOURCES OF FUNDS:
Cash on hand............................................................ $ 24.5
Revolving loans under New Credit Agreement.............................. 3.6
Term loans under New Credit Agreement................................... 175.0
Notes offered hereby.................................................... 99.7
Proceeds from repayment of Management Notes(a).......................... 3.8
-------
Total............................................................... $ 306.6
-------
-------
USES OF FUNDS:
Distribution............................................................ $ 201.4
Repayment of Old Credit Agreement....................................... 40.0
Retirement of Old Notes(b).............................................. 56.1
Estimated fees and expenses............................................. 9.1
Total............................................................... $ 306.6
-------
-------
</TABLE>
- ------------------------
(a) The Management Notes (as defined herein) will be repaid by management
shareholders out of the proceeds of the Distribution. See "Certain
Relationships and Related Transactions."
(b) Includes costs associated with the retirement of the Old Notes and the
amendment of the indenture relating thereto, including payment of accrued
interest.
The LaSalle Credit Facility to which Blue Bird Capital is a party remains
outstanding following the Recapitalization. The Selling Holders sold their Old
Notes at a price based upon a premium over the applicable U.S. Treasury rate
and, in connection with their agreement to sell their Old Notes to the Company,
the Selling Holders consented to amendments to the indenture governing the Old
Notes that would have eliminated substantially all of the material restrictive
covenants contained therein had such indenture remained in effect.
See "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" and
"Description of Debt Facilities."
30
<PAGE>
USE OF PROCEEDS
There will be no proceeds to the Company from the Exchange of Notes pursuant
to the Exchange Offer.
The net proceeds to the Company from the sale of the 144A Notes were
approximately $96.7 million. All of such proceeds, together with the proceeds of
borrowings under the New Credit Agreement and cash held by the Company, were
used to effect the Recapitalization and to pay fees and expenses incurred in
connection with the Recapitalization. See "The Recapitalization."
31
<PAGE>
CAPITALIZATION
The following table sets forth the cash and cash equivalents, short-term
debt and capitalization of BBC as of September 28, 1996 (i) on an historical
basis and (ii) on a PRO FORMA basis to give effect to the Recapitalization as if
it had occurred on September 28, 1996. There are no material differences between
the capitalization of the Company and BBC, except as set forth in footnotes (c)
and (d). This information should be read in conjunction with the information set
forth under "Selected Financial Data" and in the audited financial statements of
BBC appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 28, 1996
------------------------
HISTORICAL PRO FORMA
----------- -----------
<S> <C> <C>
(DOLLARS IN MILLIONS)
Cash and cash equivalents.............................................................. $ 24.5 $ --(a)
----------- -----------
----------- -----------
Short-term debt (including current portion of long-term debt).......................... $ 28.4 $ 27.7(b)
----------- -----------
----------- -----------
Long-term debt:
Old Credit Agreement (excluding current portion)..................................... 27.0 --
New Credit Agreement (excluding current portion)..................................... -- 166.2
Old Notes............................................................................ 50.0 --
144A Notes (c)....................................................................... -- 99.7
LaSalle Credit Facility.............................................................. 40.2 40.2
Industrial development bonds......................................................... 2.7 2.7
----------- -----------
Total long-term debt................................................................... 119.9 308.8
Redeemable common stock(d)............................................................. 24.2 11.5
Stock subscriptions receivable(e)...................................................... (3.8) --
Stockholders' equity:
Common stock; $.01 par value; 25,000,000 shares authorized; 8,424,778 shares issued
and outstanding.................................................................... .1 .1
Additional paid-in capital............................................................. 77.0 77.0
Retained earnings...................................................................... 48.5 (130.6)(f)
Cumulative translation adjustments (g)................................................. (2.5) (2.5)
----------- -----------
Total stockholders' equity (deficit)................................................... 123.1 (56.0)
----------- -----------
Total capitalization........................................................... $ 263.4 $ 264.3
----------- -----------
----------- -----------
</TABLE>
- --------------------------
(a) Reflects (i) the receipt of gross proceeds from the 144A Note Offering
($99.7 million), borrowings under the Term Facility of the New Credit
Agreement ($175 million) and borrowings under the Revolving Facility of the
New Credit Agreement ($3.6 million); (ii) the retirement of indebtedness
(including accrued interest) under the Old Credit Agreement ($40 million)
and the Old Notes ($52.7 million); (iii) the payment of fees and expenses
associated with the Recapitalization ($9.1 million) and the costs (including
premium) associated with the retirement and amendment of the Old Notes ($3.4
million); (iv) the payment of the Distribution ($201.4 million); and (v) the
proceeds from the repayment of the Management Notes from the BBC
Distribution to the management shareholders ($3.8 million). Cash was
approximately $43 million immediately prior to the Recapitalization.
(b) Reflects (i) the retirement of the current portion of indebtedness under the
Old Credit Agreement ($13 million); and (ii) the current portion of
long-term debt and revolving credit borrowings under the New Credit
Agreement ($12.4 million). Includes $15.3 million of indebtedness under the
LaSalle Credit Agreement.
(c) Represents the $100 million principal amount of the Notes less unamortized
discount of $.3 million.
(d) Redeemable common stock represents 720,000 issued and outstanding shares of
BBC Common Stock purchased by the Management Investors, primarily in
connection with the 1992 Acquisition. The Management Investors have
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
32
<PAGE>
the right, prior to the earlier of an initial public offering of equity
securities of BBC or the tenth anniversary of the Stockholders' Agreement,
to put these shares to BBC in the event of their disability, involuntary
termination not for cause, retirement, or death for a fair value price. The
redeemable common stock of BBC was recorded at fair value on the date of
issuance. The excess of the fair value price over the original fair value is
being accreted by periodic charges to retained earnings. The amounts
recorded in the balance sheets represent the estimated maximum amount
payable if all Management Investors met the specified criteria and exercised
their put rights. See "Certain Relationships and Related Transactions."
(e) Stock subscriptions receivable represent notes due from Management Investors
to BBC for stock issued in April 1992 in connection with the 1992
Acquisition. The Management Notes bear interest at an 8% interest rate.
Interest is payable annually. The Management Notes were repaid by management
optionholders out of the proceeds of the Distribution.
(f) Reflects (i) the Distribution, net of tax benefit ($188.6 million); (ii) the
adjustment to the fair value of the redeemable common stock ($12.7 million);
(iii) the costs associated with the retirement and amendment of the Old
Notes, net of tax benefit ($2 million); and (iv) the write-off of the debt
issue costs related to the indebtedness being retired, net of tax benefit
($1.2 million).
(g) Reflects the effects of exchange rate fluctuations on translating foreign
currency assets and liabilities into U.S. dollars for the foreign
subsidiaries and branches of the Company.
33
<PAGE>
SELECTED FINANCIAL DATA
Set forth below is certain selected historical consolidated financial data
for BBC as of and for the nine months ended July 27, 1996 and July 29, 1995,
fiscal years 1995, 1994 and 1993, and for the six months ended October 31, 1992,
as well as selected historical consolidated financial information for BBC prior
to the 1992 Acquisition (the "Predecessor") as of and for the six months ended
April 30, 1992 and the year ended November 2, 1991. The selected historical
consolidated financial data as of and for the full fiscal years indicated were
derived from the financial statements of BBC and subsidiaries which were audited
by Arthur Andersen. The data for the nine months ended July 27, 1996 and July
29, 1995 are unaudited but, in the opinion of BBC's management, reflect all
adjustments necessary for a fair presentation of the results of operations for
such periods. Currently, BBC conducts no independent operations and has no
significant assets other than the capital stock of Blue Bird. The results for
the nine months ended July 27, 1996 may not be indicative of the results to be
expected for the year ending November 2, 1996 because, among other things, Blue
Bird's business is seasonal, with a majority of sales occurring in the third and
fourth quarters. The selected historical financial data set forth below should
be read in conjunction with the consolidated financial statements of BBC and the
notes thereto included elsewhere in this Prospectus. Separate historical
financial data for the Predecessor are not included in this Prospectus.
Subsequent consolidated financial data of BBC reflect the purchase accounting
treatment of the 1992 Acquisition. Accordingly, the financial data of the
Predecessor and BBC are not comparable in all material respects, since such data
reflect financial positions and results of operations of these two separate
entities.
<TABLE>
<CAPTION>
BBC
----------------------------------------------------------------------------
NINE MONTHS
ENDED FISCAL YEAR ENDED SIX MONTHS
------------------------ ------------------------------------- ENDED
JULY 27, JULY 29, OCTOBER 28, OCTOBER 29, OCTOBER 30, OCTOBER 31,
1996 1995 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
INCOME STATEMENT DATA:
Net sales................................. $ 346.1 319.5 $ 517.4 $ 476.2 $ 413.5 $ 244.4
Cost of goods sold........................ 287.4 264.1 430.6 392.9 340.5 198.4
----------- ----------- ----------- ----------- ----------- -----------
Gross profit.............................. 58.7 55.4 86.8 83.3 73.0 46.0
Selling, general and administrative
expenses(a)............................. 31.5 29.5 39.8 39.0 36.3 20.1
Amortization of goodwill and
non-compete agreements.................. 2.8 3.7 4.7 5.6 5.6 9.3
----------- ----------- ----------- ----------- ----------- -----------
Operating income (loss)................... 24.4 22.2 42.3 38.7 31.1 16.6
Interest income........................... 5.3 3.0 4.6 4.1 2.9 1.4
Interest expense.......................... (12.8) (14.0) (18.5) (17.4) (18.2) (9.5)
Other income (expense)(b)................. 0.5 0.4 0.1 0.2 0.7 (0.5)
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes......... 17.4 11.6 28.5 25.6 16.5 8.0
Provision (benefit) for income taxes...... 6.8 4.9 11.6 10.2 6.9 4.3
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)......................... $ 10.6 $ 6.7 $ 16.9 $ 15.4 $ 9.6 $ 3.7
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
BALANCE SHEET DATA (AS OF END OF PERIOD):
Working capital........................... $ 57.7 $ 67.3 $ 61.7 $ 65.3 $ 52.7 $ 31.9
Total assets.............................. 439.5 412.3 379.8 332.8 342.1 337.3
Long-term debt, excluding current
maturities.............................. 118.4 115.0 113.8 125.8 135.8 143.8
Redeemable common stock, net.............. 20.4 14.2 20.9 17.5 11.0 8.0
Stockholders' equity...................... 112.1 98.8 102.6 88.8 80.7 83.8
<CAPTION>
PREDECESSOR
--------------------------
SIX MONTHS FISCAL YEAR
ENDED ENDED
APRIL 30, NOVEMBER 2
1992 1991
----------- -------------
<S> <C> <C>
INCOME STATEMENT DATA:
Net sales................................. $ 120.8 $ 428.0
Cost of goods sold........................ 98.7 345.6
----------- ------
Gross profit.............................. 22.1 82.4
Selling, general and administrative
expenses(a)............................. 34.2 48.6
Amortization of goodwill and
non-compete agreements.................. -- --
----------- ------
Operating income (loss)................... (12.1) 33.8
Interest income........................... 5.7 11.5
Interest expense.......................... (1.7) (4.3)
Other income (expense)(b)................. 1.7 (2.3)
----------- ------
Income (loss) before income taxes......... (6.4) 38.7
Provision (benefit) for income taxes...... (3.0) 12.1
----------- ------
Net income (loss)......................... $ (3.4) $ 26.6
----------- ------
----------- ------
BALANCE SHEET DATA (AS OF END OF PERIOD):
Working capital........................... $ 69.4 $ 64.9
Total assets.............................. 253.8 235.8
Long-term debt, excluding current
maturities.............................. 39.4 30.8
Redeemable common stock, net.............. -- --
Stockholders' equity...................... 137.0 143.6
</TABLE>
- ------------------------
(a) Includes expenses of the Predecessor incurred prior to the 1992 Acquisition
which the Company no longer incurs, including salaries of the Predecessor's
principal stockholders prior to the 1992 Acquisition, commission paid
relating to a Domestic International Sales Corporation (DISC) owned by such
principal stockholders, the amortization of contracts in process, and
severance and restructuring costs. Such amounts totaled $6.6 million and
$1.1 million for the six month periods ended October 31, 1992 and April 30,
1992, respectively, and $5.9 million, for fiscal year 1991.
(b) Includes charitable contributions made prior to the 1992 Acquisition which
BBC has reduced following the 1992 Acquisition. Such contributions totaled
$.6 million for the six-month period ended April 30, 1992 and $.8 million
for fiscal year 1991.
34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Approximately 79% of the Company's fiscal 1995 net sales are derived from
school bus sales and approximately 14% and 7% of the Company's fiscal 1995 net
sales are derived from the sale of commercial and recreational vehicles,
respectively. Between fiscal 1993 and fiscal 1995, the Company's operating
income has risen primarily due to increased sales volume. Over the same period,
gross profit margins have decreased slightly, principally due to an increase in
the number of Type C buses sold with GM chassis. The Company's operations are
affected by trends in the number of students enrolled in grades kindergarten
through 12 and overall educational spending by local and state governments as
well as by the federal government. In addition to incremental needs due to pupil
population growth and replacement requirements based on changes in safety
standards, factors which influence the need to purchase school buses include the
age of the existing school bus fleet, changes in school bus travel routes,
regulatory changes such as compliance with new emissions standards,
extracurricular activity usage and changes in the education structure in the
United States such as the development of preschool "head start" programs,
special education programs and magnet schools. The Company's experience has been
that during periods of stable or increasing student enrollment, demand for its
core school bus products has also remained stable or increased.
On a PRO FORMA basis, assuming the Recapitalization had been effected on
September 28, 1996, the Company's total consolidated indebtedness was increased
by approximately $188.2 million, to $336.5 million. The primary effects of the
Recapitalization on the Company's future operating results include reduced
reported profitability to the extent interest expense is above historical
amounts resulting from higher debt levels. The Company expects to generate
sufficient cash from operations to fund its working capital and capital
expenditure needs and make required interest and principal payments on its
indebtedness. See "Risk Factors--Leverage and Debt Service" and "--Restrictive
Covenants and Asset Encumbrances," and "--Liquidity and Capital Resources."
RESULTS OF OPERATIONS
The discussion of results of operations that follows is based upon and
should be read in conjunction with the financial statements, including the notes
thereto, included elsewhere in this Prospectus. Although the financial
statements are consolidated financial statements of BBC, the Company's parent,
BBC is a holding company and, as such, there would be no material differences in
the operating results of BBC, as compared with the Company. The following table
sets forth certain operating results as a percentage of net sales for the
historical periods indicated:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED
------------------------ -------------------------------------------
<S> <C> <C> <C> <C> <C>
JULY 27, JULY 29, OCTOBER 28, OCTOBER 29, OCTOBER 30,
1996 1995 1995 1994 1993
----------- ----------- ------------- ------------- -------------
Net sales.......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold................. (83.0) (82.6) (83.2) (82.5) (82.3)
Gross profit....................... 17.0 17.4 16.8 17.5 17.7
Selling, general and administrative
expense.......................... (9.9) (9.2) (7.7) (8.1) (8.8)
Operating income................... 7.0% 6.9% 8.2% 8.1% 7.5%
</TABLE>
NINE MONTHS ENDED JULY 27, 1996 COMPARED TO NINE MONTHS ENDED JULY 29,
1995. Net sales for the nine months ended July 27, 1996, were $346.1 million,
an increase of $26.7 million or 8.4% compared to the same period in 1995. This
increase was due primarily to the delivery of more Type C units during the 1996
period as compared to the 1995 period.
35
<PAGE>
Gross profit increased to $58.7 million for the nine months ended July 27,
1996 as compared to $55.4 million in the same period in 1995, an increase of
$3.3 million or 6.0%. The increased gross profit was due primarily to the higher
sales volume offset in part by the higher cost of goods sold associated with the
shift in the Company's product mix.
Selling, general and administrative expenses increased to $31.5 million for
the nine months ended July 27, 1996 from $29.5 million in the 1995 period, an
increase of $2 million or 6.8%. This increase was due primarily to budgeted
increases in engineering and marketing costs, as well as to higher selling
expenses.
Interest income increased to $5.3 million for the nine months ended July 27,
1996, compared to $3 million for the same period in 1995. The increase was due
mainly to a higher average dollar amount of leases held in the lease portfolio
for the first nine months of 1996 as compared to the same period in 1995.
Interest and debt issue expenses decreased to $12.8 million for the nine
months ended July 27, 1996 from $14 million in the prior year's similar period
due to lower interest rates on bank debt as well as lower debt levels due to the
repurchase of $25 million of the Old Notes in December, 1995. The resulting
lower interest expense was partially offset by interest expense associated with
the LaSalle Credit Facility. The LaSalle Credit Facility for Blue Bird Capital
was not in place during the 1995 period.
The provision for income taxes was $6.8 million for the nine months ended
July 27, 1996 compared to $4.9 million for the same period in 1995. The
effective tax rate for the current period was 39.1% compared to 42.4% during the
prior year period. The effective tax rate for both periods is higher than the
statutory rate primarily due to the effect of certain nondeductible amortization
charges, principally goodwill.
On December 14, 1995, the Company repurchased, for cash on the open market,
$25 million in principal amount of outstanding Old Notes for the purchase price
(expressed as a percentage of principal amount) of 106.500% plus accrued
interest to the purchase date. An extraordinary loss of $1.4 million net of a
tax benefit of $.8 million occurred during the 1996 period due to the early
extinguishment of such Old Notes.
FISCAL 1995 COMPARED TO FISCAL 1994. Net sales increased to $517.4 million
in fiscal 1995 from $476.2 million in fiscal 1994, an increase of $41.2 million,
or 8.7%. This increase was due to increased sales of Type D, Q-Bus and CS units,
as well as increased sales of Type C units.
Gross profit increased to $86.8 million in fiscal 1995 compared to $83.3
million in fiscal 1994, an increase of $3.5 million, or 4.2%. The increase was
due to increased sales volume. Gross margin decreased to 16.8% in fiscal 1995
from 17.5% in fiscal 1994. The reduced margin was due primarily to increased
sales of Type C units, on which the Company generally realizes lower margins due
to the inclusion of GM chassis.
Selling, general and administrative expenses were $39.8 million in fiscal
1995 compared to $39 million in fiscal 1994, an increase of 2.0%. The increase
was due primarily to higher expenses related to engineering and product
development.
Amortization expense decreased to $4.7 million in fiscal 1995 compared to
$5.6 million in fiscal 1994. The amortization of certain non-compete agreements
was completed during the first half of fiscal 1995.
Interest income increased to $4.6 million in fiscal 1995 compared to $4.1
million in fiscal 1994. The increase was due to a higher average dollar amount
of leases held in the lease portfolio in fiscal 1995 compared to fiscal 1994.
Interest expense increased to $18.5 million in fiscal 1995 from $17.4
million fiscal 1994, an increase of $1.1 million. The increase was due to a
higher interest rate on credit facility borrowings as compared to fiscal 1994.
36
<PAGE>
The provision for income taxes increased to $11.6 million in fiscal 1995
from $10.2 million in fiscal 1994. The increase was due to increased taxable
income resulting from higher net sales and operating income.
FISCAL 1994 COMPARED TO FISCAL 1993. Net sales increased to $476.2 million
in fiscal 1994 from $413.5 million in fiscal 1993, an increase of $62.7 million,
or 15.2%. This increase was due to increased sales of Type D units, increased
sales of chassis as part of the sale of an integrated Type C bus, as well as to
sales of the new BMC and CS units. The Type D unit has a higher average selling
price than the Type C unit.
Gross profit increased to $83.3 million in fiscal 1994 compared to $73
million in fiscal 1993, an increase of $10.3 million, or 14.1%. The increase was
due to increased sales volume. Gross margin decreased to 17.5% from 17.7% in
fiscal 1993. The reduced margin was due primarily to increased sales of Type C
units, on which the Company generally realizes lower margins due to the
inclusion of GM chassis.
Selling, general and administrative expenses increased to $39 million in
fiscal 1994 compared to $36.3 million in fiscal 1993, an increase of 7.4%. The
increase was due to expenses related to the development, introduction and
advertising of new products.
Interest income (which is primarily associated with income earned on the
Company's lease portfolio) increased to $4.1 million in fiscal 1994 from $2.9
million in fiscal 1993, an increase of $1.2 million, or 41.4%. During fiscal
1994, the average dollar amount of leases held in the lease portfolio was higher
as compared to the average fiscal 1993 portfolio amounts. In addition, the
average rate earned by the portfolio was higher in fiscal 1994 as compared to
fiscal 1993.
Interest expense decreased to $17.4 million in fiscal 1994 from $18.2
million in fiscal 1993, a decrease of $.8 million. The decrease was due to a
combination of lower average outstanding balances on credit facilities as well
as a lower average interest rate as compared to fiscal 1993.
Other income decreased to $.2 million in fiscal 1994 from $.7 million in
fiscal 1993. The decrease was due primarily to reduced gains on sales of lease
paper to LaSalle compared to the prior year.
The provision for income taxes decreased as a percentage of income before
income taxes in fiscal 1994 compared to fiscal 1993. The amortization of certain
costs related to the 1992 Acquisition was essentially unchanged from fiscal 1993
to fiscal 1994. Due to the increase in taxable income, the relative effect of
the non-deductibility of the amortization items on the effective tax rate was
smaller, thereby reducing the effective tax rate in fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise primarily from funding working
capital needs, which consist primarily of inventory and accounts receivable, and
principal and interest payments on indebtedness. The Company also requires funds
for capital expenditures, for which the Company anticipates approximately $7.3
million for fiscal 1996, and approximately $6 million for fiscal 1997.
BBC is a holding company that conducts all of its business operations
through the Company, which is a wholly-owned subsidiary. In connection with any
liquidity needs, including needs arising out of the BBC Guarantee, BBC is
dependent entirely upon cash generated by the Company.
Historically, the Company has funded its working capital needs through cash
generated from operations and borrowings under the Old Credit Agreement. In
addition, the LaSalle Credit Facility provides Blue Bird Capital with a
revolving credit facility to finance school bus leases of up to a maximum
aggregate principal amount of $100 million, of which $58.2 million was
outstanding as of July 27, 1996. Following the Recapitalization, the Company's
liquidity needs will arise primarily from debt service on the substantial
indebtedness incurred in connection with the Recapitalization, as well as from
the funding of inventory and accounts receivable. Assuming the Recapitalization
was completed as of September 28,
37
<PAGE>
1996, the Company would have had total consolidated indebtedness at such date of
approximately $336.5 million, consisting primarily of $99.7 million principal
amount of the 744A Notes, borrowings of $175 million under the New Credit
Agreement and $55.5 million of borrowings under the LaSalle Credit Facility. The
Company would also have had the ability to borrow an additional $44.5 million
under the LaSalle Credit Facility to finance school bus leases and $76.4 million
under the New Credit Agreement (assuming all of such funds would have been
available under the borrowing base calculation under the Revolving Facility of
the New Credit Agreement). Such Revolving Facility will be available to meet
future working capital and other business needs of the Company. The maximum
amount available to be borrowed under such facility is based on the sum of 85%
of Eligible Accounts Receivable (as defined in the New Credit Agreement) and 60%
of Eligible Inventory (as defined in the New Credit Agreement) of the Company
(the "Borrowing Base"). These provisions have the effect of limiting the ability
of the Company to utilize in operations or satisfy other debt obligations with
free cash flow and will limit the amount of cash the Company has on hand at any
given time. See "Description of Debt Facilities." and "Risk Factors--Leverage
and Debt Service."
The Company's interest expense as a result of the Recapitalization is
substantially higher than immediately prior to such transactions. Loans under
the New Credit Agreement bear interest at floating rates based upon the interest
rate option selected by the Company. With respect to the term loan borrowings
under the New Credit Agreement, the Company will be required to make scheduled
principal payments of approximately $8.8 million in fiscal 1997, $12.8 million
in fiscal 1998 and $16.8 million in fiscal 1999. See "Risk Factors--Restrictive
Covenants and Asset Encumbrances." For a schedule of payments due under the New
Credit Agreement, see "Description of Debt Facilities--Senior Bank Financing."
Under the New Credit Agreement, the Company is permitted to accumulate up to
$40 million in its lease portfolio of leases for its own account in addition to
leases held by Blue Bird Capital. As of July 27, 1996, the Company had
approximately $11.6 million of such leases in its lease portfolio. In addition,
as of such date, Blue Bird Capital had approximately $60.2 million in its lease
portfolio. Blue Bird Capital is required to maintain certain financial ratios,
including a ratio of Total Liabilities to Tangible Net Worth (as such terms are
defined in the LaSalle Credit Facility) that cannot exceed 10 to 1. See
"Business--Leasing" and "Description of Debt Facilities--LaSalle Credit
Agreement."
Net cash used in operating activities during the nine-month period ended
July 27, 1996 was $18.6 million compared to $38.6 million in the corresponding
nine-month period in fiscal 1995. This difference was primarily the result of
reduced accounts receivable and increased accounts payable. Net borrowings under
the Company's working capital facilities, including the LaSalle Credit Facility
were $49.5 million during the current nine-month period compared to $49.9
million in the corresponding nine-month period in fiscal 1995. The early
extinguishment of $25 million of outstanding Old Notes (see "--Results of
Operations-- Nine Months Ended July 27, 1996 compared to Nine Months Ended July
29, 1995") was funded primarily from internally generated cash and partially
from an increase in the working capital revolver.
Cash and cash equivalents were $5.3 million at July 27, 1996, compared to
$21.5 million at the end of fiscal 1995 and $2 million at the end of the
corresponding nine-month period in fiscal 1995. Net working capital decreased
$9.6 million during the nine-month period compared to the corresponding
nine-month period in fiscal 1995. Significant factors affecting working capital
were a $22.9 million decrease in indebtedness under the revolving portion of the
Old Credit Agreement, offset in part by a $19.5 million increase in the LaSalle
Credit Facility, a $6.9 million decrease in leases receivable, and increases in
cash, inventory and accounts payable of $3.3 million, $6.8 million and $9.1
million, respectively.
As a result of the Recapitalization, the Company's future operating
performance and ability to service or refinance the Notes and to repay, extend
or refinance the New Credit Agreement are subject to future economic conditions
and to financial, business and other factors, many of which are beyond the
Company's control. The Company's liquidity may also be impacted by product
liability claims and environmental matters. See "Risk Factors."
38
<PAGE>
The Company's business is seasonal in nature. A majority of the Company's
sales occur in the third and fourth quarters of the fiscal year, a pattern
typical for the industry. The Company's working capital needs increase during
the second and third quarters as production activity increases in response to
the higher seasonal sales volume. Working capital needs decrease toward the end
of this period, although beginning in December or January, working capital and
related bank borrowings begin to increase as parts for assembly into buses are
manufactured and distributed to the assembly plants. Inventory is at its highest
during July and August prior to heavy seasonal school deliveries. The following
table shows the percentages of the Company's net sales per quarter for the last
three fiscal years and estimated data for fiscal 1996.
<TABLE>
<CAPTION>
1996(A) 1995 1994 1993
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
First Quarter.......................................... 16.8% 14.8% 18.5% 16.0%
Second Quarter......................................... 19.3 20.4 17.0 15.7
Third Quarter.......................................... 26.6 26.5 30.0 30.4
Fourth Quarter......................................... 37.3 38.3 34.5 37.9
----- --------- --------- ---------
100.0% 100.0% 100.0% 100.0%
----- --------- --------- ---------
----- --------- --------- ---------
</TABLE>
- ------------------------
(a) Estimated due to the unavailability of information for the fourth quarter of
fiscal 1996.
39
<PAGE>
BUSINESS
GENERAL
Blue Bird is the leading manufacturer of school buses in North America.
Approximately 79% of the Company's net sales in fiscal 1995 were derived from
sales of school bus products. The Company also manufactures the Q-Bus and CS,
which target purchasers of medium-sized buses for commercial uses, and two
upscale RV models, the Wanderlodge and the BMC. Commercial and recreational
vehicles accounted for approximately 14% and 7%, respectively, of the Company's
fiscal 1995 net sales. The Company manufactures both quality steel bus bodies
for mounting on chassis manufactured by third parties and complete bus units
(body and chassis). Chassis generally consist of frames with engines,
transmissions, drive trains, axles, wheels, power steering, brakes and fuel
cells. The Company markets its products primarily through a network of
approximately 63 independent distributors, which resell the products to
customers, including municipalities, states, transportation contracting
companies, churches and other independent organizations. Management believes
that this distribution network results in an important competitive advantage as
it allows the Company to maintain, through its distributors, strong sales
relationships with the ultimate end-users of its products, which provide the
Company with an important source of localized market knowledge. Through its
subsidiary, Blue Bird Capital, which was formed in October 1995, the Company
provides a variety of lease financing alternatives principally to tax-exempt
customers of its school bus products. The Company also continues to provide
taxable lease financing through its Blue Bird Credit division.
The Company's business strategy is to continue to utilize its leading market
position in the school bus market as a platform from which to expand its product
offerings. The Company will continue to focus on its core school bus business,
while seeking to expand its commercial bus product offerings to various markets,
including the shuttle bus market, the smaller urban bus market and the "line
haul" or inter-city coach market. Within the school bus market, the Company will
continue to emphasize sales to distributors, as opposed to states and large
transportation contracting companies, reflecting its belief that the former
market provides greater growth and profit opportunities. The Company will also
seek to expand its international bus sales, particularly in developing
countries.
The Company's principal executive offices are located at 3920 Arkwright
Road, Macon, Georgia 31210. The Company is organized under the laws of the state
of Georgia and BBC is organized under the laws of the state of Delaware.
INDUSTRY OVERVIEW
SCHOOL BUSES. The two principal components of a school bus are the body and
chassis. Bodies and chassis are sold either as integrated units, provided by a
single supplier, or separately, in which case end-users purchase bodies and
chassis from different suppliers and have the two components assembled by the
bus body manufacturer. Approximately 57% of the Company's school bus sales in
1995, on a unit basis, were of integrated units. The ability to provide
integrated units enables manufacturers to submit bids on completed school bus
units to school bus end-users. The Company believes that integrated sales permit
school bus body manufacturers to offer end-users a lower cost complete school
bus while increasing their share of the profits realized on any sale of a unit.
Many end-users, particularly those that participate in a state bid process for
school bus purchases, however, may prefer to purchase the body and chassis
separately.
School bus purchasing is typically a centralized process involving orders of
multiple units. Purchasers of school buses are categorized into two ownership
groups: public (I.E., states and school districts); and private (I.E.,
independent transportation contracting companies and other private entities). It
has been management's experience that the transportation director of a state or
school district, or the chief procurement officer of a transportation
contracting company, as the case may be, will typically determine transportation
needs on an annual basis. In addition to replacement requirements based on
changes in
40
<PAGE>
safety standards and incremental needs due to pupil population growth, factors
which influence the need to purchase school buses include the age of the
existing school bus fleet, changes in school bus travel routes, regulatory
changes such as compliance with new emissions standards, extracurricular
activity usage and changes in the education structure in the United States such
as the development of preschool "head start" programs, special education
programs and magnet schools. In the case of public purchasers, the
transportation director may also be affected by certain budgetary constraints,
and will consider the availability of financing in making the purchasing
decision.
Once the decision relating to the purchase of replacement or new school
buses is finalized, the transportation director or the chief procurement officer
will decide on the type and brand of product to be purchased. Product
performance, manufacturer reputation, the manufacturer's ability to accommodate
specifications regarding bus design, relationships with distributors, price, the
availability of financing alternatives (E.G., leasing options), fleet
standardization and post-sale support and service are all key factors
influencing the decision to purchase a particular product. While price is an
important factor, it is not the sole determinant of the purchase decision, and
the lowest bid is not necessarily awarded the contract. As a result,
manufacturer and distributor relationships are critical to the sale of school
bus products.
Florida, Kentucky, North Carolina, South Carolina and West Virginia award
contracts for school buses based on a state bid process, with the state
generally serving as the aggregate purchaser on behalf of all of its school
districts. State officials compile the total number of buses their districts
require and then solicit bids from bus body and chassis manufacturers. This
process is much more competitive and price sensitive than the local bidding
process, and manufacturers generally must be the low bidder to win the contract.
Bus body and chassis manufacturers typically bid these purchases on a direct
basis, rather than through distributors, and view these contracts as low margin,
incremental volume. The Company estimates that approximately 15% of annual U.S.
public school bus purchases are awarded through these bids.
In the United States, approximately 78% of the estimated 410,000 school
buses currently in operation are publicly owned, with the remainder privately
owned. The Company estimates that approximately 50% of the privately owned
school buses in operation in the U.S. are owned by the five largest national
contractors. These contracting companies are fleet buyers and, therefore,
pricing in this segment of the market is highly competitive. In addition to
these large national transportation contractors, local contracting companies are
also classified as private purchasers of school buses. As is the case with
individual school districts, these smaller institutions typically purchase buses
through distributors.
Management estimates that deliveries of school buses in North America in
fiscal 1995 totaled approximately 30,600 units. In addition, management
estimates that the market demand for school bus and commercial products that the
Company manufactures and sells to countries outside of North America totaled
approximately 3,500 units in fiscal 1995.
COMMERCIAL VEHICLES. Management divides the commercial bus transportation
market into three segments, consisting of (i) public transportation, (ii)
shuttle transportation and (iii) tour, charter and commuter uses. The public
transportation sector consists of several vehicle markets, including vans,
medium-duty buses under 35 feet in length, heavy-duty buses up to 40 feet,
articulated buses up to 60 feet, and inter-city coaches designed to transport
passengers from suburbs to cities. The shuttle market is broader with users such
as airports, car rental agencies, "park-and-ride" operators, hotels, educational
and religious institutions, and providers of employee and health care-related
transportation. The tour, charter and commuter segment of the market typically
requires large over-the-road coaches ranging from 40 feet to 45 feet in length.
The Company's participation in the broad commercial bus market is limited,
as the Company produces only medium-sized commercial buses as well as shuttle
products. See "--Products." Medium-sized buses are purchased by public
transportation authorities and by tour, charter and commuter operators to
supplement a fleet of large vehicles or to facilitate smaller scale charter and
contract
41
<PAGE>
transportation needs. Management believes that rural and urban public transit
authorities are beginning to reevaluate their traditional preference, especially
in urban areas, for fleets consisting primarily of large buses. Management
further believes a trend is developing toward purchases of the medium-sized
buses similar to those built by the Company, in part because medium-sized buses
are more economical and easier to operate. The Company believes it is well
positioned to benefit from this trend. The shuttle market is served by a variety
of products which include a variety of vans, "cutaway" vans (a fiberglass body
on a van chassis), small and medium-sized coaches and some hybrid van and bus
products. Management believes that the shuttle segment will grow as airports
grow larger and move further away from cities and the number of elderly citizens
requiring shuttle transportation increases.
RECREATIONAL VEHICLES. The Company participates in the luxury niche of the
recreational motor home vehicle market. This segment of the market is small,
relatively stable, and consists of a limited number of competitors. Although
this segment of the market is profitable for the Company, it is not expected to
grow significantly. Management estimates that in a given year, there are likely
to be approximately 400 luxury motor home products similar to those manufactured
by the Company sold in the United States and believes that in order for the
Company to increase sales, it will need to increase its market share relative to
its competitors.
PRODUCTS
SCHOOL BUS PRODUCTS
GENERAL. Blue Bird produces a full range of school bus models and it is the
largest manufacturer of both conventional and transit school bus bodies in the
industry. In addition, Blue Bird sells complete Type D buses by integrating its
Type D bodies with chassis manufactured by the Company.
In 1995 Blue Bird derived approximately 13% of its net sales from the sale
of its various school bus body models and 62% of its net sales from the sale of
its integrated school buses. For classification purposes, the school bus
industry has categorized these different models into the following four general
product designations:
TYPE A. A "Type A" school bus is a conversion of a van or a body
constructed on a van-type compact truck chassis, with a gross vehicle weight
("GVW") rating of 10,000 pounds or less, designed to carry up to 21 passengers.
The engine is located in front of the windshield and the entrance door is
located behind the front wheels. The Company offers one model in this category,
the Micro-Bird, which can be ordered in several configurations. The Company does
not manufacture chassis for the Micro-Bird. Chassis are purchased by the
customer and delivered to the Company, which in turn installs the bus body.
Wholesale selling prices for Type A vehicle bus bodies typically range from
approximately $10,000 to $15,000.
TYPE B. A "Type B" school bus is a body constructed and installed on a
van-type or stripped chassis, with a GVW rating of more than 10,000 pounds,
designed to carry up to 38 passengers. Part of the engine is located beneath
and/or behind the windshield and next to the driver's seat and the entrance door
on a Type B bus is located behind the front wheels. The Company offers one model
in this category, the Mini-Bird, which can be ordered in several configurations.
The Company does not manufacture a Type B chassis. Chassis are purchased by the
customer and delivered to the Company, which in turn installs the bus body.
Wholesale selling prices for Type B vehicle bus bodies typically range from
approximately $12,000 to $20,000.
TYPE C. "Type C" school buses are the Company's largest-selling product,
accounting for more than half of the vehicles sold by Blue Bird in 1995. The
Type C bus, which is a "traditional" full-size school bus, is a body installed
on a flat back "cowl" chassis, with a GVW rating of more than 10,000 pounds,
designed to carry up to 77 passengers. The engine is located in front of the
windshield and the entrance door is located behind the front wheels. The Company
offers two models in this category, the Conventional and an
42
<PAGE>
integrated unit sold with a GM chassis, each of which can be ordered in several
configurations. Wholesale selling prices for Type C vehicle bus bodies typically
range from approximately $12,000 to $25,000, while prices for integrated
products range from approximately $40,000 to $55,000.
TYPE D. "Type D" school buses accounted for approximately one third of the
vehicles sold by the Company in 1995. A Type D school bus is a transit-type
(flat front) body installed on a chassis, with a GVW rating of more than 10,000
pounds, designed to carry up to 90 passengers. Type D buses are sold only on an
integrated basis with a chassis manufactured by the Company. The engine is
located behind the windshield and may be mounted next to the driver's seat, at
the rear of the bus, or midship between the front and rear axles. The entrance
door on a Type D bus is located ahead of the front wheels. The Company's models
in this category include the TC/2000 and the All American, each of which can be
ordered in several configurations. Wholesale selling prices for Type D vehicle
buses (including chassis) typically range from approximately $50,000 to $95,000.
COMMERCIAL VEHICLE PRODUCTS
Q-BUS. The "Q-Bus," a 37 foot long coach introduced in 1992, enables the
Company to compete in the medium-duty tour, charter and commuter markets. The
unit offers bus operators a medium-duty bus with many of the "big bus" features,
including seating capacities for up to 45 passengers, restroom, audio and visual
systems, luggage capacity of up to 240 cubic feet and engine options up to 300
horsepower. In 1996 the Company introduced a larger version of the Q-Bus with
seating capacity for up to 47 passengers, additional luggage capacity and a
400-horsepower diesel engine. This unit is designed to compete with more
expensive over-the-road coaches such as those used by operators to carry
commuters from suburban locations to urban work offices. Management believes the
Company's medium-sized bus products to be a viable alternative to larger
vehicles for a variety of reasons, including the fact that the medium-sized
buses offer lower operating costs and flexibility in terms of matching bus size
to passenger load demands. Wholesale selling prices for the Q-Bus typically
range from approximately $113,000 to $210,000.
CS. The CS series coach is designed primarily for the shuttle market. It is
offered in ten models ranging from 24 feet to 39 feet in length. In 1995, to
address a growing market segment for the airport to city/hotels commutes, the
Company introduced a CS coach known as the EZLoader. The EZLoader is designed
with a low-floor rear-end luggage compartment to allow the operator fast and
easy access for luggage handling. The unit seats up to 30 passengers. In 1996,
to meet the growing "demand response" market in the public transportation
sector, in which riders such as disabled and elderly persons call a shuttle
service for door-to-door pick-up and drop-off services (such as from home to the
hospital), the Company introduced the TranShuttle CS, a 25-foot coach with a
flat floor for multiple wheelchair accessibility. This product has been designed
to compete with the lightweight bus and cutaway van while providing greater
durability than is typical of those products. Wholesale selling prices for CS
series coaches typically range from approximately $51,000 to $89,000.
MODIFIED SCHOOL BUS PRODUCTS. The Company has taken advantage of its high
volume purchases for school bus components, and its rapid assembly-line
efficiencies, to produce and market an adaptation of the Type C and Type D
school bus in commercial form. The bus, known as the "Activity Bus," offers
basic "no-frills" transportation for commuter, shuttle, churches, colleges, and
universities. The product offers basic paint schemes, diesel and natural gas
engine options, and very functional interiors for passenger comfort. Wholesale
selling prices for the Activity Bus typically range from approximately $12,000
for non-integrated products to $70,000 for integrated products.
WORK STATION Q AND QMC. The Company's Work Station Q unit and the QMC are
designed to service the executive and corporate transport markets, and can
include features such as luxury seating, a small galley, and a restroom. Both
products are designed to carry a limited number of passengers in comfort and
style. Wholesale selling prices for the Work Station Q and the QMC typically
range from approximately $150,000 to $250,000.
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RECREATIONAL VEHICLE PRODUCTS
GENERAL. The Company manufactures complete motor homes by integrating the
motor home shell with Blue Bird-manufactured chassis. The Company offers two
luxury motor home products, both of which are targeted for the premium and mid-
to high-end markets.
WANDERLODGE. The Wanderlodge is a premium motor home manufactured by the
Company. The Wanderlodge is available in two models, 41 and 43 feet in length,
with a capacity of up to six passengers and sleeping accommodations for four.
Key features of the unit include (i) the ultra-premium design of the product,
(ii) steel body construction and a body-on-chassis design, (iii) a wide
selection of optional equipment available to the purchaser, and (iv) the
extensive product support capability provided by Blue Bird's two RV
distributors. During fiscal year 1995, 57% of recreational vehicles delivered by
the Company were Wanderlodge units. Suggested retail prices for the Wanderlodge
range from approximately $550,000 to $650,000.
BLUE BIRD MOTOR COACH. The BMC is offered as a 37- or 40-foot long
motorcoach designed to meet product demand for the expanding middle-to-high-end
segment of the luxury recreational vehicle market. Like the Wanderlodge, it
features steel body construction and a body-on-chassis design. During fiscal
year 1995, 43% of RVs delivered by the Company were BMC units. The BMC has a
suggested retail price ranging from approximately $350,000 to $465,000.
SERVICE PARTS
All of Blue Bird's distributors maintain parts inventories to service owners
of Blue Bird products. Many of such distributors purchase parts from Blue Bird's
Service Parts Group (the "Parts Group"). In addition to these sales to
distributors, the Parts Group sells parts to fleet accounts on a direct basis.
These direct sales accounts include the U.S. General Services Administration
(the "GSA"), the national transportation contracting companies and other
accounts in southern Georgia, South Carolina and Kentucky. The Company currently
operates an 80,000-square foot facility in Fort Valley, Georgia to house the
Parts Group.
MARKETING AND DISTRIBUTION
The Company sells its bus products through distributors (87% of 1995 net
sales) and directly to end-users (13% of 1995 net sales). During 1995, no
customer accounted for as much as 10% of Blue Bird's net sales. Direct sales
customers include states, transportation contracting companies, the GSA and all
export buyers. All other sales are made through the Company's distributors.
Direct sales typically involve bids for large contracts, which are highly
competitive. Accordingly, direct sales margins are typically lower than
distributor sales margins.
Blue Bird has approximately 63 independent distributors in the U.S. and
Canada, including RV distributors. Approximately 27 of the Company's 28
commercial bus distributors also distribute the Company's school bus products.
The Company's two RV distributors together have five locations. One of these
distributors, Buddy Gregg Motor Homes, Inc., accounts for approximately 70% of
the Company's RV unit volume.
Many of Blue Bird's school bus distributors have close and longstanding
relationships with transportation directors of states and school districts. The
Company believes that its distributors are well situated to understand the needs
and specifications of local school districts. In 1995, no single distributor
accounted for more than 6% of the Company's sales of school bus products.
Blue Bird distributors are bound by the terms of a distributor contract,
pursuant to which distributors are granted a non-exclusive right to sell the
Company's buses and service parts in a designated territory. Distributors are
restricted from selling other products which compete with Blue Bird's products.
The
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Company's distributor contract also requires distributors to service Blue Bird
products. Sales to distributors are on a cash-at-delivery basis. Sales by
distributors to end-users, such as school boards, are also usually on a
cash-at-delivery basis.
Blue Bird's sales organization services all of its distributors and direct
sales customers. Six regional sales managers work exclusively with distributors
in their respective regions and are responsible for coordinating sales and
marketing campaigns, pricing policies, strategic market planning and related
functions. These regional sales managers regularly visit distributors in order
to disseminate product knowledge, supply marketing advice and serve as direct
distributor support. The regional managers often accompany distributors'
salespeople to meetings with prospective purchasers. The Company sponsors an
annual international sales meeting to bring all of its distributors together,
and regional sales meetings are also conducted annually to focus on regional
strategic planning, advertising and other issues. Additionally, Blue Bird
management meets with a Dealer Advisory Council on a regular basis to discuss
strategic product and market issues, and to assist in the Company's long-term
planning process.
The Company's advertisements are run in national and regional trade journals
for the transportation and education industries. Representatives of the Company
attend national and regional product conventions as well as conventions for
educational trade groups such as the National School Board Association, the
National Association of Pupil Transportation and the National School
Transportation Association. Blue Bird also utilizes its network of independent
distributors to promote its products and disseminate product literature.
Distributors attend these conventions at the state level and are usually
accompanied by a representative of the Company.
LEASING
The Company has provided lease financing to school bus customers since 1984,
principally through its leasing division, Blue Bird Credit ("Blue Bird Credit").
On October 26, 1995, the Company formed a wholly-owned subsidiary, Blue Bird
Capital, for the purpose of expanding the availability of lease financing
alternatives to customers of its school bus products. Blue Bird Capital has
since become the Company's principal provider of leasing alternatives focusing
on tax-exempt lessees. Generally, upon receipt of orders for municipal lease
customers, the Company provides buses to be delivered by Blue Bird Capital to
the appropriate distributor, who in turn delivers the buses to municipal
customers pursuant to leases. Upon receipt of lease documents, Blue Bird Capital
borrows approximately 90% of the lease amount pursuant to the LaSalle Credit
Facility in order to pay the Company. Under the typical Blue Bird Capital lease
with a tax exempt lessee, title is held by the lessee with a lien held by Blue
Bird Capital. The average lease term is approximately three years and the
lessee's down payment is typically 10% of the lease amount. The Company accounts
for the lease as a sale and the related borrowings as long-term or short-term
debt, as applicable. Under the LaSalle Credit Facility, Blue Bird Capital is
required to maintain certain financial ratios, including a ratio of Total
Liabilities to Tangible Net Worth, that cannot exceed 10 to 1. See "Description
of Debt Facilities--LaSalle Credit Agreement." Blue Bird Capital pays the
Company as promptly as possible and generally does not carry unsold inventory.
Leases held by Blue Bird Capital are generally tax-exempt and accrue interest at
rates ranging from 4.75% to 8.0%. The Company and Blue Bird Capital have entered
into an Income Taxes Agreement whereby the Company reimburses Blue Bird Capital
for the tax benefit generated by the tax free leases.
MANUFACTURING PROCESS
The production of Blue Bird's extensive line of bus models involves various
assembly processes. The bus body assembly process begins with the assembly of
floor panels on a carriage that will carry the body assembly along the
production line. Roof bows, internal and external metal panels are rivited in
place and front and rear sections are added prior to painting. Windows, seats,
flooring and other finishing items are added prior to attaching the bus body to
the chassis. Each Blue Bird chassis is manufactured for a specific body, and a
copy of the production order travels through the production process with the
chassis. All of the
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chassis built by Blue Bird are for use with a Type D bus body. Some of these
transit-type buses require the engine to be mounted in the front of the chassis,
and others specify mounting in the rear. All Blue Bird chassis are tested to
check the gauges, speedometer, fluid systems and electrical connections for the
bus body components.
The construction of both bodies and chassis must conform to various state
and federal regulations. The most significant and comprehensive of these
regulations is set forth in the Federal Motor Vehicle Safety Standards
("FMVSS"), which apply to all school buses built during and after 1977. The
FMVSS specify requirements for a variety of vehicle components including
controls and displays, automatic transmission, defrost/defog systems, windshield
wipers, braking systems, reflectors and lights, mirrors, vehicle identification
numbers, tires and wheels, accelerator controls, warning devices, occupant
protection systems, steering systems, glazing materials, seats, windshields and
windows, rollover protection, body joints and fuel systems.
INTERNATIONAL
Other than maintaining a manufacturing facility in Canada, which accounted
for sales of approximately 1,200 buses to Canadian customers in 1995
(approximately $32.9 million in net sales), and a new facility (first production
units delivered in 1995) in Monterrey, Mexico, the Company's operations are
based in the United States. The Company exported approximately 575 bus products
in 1995, primarily to developing countries. Since foreign purchases of Blue Bird
buses are typically non-school-related, the Company is unable to rely on the
perceived strengths and marketability of its traditional school bus products.
However, the Company believes that there are opportunities to grow its export
business, particularly in developing countries, as these countries begin to
demand additional basic transportation products. In general, the Company plans
to increase its focus on the export segment of its businesses by developing
modified school bus and commercial products which meet the specifications of
purchasers in the Middle East, Africa, Europe, Mexico and Central and South
America.
In Mexico, the easing of import restrictions on new trucks and buses in
connection with the North American Free Trade Agreement may present a
significant opportunity for Blue Bird to expand its export business in that
region; however, Blue Bird's ability to expand its business in Mexico depends
largely on the stability of Mexico's economy. The opening of this marketplace
could generate opportunities in other Latin American countries as well as
enhance the reputation of Blue Bird's products throughout the region. Blue
Bird's Mexican plant is currently used to produce vehicles which are imported
into the United States, but could be used in the future to service Latin
American markets.
The Q-Bus and CS bus may also provide opportunities overseas, particularly
in Western Europe where conventional North American school bus bodies and
chassis are not marketable. In Eastern Europe, the Company's current product
line may be salable as the region becomes accessible to exporters. In addition,
the Company has developed a prototype right-hand drive chassis which will be
used with the Q-Bus body as a product for selected Western European and African
countries. Deliveries to these regions were minimal during 1995.
NEW PRODUCT DEVELOPMENT
Blue Bird's research and development program studies bus sales trends to
identify potential growth opportunities for the business and designs products to
exploit these growth opportunities. This process includes evaluating potential
new materials and components for use in existing products as well as developing
new product designs, especially for the Company's commercial and RV product
lines. Developmental projects are currently underway for expanded product
offerings in the commercial market. Blue Bird's manufacturing processes
incorporate sufficient production flexibility to enable Blue Bird to produce new
designs with minimum lead time. Current projects are underway to develop
alternative fuel buses
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based on electric and compressed natural gas power. Approximately 20
electrically powered buses were delivered in 1996.
COMPETITION
SCHOOL BUS MARKET. Four major school bus manufacturers, Blue Bird, Thomas
Built Buses, Inc. ("Thomas"), and CBW, Inc., which are privately owned
companies, and AmTran, which was acquired by Navistar in the fourth quarter of
1995, account for substantially all dollar sales of school buses. All of these
companies manufacture bus bodies which are mounted on a chassis supplied by GM,
Ford and Navistar, although GM has agreed to supply chassis for Type C bus
bodies exclusively to Blue Bird pursuant to the GM Chassis Agreement. See "--Raw
Materials and Components." The Company and Thomas, which together accounted for
approximately two-thirds of aggregate domestic school bus sales in 1995,
manufacture chassis as well as bodies for certain of their bus models.
Competition in the industry is intense, as all four manufacturers typically
compete for each significant contract that comes up for bid.
The three major school bus chassis manufacturers are GM, Ford and Navistar.
Of these, Navistar is the leading manufacturer, accounting for approximately 60%
of sales in 1995. The Company does not believe the Navistar's recent acquisition
of AmTran will have a material impact on the Company's business. In the
conventional chassis market, Navistar currently continues to make its chassis
available to all bus body manufacturers. See "Risk Factors--Limited Number of
Chassis Suppliers."
Since Blue Bird does not manufacture discrete chassis units for sale to
third-party purchasers, the Company does not directly compete with other chassis
manufacturers. However, the Company has experienced indirect competition with
some of these manufacturers, particularly Navistar, in the integrated bidding
process.
COMMERCIAL MARKET. The Company has different competitors in each of the
major commercial market segments. In the medium-duty tour, charter, and commuter
market, the Company's principal competitors include Eldorado National, a
business of Thor Industries, Inc. ("Eldorado"), and Metrotrans Corporation
("Metrotrans"). Its competitors in the shuttle market are Champion Motor Coach,
Inc. ("Champion"), Eldorado, Goshen Coach, Metrotrans, Supreme Corporation and
Thomas. In the urban and rural transit market, the Company's principal
competitors are Eldorado, Champion and Thomas.
RV MARKET. In the motor home market, the Company considers its competition
to be those companies building high-end motor homes on over-the-road coaches
such as those produced by Prevost Car, Inc., Motor Coach Industries, Inc.,
Marathon Coach, Inc., Liberty Coach, Inc., Vantare International, Inc., Country
Coach, Inc., Mitchell Coach Mfg. Co., and Custom Coach Corp. An additional
competitor, Newell Coach, Inc., is the only high-end manufacturer that builds on
its own chassis and body similar to the Wanderlodge. There are several other
small competitors who periodically enter and exit the market. Although the BMC
has a steel body construction like the Wanderlodge, it also competes with motor
home products made by Monaco Coach, Inc., Beaver Motor Coach, Inc., Country
Coach, Inc., American Eagle by Fleetwood Enterprises, Inc., and Foretravel, Inc.
RAW MATERIALS AND COMPONENTS
The largest production-related expense incurred by the Company is the cost
of purchased materials. In fiscal year 1995, material purchases represented
approximately 70% of total production costs. The Company purchases raw materials
and components from over 2,500 suppliers. Other than GM, the Company's principal
chassis supplier, no one supplier accounts for more than 10% of the Company's
aggregate expenditures on raw materials and/or components. Since Blue Bird does
not manufacture engines and does not manufacture chassis for its Type A, Type B
and Type C bus products, the cost of engines, purchased chassis and components
for Company-manufactured chassis constitute the largest components of the
Company's material expense.
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Because Type A and Type B bus purchasers obtain their chassis separately and
look to the Company only for a bus body, chassis supply is relevant for these
product lines only to the extent that it may impact the number of Type A and
Type B bus bodies ultimately sold. The Company manufactures all of its Type D
chassis, with the result that chassis components constitute a major portion of
Type D production costs.
The three major school bus Type C chassis manufacturers are GM, Ford and
Navistar. Navistar is the industry leader with a market share estimated by
market researchers of in excess of 60% in 1995. In late 1990, management of Blue
Bird was concerned about the possibility that Ford and GM might decide to
discontinue supplying Type C chassis, resulting in a situation in which Navistar
might become the sole supplier of these Type C chassis and thus be in a position
to exert increased influence over school bus manufacturers. Type C school buses
represent approximately 57% of the total units sold by the Company. In addition,
a trend toward integrated bidding (body and chassis) among school bus purchasers
caused Blue Bird to consider establishing a formal relationship with a Type C
chassis supplier to enhance the Company's competitive position in the Type C bus
segment of the market. Blue Bird and GM entered into the GM Chassis Agreement in
May 1991. The agreement can be terminated by either party on two years' notice.
As of the date of this Prospectus neither party has given notice of termination.
In general, management does not believe that termination of the GM Chassis
Agreement would have a material adverse effect upon the Company's operations,
because management believes that chassis would be available from other
suppliers. However, there can be no assurance that, given the limited number of
chassis suppliers, the Company will not be materially adversely affected in its
manufacturing efforts. See "Risk Factors--Limited Number of Chassis Suppliers."
Under the terms of the GM Chassis Agreement, GM supplies its medium-duty
chassis for Type C school buses to Blue Bird on an exclusive basis, and Blue
Bird purchases the Type C chassis model exclusively from GM. Nothing in the GM
Chassis Agreement precludes the Company from mounting its bus bodies on other
makes of chassis if the chassis are purchased by Blue Bird's customers or
distributors. In addition, the Company is not required to purchase a minimum
number of chassis from GM under the GM Chassis Agreement. The Company believes
that offering an integrated Type C product permits the Company to offer a
competitively priced product while allowing it to realize a profit on the sale
of the chassis, thereby increasing the total amount of profit that the Company
realizes on the sale of each unit. Blue Bird's arrangements with GM make it the
only current supplier of gasoline-powered Type C and Type D school buses in the
industry. The Company's distributors and GM's 750 medium-duty truck dealers
participate in servicing the end user after the initial sale. This enhanced
network provides the Blue Bird/ GM product with broad post-sale servicing and
support.
GOVERNMENT REGULATION
School bus manufacturers must conform to vehicle guidelines imposed by the
FMVSS, as well as to state and local specifications. FMVSS regulations have in
the past directly affected manufacturers of school bus bodies and chassis, as
well as end-users, by altering specifications and, as a result, increasing
costs.
With respect to environmental regulation, the most immediate issue facing
the school bus industry will be the effectiveness in 1998 of more restrictive
EPA emissions standards. These regulations will mandate certain engine changes
and result in increased costs to both manufacturers and end-users of school
buses. Blue Bird management believes that the general public will continue to
mandate improved safety standards and ongoing resolution of environmental issues
beyond 1998, and thereby will generate continuing demand for new school bus
models over the long term. See "--Legal Proceedings" for a discussion of a
pending recall of certain of the Company's products.
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BACKLOG ORDERS
As of July 27, 1996, the dollar amount of backlog orders believed by the
Company to be firm totaled $348 million. It is expected that approximately
two-thirds of such orders will be filled in the fourth quarter of fiscal year
1996. As of July 29, 1995, the dollar amount of backlog orders believed by the
Company to be firm was $318 million. Approximately two-thirds of such orders
were filled in the fourth quarter of fiscal year 1995.
PATENTS, LICENSES AND TRADEMARKS
The Company owns and maintains registrations for the Blue Bird trademark and
variations thereof in 49 countries, including the United States and Canada and
monitors the status of its trademark registrations to maintain them in force and
to renew them as required. Management believes that the Blue Bird trademarks are
valuable because of the Company's strong presence in the bus market.
Accordingly, the Company seeks to eliminate any infringement thereon. The
Company is not currently aware of any such infringement. In addition, the
Company has obtained patent protection in the United States on two safety-
related components used in its buses. One component is related to an auxiliary
heat system (which patent protection will expire in 2009) and the second
component is related to a window opening mechanism (which patent protection will
expire in 2010). The expiration of the patent protection of these two components
is not expected to have a material adverse effect on the Company's financial
condition or result of operations. The Company also takes steps, including legal
action, to protect its patent, trademark and trade name rights and proprietary
rights respecting product design and technology when circumstances warrant such
action.
SEASONALITY
The Company's sales show seasonal variation which is typical of the general
industry seasonality. A majority of the Company's sales occur in the third and
fourth quarters of the fiscal year, a pattern typical for the industry. For
additional data on the seasonal nature of the Company's sales, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
EMPLOYEES
As of September 28, 1996, the Company had approximately 2,577 employees, of
whom approximately 2,112 were hourly workers. Blue Bird's U.S. and Canadian
employees are not represented by any collective bargaining group. Blue Bird's
Mexican employees are required by local law to be members of a union. The
Company historically provided a competitive wage and benefit program and has an
active communications program with its employees. Blue Bird has a four-day,
10-hour-per-day work week, which management believes is viewed as a positive
feature by its labor force. The Company believes that its relationship with its
employees is satisfactory.
PROPERTIES
Blue Bird owns and operates seven facilities, six of which are manufacturing
facilities, in five different locations in the U.S., Canada and Mexico. In the
aggregate, these plants have approximately 1.8 million square feet of production
area. Blue Bird management considers all of these facilities to be
state-of-the-art in the school bus manufacturing industry.
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The table below provides summary descriptions of each of the plants.
<TABLE>
<CAPTION>
SQUARE
PLANT LOCATION PRODUCTS FEET EMPL.(A)
- ----------------------------- ----------------------------- ----------------------------- ---------- -----------
<S> <C> <C> <C> <C>
Blue Bird Body Company Fort Valley, Georgia TC/2000, Q-Bus All- American, 730,000 1,389
parts fabrication
Service Parts Fort Valley, Georgia Parts 80,000 N.A.(b)
Wanderlodge Fort Valley, Georgia Wanderlodge, parts 216,000 243
fabrication
Blue Bird North Georgia LaFayette, Georgia Conventional, TC/2000 216,000 262
Blue Bird Midwest Mt. Pleasant, Iowa Conventional, Mini-Bird, 227,400 263
TC/2000, Micro-Bird
Blue Bird Canada Brantford, ON (Canada) TC/2000, Conventional, 251,395 271
Micro-Bird, parts
fabrication
Blue Bird de Mexico Monterrey, Mexico Conventional 118,310 149
---------- -----
Total Company
1,839,105 2,577
---------- -----
---------- -----
</TABLE>
- ------------------------
(a) As of September 28, 1996.
(b) Included in the number of employees for Blue Bird facility in Fort Valley,
Georgia.
If Blue Bird operated all of its assembly plants at "maximum capacity,"
defined as two eight-hour shifts per day, five days per week, 250 days per year,
the Company could manufacture approximately 27,300 units per year. The Company's
capacity to fabricate all of the parts needs to build the buses is a constraint
as the Company's present fabrication facilities have the capacity to support the
production of approximately 25,000 units per year. With an investment of
approximately $2.5 million in additional equipment, Blue Bird's fabrication
capacity could support approximately 28,500 units per year.
ENVIRONMENTAL MATTERS
The Company's operations and properties are subject to numerous federal,
state, local and international laws and regulations, including those governing
the use, storage, handling, transportation, generation, treatment, emission,
release, discharge and disposal of certain materials, substances and wastes
(collectively, "Hazardous Materials"), the remediation of contaminated soil and
groundwater, and the health and safety of employees (collectively,
"Environmental Laws"). Violation of such Environmental Laws, even if
inadvertent, could have an adverse impact on the operations, business or
financial results of the Company. As such, the nature of the Company's
operations exposes it to the risk of claims with respect to such matters and
there can be no assurance that material costs or liabilities will not be
incurred in connection with such claims.
The Company maintains an inactive landfill site at its Fort Valley, Georgia,
location which is subject to regulation pursuant to the U.S. Resource
Conservation and Recovery Act, as amended ("RCRA"). RCRA is administered in
Georgia by the Environmental Protection Division of the Georgia Department of
Natural Resources ("EPD"). The Company has closed its Fort Valley landfill site
pursuant to a permit from the EPD that contains certain conditions, including
30-year post-closure groundwater monitoring. In connection with such permit, the
Company maintains a letter of credit to cover the expected cost of monitoring
over the life of the monitoring requirement. The Company currently estimates
post-closure costs for the site at $434,700. The Company's estimate of
post-closure costs is subject to periodic adjustment based on EPD regulations.
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Monitoring by the Company has detected increased levels of solvents in
groundwater near its Fort Valley site, and the Company has so advised the EPD.
Continued monitoring and testing is required to ascertain the source of these
solvents. If it is determined that the Company's landfill is the source of such
solvents, corrective action will be required. The Company believes that the cost
of any corrective action that might be required will not be material to its
results of operations or financial condition.
The Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended ("CERCLA"), and similar state laws provide for responses to and
strict liability for releases of certain Hazardous Materials into the
environment. These obligations are imposed on certain potentially responsible
parties ("PRPs"), including any person who arranged for the treatment or
disposal of Hazardous Materials at a facility. Generally, liability to the
government under CERCLA is joint and several. The Company has been named a PRP
at the Des Moines barrel and drum site in Des Moines, Iowa and the Seaboard
chemical site in Jamestown, North Carolina. In both instances, the Company is
considered a DE MINIMIS PRP. In 1993, the Company settled its liability for
cleanup costs at the Des Moines barrel and drum site for $5,250. The settlement
contains a re-opener provision in the event future cleanup costs are required,
but the Company is not aware of any anticipated cleanup costs in addition to
those covered in the settlement agreement. In 1995, the Company executed an
administrative Order on Consent among the North Carolina Department of
Environment, Health and Natural Resources, the Seaboard PRP Group II, and the
City of High Point, North Carolina, covering the investigation of cleanup
alternatives at the Seaboard chemical site. The Company anticipates that it will
have the opportunity to enter into a DE MINIMIS buy-out relating to cleanup
costs within the next two years, which buyout is expected to provide a release
from any further liability in connection with the Seaboard site. Although the
cost of such buyout is not currently known, it is not expected to be material.
Based upon its experience to date, the Company believes that the future cost
of compliance with existing Environmental Laws, and liability for known
environmental claims pursuant to such Environmental Laws, will not have a
material effect on the Company's capital expenditures, earnings or competitive
position. However, future events, such as new information, changes in existing
Environmental Laws or their interpretation, and more vigorous enforcement
policies of regulatory agencies, may give rise to additional expenditures or
liabilities that could be material.
LEGAL PROCEEDINGS
Blue Bird currently is a defendant in approximately 17 product liability
suits. The Company aggressively defends product liability cases and insists that
component manufacturers and chassis manufacturers such as GM and Navistar and
smaller parts suppliers stand behind their portions of the product by either
asserting a breach of warranty claim against such supplier or manufacturer, or
claiming a right of indemnification for such supplier or manufacturer pursuant
to the terms of the Company's standard purchase order agreements or the relevant
supplier agreement. The Company manufactures certain components itself and
assembles the various components into the completed vehicle, which may give rise
to independent liabilities. Moreover, the Company's manufacture of chassis for
its Type D school buses may expose the Company to liability associated with such
chassis. The amount of product liability insurance that the Company has in place
has varied significantly from year to year. The Company's policies generally
provide that the Company is responsible for the costs of defending product
liability claims, although Blue Bird's recent insurance plan has included some
participation by insurers in such costs at certain levels.
As of the date of this Prospectus, neither the outcome of the Company's
pending product liability cases nor the amounts of any company liabilities
related to these cases are known. The Company's insurance coverage for
occurrences in each of the past several years has been $25 million in excess of
a $2.5 million deductible (exclusive of excess liability coverage). There is no
certainty that the currently available coverage will remain available to the
Company in the future or at all, that future rate increases might not make such
insurance economically impractical for the Company to maintain, that current
deductible levels
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will be maintained, or that the Company's insurers will be financially viable if
and when payment of a claim is required.
In addition, the statute of limitations for injuries to minor children
(which varies between one and six years, depending on the state) does not
generally begin to run until the child reaches majority; therefore, there may be
potential claims of which Blue Bird is not aware (or accidents of which Blue
Bird was aware, but which did not produce any lawsuit) involving accidents going
back for a number of years. In the ordinary course of events, Blue Bird believes
that it receives notice of most potential claims within a reasonable time of the
occurrence, but there can be no assurance that Blue Bird is aware of all such
potential claims.
Management believes that, considering, among other things, the Company's
insurance coverage, the ultimate resolution of these matters will not have a
material adverse impact on the Company's financial position or results of
operations, and that any losses and expenses (including defense costs) resulting
from product liability claims will be within the applicable insurance coverage.
However, there can be no assurance that this will be true or that the amount of
losses and expenses relating to any claim or claims will not have a material
adverse effect on the Company.
Several owners of motor homes made by Blue Bird have asserted claims under
state laws addressing new vehicle defects. Such claims typically seek a refund
of the purchase price of the vehicle. Management believes that the resolution of
such claims, which are not insured, will not have a material effect on the
Company.
Blue Bird, like other vehicle manufacturers, is also subject to recalls of
its products in the event of manufacturing defects or non-compliance with
applicable regulatory standards. Such recalls can engender claims. In August
1996, the NHTSA announced its determination that approximately 11,500 school
buses were not in compliance with federal requirements for fuel systems. Of the
affected buses, 11,300 were Blue Bird Type D models in which the chassis are
manufactured by the Company, which failed crash tests when fuel tanks were
punctured upon impact. The Company is currently evaluating the scope of the
proposed product recall with the NHTSA as a result of the NHTSA's non-compliance
determination. If all 11,300 buses were to be recalled, management estimates
that the cost to the Company of the repairs required to bring the vehicles into
compliance would not be material to its results of operations or financial
condition.
52
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the persons
who are executive officers and directors of the Company and BBC as of December
4, 1996; all information is provided as of such date:
<TABLE>
<CAPTION>
NAME AGE POSITION AND EXPERIENCE
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Paul E. Glaske....................................... 63 Chairman of the Board and President of the Company
and BBC; director of the Company and BBC. At the time
the 1992 Acquisition was consummated (the "Effective
Time"), Mr. Glaske was appointed Chairman of the
Board and President of the Company and BBC and a
director of BBC. Mr. Glaske has served as President
of the Company since 1986 and a director of the
Company since 1984. He is also a director of
Borg-Warner Automotive, Inc.
Bobby G. Wallace..................................... 62 Vice President--Finance and Administration, Treasurer
and Secretary of the Company; Vice President,
Treasurer and Secretary of BBC; director of the
Company and BBC. At the Effective Time, Mr. Wallace
was appointed to his current positions with the
Company and BBC. Mr. Wallace has served as the Vice
President-- Finance and Administration of the Company
since 1987. In 1986, he was named Vice
President--Controller.
James H. Grantham.................................... 55 Vice President--Manufacturing of the Company. In
1990, Mr. Grantham was promoted to his current
position. In 1988, he was named Vice
President--Materials, and, in 1987, became Vice
President--Canadian Operations. In 1983, he became
General Manager of Blue Bird's plant in Lafayette,
Georgia, a promotion from his former position of
Production Manager of such plant. Mr. Grantham joined
Blue Bird in 1965.
Richard E. Maddox.................................... 44 Vice President--Sales of the Company. In 1990, Mr.
Maddox was promoted to his current position from his
prior position of Director-- U.S. Sales, to which he
was appointed in 1988. In 1986, he was named
Manager--U.S. Sales, and, in 1982, he was appointed
Manager--Field Sales. Mr. Maddox joined Blue Bird in
1974 and has held various positions in sales since
that time.
Wilbur C. Rumph...................................... 67 Vice President--Engineering, Research & Development
of the Company. Mr. Rumph was
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION AND EXPERIENCE
- ----------------------------------------------------- --- -----------------------------------------------------
appointed to his present position in 1968. He joined
Blue Bird in 1948, where he has held various
positions in the engineering area.
<S> <C> <C>
William G. Milby..................................... 50 Vice President and General Manager-- Canadian Blue
Bird, Mr. Milby assumed his present position in 1989.
In 1985, he was named Vice President and General
Manager of the Wanderlodge division. Mr. Milby joined
the Company in 1971 as an engineer. Mr. Milby is also
a director of Canadian Blue Bird.
B. Richard Benedict.................................. 53 Vice President and General Manager--Blue Bird
Midwest. Mr. Benedict was promoted to his current
position in 1988 from General Manager, to which he
was appointed in 1984. In 1977, Mr. Benedict was
named Production Manager. Mr. Benedict joined the
Company in 1962.
Gerald S. Armstrong.................................. 53 Director of the Company and BBC. Mr. Armstrong served
as Vice President, Treasurer and Secretary of BBC
prior to the 1992 Acquisition. Mr. Armstrong is a
Partner and a director of Stonington Partners, Inc.,
a private investment firm, a position that he has
held since 1993. He has also been a member of the
Board of Directors of MLCP, an affiliate of Merrill
Lynch since 1988. He was a Partner of MLCP from 1993
to July 1994 and an Executive Vice President of MLCP
from 1988 to 1994. MLCP is the general partner of
several limited partnerships which indirectly own
shares of BBC Common Stock. Mr. Armstrong was also a
Managing Director of the Investment Banking Division
of Merrill Lynch from 1988 to 1994. Mr. Armstrong is
also a director of AnnTaylor Stores Corporation,
Beatrice Foods, Inc., First USA, Inc., Goss Graphic
Systems, Inc., Wherehouse Entertainment, Inc. and
World Color Press, Inc.
Alexis P. Michas..................................... 38 Director of the Company and BBC. Mr. Michas served as
Chairman of the Board and President of BBC from its
inception until the Effective Time. Mr. Michas is a
Managing Partner and a director of Stonington
Partners, Inc., a private investment firm, a position
that he has held since 1993. He has also been a
member of the Board of Directors of MLCP since 1989.
He was a Partner of MLCP from 1993 to 1994 and Senior
Vice President of MLCP from 1989 to 1993. MLCP is the
general partner of several limited partnerships which
indirectly own shares of BBC
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION AND EXPERIENCE
- ----------------------------------------------------- --- -----------------------------------------------------
Common Stock. Mr. Michas was also a Managing Director
of the Investment Banking Division of Merrill Lynch
from 1991 to July 1994 and a director in the
Investment Banking Division of Merrill Lynch from
1990 to 1991. Mr. Michas is also a Director of
Borg-Warner Automotive, Inc., Borg-Warner Security
Corporation, Dictaphone Corporation, Goss Graphic
Systems, Inc., Pathmark Stores, Inc. and Supermarkets
General Holdings Corporation.
<S> <C> <C>
Alfred C. Daugherty.................................. 73 Director of the Company and BBC. Mr. Daugherty served
as a director of Blue Bird prior to the 1992
Acquisition. Mr. Daugherty was Chairman of Duracell
International, Inc., a manufacturer of premium
batteries, and Executive Vice President of Dart
Industries, Inc., a maker of consumer products and
chemical specialties, as well as a director of both
companies, until his retirement on January 1, 1995.
Mr. Daugherty is also a director of A. Duda and Sons,
Inc., Atlantic Acquaculture Technologies, Inc., Goss
Graphic Systems, Inc. and GGS Holdings, Inc.
Donald C. Trauscht................................... 62 Director of the Company and BBC. Mr. Trauscht was
elected to the Board of Directors in December 1993.
Since January 1996, Mr. Trauscht has been Chairman of
BW Capital Corp., a private investment company. From
February 1993 to December 1995, he was Chairman and
Chief Executive Officer of Borg-Warner Security
Corporation, an electronic and physical security
company. From December 1991 to January 1993, he was
Chairman and Chief Executive Officer of Borg-Warner
Corporation, a diversified corporation. Prior to
December 1991, he was President of Borg-Warner
Corporation and held various other executive
positions since 1967. He is currently a director of
Baker Hughes Inc., Thiokol Corp., IMO Industries,
Inc., Borg-Warner Automotive, Inc., Borg-Warner
Security Corporation, ESCO Electronics Corp. and
Hydrac International Corp.
</TABLE>
Each director of the Company and BBC is elected annually and serves until
the next annual meeting or until his successor is duly elected and qualified.
Each executive officer of the Company and BBC serves at the discretion of the
Boards of Directors of the Company and BBC, respectively.
55
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION. The following table sets
forth, for fiscal years 1995, 1994 and 1993, the cash compensation paid by BBC
and its subsidiaries, as well as certain other compensation paid or accrued for
fiscal years 1995, 1994, and 1993, to each of the five most highly compensated
executive officers of BBC (considering Messrs. Grantham, Maddox and Rumph, Vice
Presidents of the Company, to be executive officers of BBC) (collectively, the
"named executive officers") in all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
---------------------------
SECURITIES
UNDERLYING
ANNUAL COMPENSATION OPTIONS/ALL OTHER
FISCAL ------------------------ ---------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY (A) BONUS SARS COMPENSATION
- ---------------------------------------------- ----------- ------------ ---------- --------- ----------------
<S> <C> <C> <C> <C> <C>
Paul E. Glaske................................ 1995 $ 466,898 $ 428,606 -- $ 19,753(b)
Chairman of the Board and President and 1994 $ 449,041 $ 282,287 -- $ 19,303(b)
Director 1993 $ 424,923 $ 317,500 -- $ 139,573(c)
Bobby G. Wallace.............................. 1995(d) $ 265,388 $ 168,175 -- $ 4,050(f)
Vice President--Finance and Admin., 1994 $ 203,379 $ 101,369 $ 10,000(e) $ 3,600(g)
Treasurer, Secretary and Director 1993 $ 205,738 $ 143,711 -- $ 64,917(h)
James H. Grantham............................. 1995 $ 171,006 $ 123,008 -- $ 4,050(f)
Vice President--Manufacturing of the Company 1994 $ 161,274 $ 75,830 -- $ 3,696(g)
1993 $ 144,355 $ 84,714 -- $ 19,324(i)
Richard E. Maddox............................. 1995 $ 151,996 $ 110,707 -- $ 6,159(f)
Vice President--Sales of the Company 1994 $ 144,055 $ 68,522 -- $ 1,609(g)
1993 $ 129,832 $ 84,714 -- $ 22,941(j)
Wilbur C. Rumph............................... 1995 $ 119,674 $ 42,176 -- $ 4,074(f)
Vice President--Engineering 1994 $ 113,748 $ 29,925 -- $ 3,600(g)
1993 $ 112,725 $ 24,929 -- $ 3,148(k)
</TABLE>
- ------------------------------
(a) Includes amounts deferred at the election of the named executive officer
pursuant to the Company's 401(k) plan. Employees may contribute up to 15% of
their salaries to the 401(k) plan on a pre-tax basis, not to exceed $9,240
in 1995, $9,240 in 1994, and $8,994 in 1993.
(b) Represents life and disability insurance premiums of $15,703 paid by the
Company on behalf of Mr. Glaske. Under the 401(k) plan, the Company makes
matching contributions equal to 40% of the first 6% of each participant's
pre-tax contribution for 1994 and 45% of the first 6% of each participant's
pre-tax contribution for 1995.
(c) Represents $121,169 paid to Mr. Glaske in respect of stock appreciation
rights ("SARs") exercised in connection with the 1992 Acquisition (which
constituted a change of control under the Company's SAR plan) which were
held in escrow in accordance with the terms of an escrow agreement entered
into in connection with the 1992 Acquisition, matching contributions of
$3,148 to the Company's 401(k) plan made by the Company on behalf of Mr.
Glaske and life and disability insurance premiums of $15,256 paid by the
Company. Under the 401(k) plan, the Company makes matching contributions
equal to 35% of the first 6% of each participant's pre-tax contribution.
(d) On April 15, 1993, the Company and BBC entered into an employment agreement
with Mr. Wallace (the "Wallace Employment Agreement") pursuant to which Mr.
Wallace agreed to reduce the amount of his business time devoted to
rendering executive services on behalf of the Company on the Company's
premises or while traveling on behalf of the Company from 100% of such time
to 50% of such time in exchange for a reduction in annual compensation and
investment in BBC. Pursuant to an agreement
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
56
<PAGE>
dated October 31, 1994, the Wallace Employment Agreement was amended to
provide for a return to 100% time devoted to Company business and full
compensation.
(e) The number of shares subject to an option to purchase previously awarded to
Mr. Wallace were reduced from 100,000 to 50,000 pursuant to the Wallace
Employment Agreement. In 1994, Mr. Wallace was granted an option to purchase
10,000 shares of BBC Common Stock.
(f) The amounts shown represent matching contributions to the Company's 401(k)
plan made by the Company on behalf of the named executive officer. Under the
401(k) plan, the Company makes matching contributions equal to 40% of the
first 6% of each participant's pre-tax contribution.
(g) The amounts shown represent matching contributions to the Company's 401(k)
plan made by the Company on behalf of the named executive officer. Under the
401(k) plan, the Company makes matching contributions equal to 45% of the
first 6% of each participant's pre-tax contribution.
(h) Represents $61,769 paid to Mr. Wallace in respect of SARs exercised in
connection with the 1992 Acquisition (which constituted a change of control
under the Company's SAR plan) which were held in escrow in accordance with
the terms of an escrow agreement entered into in connection with the 1992
Acquisition and matching contributions of $3,148 to the Company's 401(k)
plan made by the Company on behalf of Mr. Wallace. Under the 401(k) plan,
the Company makes matching contributions equal to 35% of the first 6% of
each participant's pre-tax contribution.
(i) Represents $16,176 paid to Mr. Grantham in respect of SARs exercised in
connection with the 1992 Acquisition (which constituted a change of control
under the Company's SAR plan) which were held in escrow in accordance with
the terms of an escrow agreement entered into in connection with the 1992
Acquisition and matching contributions of $3,148 to the Company's 401(k)
plan made by the Company on behalf of Mr. Grantham. Under the 401(k) plan,
the Company makes matching contributions equal to 35% of the first 6% of
each participant's pre-tax contribution.
(j) Represents $20,386 paid to Mr. Maddox in respect of SARs exercised in
connection with the 1992 Acquisition (which constituted a change of control
under the Company's SAR plan) which were held in escrow in accordance with
the terms of an escrow agreement entered into in connection with the 1992
Acquisition and matching contributions of $1,645 to the Company's 401(k)
plan made by the Company on behalf of Mr. Maddox. Under the 401(k) plan, the
Company makes matching contributions equal to 35% of the first 6% of each
participant's pre-tax contribution.
(k) The amounts shown represent matching contributions to the Company's 401(k)
plan made by the Company on behalf of the named executive officer. Under the
401(k) plan, the Company makes matching contributions equal to 35% of the
first 6% of each participant's pre-tax contribution.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. No stock options or SARs were
granted in fiscal year 1995.
OPTION/SAR EXERCISES AND HOLDINGS. None of the named executives exercised
any options and/or SARs during the last fiscal year. The following table sets
forth information with respect to the named executive officers concerning the
value of unexercised options and SARs held as of the end of the last fiscal
year:
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT FISCAL YEAR-END (A)
-------------------------- --------------------------
<S> <C> <C> <C> <C>
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ------------ ------------
Paul E. Glaske............................................ 315,000 35,000 $ 7,645,050 $ 849,450
Bobby G. Wallace.......................................... 55,000 5,000 1,334,850 121,350
James H. Grantham......................................... 72,000 8,000 1,747,440 194,160
Richard E. Maddox......................................... 72,000 8,000 1,747,440 194,160
Wilbur C. Rumph........................................... 18,000 2,000 434,860 48,540
</TABLE>
- ------------------------------
(a) Computed using net proceeds value of $24.27 per share at October 28, 1995,
determined by formula in the Blue Bird Corporation Management Stock Option
Plan (the "Management Stock Option Plan").
57
<PAGE>
PENSION PLANS. Blue Bird maintains a qualified defined benefit pension
plan (the "Pension Plan") which covers all U.S. salaried employees. Benefits are
determined under a formula (which is integrated with Social Security) calculated
with reference to an employee's five-year final average earnings and such
employee's years of service. The amount of estimated annual benefits payable
under the Pension Plan based upon various levels of compensation and years of
service, determined before application of the limitations imposed by Sections
401(a)(17) and 415 of the Internal Revenue Code of 1986, as amended (the
"Code"), is set forth below:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL FIVE YEARS OF SERVICE
YEAR ANNUAL --------------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 125,000 $ 29,569 $ 39,425 $ 49,281 $ 59,138 $ 59,138
150,000 35,944 47,925 59,906 71,888 71,888
175,000 42,319 56,425 70,531 84,638 84,638
200,000 48,694 64,925 81,156 97,388 97,388
225,000 55,069 73,425 91,781 110,138 110,138
250,000 61,444* 81,925* 102,406* 122,888* 122,888*
300,000 74,194* 98,925* 123,656* 148,388* 148,388*
400,000 99,694* 132,925* 166,156* 199,388* 199,388*
500,000 125,194* 166,925* 208,656* 250,388* 250,388*
1,000,000 252,694* 336,925* 421,156* 505,388* 505,328*
2,000,000 507,694* 676,925* 846,156* 1,015,388* 1,015,388*
4,000,000 1,017,694* 1,356,925* 1,696,156* 2,035,388* 2,035,388*
</TABLE>
- ------------------------
* Determined before application of current limitations of Sections 401(a)(17)
and 415 of the Code.
Compensation covered by the Pension Plan is limited to gross wages reported
on Form W-2. Such covered compensation includes all compensation reported in the
Summary Compensation Table (other than amounts representing Company matching
contributions to the 401(k) plan) plus the value, if any, realized upon the
exercise of SARs in connection with the 1992 Acquisition. The covered
compensation for Messrs. Glaske, Wallace, Grantham, Maddox and Rumph does not
differ by more than 10% from that set forth in the Summary Compensation Table.
The estimated credited years of service for each of the named executive officers
is as follows: Mr. Glaske (10 years), Mr. Wallace (10 years), Mr. Grantham (29
years), Mr. Maddox (20 years) and Mr. Rumph (30 years). Benefits from the
Pension Plan, which are integrated with Social Security but are not offset by
any other amounts, are payable in the form of a straight life annuity or, in the
case of married participants, an actuarially equivalent joint and survivor
annuity.
In addition, Blue Bird adopted a non-qualified supplemental retirement plan
(the "SERP") effective January 1, 1991 for selected executive officers to
restore the cutback in benefits under the Pension Plan on account of certain
limitations imposed by Code Sections 401(a)(17) and 415. The SERP provides a
lump sum payout upon retirement.
58
<PAGE>
COMPENSATION OF DIRECTORS
Two of the four non-employee directors of the Company and BBC receive annual
retainers of $24,000 and meeting fees of $1,500 per meeting for up to four
meetings per year for services as directors of the Company and BBC. The
remaining directors of the Company and BBC do not receive compensation for their
services as directors and none of the directors of the Company and BBC receive
compensation for their services as members of the committees of the Boards of
Directors of the Company and BBC.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Glaske's current employment agreement with the Company provides for a
three-year term with an annual base salary of $500,000, plus participation in an
incentive bonus program, the SERP and other employee benefit plans sponsored by
the Company. If Mr. Glaske's employment is terminated by the Company without
good cause or by Mr. Glaske for good reason (as such terms are defined in the
employment agreement), the Company's obligation for the duration of the
employment agreement for salary, employee benefits, supplemental benefits and
various perquisites shall continue without mitigation. Under the terms of the
employment agreement, Mr. Glaske agrees not to disclose confidential information
for so long a such information remains competitively sensitive. During the term
of the employment agreement and for three years after its termination, Mr.
Glaske agrees not to render services to, or have greater than a 2% equity
interest in, any business which is competitive with the Company. Mr. Glaske's
employment agreement does not contain any change of control provisions.
Mr. Wallace's employment agreement with the Company provides for a one-year
term, renewable annually, with an annual base salary of $282,000, plus
participation in an incentive bonus program, the SERP and other employee benefit
plans sponsored by the Company. The employment agreement may be terminated by
either party at the end of any given 12-month period. Under the terms of the
employment agreement, Mr. Wallace agrees not to disclose confidential
information for so long as such information remains competitively sensitive.
During the term of the employment agreement and for three years after its
termination, Mr. Wallace agrees not to render services to, or have greater than
a 2% equity interest in, any business which is competitive with the Company. Mr.
Wallace's employment agreement does not contain any change of control
provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the compensation committees of the Company's and BBC's Boards
of Directors during fiscal year 1995 were Messrs. Michas, Armstrong and
Daugherty. During such time, Mr. Glaske served as the Chairman of the Board and
President of the Company and BBC.
The Stockholders' Agreement provides that in the event that Messrs.
Armstrong, Michas, Glaske and Wallace are unwilling or unable to serve, or
otherwise cease to serve, as directors of BBC, the ML Entities shall be entitled
to fill the resulting vacancies on the Board of Directors. In addition, the
Stockholders' Agreement provides that the ML Entities are entitled to nominate
successors for all BBC directors and that the stockholders of BBC will cooperate
in any removal of directors proposed by the ML Entities.
At the time of the 1992 Acquisition, Messrs. Armstrong and Michas were each
executive officers of MLCP and Managing Directors of Merrill Lynch. MLCP is an
affiliate of Merrill Lynch. In connection with the 1992 Acquisition, Merrill
Lynch served as placement agent for the Old Notes and BBC issued 7,700,000
shares of BBC Common Stock (or approximately 91% of the BBC Common Stock
outstanding as of the Effective Time) to the ML Entities.
59
<PAGE>
OWNERSHIP OF CAPITAL STOCK
The Blue Bird Common Stock is the only class of capital stock that the
Company has outstanding. BBC owns 10 shares, which represent 100% of the issued
and outstanding shares of the Company's common stock. The BBC Common Stock is
the only class of capital stock of BBC outstanding. The issued and outstanding
number of shares of BBC Common Stock is 8,424,778. The following table sets
forth as of , 1996 the number and percentage of shares of BBC Common
Stock beneficially owned by (i) each person known to BBC to be the beneficial
owner of more than 5% of the outstanding shares of BBC Common Stock, (ii) each
director of BBC, (iii) each named executive officer, and (iv) all directors and
executive officers of BBC as a group. Unless otherwise indicated in a footnote,
each person listed below possesses sole voting and investment power with respect
to the shares indicated as beneficially owned by them. The ML Entities,
Management Investors and BBC are parties to a stockholders' agreement described
under "Certain Relationships and Related Transactions."
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL SHARES OF BBC
BENEFICIAL OWNER OWNERSHIP COMMON STOCK*
- ---------------------------------------------------------------------------------- ----------- -----------------
<S> <C> <C>
ML Entities(a).................................................................... 7,665,000 91.0%
Paul E. Glaske(b)................................................................. 665,000(c) 7.6%
Blue Bird Body Company
3920 Artwright Road
Macon, Georgia 31210
Bobby G. Wallace(b)............................................................... 105,000(d) 1.2%
Blue Bird Body Company
3920 Artwright Road
Macon, Georgia 31210
James H. Grantham(b).............................................................. 152,000(e) 1.8%
Blue Bird Body Company
3920 Arkwright Road
Macon, Georgia 31210
Richard E. Maddox(b).............................................................. 152,000(f) 1.8%
Blue Bird Body Company
3920 Arkwright Road
Macon, Georgia 31210
Wilbur C. Rumph................................................................... 38,000(g) 0.5%
Blue Bird Body Company
3920 Arkwright Road
Macon, Georgia 31210
Donald C. Trauscht(b)............................................................. 4,778 0.1%
Borg-Warner Security Corporation
200 South Michigan Avenue
Chicago, Illinois 60604
A. Clark Daugherty(b)............................................................. 25,000 0.3%
321 Indian Harbor Road
Vero Beach, Florida 32963
Gerald S. Armstrong (h)........................................................... 0 --
Stonington Partners, Inc.
767 Fifth Avenue
New York, New York 10153
Alexis P. Michas (h).............................................................. 0 --
Stonington Partners, Inc.
767 Fifth Avenue
New York, New York 10153
All directors and executive officers as a group
(9 persons)..................................................................... 1,141,778(i) 12.7%
</TABLE>
- ------------------------
* Calculated in accordance with Rule 13d-3 under the Exchange Act.
(FOOTNOTES ON FOLLOWING PAGE)
60
<PAGE>
(a) Shares of BBC Common Stock beneficially owned by the ML Entities are owned
of record as follows: 3,740,188 by Merrill Lynch Capital Appreciation
Partnership No. B-XV, L.P., 2,370,278 by ML Offshore LBO Partnership No.
B-XV, 1,300,619 by ML IBK Positions, Inc., 42,500 by Merrill Lynch KECALP
L.P. 1989, 150,000 by Merrill Lynch KECALP L.P. 1991 and 61,415 by MLCP
Associates L.P. No. II. The address for the ML Entities other than ML
Offshore LBO Partnership No. B-XV is 225 Liberty Street, World Financial
Center--South Tower, New York, New York 10080. The address for ML Offshore
LBO Partnership No. B-XV is P.O. Box 25, Roseneath, The Grange, St. Peter
Port, Guernsey Channel Island, British Isles. Each entity disclaims
beneficial ownership of the shares not owned of record by it.
(b) Messrs. Glaske and Wallace are directors and executive officers of the
Company and BBC. Messrs. Grantham, Maddox and Rumph are executive officers
of the Company who perform policy making functions for BBC and are therefore
deemed executive officers of BBC. Messrs. Trauscht and Daugherty are
directors of the Company and BBC.
(c) Includes 175,000 shares subject to vested options and 140,000 shares subject
to performance options granted to Mr. Glaske under the Management Stock
Option Plan which are currently exercisable. Does not include 35,000 shares
subject to performance options granted to Mr. Glaske under the Management
Stock Option Plan which are not currently exercisable.
(d) Includes 35,000 shares subject to vested options and 20,000 shares subject
to performance options granted to Mr. Wallace under the Management Stock
Option Plan which are currently exercisable. Does not include 5,000 shares
subject to performance options granted to Mr. Wallace under the Management
Stock Option Plan which are not currently exercisable.
(e) Includes 40,000 shares subject to vested options and 32,000 shares subject
to performance options granted to Mr. Grantham under the Management Stock
Option Plan which are currently exercisable. Does not include 8,000 shares
subject to performance options granted to Mr. Grantham under the Management
Stock Option Plan which are not currently exercisable.
(f) Includes 40,000 shares subject to vested options and 32,000 shares subject
to performance options granted to Mr. Maddox under the Management Stock
Option Plan which are currently exercisable. Does not include 8,000 shares
subject to performance options granted to Mr. Maddox under the Management
Stock Option Plan which are not currently exercisable.
(g) Includes 10,000 shares subject to vested options and 8,000 shares subject to
performance options granted to Mr. Rumph under the Management Stock Option
Plan which are currently exercisable. Does not include 2,000 shares subject
to performance options granted to Mr. Rumph under the Management Stock
Option Plan which are not currently exercisable.
(h) Messrs. Armstrong and Michas are directors of the Company, BBC and MLCP.
Messrs. Armstrong and Michas are limited partners of the general partner
("LBO") of Merrill Lynch Capital Appreciation Partnership No. B-XV, L.P. and
ML Offshore LBO Partnership No. B-XV. MLCP is the general partner of LBO.
Messrs. Armstrong and Michas each disclaim beneficial ownership of shares
beneficially owned by the ML Entities.
(i) Includes 300,000 shares subject to vested options and 232,000 shares subject
to performance options granted to executive officers of BBC as a group under
the Management Stock Option Plan which are currently exercisable. Does not
include 58,000 shares subject to performance options granted to executive
officers of BBC under the Management Stock Option Plan which are not
currently exercisable. Does not include any shares beneficially owned by the
ML Entities.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Merrill Lynch, one of the Initial Purchasers (as defined herein), is an
affiliate of the Company and BBC. Two of the directors of the Company and BBC
are partners and directors of Stonington Partners, Inc. and act as consultants
to MLCP.
The Management Investors' purchase of BBC Common Stock in connection with
the 1992 Acquisition was funded through a combination of (i) $200,000 in cash,
(ii) the rollover of approximately $3.65 million of SARs on a pre-tax basis, and
(iii) nonrecourse promissory notes of the Management Investors (the "Management
Notes") in an aggregate principal amount of $4.15 million. Cash distributions
received in respect of the shares of BBC Common Stock purchased with the
proceeds of borrowings under the Management Notes were required to be applied
toward repayment of such notes. The Management Notes were repaid as a result of
the Recapitalization.
Pursuant to the terms of the Stockholders' Agreement entered into on April
15, 1992 by BBC, the Management Investors and the ML Entities (the
"Stockholders' Agreement"), all shares of BBC Common Stock purchased at the
closing of the 1992 Acquisition by the Management Investors and issued upon
exercise of options are subject to certain restrictions on transfer and certain
put and call arrangements in the event that the holder of such shares terminates
his employment with BBC or any of its subsidiaries.
Management Investors will have the right to require BBC to purchase their
shares and options in the event of death, disability, retirement or involuntary
termination for a fair value price determined pursuant to a formula based upon a
multiple of BBC's earnings before interest and taxes. BBC will have the right to
require a Management Investor to sell such Management Investor's shares and
options if such Management Investor's employment terminates at prices determined
by formulas varying under different circumstances, but in no event will such
price be higher than the greater of the initial purchase price and the fair
value price. Payments under the puts and calls are subject to certain
restrictions under the Existing Credit Agreement and the indenture for the Old
Notes, and will be subject to certain restrictions under the New Credit
Agreement and the Indenture, as applicable.
The Stockholders' Agreement also provides that in the event that Messrs.
Armstrong, Michas, Glaske and Wallace are unwilling or unable to serve, or
otherwise cease to serve, as directors of BBC, then the ML Entities shall be
entitled to fill the resulting vacancies on the Board of Directors of BBC. In
addition, the Stockholders' Agreement provides that the ML Entities are entitled
to nominate successors to all BBC directors and that the stockholders of BBC
will cooperate in any removal of directors proposed by the ML Entities.
For certain other information concerning the relationships between the
Initial Purchasers and Merrill Lynch and the Company, see "Plan of
Distribution."
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DESCRIPTION OF DEBT FACILITIES
SENIOR BANK FINANCING
In connection with the Recapitalization, the Company and BBC entered into
the New Credit Agreement, which provides senior bank financing in the maximum
aggregate principal amount of up to $255 million. The Company is the borrower
under the New Credit Agreement.
Under the New Credit Agreement, the Agent Banks (as defined herein) have
provided senior bank financing of up to $255 million pursuant to three
facilities. These facilities, which are described below, are hereinafter
referred to as the "Senior Bank Facility." Borrowings under the Senior Bank
Facility are hereinafter referred to as "Loans." The New Credit Agreement
provides that the Agent Banks may syndicate the Senior Bank Facility to other
lenders (the Agent Banks, together with any such lenders, will hereinafter be
referred to as the "Banks").
The following is a summary description of certain provisions of the New
Credit Agreement:
THE SENIOR BANK FACILITY. The New Credit Agreement provides a six-year term
loan facility (the "Tranche A Term Facility") in an aggregate principal amount
of $100 million and a seven-year term loan facility (the "Tranche B Term
Facility" and, together with the Tranche A Term Facility, the "Term Facilities")
in an aggregate principal amount of $75 million. As part of the
Recapitalization, the Term Facilities were used, among other things, to (i)
finance the purchase of the Old Notes, (ii) refinance the Existing Credit
Agreement, (iii) make the Distribution and (iv) pay certain fees and expenses in
connection with the Recapitalization. The Tranche A Term Facility matures on
November 19, 2002 with the first quarterly installment due on May 19, 1997. The
Tranche B Term Facility matures on November 19, 2003 with the first installment
due on February 19, 1997. The Term Facilities will be repaid in quarterly
installments in the following aggregate annual amounts:
<TABLE>
<CAPTION>
FISCAL YEAR
- ------------- AMOUNT TO BE REPAID
---------------------
(DOLLARS IN MILLIONS)
<S> <C>
1997 $ 8.8
1998 12.8
1999 16.8
2000 20.8
2001 22.8
2002 22.8
2003 70.5
</TABLE>
The New Credit Agreement also provides for a working capital facility (the
"Revolving Facility") of up to $80 million to be used for working capital
requirements and other general corporate purposes. The maximum amount available
under the Revolving Facility is based on the Borrowing Base. The Revolving
Facility includes a subfacility for the issuance of letters of credit in a
maximum aggregate of $20,000,000. The New Credit Agreement requires that for 30
consecutive days, at any time, during each 12-month period, borrowings under the
Revolving Facility shall not exceed $15,000,000. The Revolving Facility will
terminate on November 15, 2002 or upon the repayment of borrowings under the
Term Facilities.
INTEREST PAYMENTS. Interest on Loans under the Senior Bank Facility is
payable at one of the following rates, at the Company's option: (i) with respect
to Loans under the Revolving Facility and the Tranche A Term Facility, (a) the
Base Rate (as defined in the New Credit Agreement) plus 1.50% PER ANNUM or (b)
the Adjusted Eurodollar Rate (as defined in the New Credit Agreement) plus 2.50%
PER ANNUM, available for one-, two-, three-, six-, and, if available, in the
discretion of Banks, nine-month periods and (ii) with respect to Loans under the
Tranche B Term Facility, (a) the Base Rate plus 2.00% PER ANNUM or (b) the
Adjusted Eurodollar Rate plus 3.00% PER ANNUM, available for one-, two-, three-,
six-, and, if available, in the discretion of Banks, nine-month periods;
PROVIDED that the applicable rates may be reduced from time
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to time upon satisfaction of leverage and interest coverage tests to be set
forth in the New Credit Agreement. Interest is payable quarterly with respect to
Loans bearing interest based on the Base Rate and on the last day of selected
interest periods (and at the end of every three months, in the case of interest
periods of longer than three months) with respect to Loans bearing interest
based on the Adjusted Eurodollar Rate and, in each case, upon pre-payment.
Interest on Loans is payable in arrears and computed on the basis of a 360-day
year.
PREPAYMENTS. The New Credit Agreement requires prepayment of the Loans in
amounts equal to (i) 75% of excess cash flow (as determined under the New Credit
Agreement), (ii) the net cash proceeds of certain asset sales with cash proceeds
in excess of the amount specified in the New Credit Agreement, (iii) the net
cash proceeds from the issuance or sale of equity or debt of the Company or BBC
other than the sale of BBC Common Stock to the Company's management in the
ordinary course of business, (iv) the value of surplus assets for a pension plan
returned to BBC or any of its subsidiaries, net of transaction costs (including
taxes payable thereon) incurred in obtaining any such return and (v) the amount
necessary to reduce borrowings and letters of credit issued under the Revolving
Facility to a level commensurate with the Company's Borrowing Base. Such
mandatory prepayments will be applied first to pay interest on the principal
amount so prepaid, second to pay down scheduled repayments of principal in
reverse order of maturity under the Term Facility and third to permanently
prepay and reduce the Revolving Facility commitment. Prepayments of the Term
Facilities will be PRO RATA based on the outstanding principal amounts of the
Term Facilities; PROVIDED that prepayments allocated to Tranche B Term Facility
will be offered to Banks holding such Loans and, to the extent such Banks reject
the prepayment, 75% will be applied to the Tranche A Term Facility and 25% will
be available for the general corporate purposes of the Company. In the case of a
mandatory prepayment resulting from an asset sale, the Company will have the
option of permanently prepaying and reducing the Revolving Facility to the
extent that such asset sale reduces the Borrowing Base. In addition, the Company
may voluntarily prepay amounts outstanding under the Senior Bank Facility in
whole or in part at any time without premium or penalty (PROVIDED that
Eurodollar Rate Loans are prepayable only on the last day of the related
interest period), subject to compliance with certain notice requirements and
minimum prepayment amounts.
SECURITY INTERESTS. As security for the Senior Bank Facility, the Banks
have been granted, among other things, (i) a first priority pledge by BBC of the
capital stock of the Company and 66% of the capital stock of Canadian Blue Bird,
and (ii) a first priority lien on all or substantially all of BBC's and the
Company's assets, including intangibles, machinery, equipment, fixtures,
inventory, receivables and mortgages on all of the real property and leaseholds
owned, directly or indirectly, by BBC and Blue Bird Body Company as requested by
the Agent Banks.
GUARANTEES. BBC has guaranteed all payments and performance obligations of
Blue Bird Body Company with respect to the Senior Bank Facility. Such guarantee
is senior to the BBC Guarantee.
COVENANTS. The New Credit Agreement contains certain covenants, including
the following: (i) BBC and its subsidiaries will not incur indebtedness in
excess of specified amounts set forth in the New Credit Agreement; (ii) BBC and
its subsidiaries will not pay any dividend, or make any redemption or sinking
fund payments to its shareholders, other than (a) dividends solely in shares of
stock to the holders of that class of stock, (b) dividends to BBC to repurchase
BBC Common Stock from Management Investors in accordance with certain
subscription agreements, not to exceed an amount per fiscal year specified in
the New Credit Agreement, or (c) dividends or intercompany loans to BBC to pay
operating expenses, not exceeding $300,000 per fiscal year; (iii) in any fiscal
year, BBC and its subsidiaries will not make any expenditures to purchase or
otherwise acquire property, plant or equipment in excess of an amount specified
for each fiscal year in the New Credit Agreement; PROVIDED that, to the extent
that any unutilized part of that amount is no greater than 10% of that year's
capital expenditure allocation, such unutilized part may be used in the
following year to make such purchases; (iv) BBC and its subsidiaries will not
incur guarantees or contingent liabilities in an aggregate principal amount
exceeding amounts specified in the
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New Credit Agreement except for guarantees relating to the endorsement of
negotiable instruments made in the ordinary course of business; (v) the Company
will not make any repayments on the Notes, other than required interest
payments; (vi) BBC and its subsidiaries will not grant any security interest,
lien, charge of encumbrance, other than pursuant to permitted purchase money
obligations incurred in the ordinary course of business, liens on inventory in
favor of General Motors Acceptance Corp. to secure the purchase price of such
inventory and other specifically permitted liens; and (vii) the Company will not
make any investments except (a) investments in cash equivalents, (b) investments
existing at closing as set forth in the New Credit Agreement, (c) certain
intercompany loans made by the Company to Canadian Blue Bird for working capital
purposes, not to exceed an amount to be specified in the New Credit Agreement,
(d) investments in lease receivables not to exceed $40 million at any one time,
and (e) other investments not to exceed an aggregate of $250,000 at any time.
In addition, BBC and its subsidiaries are required to satisfy certain
financial covenants including maintenance of consolidated EBITDA and a ratio of
EBITDA to cash interest expense at minimum levels to be specified for each
fiscal quarter in the New Credit Agreement; and maintenance of a ratio of total
debt to consolidated EBITDA at less than or equal to a level to be specified for
each fiscal quarter in the New Credit Agreement. Such terms are defined in the
New Credit Agreement.
EVENTS OF DEFAULT. The New Credit Agreement contains certain events of
default, including, without limitation, the following: (i) the failure of the
BBC or its subsidiaries to pay principal on the Loans when due or failure to pay
any interest or other amounts due under the New Credit Agreement within five
days after the due date; (ii) any failure by BBC or its subsidiaries to pay
principal or interest on any indebtedness or contingent obligation in an
individual or aggregate principal amount in excess of $2.5 million or more,
after any applicable grace period, or any breach or default by BBC or its
subsidiaries of any term of any indebtedness or contingent obligation in an
individual or aggregate principal amount of $2.5 million or more, that gives the
holder of such indebtedness or contingent obligation a right to accelerate such
indebtedness or obligation; (iii) any default by BBC or its subsidiaries in the
performance or observance of certain conditions and covenants of the New Credit
Agreement; (iv) any representation or warranty made by BBC or its subsidiaries
in any document delivered in connection with the New Credit Agreement proving to
be false in any material respect; (v) the rendering of a judgment which remains
unvacated, unbonded or unstayed for a period of 60 days against, or a voluntary
settlement by, BBC or any of its subsidiaries which exceeds, in any individual
amount, $2.5 million; (vi) certain events of bankruptcy or insolvency of BBC or
its subsidiaries; (vii) the occurrence of a change of control of BBC or the
Company (as determined under the New Credit Agreement); (viii) any default by
BBC or its subsidiaries in the performance of or compliance with any term in the
New Credit Agreement, other than those specifically referred to in other events
of default therein, which has not been cured or waived by the Banks after
30-days notice of such default; (ix) any order decreeing the dissolution of BBC
or the Company or any of their respective subsidiaries that remains in full
force and effect for over 60 days; (x) an ERISA Event (as determined under the
New Credit Agreement) that results in liability to BBC in excess of $100,000,
(xi) the existence of unfunded benefit liabilities exceeding $100,000; (xii) any
guaranty granted by any party in connection with the New Credit Agreement ceases
to be in full force and effect or any guarantor denies that it has liability
under a guaranty granted in connection with the New Credit Agreement; (xiii) the
security interests or priority thereof granted pursuant to or in connection with
the New Credit Agreement are or become impaired; and (xiv) the failure of the
Company or any obligee of the Notes to comply with the subordination provisions
contained in the documents relating to the issuance of the Notes.
FEES. The Company has agreed to pay (i) a commitment fee of .50% PER ANNUM
on the unused portion of the Revolving Facility, payable quarterly in arrears,
and at maturity, and computed on the basis of a 360-day year and (ii) certain
fees, including without limitation a financing fee, an annual administrative fee
and a PER ANNUM letter of credit fee equal to the applicable spread on Loans
bearing interest based on the Adjusted Eurodollar Rate plus .25% PER ANNUM.
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OLD CREDIT AGREEMENT. As part of the Recapitalization, the Old Credit
Agreement with Bankers Trust Company ("BTCo.") was replaced and refinanced by
the New Credit Agreement.
LASALLE CREDIT AGREEMENT
Blue Bird Capital maintains the LaSalle Credit Facility with LaSalle, as
agent for itself and other lenders, pursuant to the LaSalle Credit Agreement.
The LaSalle Credit Facility is used to finance the lease financing operations of
Blue Bird Capital. Loans from LaSalle to Blue Bird Capital are secured by a
limited recourse pledge from the Company to LaSalle of all of the common stock
of Blue Bird Capital. Indebtedness of Blue Bird Capital to the Company is
subordinated to indebtedness to LaSalle. The LaSalle Credit Facility terminates
on March 31, 1999 and may be extended for up to two one-year periods. Blue Bird
Capital may borrow up to a maximum aggregate principal amount of $100 million
under the LaSalle Credit Facility, subject to certain limitations as set forth
in the LaSalle Credit Agreement.
The LaSalle Credit Agreement contains financial and other covenants,
including covenants requiring Blue Bird Capital to maintain certain financial
ratios and restricting the ability of Blue Bird Capital to incur indebtedness or
to create or suffer to exist certain liens. The LaSalle Credit Agreement also
requires that certain amounts of indebtedness thereunder be repaid by specified
dates.
The indebtedness of Blue Bird Capital under LaSalle Credit Facility bears
interest at rates that will fluctuate with changes in certain prevailing
interest rates (although such rates may be fixed for limited period of time).
The loans under the LaSalle Credit Facility as of September 26, 1996 bear
interest at the rate of 6.5% PER ANNUM. As of September 26, 1996, there was
$55.5 million outstanding under the LaSalle Credit Facility.
OLD NOTES
As a result of the Recapitalization, no Old Notes remain outstanding.
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DESCRIPTION OF THE EXCHANGE NOTES
The 144A Notes were issued and the Exchange Notes will be issued under the
Indenture dated as of November 15, 1996, (the "Indenture") among the Company,
BBC, as a guarantor, and The Chase Manhattan Bank, as trustee (the "Trustee").
For purposes of this section, the "Company" means Blue Bird Body Company. The
following summary of the material provisions of the Indenture does not purport
to be complete and is subject to, and qualified by, reference to the provisions
of the Indenture, including the definitions of certain terms contained therein
and those terms made part of the Indenture by reference to the Trust Indenture
Act of 1939, as amended, as in effect on the date of the Indenture. The
definition of certain terms used in the following summary are set forth under
"--Certain Definitions."
GENERAL
The Exchange Notes will be unsecured senior subordinated obligations of the
Company limited to $100,000,000 aggregate principal amount. The Exchange Notes
will be issued solely in exchange for an equal principal amount of outstanding
144A Notes pursuant to the Exchange Offer. The terms of the Exchange Notes will
be identical to the 144A Notes, but since the Exchange Notes will have been
registered under the Securities Act, they will generally be freely tradeable by
holders thereof who are not Affiliates of the Company. References in this
Section to the "Notes" will be references to the 144A Notes and/or Exchange
Notes, depending upon which are outstanding. The Exchange Notes will be issued
only in fully registered form without coupons, in denominations of $1,000 and
integral multiples thereof. Principal of, premium, if any, and interest on the
Notes are payable, and the Notes are exchangeable and transferable, at the
office or agency of the Company in the City of New York maintained for such
purposes (which initially will be the corporate trust office of the Trustee).
See "Book-Entry, Delivery and Form." No service charge will be made for any
registration of transfer, exchange or redemption of the Notes, except in certain
circumstances for any tax or other governmental charge that may be imposed in
connection therewith.
BBC has guaranteed, and the Company will cause its Domestic Subsidiaries
under certain circumstances (including whenever a Domestic Subsidiary becomes a
guarantor or obligor under the New Credit Agreement) to guarantee payment of the
Notes on an unsecured senior subordinated basis. See "--Note Guarantees."
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on November 15, 2006. Interest on the Notes will
accrue at the rate of 10 3/4% PER ANNUM and will be payable semi-annually on
each May 15 and November 15, commencing May 15, 1997, to the holders of record
of Notes at the close of business on the May 1 and November 1 immediately
preceding such interest payment date. Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the Issue Date. Interest will be computed on the basis of a year
comprised of twelve 30-day months.
OPTIONAL REDEMPTION
OPTIONAL REDEMPTION. The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after November 15, 2001, at the
redemption prices (expressed as percentages of
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principal amount), set forth below, plus accrued interest to the redemption
date, if redeemed during the 12-month period beginning November 15 of the years
indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ------------------------------------------------------------- -----------
<S> <C>
2001......................................................... 105.375%
2002......................................................... 103.583%
2003......................................................... 101.792%
2004 and thereafter.......................................... 100.000%
</TABLE>
In addition, as described below, in the event of a Change of Control
Triggering Event, the Company is obligated to make an offer to purchase all
outstanding Notes at a redemption price of 101% of the principal amount thereof,
plus accrued and unpaid interest to the date of purchase. The Company is also
obligated to make offers to purchase a portion (calculated as set forth below)
of the Notes at a redemption price of 100% of principal amount plus accrued and
unpaid interest to the date of purchase with a portion of the net cash proceeds
of certain sales or other dispositions of assets. See "--Change of Control
Triggering Event" and "--Certain Covenants--Disposition of Proceeds of Asset
Sales."
OPTIONAL REDEMPTION UPON PUBLIC EQUITY OFFERING. On or prior to November
15, 1999, the Company may, at its option, use the net proceeds of a Public
Equity Offering to redeem up to an aggregate of 25% of the principal amount of
Notes originally issued from the holders of Notes, on a PRO RATA basis (or as
nearly PRO RATA as practicable), at a redemption price equal to 110.75% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of redemption; PROVIDED that not less than $75 million in aggregate principal
amount of Notes is outstanding following such redemption. In order to effect the
foregoing redemption with the net proceeds of a Public Equity Offering, the
Company shall send the redemption notice not later than 60 days after the
consummation of the Public Equity Offering.
As used herein, a "Public Equity Offering" means an underwritten public
offering of Capital Stock (other than Redeemable Capital Stock) of the Company
or BBC made on a primary basis by the Company or BBC pursuant to a registration
statement filed with and declared effective by the Commission in accordance with
the Securities Act; PROVIDED that, in the event of an offering by BBC, BBC shall
contribute as equity to the Company proceeds from the Public Equity Offering of
not less than the amount necessary to redeem the Notes under the provisions
described above.
SELECTION AND NOTICE. In the event that less than all of the Notes are to
be redeemed at any time, selection of Notes for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or, if the Notes are not listed
on a national securities exchange, on a PRO RATA basis, by lot or by such method
as the Trustee will deem fair and appropriate; PROVIDED that no Notes of a
principal amount of $1,000 or less will be redeemed in part; PROVIDED, FURTHER,
that any such redemption pursuant to the provisions relating to a Public Equity
Offering shall be made on a PRO RATA basis or on as nearly a PRO RATA basis as
practicable (subject to the procedures of The Depository Trust Company or any
other depositary). Notice of redemption will be mailed by first class mail at
least 30 but not more than 60 days before the redemption date to each holder of
Notes to be redeemed at its registered address. If any Note is to be redeemed in
part only, the notice of redemption that relates to such Note will state the
portion of the principal amount thereof to be redeemed. A new Note in a
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon cancellation of the original Note. On and after
the redemption date, interest will cease to accrue on Notes or portions thereof
called for redemption.
CHANGE OF CONTROL TRIGGERING EVENT
The Indenture provides that, upon the occurrence of a Change of Control
Triggering Event (the date of such occurrence being the "Change of Control
Date"), the Company will be obligated to make an offer
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to purchase (a "Change of Control Offer"), on a business day (the "Change of
Control Purchase Date") not more than 40 nor less than 20 business days
following the Change of Control Date, all of the then outstanding Notes at a
purchase price (the "Change of Control Purchase Price") equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the Change
of Control Purchase Date. The Company will be required to purchase all Notes
properly tendered into the Change of Control Offer and not withdrawn. Prior to
the mailing of the notice to holders provided for below, the Company shall have
(i) repaid in full all Indebtedness under the New Credit Agreement, or offered
to repay and have repaid the lenders under the New Credit Agreement to the
extent such offer has been accepted under the provisions of the New Credit
Agreement, or (ii) obtained the requisite consents under the New Credit
Agreement to permit the repurchase of the Notes as provided for under this
covenant. Failure to mail the notice on the date specified below or to have
satisfied the foregoing condition precedent by the date that the notice is
required to be mailed shall constitute a covenant Default under clause (iii) of
"--Events of Default." The Company shall have no obligation to effect a
repurchase of Notes if a notice has been mailed and such condition precedent has
not been satisfied. A majority of Holders may waive this condition. It should be
noted that the New Credit Agreement may not permit lenders thereunder to accept
an offer of repayment other than on a PRO RATA basis, in which case it may not
be possible to satisfy such condition precedent absent a repayment of all of the
Indebtedness under the New Credit Agreement. See "--Amendments and Waivers."
In order to effect such Change of Control Offer, the Company will, not later
than the 20th business day after the Change of Control Date, be obligated to
mail to each Holder of Notes notice of the Change of Control Offer, which notice
will govern the terms of the Change of Control Offer and will state, among other
things, the procedures that holders must follow to accept the Change of Control
Offer.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes that might be delivered by holders of Notes
seeking to accept the Change of Control Offer.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act, and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the "Change of Control" provisions of the Indenture, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under such provisions of the Indenture
by virtue thereof.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on, the Notes
is subordinated as described below in right of payment to the prior payment in
full in cash or cash equivalents of all Senior Indebtedness.
The Indenture provides that in the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relating to the Company or
its assets, or any liquidation, dissolution or other winding-up of the Company,
whether voluntary or involuntary, or any assignment for the benefit of creditors
or other marshalling of assets or liabilities of the Company, all Senior
Indebtedness must be paid in full before any payment or distribution (excluding
certain permitted equity or subordinated securities) is made on account of the
principal of, premium, if any, or interest on the Notes.
During the continuance of any default in the payment of any Designated
Senior Indebtedness pursuant to which the maturity thereof may be accelerated
beyond any applicable grace period and after receipt by the Trustee from
representatives of holders of such Designated Senior Indebtedness of written
notice of such default, no payment or distribution of any assets of the Company
of any kind or character (excluding certain permitted equity or subordinated
securities) will be made on account of the principal of,
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<PAGE>
premium, if any, or interest on, or the purchase, redemption or other
acquisition of, the Notes unless and until such default has been cured or waived
or has ceased to exist or such Designated Senior Indebtedness will have been
discharged or paid in full.
During the continuance of any non-payment default with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated (a "Non-payment Default") and after the receipt by the Trustee from
the representatives of holders of such Designated Senior Indebtedness of a
written notice of such Non-payment Default, no payment or distribution of any
assets of the Company of any kind or character (excluding certain permitted
equity or subordinated securities) may be made by the Company on account of the
principal of, premium, if any, or interest on or the purchase, redemption or
other acquisition of, the Notes for the period specified below (the "Payment
Blockage Period").
The Payment Blockage Period will commence upon the receipt of notice of a
Non-payment Default by the Trustee from the representatives of holders of
Designated Senior Indebtedness and will end on the earlier to occur of the
following events: (i) 179 days will have elapsed since the receipt of such
notice (PROVIDED that such Designated Senior Indebtedness will not theretofore
have been accelerated), (ii) such default is cured or waived or ceases to exist
or such Designated Senior Indebtedness is discharged or (iii) such Payment
Blockage Period will have been terminated by written notice to the Company or
the Trustee from the representatives of holders of Designated Senior
Indebtedness initiating such Payment Blockage Period, after which the Company
will promptly resume making any and all required payments in respect of the
Notes, including any missed payments. In no event will a Payment Blockage Period
extend beyond 179 days from the date of the receipt by the Trustee of the notice
initiating such Payment Blockage Period. Only one Payment Blockage Period with
respect to the Notes may be commenced within any 365-day period. No Non-payment
Default with respect to Designated Senior Indebtedness that existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period will be, or can be, made the basis for the commencement of a second
Payment Blockage Period, unless such default has been cured or waived for a
period of not less than 90 consecutive days. In no event shall a Payment
Blockage Period extend beyond 179 days from the date of the receipt of the
notice referred to above and there must be a 186-consecutive-day period in any
365-consecutive-day period during which no Payment Blockage Period is in effect.
In the event that, notwithstanding the foregoing, the Company makes any payment
or distribution to the Trustee or any holder of any Note prohibited by the
subordination provision of the Indenture, then such payment or distribution will
be required to be paid over and delivered to the holders (or their
representative) of Designated Senior Indebtedness.
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute an Event of Default
under the Indenture and would enable the holders of the Notes to accelerate the
maturity thereof. See "--Events of Default."
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes and funds which would be otherwise
payable to the holders of the Notes will be paid to the holders of the Senior
Indebtedness to the extent necessary to pay the Senior Indebtedness in full, and
the Company may be unable to meet its obligations fully with respect to the
Notes.
As of September 28, 1996, on a PRO FORMA basis after giving effect to the
Recapitalization, Senior Indebtedness of the Company with respect to the Notes
would have been approximately $181.3 million. The Indenture limits, but does not
prohibit, the incurrence by the Company of additional Indebtedness which is
senior to the Notes, but prohibits the incurrence of any Indebtedness
contractually subordinated in right of payment to any other Indebtedness of the
Company and senior in right of payment to the Notes. The foreign and lease
finance operations of the Company are conducted primarily through subsidiaries
of the Company. The claims of creditors of such subsidiaries effectively will
have priority with respect to the assets and earnings of such subsidiaries over
the claims of the Company and its creditors, including holders
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of the Notes. See "Risk Factors--Subordination" and "--Restrictive Covenants and
Asset Encumbrances."
NOTE GUARANTEES
BBC has guaranteed the Company's obligations under the Notes. In addition,
if any Domestic Subsidiary of the Company becomes a guarantor or obligor in
respect of Indebtedness of the Company or any of its Restricted Subsidiaries,
the Company's obligations under the Notes will be guaranteed by such Domestic
Subsidiary. See "--Certain Covenants--Limitation on Guarantees by Restricted
Subsidiaries." Subject to the subordination provisions described above, if the
Company defaults in payment of the principal of, premium, if any, or interest on
the Notes, BBC and each other Guarantor will be obligated to duly and punctually
pay the same.
The Indebtedness evidenced by each Note Guarantee (including the payment of
principal of, premium, if any, and interest on the Notes) is subordinated on the
same basis to Guarantor Senior Indebtedness (defined with respect to the
Indebtedness of a Guarantor) as the Notes are subordinated to Senior
Indebtedness. See "--Subordination." As of September 28, 1996, on a PRO FORMA
basis after giving effect to the Recapitalization, Guarantor Senior Indebtedness
with respect to BBC was approximately $178.6 million.
CERTAIN COVENANTS
The Indenture contains the following covenants, among others:
LIMITATION ON INDEBTEDNESS. The Indenture provides that the Company will
not, and will not permit any of the Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee or in any manner become liable,
contingently or otherwise (in each case, to "incur"), for the payment of any
Indebtedness (including any Acquired Indebtedness); PROVIDED that (i) the
Company and any Subsidiary Guarantor will be permitted to incur Indebtedness
(including Acquired Indebtedness) and (ii) a Restricted Subsidiary will be
permitted to incur Acquired Indebtedness, if immediately after giving PRO FORMA
effect thereto, the Consolidated Fixed Charge Coverage Ratio of the Company is
at least equal to 2.00:1.00.
Notwithstanding the foregoing, the Company and, to the extent specifically
set forth below, the Restricted Subsidiaries may incur each and all of the
following:
(i) Indebtedness of the Company or any Subsidiary Guarantor under the
New Credit Agreement in an aggregate principal amount at any one time
outstanding not to exceed the sum of (a) $175,000,000 with respect to
Indebtedness under the Term Facilities, less principal payments made by the
Company in respect of the Term Facilities, (b) $80,000,000 in the aggregate
with respect to Indebtedness under the Revolving Facility and the letter of
credit facility, less the amount by which the aggregate commitment under the
Revolving Facility has been permanently reduced to the extent that any
repayments required to be made in connection with effecting such permanent
reduction have been made and (c) any Indebtedness incurred under the New
Credit Agreement pursuant to and in compliance with the provisions described
under either (1) the proviso of the first paragraph of this covenant or (2)
clause (xii) below;
(ii) Indebtedness of the Company or any Subsidiary Guarantor under the
Indenture, the Notes and any Note Guarantees;
(iii) Indebtedness of the Company or any Restricted Subsidiary not
otherwise referred to in this paragraph that is outstanding on the Issue
Date, except Indebtedness to be repaid as described under "Use of Proceeds;"
(iv) Indebtedness of the Company or any Restricted Subsidiary in respect
of performance bonds, bankers' acceptances, letters of credit of the Company
or any Restricted Subsidiary and surety bonds provided by the Company or any
Restricted Subsidiary in the ordinary course of business, not to exceed at
any given time $10,000,000 in the aggregate;
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(v) subject to the covenant described under "--Limitation on Restricted
Payments," Indebtedness of any Restricted Subsidiary to the Company or any
Restricted Subsidiary which is not subordinated in right of payment to any
Indebtedness of such Restricted Subsidiary;
(vi) Indebtedness of the Company to any Restricted Subsidiary which is
unsecured and subordinated in right of payment from and after such time as
the Notes shall become due and payable (whether at Stated Maturity, by
acceleration or otherwise) to the payment and performance of the Company's
obligations under the Indenture or the Notes;
(vii) any guarantees of Indebtedness by a Restricted Subsidiary entered
in compliance with the covenant under the Indenture described under
"--Limitations on Guarantees by Restricted Subsidiaries;"
(viii) Interest Rate Protection Obligations of the Company or any
Restricted Subsidiary covering Indebtedness of the Company or any Restricted
Subsidiary (which Indebtedness (a) bears interest at fluctuating interest
rates and (b) is otherwise permitted to be incurred under this covenant) to
the extent the notional principal amount of such Interest Rate Protection
Obligations does not exceed the principal amount of the Indebtedness to
which such Interest Rate Protection Obligations relate;
(ix) Indebtedness of the Company or any Restricted Subsidiary under
Currency Agreements relating to (a) Indebtedness of the Company or a
Restricted Subsidiary and/or (b) obligations to purchase or sell assets or
properties or, in each case, incurred in the ordinary course of business of
the Company or any Restricted Subsidiary; PROVIDED that such Currency
Agreements do not increase the Indebtedness or other obligations of the
Company and the Restricted Subsidiaries outstanding other than as a result
of fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(x) Capitalized Lease Obligations of the Company or any Restricted
Subsidiary in an aggregate amount not exceeding $7,500,000 outstanding at
any time;
(xi) (a) Indebtedness of the Company or any Subsidiary Guarantor to the
extent the proceeds thereof are used to Refinance Indebtedness of the
Company or any Subsidiary Guarantor (including all or a portion of the
Notes) or any Restricted Subsidiary and (b) Indebtedness of any Restricted
Subsidiary that is not a Subsidiary Guarantor to the extent the proceeds
thereof are used to Refinance Indebtedness of any Restricted Subsidiary that
is not a Subsidiary Guarantor, in each case, other than the Indebtedness to
be Refinanced as described under "Use of Proceeds" and Indebtedness incurred
under clauses (i), (ii) or (v) above; PROVIDED that, in the case of either
clause (a) or (b), (1) the principal amount of Indebtedness incurred
pursuant to this clause (xi) (or, if such Indebtedness provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof, the original issue
price of such Indebtedness) shall not exceed the sum of the principal amount
of Indebtedness so Refinanced (or, if such Indebtedness provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof, the original issue
price of such Indebtedness plus any accreted value attributable thereto
since the original issuance of such Indebtedness) plus the amount of any
premium required to be paid in connection with such Refinancing pursuant to
the terms of such Indebtedness or the amount of any premium reasonably
determined by the Company or a Restricted Subsidiary, as applicable, as
necessary to accomplish such Refinancing by means of a tender offer or
privately negotiated purchase, plus the amount of expenses in connection
therewith; and (2) except in the case of Refinancing or replacement of
Senior Indebtedness or Guarantor Senior Indebtedness or of any Indebtedness
of any Restricted Subsidiary that is not a Subsidiary Guarantor, does not
reduce the Average Life to Stated Maturity of such Indebtedness; and
(xii) additional Indebtedness of the Company or any Restricted Subsidiary
not described by any other clause of this definition, not to exceed an
aggregate principal amount at any time outstanding of $25,000,000 (less the
aggregate principal amount of Indebtedness incurred under the New Credit
Agreement under subclause (i)(c)(1) above).
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LIMITATION ON RESTRICTED PAYMENTS. The Indenture provides that the Company
will not, and will not permit any of the Restricted Subsidiaries to, directly or
indirectly:
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of Capital Stock of the Company or any payment made
to the direct or indirect holders (in their capacities as such) of Capital
Stock of the Company (other than dividends or distributions payable solely
in rights to purchase Capital Stock of the Company (other than Redeemable
Capital Stock)); or
(ii) purchase, redeem, defease or otherwise acquire or retire for value
any Capital Stock of the Company (other than any such Capital Stock owned by
a Restricted Subsidiary); or
(iii) make any principal payment on, or purchase, defease, repurchase,
redeem or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment, scheduled sinking fund payment or other
Stated Maturity, any Subordinated Indebtedness (other than any such
Subordinated Indebtedness owed to a Restricted Subsidiary); or
(iv) make any Investment (other than a Permitted Investment) in any
person;
(such payments or Investments described in the preceding clauses (i), (ii),
(iii) and (iv) are collectively referred to as "Restricted Payments"), unless,
at the time of and after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than in cash, shall be the Fair
Market Value of the asset(s) proposed to be transferred by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment),
(a) no Default shall have occurred and be continuing, (b) the aggregate amount
of all Restricted Payments declared or made from and after the Issue Date would
not exceed the sum of (1) 50% of the aggregate Consolidated Net Income of the
Company accrued on a cumulative basis during the period (treated as one
accounting period) beginning on September 29, 1996 and ending on the last day of
the fiscal quarter of the Company immediately preceding the date of such
proposed Restricted Payment (or, if such aggregate cumulative Consolidated Net
Income of the Company for such period shall be a deficit, minus 100% of such
deficit) PLUS (2) the aggregate net cash proceeds received by the Company either
(x) as capital contributions in the form of common equity to the Company after
the Issue Date or (y) from the issuance or sale of Capital Stock (excluding
Redeemable Capital Stock but including Capital Stock issued upon the conversion
of convertible Indebtedness, in exchange for outstanding Indebtedness or from
the exercise of options, warrants or rights to purchase Capital Stock (other
than Redeemable Capital Stock)) of the Company to any person (other than to a
Restricted Subsidiary of the Company) after the Issue Date plus (3) in the case
of the disposition or repayment of any Investment constituting a Restricted
Payment made after the Issue Date, an amount equal to the lesser of the return
of capital with respect to such Investment and the initial amount of such
Investment, in either case, less the cost of the disposition of such Investment
and (iii) the Company could incur $1.00 of additional Indebtedness under the
first paragraph of "--Limitation on Indebtedness." For purposes of the preceding
clause (b)(2), upon the issuance of Capital Stock either from the conversion of
convertible Indebtedness or exchange for outstanding Indebtedness or upon the
exercise of options, warrants or rights, the amount counted as net cash proceeds
received will be the cash amount received by the Company at the original
issuance of the Indebtedness that is so converted or exchanged or from the
issuance of options, warrants or rights, as the case may be, plus the
incremental amount of cash received by the Company, if any, upon the conversion,
exchange or exercise thereof.
None of the foregoing provisions of this covenant will prohibit (i) the
payment of any dividend within 60 days after the date of its declaration, if at
the date of declaration such payment would be permitted by the provisions of the
Indenture; (ii) so long as no Default shall have occurred and be continuing, the
redemption, repurchase or other acquisition or retirement of any shares of any
class of Capital Stock of the Company in exchange for, or out of the net
proceeds of, a substantially concurrent issue and sale of other shares of
Capital Stock (other than Redeemable Capital Stock) of the Company to any person
(other than to a Restricted Subsidiary); PROVIDED that such net proceeds are
excluded from clause (b)(2) of the preceding paragraph; (iii) so long as no
Default shall have occurred and be continuing, any redemption, repurchase or
other acquisition or retirement of Subordinated Indebtedness made by exchange
for, or out
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of the net proceeds of, a substantially concurrent issue and sale of (a) Capital
Stock (other than Redeemable Capital Stock) of the Company or (b) Indebtedness
of the Company or any Guarantor so long as such Indebtedness (1) is subordinated
to Senior Indebtedness and the Notes or Guarantor Senior Indebtedness and the
Note Guarantees of such Guarantor, as the case may be, at least to the same
extent as the Subordinated Indebtedness so purchased, exchanged, redeemed,
repurchased, acquired or retired and (2) has no Stated Maturity earlier than the
Stated Maturity for the final scheduled principal payment of the Notes; (iv)
dividends paid or intercompany loans made by the Company to BBC for the purpose
of paying operating expenses of BBC arising in the ordinary course of business,
including, without limitation, for the payment of taxes; (v) Investments
constituting Restricted Payments made as a result of the receipt of non-cash
consideration from any Asset Sale made pursuant to and in compliance with the
covenant described under "--Disposition of Proceeds of Asset Sales"; (vi) the
making of the Distribution in connection with the Recapitalization or (vii)
payment made by the Company under the Income Taxes Agreement. In computing the
amount of Restricted Payments previously made for purposes of clause (b) of the
preceding paragraph, Restricted Payments under the immediately preceding clauses
(i) and (v) shall be included.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Indenture provides that the
Company will not, and will not permit any of the Restricted Subsidiaries to,
directly or indirectly, conduct any business or enter into or suffer to exist
any transaction or series of related transactions with, or for the benefit of,
any Affiliate of the Company (other than a Restricted Subsidiary so long as no
Affiliate of the Company or beneficial holder of 5% or more of any class or
series of Capital Stock of the Company shall beneficially own any Capital Stock
in such Restricted Subsidiary) or any beneficial holder of 10% or more of any
class of Capital Stock of the Company except (i) on terms that are no less
favorable to the Company or the Restricted Subsidiary, as the case may be, than
those which could have been obtained in a comparable transaction at such time
from persons who do not have such a relationship with the Company, and (ii) with
respect to any transaction or series of related transactions involving aggregate
payments or value equal to or greater than $1,000,000, the Company shall have
delivered an officer's certificate to the Trustee certifying that such
transaction or series of related transactions comply with the preceding clause
(i) and, with respect to any transaction or series of transactions involving
aggregate payments or value equal to or greater than $5,000,000, further
certifying that such transaction or series of transactions have been approved by
a majority of the Board of Directors of the Company, including a majority of the
disinterested directors of the Board of Directors of the Company. For the
purposes of the foregoing, a director of the Company shall not be considered
"interested" with respect to a transaction solely by virtue of being a director
of the other party to such transaction. The Company shall be deemed to have
complied with the foregoing provisions if it has obtained a written opinion from
an Independent Financial Advisor stating that the terms of such transaction or
series of transactions are fair to the Company or such Restricted Subsidiary, as
the case may be, from a financial point of view. This foregoing covenant shall
not apply to (i) the payment of reasonable and customary fees to directors of
the Company, (ii) any customary provision for the indemnification of officers or
directors of the Company, (iii) any transactions with a Wholly-Owned
Unrestricted Subsidiary in connection with a Lease Financing Transaction
(including pursuant to the Income Taxes Agreement) and (d) transactions related
to the Recapitalization.
DISPOSITION OF PROCEEDS OF ASSET SALES. The Indenture provides that the
Company will not, and will not permit any of the Restricted Subsidiaries to,
make any Asset Sale unless (i) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Sale at least equal to the Fair
Market Value of the shares and/or assets subject to such Asset Sale and (ii) at
least 75% of the consideration for any such Asset Sale is cash and/or Cash
Equivalents (PROVIDED that the following shall be deemed cash for purposes of
this provision and be treated as Net Cash Proceeds, subject to application as
hereinafter provided: the amount of any liabilities (as shown on the balance
sheet or in the notes thereto of the Company or such Restricted Subsidiary) of
the Company or such Restricted Subsidiary that are assumed (and from which the
Company or such Restricted Subsidiary is unconditionally released) in connection
with such Asset Sale by the transferee or purchaser of such assets or on behalf
of such transferee or
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purchaser by a third party). To the extent the Net Cash Proceeds of any Asset
Sale are not required to be applied to repay, and permanently reduce the
commitments under, any outstanding Indebtedness under the New Credit Agreement
as required by the terms thereof or are not so applied, then the Company may,
within 12 months of the Asset Sale, invest Net Cash Proceeds in properties and
assets which replace the properties and assets that were the subject of the
Asset Sale or in properties and assets (including inventory) that will be used
in the business of the Company and the Restricted Subsidiaries existing on the
Issue Date or in businesses reasonably related thereto.
The amount of such Net Cash Proceeds in excess of the amount (i) used to
repay Indebtedness under the New Credit Agreement and (ii) permitted to be
invested and so invested as set forth above is referred to herein as "Excess
Proceeds."
When the aggregate amount of Excess Proceeds equals or exceeds $10,000,000,
the Company will be obligated to make an offer (an "Asset Sale Offer") to
purchase from all holders of the Notes, on a day not more than 40 business days
thereafter, the maximum principal amount (expressed as a multiple of $1,000) of
Notes that may be purchased with the aggregate Excess Proceeds at a price,
payable in cash, equal to 100% of the principal amount of the Notes plus accrued
and unpaid interest, if any, to the date of purchase (the "Asset Sale Offer
Price"). An Asset Sale Offer will be required to be kept open for a period of at
least 20 business days. To the extent that an Asset Sale Offer is not fully
subscribed to, the Company will be entitled to retain the unutilized portion of
the Excess Proceeds. Whenever Excess Proceeds received by the Company exceed
$10,000,000, such Excess Proceeds will, prior to the purchase of Notes, be set
aside by the Company in a separate account pending (i) deposit with the
depositary of the amount required to purchase the Notes tendered in an Asset
Sale Offer or (ii) delivery by the Company of the Asset Sale Offer Price to the
holders of the Notes validly tendered and not withdrawn pursuant to an Asset
Sale Offer. Such Excess Proceeds may be invested in Cash Equivalents, as
directed by the Company, having a maturity date which is not later than the
earliest possible date for purchase or redemption of Notes pursuant to the Asset
Sale Offer. The Company will be entitled to any interest or dividends accrued,
earned or paid on such Cash Equivalents.
The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act, and any other securities laws or regulations
in connection with the purchase of Notes pursuant to an Asset Sale Offer. To the
extent that the provisions of any securities laws or regulations conflict with
the "Disposition of Proceeds of Asset Sales" provisions of the Indenture, the
Company will comply with the applicable securities laws and regulations and will
not be deemed to have breached its obligations under such provisions of the
Indenture by virtue thereof.
LIMITATION ON LIENS. The Indenture provides that the Company will not, and
will not permit any Restricted Subsidiary to, create, incur, assume or suffer to
exist any Lien of any kind, upon any of its property or assets, whether now
owned or acquired after the Issue Date, or any proceeds therefrom, which secure
either (i) Subordinated Indebtedness unless the Notes and the Note Guarantees,
as applicable, are secured by a Lien on such property, assets or proceeds that
is senior in priority to the Liens securing such Subordinated Indebtedness or
(ii) Pari Passu Indebtedness unless the Notes and the Note Guarantees, as
applicable, are equally and ratably secured with the Liens securing such Pari
Passu Indebtedness.
LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS. The Indenture
provides that neither the Company nor any Guarantor will create, incur, assume,
guarantee or in any other manner become liable with respect to any Indebtedness
(other than the Notes and the Note Guarantees) that is subordinate in right of
payment to any Indebtedness of the Company or of such Guarantor, as the case may
be, unless such Indebtedness is either (i) PARI PASSU in right of payment with
the Notes or such Note Guarantee, as the case may be, or (ii) subordinate in
right of payment to, the Notes or such Note Guarantee, as the case may be, in
the same manner and at least to the same extent as the Notes are subordinated to
Senior Indebtedness or as such Note Guarantee is subordinated to Guarantor
Senior Indebtedness, as the case may be.
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LIMITATION ON GUARANTEES BY RESTRICTED SUBSIDIARIES. The Indenture provides
that the Company will not permit any of the Domestic Subsidiaries, directly or
indirectly, to guarantee the payment of any Indebtedness of BBC, the Company or
any Restricted Subsidiary unless such Domestic Subsidiary (i) is a Subsidiary
Guarantor or (ii) simultaneously executes and delivers a supplemental indenture
to the Indenture pursuant to which it will become a Subsidiary Guarantor under
the Indenture. Notwithstanding the foregoing, any Note Guarantee by a Restricted
Subsidiary will provide by its terms that it will be automatically and
unconditionally released and discharged upon any sale, exchange or transfer, to
any person not an Affiliate of the Company, of all of the Capital Stock of such
Restricted Subsidiary, or all or substantially all the assets of such Restricted
Subsidiary, pursuant to a transaction which is in compliance with the Indenture.
The Indenture further provides that the Company may, at any time, cause a
Restricted Subsidiary to become a Subsidiary Guarantor by executing and
delivering a supplemental indenture providing for the guarantee of payment of
the Notes by such Restricted Subsidiary on the basis provided in the Indenture.
RESTRICTIONS ON PREFERRED STOCK OF RESTRICTED SUBSIDIARIES. The Indenture
provides that the Company will not permit any of the Restricted Subsidiaries to
issue any Preferred Stock (other than to the Company or to a Wholly-Owned
Restricted Subsidiary) or permit any person (other than the Company or a Wholly-
Owned Restricted Subsidiary) to own any Preferred Stock of any Restricted
Subsidiary.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES. The Indenture provides that the Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, create or otherwise
cause or suffer to exist, or enter into any agreement with any person that would
cause to become effective, any consensual encumbrance or restriction of any
kind, on the ability of any Restricted Subsidiary to (i) pay dividends, in cash
or otherwise, or make any other distribution on or in respect of its Capital
Stock or any other interest or participation in, or measured by, its profits,
(ii) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary, (iii) make loans or advances to the Company or any other Restricted
Subsidiary or (iv) transfer any of its property or assets to the Company or any
other Restricted Subsidiary, except (a) any encumbrance or restriction existing
under the security documentation for the New Credit Agreement as in effect on
the Issue Date relating to assets subject to a Lien created thereby; (b) any
encumbrance or restriction, with respect to a Restricted Subsidiary that is not
a Restricted Subsidiary on the Issue Date, in existence at the time such person
becomes a Restricted Subsidiary (but not created in contemplation thereof); and
(c) any encumbrance or restriction existing under any agreement that refinances
or replaces the agreements containing the restrictions in the foregoing clauses
(a) and (b); PROVIDED that the terms and conditions of any such restrictions
permitted under this clause (c) are not materially less favorable to the holders
of the Notes than those under or pursuant to the agreement evidencing the
Indebtedness being refinanced.
LIMITATION ON DESIGNATIONS OF UNRESTRICTED SUBSIDIARIES. The Indenture
provides that the Company may designate any Subsidiary of the Company (other
than a Subsidiary Guarantor) as an "Unrestricted Subsidiary" under the Indenture
(a "Designation") only if:
(i) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation;
(ii) the Company would be permitted under the Indenture to make an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the "Designation Amount") equal to the Fair
Market Value of the Capital Stock of such Subsidiary on such date; and
(iii) the Company would be permitted under the Indenture to incur $1.00
of additional Indebtedness pursuant to the first paragraph of the covenant
described under "--Limitation on Indebtedness" at the time of Designation
(assuming the effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment pursuant to the covenant
described under "--Limitation on Restricted Payments" for all purposes of the
Indenture in the Designation Amount. The Indenture further provides
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that (i) the Company shall not and shall not permit any Restricted Subsidiary
to, at any time (a) provide credit support for, or a guarantee of, any
Indebtedness of any Unrestricted Subsidiary (including any undertaking,
agreement or instrument evidencing such Indebtedness), (b) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (c) be
directly or indirectly liable for any Indebtedness which provides that the
holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except in the case of
clause (a) or (b) to the extent permitted under the covenant described under
"--Limitation on Restricted Payments" and to the extent set forth in the first
parenthetical in the definition of "Lease Financing Transaction" and (ii) no
Unrestricted Subsidiary shall at any time guarantee or otherwise provide credit
support for any obligation of the Company or any Restricted Subsidiary.
The Indenture further provides that the Company may revoke any Designation
of a Subsidiary as an Unrestricted Subsidiary (a "Revocation") if:
(i) no Default shall have occurred and be continuing at the time of and
after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at such
time, have been permitted to be incurred for all purposes of the Indenture;
All Designations and Revocations must be evidenced by board resolutions of
the Company delivered to the Trustee certifying compliance with the foregoing
provisions.
Blue Bird Capital is treated as an Unrestricted Subsidiary under the
Indenture as of the Issue Date.
REPORTING REQUIREMENTS. The Indenture requires that the Company file with
the Commission the annual reports, quarterly reports and other documents
required to be filed with the Commission pursuant to Sections 13 and 15 of the
Exchange Act, whether or not the Company has a class of securities registered
under the Exchange Act. The Company is required to file with the Trustee within
15 days after it files such reports and documents with the Commission copies of
such reports and documents.
CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
The Indenture provides that the Company will not, in any transaction or
series of related transactions, merge or consolidate with or into, or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to, any person or persons, and that the Company
will not permit any of the Restricted Subsidiaries to enter into any such
transaction or series of related transactions if such transaction or series of
related transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all of
the properties and assets of the Company or of the Company and the Restricted
Subsidiaries, taken as whole, to any other person or persons, unless (i) either
(a)(1) if the transaction or transactions is a merger or consolidation involving
the Company, the Company shall be the surviving person of such merger or
consolidation or (2) if the transaction or transactions is a merger or
consolidation involving a Restricted Subsidiary, such Restricted Subsidiary
shall be the surviving person of such merger or consolidation and such surviving
person shall be a Restricted Subsidiary, or (b)(1) the person formed by such
consolidation or into which the Company or such Restricted Subsidiary is merged
or to which the properties and assets of the Company or such Restricted
Subsidiary, as the case may be, are transferred (any such surviving person or
transferee person being the "Surviving Entity") shall be a corporation organized
and existing under the laws of the United States of America, any State thereof
or the District of Columbia and (2)(A) in the case of a transaction involving
the Company, the Surviving Entity shall expressly assume by a supplemental
indenture executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of the Company under the Notes and the Indenture,
and in each case, the Indenture shall remain in full force and effect, or (B) in
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the case of a transaction involving a Restricted Subsidiary that is a Subsidiary
Guarantor, the Surviving Entity shall expressly assume by a supplemental
indenture executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of such Restricted Subsidiary under its Note
Guarantee and related supplemental indenture, and in each case, such Note
Guarantee and supplemental indenture shall remain in full force and effect; and
(ii) immediately after giving effect to such transaction or series of related
transactions on a PRO FORMA basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), no Default shall have
occurred and be continuing and the Company, or the Surviving Entity, as the case
may be, after giving effect to such transaction or series of transactions on a
PRO FORMA basis, could incur $1.00 of additional Indebtedness under the first
paragraph of "--Limitation on Indebtedness."
In connection with any consolidation, merger, transfer, lease or other
disposition contemplated hereby, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an officers' certificate and an opinion of counsel, each stating that
such consolidation, merger, transfer, lease or other disposition and the
supplemental indenture in respect thereof comply with the requirements under the
Indenture. In addition, each Subsidiary Guarantor, unless it is the other party
to the transaction or unless its Note Guarantee will be released and discharged
in accordance with its terms as a result of the transaction, will be required to
confirm, by supplemental indenture, that its Note Guarantee will continue to
apply to the obligations of the Company or the Surviving Entity under the
Indenture.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, in which the
Company or the Restricted Subsidiary, as the case may be, is not the continuing
corporation, the successor corporation formed by such a consolidation or into
which the Company or such Restricted Subsidiary is merged or to which such
transfer is made, will succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Restricted Subsidiary, as the case
may be, under the Indenture with the same effect as if such successor
corporation had been named as the Company or such Restricted Subsidiary therein;
and thereafter, except in the case of (i) a lease or (ii) any sale, assignment,
conveyance, transfer, lease or other disposition to a Restricted Subsidiary of
the Company, the Company or such Guarantor, as the case may be, shall be
discharged from all obligations and covenants under the Indenture and the Notes.
The Indenture provides that for all purposes of the Indenture and the Notes
(including the provision of this covenant and the covenants described under
"--Limitation on Indebtedness," "--Limitation on Restricted Payments" and
"--Limitation on Liens"), Subsidiaries of any Surviving Entity will, upon such
transaction or series of related transactions, become Restricted Subsidiaries or
Unrestricted Subsidiaries as provided pursuant to the covenant described under
"--Limitation on Designations of Unrestricted Subsidiaries" and all
Indebtedness, and all Liens on property or assets, of the Company and the
Restricted Subsidiaries in existence immediately prior to such transaction or
series of related transactions will be deemed to have been incurred upon such
transaction or series of related transactions.
EVENTS OF DEFAULT
The following are "Events of Default" under the Indenture:
(i) default in the payment of the principal of or premium, if any, when
due and payable, on any of the Notes (at its Stated Maturity, upon optional
redemption, required purchase, scheduled principal payment or otherwise); or
(ii) default in the payment of an installment of interest on any of the
Notes, when due and payable, for 30 days; or
(iii) the Company or any Guarantor fails to comply with any of its
obligations described under "--Consolidation, Merger, Sale of Assets, ETC.,"
"--Change of Control Triggering Event" or "--Certain Covenants--Disposition
of Proceeds of Asset Sales;" or
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(iv) the Company or any Guarantor fails to perform or observe any other
term, covenant or agreement contained in the Notes, the Note Guarantees or
the Indenture (other than a default specified in (i), (ii) or (iii) above)
for a period of 30 days after written notice of such failure requiring the
Company to remedy the same shall have been given (a) to the Company by the
Trustee or (b) to the Company and the Trustee by the holders of 25% in
aggregate principal amount of the Notes then outstanding; or
(v) default or defaults under any agreement, indenture or instrument
under which the Company or any Restricted Subsidiary then has outstanding
Indebtedness in excess of $5,000,000 in the aggregate and either (a) such
Indebtedness is already due and payable in full or (b) such default or
defaults results in the acceleration of the maturity of such Indebtedness;
or
(vi) any Note Guarantee ceases to be in full force and effect or is
declared null and void or any Guarantor denies that it has any further
liability under any Note Guarantee, or gives notice to such effect (other
than by reason of the termination of the Indenture or the release of any
such Note Guarantee in accordance with "--Certain Covenants--Limitation on
Guarantees by Restricted Subsidiaries") and such condition shall have
continued for a period of 30 days after written notice of such condition
shall have been given (a) to the Company by the Trustee or (b) to the
Company and the Trustee by the holders of 25% in aggregate principal amount
of the Notes then outstanding; or
(vii) one or more judgments, orders or decrees of any court or regulatory
or administrative agency for the payment of money in excess of $5,000,000
either individually or in the aggregate, shall have been entered against the
Company or any Restricted Subsidiary or any of their respective properties
and shall not have been discharged and either (a) any creditor shall have
commenced an enforcement proceeding upon such judgment, order or decree or
(b) there shall have been a period of 60 consecutive days during which a
stay of enforcement of such judgment, order or decree, by reason of a
pending appeal or otherwise, will not be in effect; or
(viii) certain events of bankruptcy, insolvency or reorganization with
respect to BBC, the Company or any Material Subsidiary of the Company shall
have occurred; or
(ix) either (a) the collateral agent under the New Credit Agreement or
(b) if the New Credit Agreement shall no longer be in force and effect, any
holder of at least $5,000,000 in aggregate principal amount of Indebtedness
of the Company or any Restricted Subsidiary shall commence judicial
proceedings to foreclose upon assets of the Company or any of its Restricted
Subsidiaries having an aggregate Fair Market Value, individually or in the
aggregate, in excess of $5,000,000 or shall have exercised any right under
applicable law or applicable security documents to take ownership of any
such assets in lieu of foreclosure.
If an Event of Default (other than as specified in clause (viii) with
respect to the Company), shall occur and be continuing, the Trustee, by notice
to the Company, or the holders of at least 25% in aggregate principal amount of
the Notes then outstanding, by notice to the Trustee and the Company, may
declare the principal of, premium, if any, and accrued interest on all of the
outstanding Notes due and payable immediately, upon which declaration, all
amounts payable in respect of the Notes will be immediately due and payable;
PROVIDED, HOWEVER, that so long as the New Credit Agreement shall be in force
and effect, if an Event of Default shall have occurred and be continuing (other
than an Event of Default under clause (viii) with respect to the Company), any
such acceleration shall not be effective until the earlier to occur of (i) five
business days following delivery of a notice of such acceleration to the agent
under the New Credit Agreement and (ii) the acceleration of any Indebtedness
under the New Credit Agreement. If an Event of Default specified in clause
(viii) above with respect to the Company occurs and is continuing, then the
principal of, premium, if any, and accrued interest on all of the outstanding
Notes will IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of Notes.
Notwithstanding the preceding paragraph, in the event of a declaration of
acceleration in respect of the Notes because an Event of Default specified in
clause (v) shall have occurred and be continuing, such
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declaration of acceleration will be automatically annulled if the Indebtedness
that is the subject of such Event of Default has been discharged or paid (if
permitted by the terms thereof and the Indenture) or the requisite holders
thereof have rescinded their declaration of acceleration in respect of such
Indebtedness, and written notice of such discharge of rescission, as the case
may be, shall have been given to the Trustee by the Company and by the requisite
holders of such Indebtedness or a trustee, fiduciary or agent for such holders,
within 60 days after such declaration of acceleration in respect of the Notes
and no other Event of Default has occurred which has not been cured or waived
during such 60-day period.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of the outstanding Notes, by written
notice to the Company and the Trustee, may rescind such declaration if (i) the
Company has paid or deposited with the Trustee a sum sufficient to pay (a) all
sums paid or advanced by the Trustee under the Indenture and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, (b) all overdue interest on all Notes, (c) the principal of and
premium, if any, on any Notes which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate borne by the Notes,
and (d) to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate borne by the Notes; and (ii) all Events of Default,
other than the non-payment of principal of, premium, if any, and interest on the
Notes that has become due solely by such declaration of acceleration, have been
cured or waived.
The holders of not less than a majority in aggregate principal amount of the
outstanding Notes may on behalf of the holders of all the Notes waive any past
defaults under the Indenture, except a default in the payment of the principal
of, premium, if any, or interest on any Note, or in respect of a covenant or
provision which under the Indenture cannot be modified or amended without the
consent of the holder of each Note outstanding.
No holder of any of the Notes has any right to institute any proceeding with
respect to the Indenture or any remedy thereunder, unless the holders of at
least 25% in aggregate principal amount of the outstanding Notes have made
written request, and offered reasonable indemnity, to the Trustee to institute
such proceeding as Trustee under the Notes and the Indenture, the Trustee has
failed to institute such proceeding within 15 days after receipt of such notice
and the Trustee, within such 15-day period, has not received directions
inconsistent with such written request by holders of a majority in aggregate
principal amount of the outstanding Notes. Such limitations do not apply,
however, to a suit instituted by a holder of a Note for the enforcement of the
payment of the principal of, premium, if any, or interest on such Note on or
after the respective due dates expressed in such Note.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default will occur and be continuing, the Trustee
under the Indenture is not under any obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any of the holders
unless such holders shall have offered to the Trustee reasonable security or
indemnity. Subject to certain provisions concerning the rights of the Trustee,
the holders of a majority in aggregate principal amount of the outstanding Notes
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee under the Indenture.
The Company is required to furnish to the Trustee annual and quarterly
statements as to the performance by the Company and the Guarantors of their
respective obligations under the Indenture and as to any default in such
performance. The Company is also required to notify the Trustee within five
business days of any event which is, or after notice or lapse of time or both
would become, an Event of Default.
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DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option and at any time, terminate the obligations of
the Company and the Guarantors with respect to the outstanding Notes
("defeasance"). Such defeasance means that the Company will be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Notes, except for (i) the rights of holders of outstanding Notes to receive
payment in respect of the principal of, premium, if any, and interest on such
Notes when such payments are due, (ii) the Company's obligations to issue
temporary Notes, register the transfer or exchange of any Notes, replace
mutilated, destroyed, lost or stolen Notes and maintain an office or agency for
payments in respect of the Notes, (iii) the rights, powers, trusts, duties and
immunities of the Trustee, and (iv) the defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to terminate
the obligations of the Company and any Guarantor with respect to certain
covenants that are set forth in the Indenture, some of which are described under
"--Certain Covenants," and any omission to comply with such obligations will not
constitute a Default or an Event of Default with respect to the Notes ("covenant
defeasance").
In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the holders of the Notes, cash in United States dollars, U.S. Government
Obligations (as defined in the Indenture), 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, premium, if any, and
interest on the outstanding Notes to redemption or maturity; (ii) the Company
shall have delivered to the Trustee an opinion of counsel to the effect that the
holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance or 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 defeasance
or covenant defeasance had not occurred (in the case of defeasance, such opinion
must refer to and be based upon a ruling of the Internal Revenue Service or a
change in applicable federal income tax laws); (iii) no Default shall have
occurred and be continuing on the date of such deposit; (iv) such defeasance or
covenant defeasance shall not cause the Trustee to have a conflicting interest
with respect to any securities of the Company or any Guarantor; (v) such
defeasance or covenant defeasance shall not result in a breach or violation of,
or constitute a default under, any material agreement or instrument to which the
Company or any Guarantor is a party or by which it is bound; (vi) the Company
shall have delivered to the Trustee an opinion of counsel to the effect that (a)
the trust funds will not be subject to any rights of holders of Senior
Indebtedness, including, without limitation, those arising under the Indenture
and (b) after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; and (vii) the Company
shall have delivered to the Trustee an officers' certificate and an opinion of
counsel, each stating that all conditions precedent under the Indenture to
either defeasance or covenant defeasance, as the case may be, have been complied
with.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company or any Guarantor has
irrevocably deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the
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date of deposit together with irrevocable instructions from the Company
directing the Trustee to apply such funds to the payment thereof at maturity or
redemption, as the case may be; (ii) the Company or any Guarantor has paid all
other sums payable under the Indenture by the Company and the Guarantors; and
(iii) the Company and each of the Guarantors have delivered to the Trustee an
officers' certificate and an opinion of counsel each stating that all conditions
precedent under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.
AMENDMENTS AND WAIVERS
From time to time, the Company and the Guarantors, when authorized by
resolutions of their Boards of Directors, and the Trustee may, without the
consent of the holders of any outstanding Notes, amend, waive or supplement the
Indenture or the Notes for certain specified purposes, including, among other
things, curing ambiguities, defects or inconsistencies, qualifying, or
maintaining the qualification of, the Indenture under the Trust Indenture Act of
1939, as amended, or making any change that does not materially adversely affect
the legal rights of any holder; PROVIDED, HOWEVER, that the Company has
delivered to the Trustee an Opinion of Counsel (as defined in the Indenture)
stating that such change does not materially adversely affect the legal rights
of any holder. Other amendments and modifications of the Indenture or the Notes
may be made by the Company, the Guarantors and the Trustee with the consent of
the holders of not less than a majority of the aggregate principal amount of the
outstanding Notes; PROVIDED, HOWEVER, that no such modification or amendment
may, without the consent of the holder of each outstanding Note affected
thereby, (i) reduce the principal amount of, extend the fixed maturity of or
alter the redemption provisions of, the Notes, (ii) change the currency in which
any Notes or any premium or the interest thereon is payable, (iii) reduce the
percentage in principal amount of outstanding Notes that must consent to an
amendment, supplement or waiver or consent to take any action under the
Indenture or the Notes, (iv) impair the right to institute suit for the
enforcement of any payment on or with respect to the Notes, (v) waive a default
in payment with respect to the Notes in accordance with the Indenture, (vi) upon
the failure to mail or the mailing of the notice required for a Change of
Control Offer following, in either case, satisfaction of the condition precedent
to the mailing of such notice or upon the occurrence of an Asset Sale, alter the
Company's obligation to purchase the Notes in accordance with the Indenture or
waive any default in the performance thereof, (vii) reduce or change the rate or
time for payment of interest on the Notes, (viii) affect the ranking of the
Notes or (ix) except in compliance with the express provisions of the Indenture,
release any Guarantor from any of its obligations under its Note Guarantee or
the Indenture.
THE TRUSTEE
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to obtain
payments of claims in certain cases or to realize on certain property received
in respect of any such claim as security or otherwise. Subject to the TIA, the
Trustee will be permitted to engage in other transactions, provided that if the
Trustee acquires any conflicting interest as described in the TIA, it must
eliminate such conflict within 90 days or resign.
The holders of a majority in principle amount of the then outstanding Notes
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, subject to certain exceptions. The Indenture provides
that, except during the continuance of an Event of Default, the Trustee will
perform only such duties as are specifically set forth in the Indenture. During
the existence of an Event of Default, the Trustee will exercise such rights and
powers vested in it by the Indenture, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. The Trustee may
require reasonable indemnity against costs, expenses or liabilities likely to be
incurred prior to proceeding with any investigation requested by at least a
majority of Holders.
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GOVERNING LAW
The Indenture and the Notes are governed by the laws of the State of New
York, without regard to the principles of conflicts of law.
CERTAIN DEFINITIONS
"ACQUIRED INDEBTEDNESS" means Indebtedness of a person (i) assumed in
connection with an Asset Acquisition from such person or (ii) existing at the
time such person becomes a Restricted Subsidiary of any other person (other than
any Indebtedness incurred in connection with, or in contemplation of, such Asset
Acquisition or such person becoming such a Restricted Subsidiary).
"AFFILIATE" means, with respect to any specified person, (i) any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person or (ii) any other person that
owns, directly or indirectly, 5% or more of any class or series of such
person's, or the parent of such person's, Capital Stock or any officer, director
or Affiliate of any such other person or, with respect to any other natural
person, any person having a relationship with such other person by blood,
marriage or adoption not more remote than first cousin. For the purposes of this
definition, "control" when used with respect to any specified person means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of Voting Stock, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"ASSET ACQUISITION" means (i) an Investment by the Company or any Restricted
Subsidiary in any other person pursuant to which such person will become a
Restricted Subsidiary or will be merged with the Company or any Restricted
Subsidiary or (ii) the acquisition by the Company or any Restricted Subsidiary
of the assets of any person which constitute all or substantially all of the
assets of such person, or any division or line of business of such person.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
transfer, lease or other disposition to any person other than the Company or a
Restricted Subsidiary, in one or a series of related transactions, of (i) any
Capital Stock of any Restricted Subsidiary of the Company; (ii) all or
substantially all of the assets of any division or line of business of the
Company or any Restricted Subsidiary; or (iii) any other properties or assets of
the Company or any Restricted Subsidiary other than in the ordinary course of
business. For the purposes of this definition, the term "Asset Sale" will not
include (i) any sale, issuance, conveyance, transfer, lease or other disposition
of properties or assets that is governed by the provisions described under
"Consolidation, Merger, Sale of Assets, ETC.," (ii) the sale of lease portfolio
assets pursuant to the terms of any Lease Portfolio Documents or (iii) sales of
property or equipment that have become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be. For purposes of the covenant
described under "--Certain Covenants--Disposition of Proceeds of Asset Sales,"
the term "Asset Sale" shall not include any sale, conveyance, transfer, lease or
other disposition of any property or asset, whether in one transaction or a
series of related transactions, either (I) involving assets with a Fair Market
Value not in excess of the equivalent of $250,000 or (II) in connection with a
Capitalized Lease Obligation.
"AVERAGE LIFE TO STATED MATURITY" means, with respect to any Indebtedness,
as at any date of determination, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years from such date to the date or dates
of each successive scheduled principal payment (including, without limitation,
any sinking fund requirements) of such Indebtedness multiplied by (b) the amount
of each such principal payment by (ii) the sum of all such principal payments.
"CAPITAL STOCK" means, with respect to any person, any and all shares,
interests, participation, rights in or other equivalents (however designated) of
such person's capital stock, and any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.
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"CAPITALIZED LEASE OBLIGATION" means any obligation under a lease of (or
other agreement conveying the right to use) any property (whether real, personal
or mixed) that is required to be classified and accounted for as a capital lease
obligation under GAAP, and, for the purpose of the Indenture, the amount of such
obligation at any date shall be the capitalized amount thereof at such date,
determined in accordance with GAAP.
"CASH EQUIVALENTS" means, at any time, (i) any evidence of Indebtedness with
a maturity of one year or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(PROVIDED that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit or acceptances with a
maturity of one year or less of any financial institution that is a member of
the Federal Reserve System having combined capital and surplus and undivided
profits of not less than $500,000,000; (iii) commercial paper with a maturity of
one year or less issued by a corporation that is not an Affiliate of the Company
(other than Merrill Lynch and its Affiliates) organized under the laws of any
state of the United States or the District of Columbia and rated at least A-1 by
Standard & Poor's Corporation ("Standard & Poor's") or at least P-1 by Moody's
Investor Services, Inc. ("Moody's"); and (iv) repurchase agreements and reverse
repurchase agreements relating to marketable direct obligations issued or
unconditionally guaranteed by the government of the United States of America or
issued by any agency thereof and backed by the full faith and credit of the
United States of America, in each case, maturing within one year from the date
of acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following events: (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) other than Permitted Holders is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person will be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of a
majority of the total Voting Stock of the Company or BBC, as the case may be;
(ii) the Company or BBC, as the case may be, consolidates with, or merges with
or into, another person or sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets to any person, or
any person consolidates with, or merges with or into, the Company or BBC, as the
case may be, in any such event pursuant to a transaction in which the
outstanding Voting Stock of the Company or BBC, as the case may be, is converted
into or exchanged for cash, securities or other property, other than any such
transaction where (a) the outstanding Voting Stock of the Company or BBC, as the
case may be, is converted into or exchanged for Voting Stock (other than
Redeemable Capital Stock) of the surviving or transferee corporation and (b) the
holders of the Voting Stock of the Company or BBC, as the case may be,
immediately prior to such transaction own, directly or indirectly, not less than
a majority of the Voting Stock of the surviving or transferee corporation
immediately after such transaction; (iii) during any consecutive two-year
period, individuals who at the beginning of such period constituted the Board of
Directors of the Company or BBC (together with any new directors whose election
by such Boards of Directors or whose nomination for election by the stockholders
of the Company or BBC was approved by a vote of 66 2/3% of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) or such
other directors as have been appointed by MLCP cease for any reason to
constitute a majority of the Board of Directors of the Company or BBC, as the
case may be, then in office; or (iv) any order, judgment or decree shall be
entered against the Company or BBC decreeing the dissolution or split up of the
Company or BBC and such order shall remain undischarged or unstayed for a period
in excess of 60 days.
"CHANGE OF CONTROL TRIGGERING EVENT" means the occurrence of both a Change
of Control and a Rating Decline.
"CONSOLIDATED CASH FLOW AVAILABLE FOR FIXED CHARGES" means, for any period,
(i) the sum of, without duplication, the amounts for such period, taken as a
single accounting period, of (a) Consolidated Net Income, (b) Consolidated
Non-cash Charges, (c) to the extent reducing Consolidated Net Income,
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Consolidated Interest Expense, and (d) to the extent reducing Consolidated Net
Income, Consolidated Income Tax Expense less (ii) other non-cash items
increasing Consolidated Net Income for such period.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means the ratio of the aggregate
amount of Consolidated Cash Flow Available for Fixed Charges of the Company for
the four full fiscal quarters immediately preceding the date of the transaction
(the "Transaction Date") giving rise to the need to calculate the Consolidated
Fixed Charge Coverage Ratio (such four full fiscal quarter period being referred
to herein as the "Four Quarter Period") to the aggregate amount of Consolidated
Fixed Charges of the Company for the Four Quarter Period. For purposes of this
definition, if the Transaction Date occurs prior to the first anniversary of the
Issue Date, "Consolidated Cash Flow Available for Fixed Charges" and
"Consolidated Fixed Charges" will be calculated, in the case of the Company,
after giving effect on a PRO FORMA basis as if the Recapitalization occurred on
the first day of the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated Cash Flow
Available for Fixed Charges" and "Consolidated Fixed Charges" will be
calculated, without duplication, after giving effect on a PRO FORMA basis for
the period of such calculation to (i) the incurrence of any Indebtedness of the
Company or any of the Restricted Subsidiaries during the period commencing on
the first day of the Four Quarter Period to and including the Transaction Date
(the "Reference Period"), including, without limitation, the incurrence of the
Indebtedness giving rise to the need to make such calculation, as if such
incurrence occurred on the first day of the Reference Period, (ii) an adjustment
to eliminate or include, as applicable, the Consolidated Cash Flow Available for
Fixed Charges and Consolidated Fixed Charges of the Company directly
attributable to assets which are the subject of any Asset Sale or Asset
Acquisition (including, without limitation, any Asset Acquisition giving rise to
the need to make such calculation as a result of the Company or one of the
Restricted Subsidiaries (including any person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness) occurring during the Reference
Period, as if such Asset Sale or Asset Acquisition occurred on the first day of
the Reference Period and (iii) the retirement of Indebtedness during the
Reference Period which cannot thereafter be reborrowed occurring as if retired
on the first day of the Reference Period. For purposes of calculating
Consolidated Fixed Charges for this definition of "Consolidated Fixed Charge
Coverage Ratio," interest on Indebtedness incurred during the Four Quarter
Period under any revolving credit facility which can be borrowed and repaid
without reducing the commitments thereunder shall be the actual interest during
the Four Quarter Period. Furthermore, in calculating Consolidated Fixed Charges
for purposes of determining the denominator (but not the numerator) of this
definition of "Consolidated Fixed Charge Coverage Ratio," (i) interest on
Indebtedness determined on a fluctuating basis as of the Transaction Date and
which will continue to be so determined thereafter will be deemed to accrue at a
fixed rate PER ANNUM equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; (ii) if interest on any Indebtedness actually
incurred on the Transaction Date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect on the
Transaction Date will be deemed to have been in effect during the Reference
Period; and (iii) notwithstanding clause (i) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
agreements relating to Interest Rate Protection Obligations, will be deemed to
accrue at the rate PER ANNUM resulting after giving effect to the operation of
such agreements. If the Company or any Restricted Subsidiary, directly or
indirectly, guarantees Indebtedness of a third person, the above definition will
give effect to the incurrence of such guaranteed Indebtedness as if the Company
or any Restricted Subsidiary had directly incurred or otherwise assumed such
guaranteed Indebtedness.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of, without
duplication, the amounts for such period of (i) Consolidated Interest Expense;
and (ii) the aggregate amount of cash dividends and other distributions paid or
accrued during such period in respect of Redeemable Capital Stock.
"CONSOLIDATED INCOME TAX EXPENSE" means, for any period, the provision for
federal, state, local and foreign income taxes of the Company and the Restricted
Subsidiaries for such period as determined on a
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consolidated basis in accordance with GAAP. To the extent that Blue Bird Capital
is an Unrestricted Subsidiary during such period and to the extent payments
under the Income Taxes Agreement reduce Consolidated Net Income, Consolidated
Income Tax Expense shall include such payments under the Income Taxes Agreement.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, without duplication,
the sum of (i) the interest expense of the Company and the Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (a) any amortization of debt discount
attributable to such period, (b) the net cost under Interest Rate Protection
Obligations (including any amortization of discounts), (c) the interest portion
of any deferred payment obligation, (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing and (e) all accrued interest, and (ii) all but the principal component
of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by the Company and the Restricted Subsidiaries during such period and as
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the consolidated net income
(or loss) of the Company and the Restricted Subsidiaries for such period as
determined in accordance with GAAP, adjusted, to the extent included in
calculating such net income (or loss), by excluding, without duplication, (i)
all extraordinary gains or losses (net of fees and expenses relating to the
transaction giving rise thereto), (ii) the portion of net income (or loss) of
the Company and the Restricted Subsidiaries allocable to minority interests in
unconsolidated persons to the extent that cash dividends or distributions have
not actually been received by the Company or one of the Restricted Subsidiaries,
(iii) net income (or loss) of any person combined with the Company or one of the
Restricted Subsidiaries in a "pooling of interests" basis attributable to any
period prior to the date of combination, (iv) any gain or loss, net of taxes,
realized upon the termination of any employee pension benefit plan, (v) gains or
losses in respect of any Asset Sales by the Company or one of the Restricted
Subsidiaries (net of fees and expenses relating to the transaction giving rise
thereto), and (vi) the net income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulations applicable to that
Restricted Subsidiary or its stockholders. Consolidated Net Income shall not be
reduced for any charges arising out of any transaction undertaken as part of the
Recapitalization, but shall be reduced by dividends described under clause (iv)
of the last paragraph of the covenant described under "--Certain
Covenants--Limitation on Restricted Payments."
"CONSOLIDATED NON-CASH CHARGES" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the Company and the
Restricted Subsidiaries reducing net income for such period, determined on a
consolidated basis in accordance with GAAP.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company against fluctuations in currency values.
"DEFAULT" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"DESIGNATED SENIOR INDEBTEDNESS" means (i) all Senior Indebtedness under the
New Credit Agreement and (ii) any other Senior Indebtedness which, at the time
of the incurrence of such Indebtedness, is specifically designated in the
instrument evidencing such Senior Indebtedness as "Designated Senior
Indebtedness" by the Company.
"DESIGNATION" has the meaning set forth under "--Certain
Covenants--Limitation on Designations of Unrestricted Subsidiaries."
"DESIGNATION AMOUNT" has the meaning set forth under "--Certain
Covenants--Limitation on Designations of Unrestricted Subsidiaries."
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"DOMESTIC SUBSIDIARY" means a Restricted Subsidiary organized under the laws
of the United States, any State or territory thereof or the District of
Columbia.
"EVENT OF DEFAULT" will have the meaning ascribed to such term under
"--Events of Default."
"FAIR MARKET VALUE" means, with respect to any asset, the price which could
be negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction. Fair Market Value will be determined by
the board of directors of the Company acting in good faith evidenced by a Board
Resolution thereof delivered to the Trustee.
"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 may be approved by a significant segment of the accounting
profession of the United States, which are applicable as of the Issue Date and
are consistently applied.
"GUARANTEE" means, as applied to any obligation, (i) a guarantee (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), direct or indirect, in any manner, of any part or all of such
obligation and (ii) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or performance
(or payment of damages in the event of non-performance) of all or any part of
such obligation, including, without limiting the foregoing, the payment of
amounts drawn down by letters of credit.
"GUARANTOR" means each issuer of a Note Guarantee.
"GUARANTOR SENIOR INDEBTEDNESS" means, with respect to the Indebtedness of
any Guarantor, any such Indebtedness represented by a guarantee by such
Guarantor of any Senior Indebtedness.
"INCOME TAXES AGREEMENT" means the agreement between the Company and Blue
Bird Capital, dated October 18, 1995, as in effect on the Issue Date or as
modified, amended or supplemented in any respect that is not materially adverse
in any respect to the Company.
"INDEBTEDNESS" means, with respect to any person, without duplication, (i)
all indebtedness of such person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payable and other accrued
current liabilities incurred in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such person in
connection with any letters of credit, bankers acceptance or other similar
credit transaction and in connection with any agreement to purchase, redeem,
exchange, convert or otherwise acquire for value any Capital Stock of such
person, or any warrants, rights or options to acquire such Capital Stock, now or
hereafter outstanding, (ii) all obligations of such person evidenced by bonds,
notes, debentures or other similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (iv) all Capitalized Lease
Obligations of such person, (v) all Indebtedness referred to in the preceding
clauses of other persons and all dividends of other persons, the payment of
which is secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such person, even though such person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligation being deemed to be
the lesser of the value of such property or asset or the amount of the
obligation so secured), (vi) all guarantees of Indebtedness by such person,
(vii) all Redeemable Capital Stock valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends,
(viii) all obligations under or in respect of currency exchange contracts and
Interest Rate Protection Obligations of such person, and (ix) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of
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the types referred to in clauses (i) through (viii) above. For purposes hereof,
the "maximum fixed repurchase price" of any Redeemable Capital Stock which does
not have a fixed repurchase price will be calculated in accordance with the
terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness will be required to be determined
pursuant to the Indenture, and if such price is based upon, or measured by, the
Fair Market Value of such Redeemable Capital Stock, such fair market value to be
determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.
"INDEPENDENT FINANCIAL ADVISOR" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not have, a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"INTEREST RATE PROTECTION OBLIGATIONS" means the obligations of any person
pursuant to any arrangement with any other person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such person
calculated by applying a fixed or a floating rate of interest on the same
notional amount or any other arrangement involving payments by or to such person
based upon fluctuations in interest rates.
"INVESTMENT" means, with respect to any person, any direct or indirect
advance, loan or other extension of credit (including by means of a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others or otherwise), or any purchase or acquisition by such person of any
Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by any other person. Investments will exclude extensions of
trade credit on commercially reasonable terms in accordance with normal trade
practices. In addition to the foregoing, any foreign exchange contract, currency
swap, Interest Rate Protection Obligation or similar agreement shall constitute
an Investment.
"LEASE FINANCING TRANSACTION" means any transaction that may be entered into
by the Company or any Restricted Subsidiary on an arm's-length basis and with no
recourse to the Company or a Restricted Subsidiary (other than (i) recourse
limited to the Capital Stock of an Unrestricted Subsidiary pledged by the
Company or a Restricted Subsidiary in connection with a Lease Financing
Transaction and (ii) recourse limited to circumstances where a governmental
authority fails to allocate funds to a lease in its budget) involving (a) the
sale by the Company or a Subsidiary of the Company of lease receivables
(including a sale to any Unrestricted Subsidiary and securitization
transactions); (b) the sale by any Subsidiary of the Company of lease
receivables (including securitization transactions); (c) the sale by the Company
of buses and related equipment to any Subsidiary of the Company to facilitate
such Subsidiary subsequently selling or otherwise financing the lease
receivables arising from such buses and related equipment; (d) the sale or lease
by any Subsidiary of the Company of buses and related equipment for which the
receivables arising from such sales and leases will be sold or financed by such
Subsidiary; or (e) the financing of any of the foregoing.
"LEASE PORTFOLIO DOCUMENTS" means (i) the Amended and Restated Loan
Agreement dated March 29, 1996 by and between Blue Bird Capital Corporation and
LaSalle National Bank and all agreements executed pursuant thereto, as the same
may be amended, renewed, extended, substituted, replaced, supplemented or
otherwise modified from time to time, or (ii) any documentation relating to any
other Lease Financing Transaction.
"LIEN" means any mortgage, charge, pledge, lien (statutory or other),
privilege, security interest, hypothecation, cessation and transfer, lease of
real property, assignment for security, claim, deposit arrangement, or
preference or priority or other encumbrance upon or with respect to any property
of any kind, whether real, personal or mixed, movable or immovable, now owned or
hereafter acquired. A person
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will be deemed to own subject to a Lien any property which it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement.
"MATERIAL SUBSIDIARY" means Canadian Blue Bird and each other Restricted
Subsidiary of the Company that is a "significant subsidiary" as defined in Rule
1-02 of Regulation S-X under the Securities Act and the Exchange Act (as such
regulation is in effect on the Issue Date).
"NET CASH PROCEEDS" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary) net of (i) brokerage
commissions and other reasonable fees and expenses (including fees and expenses
of legal counsel and investment bankers) related to such Asset Sale, (ii)
provisions for all taxes payable as a result of such Asset Sale, (iii) amounts
required to be paid to any person (other than the Company or any Restricted
Subsidiary) owning a beneficial interest in or having a Lien on the assets
subject to the Asset Sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary, as the case may be, as a reserve required
in accordance with GAAP consistently applied against any liabilities associated
with such Asset Sale and retained by the Company or any Restricted Subsidiary,
as the case may be, after such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"NEW CREDIT AGREEMENT" means the First Amended and Restated Credit Agreement
among the Company, BBC, BTCo., as Administrative Agent, Merrill Lynch & Co., as
Syndication Agent (and BTCo. and Merrill Lynch & Co., together, the "Agent
Banks"), and the other financial institutions signatory thereto, as in effect on
the Issue Date, and as such agreement may be amended, renewed, extended,
substituted, refinanced, replaced, supplemented or otherwise modified from time
to time, and includes any agreement (i) extending the maturity of all or any
portion of the Indebtedness thereunder, (ii) adding additional borrowers or
guarantors thereunder and (iii) increasing the amount to be borrowed thereunder;
PROVIDED that in the case of clauses (i), (ii) and (iii), any such agreement is
not prohibited by the Indenture.
"NOTE GUARANTEE" means the guarantee by BBC and any additional guarantees
created pursuant to the provisions of the Indenture of the Company's Indenture
Obligations pursuant to the guarantee included in the Indenture.
"PARI PASSU INDEBTEDNESS" means any Indebtedness of the Company or any
Subsidiary Guarantor ranking PARI PASSU in right of payment with the Notes or
the Note Guarantees, as applicable.
"PERMITTED HOLDERS" means MLCP or any other person, directly or indirectly,
controlling, controlled by or under direct or indirect common control with MLCP.
"PERMITTED INVESTMENT" means (i) Investments in any of the Notes; (ii)
Investments in Cash Equivalents; (iii) Investments by the Company or any
Restricted Subsidiary in a Restricted Subsidiary or another person, if as a
result of such Investment (a) such other person becomes a Restricted Subsidiary
or (b) such other person is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, the Company or a Restricted
Subsidiary; (iv) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers, in each case
arising in the ordinary course of business; (v) Investments in lease
receivables, with respect to leases on terms consistent with the Company's prior
practices; (vi) Investments in any Subsidiary of the Company pursuant to the
terms of any Lease Portfolio Documents on a basis consistent with past practice;
PROVIDED that such Subsidiary is engaged solely in the business of financing or
carrying lease receivables related to the Company's products; (vii) Investments
in Interest Rate Protection Obligations and currency exchange contracts
permitted by the covenant described under "--Limitation on Indebtedness;" (viii)
loans or advances to officers or employees of the Company and the Restricted
Subsidiaries in the ordinary course of business for BONA FIDE business purposes
of the
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Company and the Restricted Subsidiaries (including travel and moving expenses)
not in excess of $500,000 in the aggregate at any one time outstanding; and (ix)
Investments not otherwise described in this definition in an aggregate amount
not exceeding $5,000,000 at any time outstanding.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PREFERRED STOCK" means, with respect to any person, any and all shares,
interests, participation or other equivalents (however designated) of such
person's preferred or preference stock whether now outstanding, or issued after
the date of the Indenture, and including, without limitation, all classes and
series of preferred or preference stock.
"RATING AGENCIES" means (i) Standard & Poor's, (ii) Moody's and (iii) if
Standard & Poor's or Moody's or both shall not make a rating of the Notes
publicly available, a nationally recognized securities rating agency or
agencies, as the case may be, selected by the Company, which shall be
substituted for Standard & Poor's or Moody's or both, as the case may be.
"RATING CATEGORY" means (i) with respect to Standard & Poor's, any of the
following categories: BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's, any of the following categories: Ba,
B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the
equivalent of any such category of Standard & Poor's or Moody's used by another
Rating Agency. In determining whether the rating of the Securities has decreased
by one or more gradations, gradations within Rating Categories (+ and - for
Standard & Poor's; 1, 2 and 3 for Moody is; or the equivalent gradations for
another Rating Agency) shall be taken into account (E.G., with respect to
Standard & Poor's, a decline in a rating from BB+ to BB, as well as from BB- to
B+, will constitute a decrease of one gradation).
"RATING DATE" means the date which is 90 days prior to the earlier of (i) a
Change of Control and (ii) public notice of the occurrence of a Change of
Control or of the intention by the Company or any Permitted Holder to effect a
Change of Control.
"RATING DECLINE" means the decrease (as compared with the Rating Date) by
one or more gradations (including gradations within Rating Categories as well as
between Rating Categories) of the rating of the Notes by either Rating Agency
on, or within six months after, the date of public notice of the occurrence of a
Change of Control or of the intention by the Company or any Permitted Holder to
effect a Change of Control (which period shall be extended for so long as the
rating of the Notes is under publicly announced consideration for possible
downgrade by any of the Rating Agencies).
"REDEEMABLE CAPITAL STOCK" means, with respect to any person, any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, except to the extent exchangeable
at the option of such person subject to the terms of any debt instrument to
which such person is a party), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is exchangeable for Indebtedness (other than at the option of such person), or
is redeemable at the option of the holder thereof, in whole or in part, in any
such case, on or prior to the final maturity date of the Notes.
"REFINANCE" means, with respect to any Indebtedness, any refinancing,
redemption, retirement, renewal, extension or refunding of such Indebtedness.
"RESTRICTED PAYMENT" has the meaning set forth under "--Certain
Covenants--Limitation on Restricted Payments."
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a board resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with the covenant described under "--Certain Covenants--
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Limitation on Designations of Unrestricted Subsidiaries." Any such designation
may be revoked by a board resolution of the Company delivered to the Trustee,
subject to the provisions of such covenant.
"REVOCATION" has the meaning ascribed to that term under "--Certain
Covenants--Limitation on Designations of Unrestricted Subsidiaries."
"SENIOR INDEBTEDNESS" means the principal of, premium, if any, and interest
on any Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the generality
of the foregoing, "Senior Indebtedness" will include the principal of, premium,
if any, and interest (including interest that would accrue but for the filing of
a petition initiating any proceeding under any state or federal bankruptcy laws,
whether or not such claim is allowable in such proceeding) on all obligations of
every nature of the Company from time to time owed to the lenders under the New
Credit Agreement, including, without limitation, principal of and interest on,
and all fees and expenses payable under the New Credit Agreement.
Notwithstanding the foregoing, "Senior Indebtedness" does not include, to the
extent constituting Indebtedness, (i) Indebtedness evidenced by the Notes, (ii)
Indebtedness that is subordinate or junior in right of payment to any
Indebtedness of the Company, (iii) Indebtedness which, when incurred and without
respect to any election under Section 1111(b) of Title 11, United States Code,
is without recourse to the Company, (iv) Indebtedness which is represented by
Redeemable Capital Stock, (v) Indebtedness for goods, materials or services
purchased in the ordinary course of business or Indebtedness consisting of trade
payable or other current liabilities (other than any current liabilities owing
under the New Credit Agreement or the current portion of any long-term
Indebtedness which would constitute Senior Indebtedness but for the operation of
this clause (v)), (vi) Indebtedness of or amounts owed by the Company for
compensation to employees or for services rendered to the Company, (vii) any
liability for federal, state, local or other taxes owed or owing by the Company,
(viii) Indebtedness of the Company to a Restricted Subsidiary of the Company or
any other Affiliate of the Company or any of such Affiliate's Restricted
Subsidiaries, other than Indebtedness owed to Merrill Lynch or an Affiliate
thereof by reason of its ownership of securities of the Company acquired in the
ordinary course of its trading or underwriting activities, whether such
securities are held by it for its own account or as nominee, (ix) that portion
of any Indebtedness which at the time of issuance is issued in violation of the
Indenture and (x) amounts owing under leases (other than Capitalized Lease
Obligations).
"STATED MATURITY" means, with respect to any Note or any installment of
interest thereon, the dates specified in such Note as the fixed date on which
the principal of such Note or such installment of interest is due and payable,
and when used with respect to any other Indebtedness, means the date specified
in the instrument governing such Indebtedness as the fixed date on which the
principal of such Indebtedness or any installment of interest thereon is due and
payable.
"SUBSIDIARY" means, with respect to any person, any other person of which a
majority of the equity ownership or the Voting Stock is, at the time, owned,
directly or indirectly, by such person.
"SUBSIDIARY GUARANTOR" mean each Subsidiary of the Company that in the
future executes a supplemental indenture in which such Subsidiary agrees to be
bound by the terms of the Indenture as a Guarantor.
"SUBORDINATED INDEBTEDNESS" means, with respect to the Company, Indebtedness
of the Company which is expressly subordinated in right of payment to the Notes
or, with respect to any Subsidiary Guarantor, Indebtedness of such Subsidiary
Guarantor which is expressly subordinated in right of payment to the Note
Guarantee of such Subsidiary Guarantor.
"UNRESTRICTED SUBSIDIARY" means a Subsidiary of the Company (other than a
Subsidiary Guarantor) designated as such pursuant to and in compliance with the
covenant described under "--Certain Covenants--Limitation on Designations of
Unrestricted Subsidiaries." Any such designation may be revoked by
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a board resolution of the Company delivered to the Trustee, subject to the
provisions of such covenant. Blue Bird Capital will be treated as an
Unrestricted Subsidiary under the Indenture as of the Issue Date.
"VOTING STOCK" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees of
any persons (irrespective of whether or not, at the time, stock of any other
class or classes will have, or might have, voting power by reason of the
happening of any contingency).
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of
which 100% of the outstanding Capital Stock is owned by the Company and/or
another Wholly-Owned Restricted Subsidiary. For purposes of this definition, any
directors' qualifying shares or investments by foreign nationals mandated by
applicable law shall be disregarded in determining the ownership of a Restricted
Subsidiary.
"WHOLLY-OWNED UNRESTRICTED SUBSIDIARY" means any Unrestricted Subsidiary of
which 100% of the outstanding Capital Stock is owned by the Company and/or a
Wholly-Owned Restricted Subsidiary and/or another Wholly-Owned Unrestricted
Subsidiary. For purposes of this definition, any directors' qualifying shares or
investments by foreign nationals mandated by applicable law shall be disregarded
in determining the ownership of an Unrestricted Subsidiary.
EXCHANGE OFFER; REGISTRATION RIGHTS
In the event that applicable law or interpretations of the staff of the
Commission do not permit the Company to effect the Exchange Offer, or if certain
Holders of the 144A Notes are not permitted to participate in, or do not receive
the benefit of, the Exchange Offer, the Registration Rights Agreement provides
that the Company and the Guarantor will use all reasonable efforts to cause to
become effective a shelf registration statement with respect to the resale of
the 144A Notes and to keep such shelf registration statement effective until
three years after the Issue Date or such shorter period ending when all the 144A
Notes have been sold thereunder. The interest rate on the 144A Notes is subject
to increase under certain circumstances if the Company and the Guarantor are not
in compliance with their obligations under the Registration Rights Agreement.
See "Exchange Offer; Registration Rights."
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DESCRIPTION OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF AN INVESTMENT IN THE EXCHANGE NOTES
The following is a summary of the material United States federal income tax
consequences of the acquisition, ownership and disposition of the 144A Notes or
the Exchange Notes by a United States Holder (as defined below). This summary
deals only with United States Holders that will hold the 144A Notes or the
Exchange Notes as capital assets. The discussion does not cover all aspects of
federal taxation that may be relevant to, or the actual tax effect that any of
the matters described herein will have on, the acquisition, ownership or
disposition of the 144A Notes or the Exchange Notes by particular investors, and
does not address state, local, foreign or other tax laws. In particular, this
summary does not discuss all of the tax considerations that may be relevant to
certain types of investors subject to special treatment under the federal income
tax laws (such as banks, insurance companies, investors liable for the
alternative minimum tax, individual retirement accounts and other tax-deferred
accounts, tax-exempt organizations, dealers in securities or currencies,
investors that will hold the 144A Notes or the Exchange Notes as part of
straddles, hedging transactions or conversion transactions for federal tax
purposes or investors whose functional currency is not United States Dollars).
Furthermore, the discussion below is based on provisions of the Code, and
regulations, rulings, and judicial decisions thereunder as of the date hereof,
and such authorities may be repealed, revoked or modified so as to result in
U.S. federal income tax consequences different from those discussed below.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, OR DISPOSITION OF EXCHANGE NOTES
SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR INTERNATIONAL TAXING JURISDICTION.
As used herein, the term "United States Holder" means a beneficial owner of
the 144A Notes or the Exchange Notes that is (i) a citizen or resident of the
United States for United States federal income tax purposes, (ii) a corporation
created or organized under the laws of the United States or any State thereof,
(iii) a person or entity that is otherwise subject to United States federal
income tax on a net income basis in respect of income derived from the 144A
Notes of the Exchange Notes, or (iv) a partnership to the extent the interest
therein is owned by a person who is described in clause (i), (ii) or (iii) of
this paragraph.
INTEREST
Interest (including any additional interest paid because of failure to
satisfy the requirements of the Registration Rights Agreement ("Additional
Interest")) paid on a 144A Note or an Exchange Note will be taxable to a United
States Holder as ordinary income at the time it is received or accrued,
depending on the holder's method of accounting for tax purposes.
ACQUISITION PREMIUM
If a United States Holder acquires an Exchange Note or has acquired a 144A
Note, in each case, for an amount more than its redemption price, the Holder may
elect to amortize such bond premium on a yield to maturity basis.
PURCHASE, SALE, EXCHANGE, RETIREMENT AND REDEMPTION OF THE EXCHANGE NOTES
In general, a United States Holder's tax basis in an Exchange Note will
equal the price paid for the 144A Notes for which such Exchange Note was
exchanged pursuant to the Exchange Offer. A United States Holder generally will
recognize gain or loss on the sale, exchange, retirement, redemption or other
disposition of a 144A Note or an Exchange Note (or portion thereof) equal to the
difference between the amount realized on such disposition and the United States
Holder's tax basis in the 144A Note or the Exchange Note (or portion thereof).
Except to the extent attributable to accrued but unpaid interest, gain or loss
recognized on such disposition of a 144A Note or an Exchange Note will be
capital gain or loss and
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will be long-term capital gain or loss if such 144A Note or Exchange Note was
held for more than one year. Any such gain will generally be United States
source gain.
The purchase of an Exchange Note or 144A Note in a subsequent resale may be
affected by the market discount provisions of the Code. These rules generally
provide that, subject to a statutorily defined DE MINIMIS exception, if a United
States Holder purchases an Exchange Note (or purchased a 144A Note) at a "market
discount," as defined below, and thereafter recognizes gain upon a disposition
of the Exchange Note (including dispositions by gift or redemption), the lesser
of such gain (or appreciation, in the case of a gift) or the portion of the
market discount that has accrued ("accrued market discount") while the Exchange
Note (and its predecessor 144A Note, if any) was held by such United States
Holder will be treated as ordinary interest income at the time of disposition
rather than as capital gain. For an Exchange Note or a 144A Note, "market
discount" is the excess of the stated redemption price at maturity over the tax
basis immediately after its acquisition by a United States Holder. Market
discount generally will accrue ratably during the period from the date of
acquisition to the maturity date of the Exchange Note, unless the United States
Holder elects to accrue such discount on the basis of the constant yield method.
In lieu of including the accrued market discount in income at the time of
disposition, a United States Holder of an Exchange Note acquired at a market
discount (or acquired in exchange for a 144A Note acquired at a market discount)
may elect to include the accrued market discount in income currently either
ratably or using the constant yield method. Once made, such an election applies
to all other obligations that the United States Holder purchases at a market
discount during the taxable year for which the election is made and in all
subsequent taxable years of the United States Holder, unless the Internal
Revenue Service consents to a revocation of the election. If an election is made
to include accrued market discount in income currently, the basis of an Exchange
Note in the hands of the United States Holder will be increased by the accrued
market discount thereon, as it is includible in income.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments of interest (including any Additional Interest) and principal on,
and the proceeds of sale or other disposition of the 144A Notes or the Exchange
Notes payable to a United States Holder may be subject to information reporting
requirements, and backup withholding at a rate of 31% will apply to such
payments if the United States Holder fails to provide an accurate taxpayer
identification number or to report all interest and dividends required to be
shown on its federal income tax returns. Certain United States Holders
(including, among others, corporations) are not subject to backup withholding.
United States Holders should consult their tax advisors as to their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
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BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the Exchange Notes will be issued in fully
registered form, without coupons. Except as described below, the Exchange Notes
will be deposited with, or on behalf of, The Depository Trust Company, New York,
New York ("DTC"), and registered in the name of Cede & Co. ("Cede") as DTC's
nominee, in the form of a global Exchange Note certificate (the "Global Exchange
Note") or will remain in the custody of the Trustee pursuant to the FAST Balance
Certificate Agreement between DTC and the Trustee.
Holders of Exchange Notes who elect to take physical delivery of their
certificates instead of holding their interest through the Global Exchange Note
(collectively referred to herein as the "Non-Global Holders") will be issued in
registered form a certificated Exchange Note ("Certificated Exchange Note").
Upon the transfer of any Certificated Exchange Note initially issued to a
Non-Global Holder, such Certificated Exchange Note will, unless the transferee
requests otherwise or the Global Exchange Note has previously been exchanged in
whole for Certificated Exchange Notes, be exchanged for an interest in the
Global Exchange Note.
THE GLOBAL EXCHANGE NOTE. The Company expects that, pursuant to procedures
established by DTC, (a) upon deposit of the Global Exchange Note, DTC or its
custodian will credit on its internal system the principal amount at maturity of
Exchange Notes of the individual beneficial interests represented by such Global
Exchange Note to the respective accounts of persons who have accounts with DTC
and (b) ownership of beneficial interests in the Global Exchange Note will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC or its nominee (with respect to interests of
Participants (as defined herein)) and the records of Participants (with respect
to interests of persons other than Participants). Ownership of beneficial
interests in the Global Exchange Note will be limited to persons who have
accounts with DTC ("Participants") or persons who hold interests through
Participants. Qualified Institutional Buyers may hold their interests in the
Global Note directly through DTC if they are Participants in such system, or
indirectly through organizations which are Participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Exchange Notes, DTC or such nominee, as the case may be, will be considered the
sole owner and holder of the Exchange Notes represented by such Global Exchange
Note for all purposes under the Indenture. No beneficial owner of an interest in
the Global Exchange Note will be able to transfer such interest except in
accordance with DTC's procedures, in addition to those provided for under the
Indenture with respect to the Exchange Notes.
Payments of the principal of or premium and interest on the Global Exchange
Note will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any paying agent under the
Indenture 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 Exchange Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
the principal of or premium and interest on the Global Exchange Note, will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Exchange
Note as shown on the records of DTC or its nominee. The Company also expects
that payments by Participants to owners of beneficial interests in the Global
Exchange Note held through such Participants will be governed by standing
instructions and customary practice as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such Participants.
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<PAGE>
Transfers between Participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in federal funds. If a holder requires physical delivery of a
Certificated Exchange Note for any reason, including to sell Exchange Notes to
persons in states which require physical delivery of the Exchange Notes or to
pledge such securities, such holder must transfer its interest in the Global
Exchange Note in accordance with the normal procedures of DTC and with the
procedures set forth in the Indenture.
DTC has advised the Company that DTC will take any action permitted to be
taken by a holder of Exchange Notes (including the presentation of Exchange
Notes for exchange as described below) only at the direction of one or more
Participants to whose account the DTC interests in the Global Exchange Note are
credited and only in respect of such portion of the aggregate principal amount
of Exchange Notes as to which such Participant or Participants has or have given
such direction. However, if there is an Event of Default under the Indenture,
DTC will exchange the Global Exchange Note for Certificated Exchange Notes,
which it will distribute to its Participants.
DTC has advised the Company as follows: 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 facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in 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 certain other
organizations. 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
("Indirect Participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interest in the Global Exchange Notes among Participants of DTC, it
is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations.
CERTIFICATED EXCHANGE NOTES. If DTC is at any time unwilling or unable to
continue as a depository for the Global Exchange Note and a successor depository
is not appointed by the Company within 90 days, the Company will issue
Certificated Exchange Notes in exchange for the Global Exchange Note.
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EXCHANGE OFFER; REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement with the Initial Purchasers,
the Company agreed to file with the Commission the Exchange Offer Registration
Statement of which this Prospectus is a part on an appropriate form under the
Securities Act with respect to an offer to exchange the Notes for the Exchange
Notes. Upon the effectiveness of the Exchange Offer Registration Statement, the
Company will offer to the holders of 144A Notes who are able to make certain
representations the opportunity to exchange their 144A Notes for Exchange Notes.
If (i) the Company is not permitted to file the Exchange Offer Registration
Statement or to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy, (ii) the Exchange Offer is not
for any other reason consummated within 150 days after the Issue Date, (iii) any
holder of 144A Notes notifies the Company within a specified time period that
(a) due to a change in law or policy it is not entitled to participate in the
Exchange Offer, (b) due to a change in law or policy it may not resell the
Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
holder or (c) it is a broker-dealer and owns 144A Notes acquired directly from
the Company or an affiliate of the Company or (iv) the holders of a majority of
the 144A Notes may not resell the Exchange Notes acquired by them in the
Exchange Offer to the public without restriction under the Securities Act and
without restriction under applicable blue sky or state securities laws, the
Company will file with the Commission the Shelf Registration Statement to cover
resales of the Transfer Restricted Notes (as defined herein) by the holders
thereof. The Company will use its best efforts to cause the applicable
registration statement to be declared effective as promptly as possible by the
Commission. For purposes of the foregoing, "Transfer Restricted Notes" means
each 144A Note until (i) the date on which such Note has been exchanged by a
person other than a broker-dealer for an Exchange Note in the Exchange Offer,
(ii) following the exchange by a broker-dealer in the Exchange Offer of a 144A
Note for an Exchange Note, the date on which such Exchange Note is sold to a
purchaser who receives from such broker-dealer on or prior to the date of such
sale a copy of the prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such 144A Note has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement, (iv) the date on which such 144A Note is distributed to
the public pursuant to Rule 144(k) under the Securities Act (or any similar
provision then in force, but not Rule 144A under the Securities Act), (v) such
144A Note shall have been otherwise transferred by the holder thereof and a new
Note not bearing a legend restricting further transfer shall have been delivered
by the Company and subsequent disposition of such Note shall not require
registration or qualification under the Securities Act or any similar state law
then in force or (vi) such 144A Note ceases to be outstanding.
Under existing Commission interpretations, the Exchange Notes would, in
general, be freely transferable after the Exchange Offer without further
registration under the Securities Act; PROVIDED that in the case of
broker-dealers participating in the Exchange Offer, a prospectus meeting the
requirements of the Securities Act must be delivered upon resale by such
broker-dealers in connection with resales of the Exchange Notes. The Company has
agreed, for period of 180 days after consummation of the Exchange Offer, to make
available a prospectus meeting the requirements of the Securities Act to any
such broker-dealer for use in connection with any resale of any Exchange Notes
acquired in the Exchange Offer. A broker-dealer which delivers such a prospectus
to purchasers in connection with such resales will be subject to certain of the
civil liability provisions under the Securities Act and will be bound by the
provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations). In addition, the Company has agreed
separately with Merrill Lynch to use its best efforts to maintain a
market-making prospectus to enable Merrill Lynch to make a market in the Notes,
although Merrill Lynch is not obligated to do so.
Each holder of 144A Notes that wishes to exchange such 144A Notes for
Exchange Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any
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Exchange Notes to be received by it will be acquired in the ordinary course of
its business, (ii) it has no arrangement with any person to participate in the
distribution of the Exchange Notes and (iii) it is not an "affiliate," as
defined in Rule 405 of the Securities Act, of the Company, or if it is an
affiliate, it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
Exchange Notes. If the holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Notes that were acquired as a result
of market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes.
The Company has agreed to pay all expenses incident to the Exchange Offer
and will indemnify the Initial Purchasers against certain liabilities, including
liabilities under the Securities Act.
The Registration Rights Agreement provides that: (i) unless the Exchange
Offer would not be permitted by applicable law or Commission policy, the Company
will use its best efforts to file the Exchange Offer Registration Statement with
the Commission on or prior to 60 days after the Issue Date, (ii) unless the
Exchange Offer would not be permitted by applicable law or Commission policy,
the Company will use its best efforts to have the Exchange Offer Registration
Statement declared effective by the Commission on or prior to 120 days after the
Issue Date, (iii) unless the Exchange Offer would not be permitted by applicable
law or Commission policy, the Company will commence the Exchange Offer and use
its best efforts to issue on or prior to 150 days after the Issue Date, Exchange
Notes in Exchange for all 144A Notes tendered prior thereto in the Exchange
Offer and (iv) if obligated to file the Shelf Registration Statement, the
Company will use its best efforts to file prior to the later of (a) 90 days
after the Issue Date or (b) 30 days after such filing obligation arises and use
their best efforts to cause the Shelf Registration Statement to be declared
effective by the Commission on or prior to 60 days after such obligation arises;
PROVIDED that if the Company has not consummated the Exchange Offer within 150
days of the Issue Date, then the Company will file the Shelf Registration
Statement with the Commission on or prior to the 151st day after the Issue Date.
The Company shall use its best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended until the third anniversary (or
such shorter period as required by Rule 144(k) under the Securities Act) of the
effective date of the Shelf Registration Statement or such shorter period that
will terminate when all the Transfer Restricted Notes covered by the Shelf
Registration Statement have been sold pursuant thereto. If (i) the Company fails
to file any of the registration statements required by the Registration Rights
Agreement on or before the date specified for such filing, (ii) any of such
registration statements are not declared effective by the Commission on or prior
to the date specified for such effectiveness (the "Effectiveness Target Date"),
subject to certain limited exceptions, (iii) the Company fails to consummate the
Exchange Offer within 30 days of the Effectiveness Target Date with respect to
the Exchange Offer Registration Statement, or (iv) the Shelf Registration
Statement is declared effective but thereafter, subject to certain limited
exceptions, ceases to be effective or usable in connection with resales of
Transfer Restricted Notes, as the case may be, during the periods specified in
the Registration Rights Agreement (each such event referred to in clauses (i)
through (iv) above, a "Registration Default"), then the interest rate on
Transfer Restricted Notes will accrue at a rate PER ANNUM equal to an additional
one quarter of one percent (0.25%) of the principal amount of the Notes upon the
occurrence of each Registration Default, which rate will increase by one quarter
of one percent (0.25%) each 90-day period that such additional interest
continues to accrue under any such circumstance, with an aggregate maximum
increase in the interest rate equal to one percent (1%) PER ANNUM. Following the
cure of all Registration Defaults, the accrual of additional interest will cease
and the interest rate will revert to the original rate.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of the form of which will be available upon request to the
Company.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
("Participating Broker-Dealer") pursuant to the Exchange Offer must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. This Prospectus, as it may be amended or supplemented from time to time,
may be used by a Participating Broker-Dealer in connection with resales of
Exchange Notes received in exchange for 144A Notes where such 144A Notes were
acquired as a result of market-making activities or other trading activities.
The Company has agreed that it will make this Prospectus, as amended or
supplemented, available to any Participating Broker-Dealer for use in connection
with any such resale and Participating Broker-Dealers shall be authorized to
deliver this Prospectus for a period not exceeding 180 days after the Expiration
Date. In addition, until (90 days after the date of this Prospectus), all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker-Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time, in one or more transactions in the over-the-counter market,
in negotiated transactions, through the writing of options on the Exchange Notes
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or at
negotiated prices. Any such resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such Participating Broker-Dealer that
resells the Exchange Notes that were received by it for its own account pursuant
to the Exchange Offer. Any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Exchange Notes and
any omissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any Participating Broker-Dealer
that requests such documents in the Letter of Transmittal. See "The Exchange
Offer."
MLCP, an affiliate of Merrill Lynch, holds together with its affiliates in
the aggregate approximately 91% of the outstanding shares of BBC Common Stock.
If Merrill Lynch conducts any market-making activities in the Exchange Notes, it
may be required to deliver a "market-making prospectus," registered with the
Commission, when effecting offers and sales in the Exchange Notes because of
such equity ownership of the Company by MLCP. Merrill Lynch has no obligation to
make a market in the 144A Notes or the Exchange Notes, and may discontinue its
market-making activities at any time without notice, at its sole discretion. BT
Securities Corporation is an affiliate of BTCo., the agent and a lender under
both the Existing Credit Agreement and the New Credit Agreement, and BTCo. has
received and will receive customary fees in connection therewith.
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LEGAL MATTERS
The validity of the Notes and the Note Guarantees offered hereby will be
passed upon for the Company and BBC by Wachtell, Lipton, Rosen & Katz, New York,
New York. Wachtell, Lipton, Rosen & Katz will rely upon an opinion provided by
Rogers & Hardin, Atlanta, Georgia, as to certain matters of Georgia law.
EXPERTS
The consolidated financial statements of the Company as of October 28, 1995
and October 29, 1994, and for each of the three years in the period ended
October 28, 1995, included in this Prospectus have been audited by Arthur
Andersen, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.
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BLUE BIRD CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS................................................................... F-2
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of October 28, 1995 and October 29, 1994.................................. F-3
Consolidated Statements of Income for the Years Ended October 28, 1995, October 29, 1994 and October 30,
1993................................................................................................... F-5
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended October 28, 1995, October
29, 1994 and October 30, 1993.......................................................................... F-6
Consolidated Statements of Cash Flows for the Years Ended October 28, 1995, October 29, 1994 and October
30, 1993............................................................................................... F-7
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS......................................................... F-8
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheets as of July 27, 1996 and October 28, 1995................. F-20
Unaudited Condensed Consolidated Statements of Income for the
three-month and nine-month periods ended July 27, 1996 and July 29, 1995............................... F-21
Unaudited Condensed Consolidated Statements of Cash Flows for the
nine-month periods ended July 27, 1996 and July 29, 1995............................................... F-22
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS............................................. F-23
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
Blue Bird Corporation:
We have audited the accompanying consolidated balance sheets of BLUE BIRD
CORPORATION (a Delaware corporation) AND SUBSIDIARIES as of October 28, 1995 and
October 29, 1994 and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended October 28, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Blue Bird Corporation and
subsidiaries as of October 28, 1995 and October 29, 1994 and the results of
their operations and their cash flows for each of the three years in the period
ended October 28, 1995 in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Atlanta, Georgia
December 14, 1995
F-2
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 28, 1995 AND OCTOBER 29, 1994
<TABLE>
<CAPTION>
ASSETS 1995 1994
- --------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents...................................................... $ 21,452,114 $ 10,489,786
Trade receivables.............................................................. 18,865,820 14,263,586
Leases receivable.............................................................. 47,222,024 29,991,634
Inventories.................................................................... 83,346,271 75,784,770
Other current assets........................................................... 6,946,710 7,381,495
-------------- --------------
Total current assets....................................................... 177,832,939 137,911,271
-------------- --------------
LEASES RECEIVABLE, noncurrent.................................................... 15,000,000 0
-------------- --------------
PROPERTY, PLANT, AND EQUIPMENT:
Land........................................................................... 4,079,545 2,168,957
Buildings...................................................................... 16,898,812 13,907,637
Machinery and equipment........................................................ 26,782,544 24,109,830
Automobiles, trucks, and airplane.............................................. 4,847,494 4,488,983
Office furniture and equipment................................................. 4,844,284 4,332,150
Construction in progress....................................................... 1,419,916 6,216,205
-------------- --------------
58,872,595 55,223,762
Less accumulated depreciation.................................................. (21,860,349) (16,308,088)
-------------- --------------
Net property, plant, and equipment......................................... 37,012,246 38,915,674
OTHER ASSETS:
Deferred debt issuance costs, net of accumulated amortization of $7,764,807 and
$5,519,628 in 1995 and 1994, respectively.................................... 4,111,690 5,606,869
Goodwill, net of accumulated amortization of $13,567,500 and $9,707,500 in 1995
and 1994, respectively....................................................... 139,124,106 142,984,106
Noncompete agreement, net of accumulated amortization of $5,000,000 and
$4,167,133 in 1995 and 1994, respectively.................................... 0 832,867
Land and idle facilities....................................................... 2,723,347 2,723,347
Other assets................................................................... 3,987,332 3,882,464
-------------- --------------
Total other assets......................................................... 149,946,475 156,029,653
-------------- --------------
Total assets............................................................... $ 379,791,660 $ 332,856,598
-------------- --------------
-------------- --------------
</TABLE>
F-3
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
OCTOBER 28, 1995 AND OCTOBER 29, 1994
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994
- --------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
CURRENT LIABILITIES:
Revolving credit facility...................................................... $ 35,661,573 $ 0
Current portion of long-term debt.............................................. 12,000,000 10,000,000
Trade accounts payable......................................................... 25,743,234 25,053,630
Deposits and amounts due customers............................................. 4,021,274 3,893,705
Income taxes payable........................................................... 6,926,161 1,745,520
Accrued warranty............................................................... 5,455,110 6,055,110
Other accrued liabilities...................................................... 16,766,138 17,074,140
Deferred income taxes.......................................................... 9,534,962 8,795,783
-------------- --------------
Total current liabilities.................................................. 116,108,452 72,617,888
-------------- --------------
LONG-TERM LIABILITIES:
Long-term debt................................................................. 111,000,000 123,000,000
Bonds payable.................................................................. 2,750,000 2,750,000
Accrued pension expense........................................................ 8,435,662 7,906,453
Deferred compensation.......................................................... 1,157,435 1,244,959
Deferred income taxes.......................................................... 5,898,112 6,632,280
Other long-term liabilities.................................................... 10,942,778 12,342,773
-------------- --------------
Total long-term liabilities................................................ 140,183,987 153,876,465
-------------- --------------
COMMITMENTS AND CONTINGENCIES (Notes 10 and 11)
REDEEMABLE COMMON STOCK, $.01 par value; 720,000 shares issued and outstanding in
1995 and 1994 (Note 8)......................................................... 24,672,000 21,348,000
STOCK SUBSCRIPTIONS RECEIVABLE (Note 8).......................................... (3,800,000) (3,800,000)
-------------- --------------
20,872,000 17,548,000
-------------- --------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 25,000,000 shares authorized, 7,704,778 shares
issued and outstanding in 1995 and 1994...................................... 77,048 77,048
Additional paid-in capital..................................................... 77,022,956 77,022,956
Retained earnings.............................................................. 27,895,901 14,368,280
Minimum pension liability adjustment........................................... 0 (400,000)
Cumulative translation adjustments............................................. (2,368,684) (2,254,039)
-------------- --------------
Total stockholders' equity................................................. 102,627,221 88,814,245
-------------- --------------
Total liabilities and stockholders' equity................................. $ 379,791,660 $ 332,856,598
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-4
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
NET SALES....................................................... $ 517,444,172 $ 476,240,848 $ 413,492,427
COST OF GOODS SOLD.............................................. 430,667,432 392,938,251 340,513,350
-------------- -------------- --------------
GROSS PROFIT.................................................... 86,776,740 83,302,597 72,979,077
-------------- -------------- --------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.................... 39,795,821 39,038,361 36,225,471
AMORTIZATION OF GOODWILL AND NONCOMPETE AGREEMENTS.............. 4,692,867 5,567,000 5,656,802
-------------- -------------- --------------
44,488,688 44,605,361 41,882,273
-------------- -------------- --------------
OPERATING INCOME................................................ 42,288,052 38,697,236 31,096,804
INTEREST INCOME................................................. 4,618,315 4,056,013 2,944,582
INTEREST EXPENSE................................................ (18,537,244) (17,405,932) (18,183,788)
OTHER INCOME, NET............................................... 168,554 217,613 667,142
-------------- -------------- --------------
INCOME BEFORE INCOME TAXES...................................... 28,537,677 25,564,930 16,524,740
PROVISION FOR INCOME TAXES...................................... (11,686,056) (10,157,248) (6,929,861)
-------------- -------------- --------------
NET INCOME...................................................... $ 16,851,621 $ 15,407,682 $ 9,594,879
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
<TABLE>
<CAPTION>
MINIMUM
ADDITIONAL CUMULATIVE CUMULATIVE PENSION
COMMON PAID-IN RETAINED TRANSLATION LIABILITY
STOCK CAPITAL EARNINGS ADJUSTMENTS ADJUSTMENT
--------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, October 31, 1992................... $ 77,000 $ 76,923,000 $ (518,001) $ (628,192) $ 0
Net income.............................. 0 0 9,594,879 0 0
Purchase of redeemable common stock..... 0 0 150,920 0 0
Accretion of redeemable common stock.... 0 0 (3,700,800) 0 0
Translation adjustments................. 0 0 0 (1,194,152) 0
--------- ------------- ------------- ------------- -----------
BALANCE, October 30, 1993................... 77,000 76,923,000 5,526,998 (1,822,344) 0
Net income.............................. 0 0 15,407,682 0 0
Issuance of common stock................ 48 99,956 0 0 0
Accretion of redeemable common stock.... 0 0 (6,566,400) 0 0
Translation adjustments................. 0 0 0 (431,695) 0
Minimum pension liability adjustment.... 0 0 0 0 (400,000)
--------- ------------- ------------- ------------- -----------
BALANCE, October 29, 1994................... 77,048 77,022,956 14,368,280 (2,254,039) (400,000)
Net income.............................. 0 0 16,851,621 0 0
Accretion of redeemable common stock.... 0 0 (3,324,000) 0 0
Translation adjustments................. 0 0 0 (114,645) 0
Minimum pension liability adjustment.... 0 0 0 0 400,000
--------- ------------- ------------- ------------- -----------
BALANCE, October 28, 1995................... $ 77,048 $ 77,022,956 $ 27,895,901 $ (2,368,684) $ 0
--------- ------------- ------------- ------------- -----------
--------- ------------- ------------- ------------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................... $ 16,851,621 $ 15,407,682 $ 9,594,879
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.............................. 12,558,707 13,521,452 14,038,249
Increase in cash surrender value of life insurance......... (234,103) (116,467) (144,443)
Deferred income taxes...................................... 5,011 (1,707,636) 4,715,018
Other...................................................... 0 0 (560,248)
Changes in assets and liabilities:
Trade receivables........................................ (4,602,234) 3,927,301 3,156,949
Inventories.............................................. (7,561,501) (591,991) (5,545,987)
Trade accounts payable................................... 689,604 1,088,116 8,442,150
Income taxes payable..................................... 5,180,641 1,201,942 (6,755,617)
Other current liabilities................................ (1,778,792) 3,055,578 (8,393,861)
Other.................................................... 185,669 640,166 692,621
Total adjustments...................................... 4,443,002 21,018,461 9,644,831
-------------- -------------- --------------
Net cash provided by operating activities.............. 21,294,623 36,426,143 19,239,710
-------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment acquisitions.................... (3,648,833) (8,594,212) (1,127,374)
Increases in leases receivable................................. (32,230,390) (1,331,603) (9,070,155)
-------------- -------------- --------------
Net cash (used in) investing activities................ (35,879,223) (9,925,815) (10,197,529)
-------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under bank credit agreements and
revolving credit line........................................ 25,661,573 (26,100,000) 4,100,000
Payment of escrow note payable................................. 0 0 (9,725,163)
Stock redemption............................................... 0 0 (522,480)
Other.......................................................... 0 100,004 0
-------------- -------------- --------------
Net cash provided by (used in) financing activities.... 25,661,573 (25,999,996) (6,147,643)
-------------- -------------- --------------
EFFECT OF EXCHANGE RATE FLUCTUATIONS............................. (114,645) (431,695) (1,194,152)
-------------- -------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS........................ 10,962,328 68,637 1,700,386
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR................... 10,489,786 10,421,149 8,720,763
-------------- -------------- --------------
CASH AND CASH EQUIVALENTS AT END OF YEAR......................... $ 21,452,114 $ 10,489,786 $ 10,421,149
-------------- -------------- --------------
-------------- -------------- --------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest....................................................... $ 14,959,218 $ 13,856,104 $ 16,517,235
-------------- -------------- --------------
-------------- -------------- --------------
Income taxes................................................... $ 4,038,000 $ 10,224,110 $ 8,830,514
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-7
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
1. NATURE OF BUSINESS
Blue Bird Corporation and subsidiaries ("BBC" or the "Company") are engaged
in the manufacture and assembly of school buses, commercial buses, and
recreational vehicles. BBC has facilities in the United States, Canada, and
Mexico.
FISCAL YEAR
BBC's fiscal year ends on the Saturday nearest October 31 of each year,
generally referred to as a "52-/53-week year." Fiscal years 1995, 1994, and 1993
contained 52 weeks.
ACQUISITION ACCOUNTING AND VALUATION
On April 15, 1992, BBC acquired all of the outstanding capital stock of Blue
Bird Body Company and subsidiaries (the "Predecessor") through the merger of BB
Acquisition Corp., a wholly owned subsidiary of BBC, with and into the
Predecessor, with the Predecessor as the surviving corporation. The acquisition
was accounted for as a purchase. The excess purchase price over the fair value
of the net assets, as adjusted, of $152,691,606 was allocated to goodwill. The
goodwill is being amortized using the straight-line method over 40 years. BBC
periodically reviews the value assigned to goodwill to determine whether it has
been permanently impaired by adverse conditions affecting BBC. The Company uses
an estimate of its undiscounted net income over the remaining life of the
goodwill in measuring whether the goodwill is recoverable. Management is of the
opinion that there has been no diminution in the value assigned to goodwill.
SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
BBC and its domestic and foreign subsidiaries (owned 100% by BBC). All
significant intercompany transactions and accounts have been eliminated in
consolidation.
TRANSLATION AND REMEASUREMENT OF FOREIGN CURRENCIES
For the purpose of consolidation, the accounts for certain foreign
subsidiaries and foreign branches of domestic subsidiaries of the U.S. parent
are translated into U.S. dollars. Foreign currency assets and liabilities are
translated using the exchange rates in effect at the balance sheet date. Results
of operations are translated using the weighted average exchange rates in effect
during the period. The effects of exchange rate fluctuations on translating
foreign currency assets and liabilities into U.S. dollars are accumulated as
part of the cumulative translation adjustments in the stockholders' equity
section.
One foreign subsidiary (the "Subsidiary") of the U.S. parent transacts sales
denominated in U.S. dollars, while the Company provides inventory and financing.
Accordingly, the U.S. dollar is deemed to be the functional currency. The
Subsidiary does not maintain its books in U.S. dollars but remeasures its
monetary assets and liabilities at balance sheet date rates, its nonmonetary
items at historical rates, and income and expense amounts at the weighted
average rates in effect for the period, except for depreciation and cost of
goods sold which use historical rates. The effects of exchange rate fluctuations
on the
F-8
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
1. NATURE OF BUSINESS (CONTINUED)
remeasurement of the Subsidiary's financial statements are recognized as
exchange gains or losses on the statement of income.
The Company recognizes exchange gains and losses from foreign currency
transactions as other income or expense for the period. A loss of approximately
$617,000 was recorded in fiscal 1995. A gain of approximately $5,000 and a loss
of approximately $499,000 were recorded in fiscal years 1994 and 1993,
respectively.
FINANCIAL INSTRUMENTS
BBC's financial instruments consist primarily of cash and cash equivalents,
trade receivables, leases receivable, accounts payable, revolving credit
facility, long-term debt, and certain interest rate agreements (Note 4). At
October 28, 1995, the estimated fair value of BBC's senior subordinated debt was
$79,875,000. The fair value of the senior subordinated debt was based on the
discounted values of their related cash flows at current market interest rates.
In management's opinion, the carrying amounts of all other financial instruments
approximate their fair values at October 28, 1995.
REVENUE RECOGNITION
BBC recognizes revenue on sales when the related product has been delivered
to the customer and title has passed or full payment has been received from the
customer and the product is completed and awaiting customer pickup.
CASH AND CASH EQUIVALENTS
BBC considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or market, cost being determined
on the last-in, first-out ("LIFO") basis. Such costs include raw materials,
direct labor, and manufacturing overhead.
If the first-in, first-out method had been used, inventories would have been
approximately $85,900,000 at October 28, 1995 and approximately $75,100,000 at
October 29, 1994.
The components of inventory as of October 28, 1995 and October 29, 1994
consist of the following:
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Raw materials.................................................. $ 32,463,235 $ 28,013,874
Work in process................................................ 22,830,735 25,515,795
Finished goods................................................. 28,052,301 22,255,101
------------- -------------
Total inventories (LIFO cost).............................. $ 83,346,271 $ 75,784,770
------------- -------------
------------- -------------
</TABLE>
F-9
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
1. NATURE OF BUSINESS (CONTINUED)
PROPERTY, PLANT, AND EQUIPMENT
Property, plant and equipment were stated at their fair market values at the
date of acquisition. Assets purchased since the acquisition are stated at cost.
All assets are being depreciated on a straight-line basis over their estimated
useful lives.
The following represent the estimated useful lives of the assets:
<TABLE>
<S> <C>
20-33
Buildings....................................................... years
Machinery and equipment......................................... 5-10 years
Automobiles, trucks, and airplane............................... 3-5 years
Office furniture and equipment.................................. 3-10 years
</TABLE>
Expenditures for property and repair costs which substantially increase
useful lives are capitalized. Currently, normal maintenance and repair costs are
charged to expense as incurred. Gains and losses on disposals of property,
plant, and equipment are reflected in current income.
Interest costs for the construction of certain long-term assets are
capitalized and amortized over the related assets' estimated useful lives. The
Company capitalized net interest costs of approximately $208,237 for the year
ended October 28, 1995 and $145,000 for the year ended October 29, 1994.
Depreciation expense of $5,575,840, $5,608,035, and $5,951,843 was recorded
for the years ended October 28, 1995, October 29, 1994, and October 30, 1993,
respectively.
LAND AND IDLE FACILITIES
BBC currently has land and idle facilities held for sale located in Buena
Vista, Virginia. The estimated fair value of the land and facilities is included
as land and idle facilities in the accompanying balance sheets.
PRODUCT WARRANTY COSTS
The provision for estimated warranty costs is recorded in the year the unit
is sold. Warranty costs totaled $5,313,438, $6,679,409, and $5,247,913 for the
years ended October 28, 1995, October 29, 1994, and October 30, 1993,
respectively.
NONCOMPETE AGREEMENTS
BBC assigned $5,000,000 to noncompete agreements with the former owners. The
related assets were amortized over three years. Amortization expense totaled
$833,000, $1,667,000, and $1,667,000 for the years ended October 28, 1995,
October 29, 1994, and October 30, 1993, respectively.
ACCOUNTING STANDARDS YET TO BE ADOPTED
In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," which the Company is required to adopt in fiscal year
1997. SFAS No. 123 requires companies to estimate the value of all
F-10
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
1. NATURE OF BUSINESS (CONTINUED)
stock-based compensation using a recognized pricing model. Companies have the
option to recognize this value as an expense to disclose its pro forma effects
on net income. The Company's management has not yet determined its method of
adoption or the financial statement impact of adopting SFAS No. 123. Other
issued but not yet required FASB standards are not currently applicable to the
Company's operations.
RECLASSIFICATIONS
Certain October 29, 1994 balances have been reclassified to conform with the
October 28, 1995 presentation.
2. LEASES RECEIVABLE
Under the terms of the Bank Credit Agreement discussed in Note 4, BBC is
required to sell leases receivable to a bank once certain levels of lease
receivables are exceeded. Under the original agreement, as leases were sold, the
purchaser established a holdback reserve. However, during 1994, the agreement
was modified such that the holdback reserve has been replaced with a letter of
credit. The letter of credit fluctuates based on the amount of sold leases and
was $1,000,000 and $1,500,000 at October 28, 1995 and October 29, 1994,
respectively.
During 1995, BBC amended the Bank Credit Agreement to allow BBC to hold more
leases receivable. As part of the amendment, BBC created a new subsidiary, Blue
Bird Capital Corporation ("Blue Bird Capital") which acts as the holding agent
and administrator of the incremental leases allowed by the amended credit
agreement.
BBC finances the sale of buses to school districts, other tax-exempt
municipalities, and contractors under sales-type leases. Lease terms range from
one to seven years and contain a bargain purchase option at the end of the lease
term. Under the lease terms, the lessee bears substantially all risks of
ownership. BBC retains a lien on the title until all lease payments have been
made.
The net investment in leases arising from these arrangements as of October
28, 1995 and October 29, 1994 was as follows:
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Leases......................................................... $ 71,803,080 $ 34,887,109
Unearned interest revenue...................................... (9,581,056) (4,895,475)
------------- -------------
Net leases receivable.......................................... $ 62,222,024 $ 29,991,634
------------- -------------
------------- -------------
</TABLE>
Interest income recognized on leases receivable was $2,914,928, $2,652,570,
and $1,797,073 for the years ended October 28, 1995, October 29, 1994, October
30, 1993, respectively.
F-11
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
3. NET CASH SURRENDER VALUE OF LIFE INSURANCE
Details of the net cash surrender value of life insurance on the lives of
individuals in whom BBC has an insurable interest as of October 28, 1995 and
October 29, 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Cash values..................................................... $ 7,193,239 $ 6,959,136
Less life insurance loans..................................... (4,458,000) (4,458,000)
------------- -------------
Net cash surrender value, included in other assets.............. $ 2,735,239 $ 2,501,136
------------- -------------
------------- -------------
</TABLE>
4. DEBT
Outstanding debt at October 28, 1995 and October 29, 1994 consisted of the
following:
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Bank term loan, principal and interest payable in quarterly installments through
October 15, 1998; interest payable at the option of BBC at either the prime
rate plus .75% or the Eurodollar rate plus 1.75%; interest rate at 7.625% on
October 28, 1995; collateralized by all real, personal, and mixed property, as
defined........................................................................ $ 48,000,000 $ 58,000,000
11.75% Series B senior subordinated notes, due April 15, 2002; interest payable
semiannually; sinking fund deposits of $18,750,000 due on April 15, 2000 and
April 15, 2001; subordinated to senior debt.................................... 75,000,000 75,000,000
Revolving credit facility with final maturity on September 15, 1997; interest
payable quarterly at the option of BBC at either the prime rate or the
Eurodollar rate plus 1.25%; collateralized by all Blue Bird Capital stock...... 35,661,573 0
Industrial development bonds, due March 2001; interest payable quarterly;
interest rate at 3.95% on October 28, 1995; secured by a letter of credit...... 2,750,000 2,750,000
-------------- --------------
161,411,573 135,750,000
Less:
Current portion of debt........................................................ 12,000,000 10,000,000
Revolving credit facility...................................................... 35,661,573 0
-------------- --------------
Long-term debt and bonds payable................................................. $ 113,750,000 $ 125,750,000
-------------- --------------
-------------- --------------
</TABLE>
On April 15, 1992, BBC entered into a $170,000,000 bank credit agreement
with Bankers Trust Company (the "Bank Credit Agreement"), secured by the capital
stock of BBC and 66% of the capital stock of Canadian Blue Bird Coach, Ltd. (a
wholly-owned subsidiary of BBC). The Bank Credit Agreement provides for a term
loan and a revolving credit facility comprised of working capital loans and
swing line loans. The revolving credit facility matures in October 1998 and
requires interest payable quarterly at the option of BBC. Interest rates on the
working capital loans is the prime rate plus .75% or the Eurodollar rate plus
1.75% and is the prime rate plus .25% on the swing line loans. The weighted
average interest rate of the revolving credit facility for the years ended
October 28, 1995 and October 29, 1994 was
F-12
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
4. DEBT (CONTINUED)
8.65% and 7.03%, respectively. The revolving credit facility is collateralized
by all real, personal, and mixed property, as defined. No amounts were
outstanding under this revolving credit facility at October 28, 1995 or October
29, 1994. The Bank Credit Agreement contains certain restrictive covenants. The
most restrictive covenants include (a) a maximum leverage ratio, as defined, (b)
a minimum fixed charge coverage ratio, as defined, (c) a minimum interest
coverage ratio, as defined, (d) limitations of capital expenditures, and (e)
certain restrictions on dividend distributions, as defined. All of these
covenants have been met as of October 28, 1995.
The maximum available borrowing amount on the Bank Credit Agreement
revolving credit facility, as amended, is $77,000,000. The revolving credit
facility requires quarterly payment of a commitment fee equal to .375% per annum
of the daily unused portion.
In connection with the creation of Blue Bird Capital (Note 2), BBC
negotiated a new credit facility (the "New Facility") with LaSalle National
Bank. The maximum capacity of the New Facility is $50,000,000 subject to meeting
certain covenants, as defined. The New Facility requires quarterly payments of a
commitment fee equal to .125% PER ANNUM of the daily unused portion and contains
certain restrictive covenants. The most restrictive covenants include net
income, tangible net worth, and interest coverage ratio. All of these financial
ratios have been met as of October 28, 1995.
In connection with the Bank Credit Agreement, BBC purchased interest rate
caps with notional principal amounts totaling $76,000,000 in order to reduce the
impact of changes in interest rates on its floating rate long-term debt. The
interest rate agreements mature at dates ranging from April 1996 to April 1998.
The industrial development bonds accrue interest based on a variable weekly
interest rate, with interest payments due quarterly. An irrevocable letter of
credit backing the bonds has been issued by Wachovia Bank of Georgia, N.A. This
letter of credit requires adherence to certain terms and financial ratios which
are the same or less restrictive than those under the revolving credit
facilities and term loan, all of which have been met as of October 28, 1995.
The future minimum principal payments by fiscal year of outstanding debt at
October 28, 1995 are as follows:
<TABLE>
<S> <C>
1996.......................................................... $47,661,573
1997.......................................................... 16,000,000
1998.......................................................... 20,000,000
1999.......................................................... 0
2000.......................................................... 18,750,000
Thereafter.................................................... 59,000,000
-----------
$161,411,573
-----------
-----------
</TABLE>
5. INCOME TAXES
BBC follows the provisions of SFAS No. 109, "Accounting for Income Taxes,"
for financial reporting purposes. SFAS No. 109 requires, among other things, the
determination of deferred income taxes using
F-13
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
5. INCOME TAXES (CONTINUED)
the liability method, under which deferred tax assets and liabilities are
determined based on the differences between the financial accounting and tax
bases of assets and liabilities. Deferred tax assets or liabilities at the end
of each period are determined using the currently enacted tax rates to apply to
taxable income in the periods in which the deferred tax asset or liability is
expected to be settled or realized.
The components of the net deferred tax liability are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Total deferred tax liabilities................................ $ 31,759,029 $ 32,025,470
Total deferred tax assets..................................... (16,325,955) (16,597,407)
-------------- --------------
Net deferred tax liability.................................... $ 15,433,074 $ 15,428,063
-------------- --------------
-------------- --------------
</TABLE>
The sources and differences between the financial accounting and tax basis
of BBC's assets and liabilities which give rise to the deferred tax liabilities
are as follows:
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Deferred tax liabilities:
Stepped-up basis in net assets............................... $ 20,633,323 $ 20,297,173
Depreciation................................................. 2,520,201 3,149,033
Other........................................................ 8,603,505 8,579,264
------------- -------------
$ 31,757,029 $ 32,025,470
------------- -------------
------------- -------------
Deferred tax assets:
Warranty reserves............................................ $ 5,198,629 $ 5,443,466
Pension reserve.............................................. 1,935,666 2,144,950
Deferred compensation reserve................................ 3,053,529 2,617,997
Workers' compensation reserve................................ 1,656,866 1,589,726
Foreign tax credit carryovers................................ 0 575,000
Other........................................................ 4,481,265 4,226,268
------------- -------------
$ 16,325,955 $ 16,597,407
------------- -------------
------------- -------------
</TABLE>
F-14
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
5. INCOME TAXES (CONTINUED)
The components of the provision (benefit) for income taxes are as follows as
of October 28, 1995, October 29, 1994, and October 30, 1993:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- ------------
<S> <C> <C> <C>
Current:
Federal............................................................ $ 9,945,714 $ 10,956,249 $ 1,334,417
Foreign............................................................ 542,000 410,894 711,889
State.............................................................. 1,193,331 1,072,741 168,537
------------- ------------- ------------
Current, total....................................................... 11,681,045 12,439,884 2,214,843
------------- ------------- ------------
Deferred:
Federal and state.................................................. 5,011 (2,278,490) 4,773,018
Foreign............................................................ 0 (4,146) (58,000)
------------- ------------- ------------
Deferred, net........................................................ 5,011 (2,282,636) 4,715,018
------------- ------------- ------------
Tax provision, net................................................... $ 11,686,056 $ 10,157,248 $ 6,929,861
------------- ------------- ------------
------------- ------------- ------------
</TABLE>
BBC had available U.S. foreign tax credit carryovers of approximately $0,
$575,000 and $1,916,000 at October 28, 1995, October 29, 1994, and October 30,
1993, respectively. Income from foreign operations was approximately $340,000,
$1,410,000, and $1,575,000 for the years ended October 28, 1995, October 1994,
and October 30, 1993, respectively.
A valuation allowance is provided when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. At the
acquisition date, there was significant uncertainty regarding the Company's
ability to generate enough foreign source taxable income to enable it to utilize
the foreign tax credit carryovers existing at that date. Therefore, at the
acquisition date, the Company's management established a valuation allowance
equal to the foreign tax credit carryovers.
As a result of improved economic conditions in the Company's domestic and
international markets during 1994, the Company began generating sufficient
foreign source taxable income to allow the utilization of approximately
$1,341,000 of the foreign tax credit carryovers. Further, management believed
that the remaining foreign tax credit carryovers of $575,000 were more likely
than not to be realized. Therefore, during 1994, the Company decreased the
valuation allowance by $1,916,000. In accordance with SFAS No. 109, the change
in the valuation allowance was recorded as a reduction in goodwill rather than
as a reduction in the provision for income taxes.
F-15
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
5. INCOME TAXES (CONTINUED)
The income tax provision as of October 28, 1995, October 29, 1994, and
October 30, 1993 differs from the amount computed by applying the statutory
rates for U.S. federal income taxes to income before income taxes because of the
following:
<TABLE>
<CAPTION>
1995 1994 1993
------------- ------------- ------------
<S> <C> <C> <C>
Income tax computed at statutory rates..................... $ 9,988,188 $ 8,947,726 $ 5,618,412
Foreign tax impact......................................... (119,078) (86,608) 116,943
Tax-exempt interest income................................. (700,359) (286,294) (276,503)
State income taxes, net of federal income tax effect....... 775,665 562,360 612,968
Goodwill amortization...................................... 1,307,024 1,321,381 1,313,880
Other...................................................... 434,616 (301,317) (455,839)
------------- ------------- ------------
$ 11,686,056 $ 10,157,248 $ 6,929,861
------------- ------------- ------------
------------- ------------- ------------
</TABLE>
6. BENEFIT PLANS
PENSION PLANS
BBC has several defined benefit pension plans and a defined contribution
plan covering substantially all domestic employees and a defined contribution
plan for Canadian employees. Total pension expenses amounted to $3,399,151,
$2,785,030, and $2,537,613 for the years ended October 28, 1995, October 29,
1994, and October 30, 1993, respectively.
The board of directors adopted a supplemental excess retirement plan
effective January 1, 1991. This plan is restricted to certain key executives and
is not qualified under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and is unfunded.
The board of directors adopted a supplemental excess retirement plan in the
form of a rabbi trust (a grantor trust set up to fund deferred compensation for
certain individuals as allowed under the Internal Revenue Code of 1986, as
amended) effective November 1, 1995. This plan is restricted to certain
executives and is not qualified under ERISA and is not funded.
BBC's funding policy is to contribute the net periodic pension cost accrued
each year to the U.S. salaried and hourly defined benefit plans. However, the
contribution will not be less than the minimum required contribution under ERISA
or greater than the maximum tax-deductible contribution.
Net pension cost for the U.S. defined benefit plans includes the following
as of October 28, 1995, October 29, 1994 and October 30, 1993:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Service costs/benefits earned during the period............... $ 1,337,279 $ 1,246,107 $ 1,107,207
Interest costs on projected benefit obligations............... 3,320,053 3,025,245 2,877,482
Return on plan assets......................................... (8,189,694) (1,069,849) (2,504,009)
Net amortization and deferral................................. 5,453,920 (1,630,964) 0
------------ ------------ ------------
Net periodic pension costs.................................... $ 1,921,558 $ 1,570,539 $ 1,480,680
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
F-16
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
6. BENEFIT PLANS (CONTINUED)
The following table sets forth these plans' funded status at October 28,
1995:
<TABLE>
<CAPTION>
PLAN
PLAN ASSETS ACCUMULATED
IN EXCESS OF BENEFITS IN
ACCUMULATED EXCESS OF UNQUALIFIED RABBI
BENEFITS ASSETS PLAN TRUST
-------------- -------------- ------------- ----------
<S> <C> <C> <C> <C>
Pension benefit obligation:
Vested Benefits........................... $ (26,042,529) $ (12,187,890) $ (1,890,539) $ (55,079)
Nonvested benefits........................ (94,224) (765,474) 0 0
-------------- -------------- ------------- ----------
Accumulated benefit obligation.............. $ (26,136,753) $ (12,953,364) $ (1,890,539) $ (55,079)
-------------- -------------- ------------- ----------
-------------- -------------- ------------- ----------
Projected benefit obligation................ $ (31,740,630) $ (12,953,364) $ (1,890,539) $ (55,079)
Market value of plan assets................. 31,169,464 11,345,581 0 0
-------------- -------------- ------------- ----------
Unfunded projected benefit obligation....... (571,166) (1,607,783) (1,890,539) (55,079)
Unrecognized net (gain) loss................ (3,491,025) 873,517 0 0
Unrecognized prior service costs............ (629,471) (1,211,507) 0 0
Other adjustment............................ (12,672) 0 0 0
Adjustment required to recognize minimum
liability................................. 0 337,990 0 0
-------------- -------------- ------------- ----------
Pension liability recognized in balance
sheets.................................... $ (4,704,334) $ (1,607,783) $ (1,890,539) $ (55,079)
-------------- -------------- ------------- ----------
-------------- -------------- ------------- ----------
</TABLE>
Assets of the salaried and hourly plans are invested primarily in U.S.
government securities, common stock funds, cash management funds, and insurance
company group annuity contracts. For 1995 and 1994, the discount rate and
expected long-term rate of return on assets were both approximately 8%. The
expected average rate of increase in future compensation levels used was 5%.
Pursuant to the provisions of SFAS No. 87, "Employers' Accounting for
Pensions," the Company recorded in accrued pension expense an additional minimum
pension liability adjustment of $337,990 as of October 28, 1995, representing
the amount by which the accumulated benefit obligation exceeded the fair value
of plan assets plus accrued amounts previously recorded. The additional
liability has been offset by an intangible asset to the extent of previously
unrecognized prior service cost. During 1994, the amount in excess of previously
unrecognized prior service cost was recorded as a reduction of stockholders'
equity in the amount of $400,000. As of October 28, 1995, there was no amount in
excess of previously unrecognized prior service cost recorded as a reduction of
stockholders' equity.
The 401(k) plan for domestic employees and the pension plan covering
Canadian employees are defined contribution plans. Such actuarial information as
presented above is not applicable to these plans. Total expenses under such
plans for the years ended October 28, 1995, October 29, 1994, and October 30,
1993 amounted to $1,477,593, $1,214,491, and $1,056,433, respectively.
F-17
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
6. BENEFIT PLANS (CONTINUED)
POSTRETIREMENT BENEFITS
The Predecessor discontinued its postretirement health care and dental
benefits in 1991. Coverage was available and will continue only for employees
over age 55 who had elected early retirement and are currently entitled to such
benefits, which are subject to certain limitations. BBC has recorded a liability
of approximately $800,000 at October 28, 1995 and October 29, 1994, which
represents management's best estimate of expected future benefits.
MEDICAL, DENTAL, AND ACCIDENT AND SICKNESS BENEFITS
BBC provides and is partially self-insured for medical, dental, and accident
and sickness benefits. BBC maintains a voluntary employee benefit association
trust through which all cash used to pay claims is processed. The trust is fully
funded at year-end to cover incurred but not reported claims. Therefore, neither
the trust's assets nor the liability for claims is reported in the accompanying
balance sheets.
7. DEFERRED COMPENSATION AND SUPPLEMENTAL RETIREMENT BENEFITS
At October 28, 1995 and October 29, 1994, the accompanying financial
statements reflect liabilities for anticipated payment of deferred compensation
and supplemental retirement benefits described above in the amounts of
$1,157,435 and $1,244,959, respectively.
8. REDEEMABLE COMMON STOCK AND STOCK SUBSCRIPTIONS RECEIVABLE
Redeemable common stock represents shares of common stock purchased by
members of management ("Management Investors"), primarily in conjunction with
the acquisition. The Management Investors have the right, prior to the earlier
of an initial public offering of equity securities or the tenth anniversary of
the stockholders' agreement, to put these shares to BBC in the event of their
disability, involuntary termination, not for cause, retirement (all as defined
in the stockholders' agreement), or death for a fair value price, as defined in
the stockholders' agreement. The redeemable common stock was recorded at fair
value on the date of issuance. The excess of the fair value price over the
original fair value is being accreted by periodic charges to retained earnings.
The amounts recorded in the balance sheets represent the estimated maximum
amount payable if all management investors met the specified criteria and
exercised their put rights.
Stock subscriptions receivable represent notes due from members of
management for stock issued in April 1992 in conjunction with the acquisition.
The notes bear interest at an 8% interest rate. Interest is payable annually.
9. DIVIDENDS DECLARED
No dividends were declared for the years ended October 28, 1995, October 29,
1994, and October 30, 1993.
F-18
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 28, 1995, OCTOBER 29, 1994,
AND OCTOBER 30, 1993
10. LEASES
BBC has no capitalized leases in which it is the lessee. Rental expenses for
operating leases were approximately $1,625,000, $1,562,000, and $1,343,000 for
the years ended October 28, 1995, October 29, 1994, and October 30, 1993,
respectively. Operating leases relate primarily to computer equipment and
software, office space, and miscellaneous office equipment. The future minimum
lease payments under operating leases by fiscal year as of October 28, 1995 are
approximately as follows:
<TABLE>
<S> <C>
1996............................................................... $ 570,000
1997............................................................... 585,000
1998............................................................... 484,000
1999............................................................... 453,000
2000 and thereafter................................................ 49,000
---------
$2,141,000
---------
---------
</TABLE>
11. CONTINGENCIES
As of October 28, 1995, BBC had a number of product liability and other
cases pending. At the date of this report, neither the outcome of the cases nor
the amounts of any company liabilities related to these cases are known.
Management believes that, considering BBC's insurance coverage and its intention
to vigorously defend its position, the ultimate resolution of these matters will
not have a material adverse impact on BBC's financial position or results of
operations.
12. MANAGEMENT STOCK OPTION PLAN
Effective April 15, 1992, BBC's board of directors adopted a nonqualified
management stock option plan (the "Plan") which provided for the granting of
options to key employees of BBC to purchase up to 850,000 shares of common
stock. Pursuant to the Plan, on April 15, 1992, key employees were granted
options (the "Vested Options") to purchase an aggregate of 400,000 shares of
common stock at an exercise price equal to $10 per share (the fair value of the
stock at the grant date as determined by the board of directors). The Vested
Options were fully vested at the time of grant. Additionally, on April 15, 1992,
key employees were granted options (the "Performance Options") to purchase an
aggregate of 400,000 shares at an exercise price equal to $10 per share. The
Performance Options vest ratably over the next five years based on BBC's
achieving certain levels of earnings performance, as defined in the Plan, and in
any case ten years from the date of grant. During the year ended October 30,
1993, options for 70,000 shares were canceled and options for 10,000 shares were
issued. As of October 28, 1995 and October 29, 1994, 720,000 options to purchase
shares were outstanding.
13. SUBSEQUENT EVENT
On December 14, 1995, the Company acquired $25,000,000 principal amount of
its 11.75% Series B senior subordinated notes (the "Series B Notes"), due April
15, 2002 for a purchase price equal to 106.5% of the principal amount plus
accrued interest. The purchase will result in a one-time, after-tax
extraordinary charge of approximately $1,415,000 in the first quarter of fiscal
year 1996. All of the Series B Notes are included in long-term debt on the
accompanying consolidated balance sheets.
F-19
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
BLUE BIRD BODY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JULY 27, 1996 AND OCTOBER 28, 1995
($ IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
OCTOBER 28,
1995
JULY 27, -----------
1996
-----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............................................................. $ 5,260 $ 21,452
Trade receivables..................................................................... 20,067 18,866
Leases receivable..................................................................... 33,125 47,222
Inventories........................................................................... 156,756 83,346
Prepaid expenses...................................................................... 1,579 1,020
Other current assets.................................................................. 2,914 5,927
----------- -----------
Total current assets................................................................ 219,701 177,833
LEASES RECEIVABLE, NONCURRENT........................................................... 38,654 15,000
PROPERTY, PLANT, AND EQUIPMENT.......................................................... 61,170 58,872
Less accumulated depreciation......................................................... (25,986) (21,860)
----------- -----------
Property, plant, and equipment, net................................................. 35,184 37,012
----------- -----------
GOODWILL AND OTHER INTANGIBLE ASSETS.................................................... 163,733 165,594
Less accumulated amortization......................................................... (24,714) (21,712)
----------- -----------
Goodwill & other intangible assets, net............................................. 139,019 143,882
----------- -----------
OTHER ASSETS............................................................................ 6,935 6,065
----------- -----------
Total assets........................................................................ $ 439,493 $ 379,792
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving credit facilities........................................................... $ 46,547 $ 35,662
Current portions of long-term debt.................................................... 13,000 12,000
Accounts payable...................................................................... 58,600 25,743
Income taxes payable.................................................................. 1,764 6,926
Deferred income taxes................................................................. 8,442 9,535
Other current liabilities............................................................. 33,644 26,242
----------- -----------
Total current liabilities........................................................... 161,997 116,108
LONG-TERM DEBT.......................................................................... 118,404 113,750
DEFERRED INCOME TAXES................................................................... 5,550 5,898
OTHER LIABILITIES....................................................................... 21,017 20,536
REDEEMABLE COMMON STOCK, NET............................................................ 20,431 20,872
----------- -----------
Total liabilities................................................................... 327,399 277,164
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 25,000,000 shares authorized; 7,704,778 and 7,704,778
outstanding respectively............................................................ 77 77
Additional paid-in capital............................................................ 77,023 77,023
Retained earnings..................................................................... 37,553 27,896
Other stockholders' equity............................................................ (2,559) (2,368)
----------- -----------
Total stockholders' equity.......................................................... 112,094 102,628
----------- -----------
Total liabilities and stockholders' equity.......................................... $ 439,493 $ 379,792
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
F-20
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
BLUE BIRD BODY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH AND NINE MONTH PERIODS
ENDED JULY 27,1996 AND JULY 29,1995
($ IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------ ------------------------
<S> <C> <C> <C> <C>
JULY 27, JULY 29, JULY 27, JULY 29,
1996 1995 1996 1995
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Net sales................................................... $ 146,788 $ 137,340 $ 346,115 $ 319,445
Cost of goods sold.......................................... 122,141 113,037 287,427 264,085
----------- ----------- ----------- -----------
Gross profit.......................................... 24,647 24,303 58,688 55,360
Selling, general and administrative expenses................ 10,612 9,499 31,501 29,462
Amortization of goodwill and other intangibles.............. 940 965 2,820 3,728
----------- ----------- ----------- -----------
Operating income............................................ 13,095 13,839 24,367 22,170
Interest income............................................. 1,845 1,016 5,353 2,993
Interest and debt issue expense............................. (4,425) (5,332) (12,796) (14,005)
Other income (expense)...................................... 110 613 543 475
----------- ----------- ----------- -----------
Income before income taxes.................................. 10,625 10,136 17,467 11,633
Provision for income taxes.................................. 4,049 4,330 6,835 4,929
----------- ----------- ----------- -----------
Net income before extraordinary items....................... 6,576 5,806 10,632 6,704
Extraordinary item--loss on extinguishment of debt (net of
income tax benefit of $838)............................... 0 0 (1,416) 0
----------- ----------- ----------- -----------
Net income............................................ $ 6,576 $ 5,806 $ 9,216 $ 6,704
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
F-21
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
BLUE BIRD BODY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED JULY 27, 1996 AND JULY 29, 1995
($ IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
<S> <C> <C>
JULY 27, JULY 29,
1996 1995
----------- -----------
<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).................................................................... $ 9,216 $ 6,704
----------- -----------
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Extraordinary loss on extinguishment of debt....................................... 2,254 0
Depreciation and amortization...................................................... 8,694 9,452
Increase in cash surrender value of life insurance................................. (47) (71)
Deferred income taxes.............................................................. (1,441) (1,971)
Changes in operating assets and liabilities:
(Increase) decrease in trade receivables........................................... (1,201) (6,597)
(Increase) decrease in inventories................................................. (73,410) (74,177)
(Increase) decrease in prepaid expenses............................................ (559) (109)
Increase (decrease) in accounts payable............................................ 32,857 24,449
Increase (decrease) in income taxes payable........................................ (5,162) 974
Other.............................................................................. 10,220 2,730
----------- -----------
Total adjustments................................................................ (27,795) (45,320)
----------- -----------
Net cash used in operating activities............................................ (18,579) (38,616)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment acquisitions.......................................... (2,587) (2,762)
Leases receivable.................................................................... (9,557) (9,991)
----------- -----------
Net cash used in investing activities............................................ (12,144) (12,753)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowing on working capital revolvers........................................... 49,539 49,900
Repayment of long-term debt.......................................................... (33,000) (6,000)
Debt prepayment premium.............................................................. (1,625) 0
Other................................................................................ (192) (949)
----------- -----------
Net cash (used in) provided by financing activities.............................. 14,722 42,951
----------- -----------
EFFECT OF EXCHANGE RATE FLUCTUATION.................................................... (191) (95)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS.............................................. (16,192) (8,513)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....................................... 21,452 10,490
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............................................. $ 5,260 $ 1,977
----------- -----------
----------- -----------
SUPPLEMENTAL INFORMATION:
Cash interest paid................................................................... $ 10,790 $ 11,818
----------- -----------
----------- -----------
Cash income taxes paid............................................................... $ 8,351 $ 5,928
----------- -----------
----------- -----------
</TABLE>
F-22
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
BLUE BIRD BODY COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF FINANCIAL STATEMENTS AND FORMATION AND ORGANIZATION
The accompanying unaudited condensed consolidated financial statements of
Blue Bird Corporation and subsidiaries ("BBC") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
It is suggested that these condensed consolidated financial statements be read
in conjunction with the financial statements and the notes thereto included in
the joint annual report of BBC and Blue Bird Body Company (the "Predecessor")
(see "Acquisition" below) on Form 10-K for the fiscal year ended October 28,
1995.
The accompanying unaudited financial statements include, in the opinion of
management, all adjustments, which are of a normal recurring nature, necessary
for a fair presentation for the periods presented. Results for the interim
periods presented are not necessarily indicative of results that may be expected
for a full fiscal year.
FISCAL YEAR
BBC's fiscal year ends on the Saturday nearest October 31 of each year,
generally referred to as a "52-/53-week year." Fiscal year 1996 contains 53
weeks and fiscal year 1995 contains 52 weeks.
ACQUISITION
On April 15, 1992, BBC (formerly B B Holding Corp.) acquired all of the
outstanding capital stock of the Predecessor through the merger of B B
Acquisition Corp., a wholly-owned subsidiary of BBC, with and into the
Predecessor (the "Acquisition"), with the Predecessor as the surviving
corporation. The Acquisition was accounted for as a purchase.
2. INVENTORIES
Inventories are valued at the lower of cost or market, cost being determined
on the last-in, first-out basis. If the first-in, first-out method had been
used, inventories would have been approximately $4,000,000 higher at July 27,
1996 and approximately $2,600,000 higher at October 28, 1995.
The components of inventory consist of the following at July 27, 1996 and
October 28, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
Raw materials.......................................................... $ 29,024 $ 32,463
Work in process........................................................ 47,473 22,831
Finished goods......................................................... 80,259 28,052
---------- ---------
$ 156,756 $ 83,346
---------- ---------
---------- ---------
</TABLE>
3. CONTINGENCIES
PENDING LITIGATION AND INSURANCE PROGRAM
As of July 27, 1996, a number of product liability cases were pending
against a subsidiary of BBC. Neither the outcome of certain cases nor the
amounts of any liabilities related to these certain cases are known, however,
management believes that the ultimate resolution of these matters will not have
a material adverse impact on BBC's financial position or results of operations.
F-23
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED 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 OR BY THE INITIAL PURCHASERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION TO BUY, THE EXCHANGE
NOTES OFFERED HEREBY 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 HEREUNDER SHALL, IN ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS
PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Available Information............................. 3
Prospectus Summary................................ 5
Summary Financial Data............................ 11
Risk Factors...................................... 13
The Exchange Offer................................ 21
Certain Federal Income Tax Consequences of the
Exchange Offer.................................. 29
The Recapitalization.............................. 30
Use of Proceeds................................... 31
Capitalization.................................... 32
Selected Financial Data........................... 34
Management's Discussion and Analysis of Financial
Condition and Results of Operations............. 35
Business.......................................... 40
Management........................................ 53
Ownership of Capital Stock........................ 60
Certain Relationships and Related Transactions.... 62
Description of Debt Facilities.................... 63
Description of the Exchange Notes................. 67
Description of Certain Federal Income Tax
Consequences of an Investment in the Exchange
Notes........................................... 93
Book-Entry, Delivery and Form..................... 95
Exchange Offer; Registration Rights............... 97
Plan of Distribution.............................. 99
Legal Matters..................................... 100
Experts........................................... 100
Index to Consolidated Financial Statements........ F-1
</TABLE>
[LOGO]
BLUE BIRD BODY COMPANY
OFFER TO EXCHANGE
$100,000,000
10 3/4% SENIOR SUBORDINATED
NOTES DUE 2006
FOR
10 3/4% SENIOR SUBORDINATED
NOTES DUE 2006, SERIES B
-------------
PROSPECTUS
-------------
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[ALTERNATIVE PAGE FOR MARKET-MAKING PROSPECTUS]
PRELIMINARY PROSPECTUS
[LOGO]
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
BLUE BIRD BODY COMPANY
---------------
The 10 3/4% Senior Subordinated Notes due 2006, Series B (the "Exchange
Notes") were issued in exchange for the 10 3/4% Senior Subordinated Notes due
2006 (the "144A Notes" and, together with the Exchange Notes, the "Notes") by
the Blue Bird Body Company, a Georgia corporation (the "Company"). The Exchange
Notes are guaranteed on a senior subordinated basis by Blue Bird Corporation, a
Delaware corporation ("BBC" or the "Guarantor") of which the Company is a
wholly-owned subsidiary. See "Description of the Exchange Notes."
Interest on the Exchange Notes is payable semi-annually in arrears on May 15
and November 15 of each year, commencing May 15, 1996. The Exchange Notes are
redeemable at the option of the Company, in whole or in part, at any time on or
after November 15, 2001, at the redemption prices set forth herein, together
with accrued and unpaid interest to the date of redemption. In addition, on or
prior to November 15, 1999, the Company may redeem up to 25% of the originally
issued Notes, at a price of 110.75% of the principal amount thereof, together
with accrued and unpaid interest to the date of redemption, with the net
proceeds of a Public Equity Offering (as defined herein); PROVIDED that not less
than $75 million in principal amount of Notes is outstanding immediately after
giving effect to such redemption. Upon the occurrence of a Change of Control
Triggering Event (as defined herein), each holder of Exchange Notes will,
subject to the limitations described herein, have the right to require the
Company to purchase all or a portion of such holder's Exchange Notes at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase. See "Description of the
Exchange Notes."
The Exchange Notes are unsecured senior subordinated obligations of the
Company and are subordinated in right of payment to all existing and future
Senior Indebtedness (as defined herein) of the Company. As of September 28,
1996, on a PRO FORMA basis after giving effect to the Recapitalization (as
defined herein), the Company would have had approximately $181.3 million of
Senior Indebtedness outstanding. In addition, at September 28, 1996, after
giving effect to the Recapitalization, the aggregate amount of indebtedness and
other liabilities of subsidiaries of the Company to which holders of the
Exchange Notes are structurally subordinated would have been approximately $63
million (which is comprised principally of liabilities of the Company's special
purpose lease financing subsidiary).
SEE "RISK FACTORS," BEGINNING ON PAGE 13, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER 144A NOTES IN THE
EXCHANGE OFFER.
------------------------
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.
------------------------
This Prospectus is to be used by Merrill Lynch, Pierce, Fenner & Smith
("Merrill Lynch") in connection with offers and sales in market-making
transactions at negotiated prices related to prevailing market price at the time
of sale. Merrill Lynch may act as principal or agent in such transactions and
has no obligation to make a market in the Exchange Notes, and may discontinue
its market-making activities any time without notice, at its sole discretion.
The Company will receive no portion of the proceeds of the sale of such Exchange
Notes and will bear expenses incident to the registration thereof.
------------------------
MERRILL LYNCH & CO.
The date of this Prospectus is , 1996.
<PAGE>
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
No dealer, salesperson, or other person has been authorized to give
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or Merrill Lynch. This prospectus
does not constitute an offer to sell or the solicitation of an offer to buy any
security other than the Exchange Notes offered hereby, nor does it constitute an
offer to sell or the solicitation of an offer to buy any of the Exchange Notes
to any person in any jurisdiction in which it is unlawful to make such an offer
or solicitation to such person. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create any implication that
the information contained herein is correct as of any date subsequent to the
date hereof.
AVAILABLE INFORMATION
The Company and BBC have jointly filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-4 (together
with all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Exchange Notes being offered hereby and
the related BBC Guarantee (as defined herein). This Prospectus, which forms a
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement. For further information with respect to the
Company, BBC, the Exchange Notes and the related BBC Guarantee offered hereby,
reference is made to the Registration Statement. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete, and, where such contract or other document is an exhibit
to the Registration Statement, each such statement is qualified in all respects
by the provisions in such exhibit, to which reference is hereby made. Copies of
the Registration Statement may be examined without charge at the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the web site (http://www.sec.gov.) maintained by
the Commission and at the Commission's Regional Offices located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any
portion of the Registration Statement can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
Upon the effectiveness of the Registration Statement, the Company became
subject to the informational requirements of the Exchange Act of 1934, as
amended (the "Exchange Act"), and, in accordance therewith, will file periodic
reports and other information with the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of any material so filed can be obtained from the
Public Reference Section of the Commission, upon payment of certain fees
prescribed by the Commission. In addition, pursuant to the Indenture (as defined
herein) covering the 144A Notes and the Exchange Notes, the Company has agreed
to file with the Commission and provide to the Holders the annual reports and
the information, documents and other reports otherwise required pursuant to
Section 13 of the Exchange Act. Such requirements may be satisfied through the
filing and provision of such documents and reports which would otherwise be
required pursuant to Section 13 in respect of the Company.
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it is required to furnish the information required to be filed
to the Commission to (i) the Trustee (as defined herein) and (ii) the holders of
the 144A Notes and the Exchange Notes. The Company has agreed that, even if it
is not required under the Exchange Act to furnish such information to the
Commission, it will nonetheless continue to furnish such information that would
be required to be furnished by the Company by Section 13 of the Exchange Act to
the Trustee and the Holders of the 144A Notes or Exchange Notes as if they were
subject to such periodic reporting requirements.
A-2
<PAGE>
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
USE OF PROCEEDS
This Prospectus is delivered in connection with the sale of the Exchange
Notes by Merrill Lynch in market-making transactions. The Company will not
receive any of the proceeds from such transactions.
A-3
<PAGE>
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
RISK FACTORS
TRADING MARKET FOR THE NOTES
There is currently no established market for the Exchange Notes and there
can be no assurance as to the liquidity of markets that may develop for the
Exchange Notes, the ability of the holders of the Exchange Notes to sell their
Exchange Notes or the price at which such holders would be able to sell their
Exchange Notes. If such markets were to exist, the Exchange Notes could trade at
prices that may be lower than the initial market values thereof depending on
many factors, including prevailing interest rates and the markets for similar
securities. Although there is currently no market for the Exchange Notes,
Merrill Lynch has advised the Company that it currently intends to make a market
in the Exchange Notes. However, Merrill Lynch is not obligated to do so, and any
market-making with respect to the Exchange Notes may be discontinued at any
time, for any reason, without notice at the sole discretion of Merrill Lynch.
In addition, if Merrill Lynch conducts any market-making activities in
respect of the Exchange Notes, it may be required to deliver a "market-making
prospectus" when effecting offers and sales in the Exchange Notes, because of
the equity ownership of affiliates of Merrill Lynch. The ML Entities in the
aggregate hold approximately 91% of the BBC Common Stock. For so long as a
market-making prospectus is required to be delivered, the ability of Merrill
Lynch to make a market in the Notes may, in part, be dependent on the ability of
the Company to maintain a current market-making prospectus. Therefore, no
assurance can be given as to the liquidity of, or the trading market for, the
Exchange Notes.
A-4
<PAGE>
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
PLAN OF DISTRIBUTION
This Prospectus is to be used by Merrill Lynch in connection with offers and
sales of the Exchange Notes in market-making transactions at negotiated prices
related to prevailing market prices at the time of sale. Merrill Lynch may act
as principal or agent in such transactions, has no obligation to make a market
in the Exchange Notes, and may discontinue its market-making activities at any
time without notice, at its sole discretion.
Merrill Lynch is an affiliate of entities that beneficially own a majority
of the voting power of the capital stock of BBC, the Company's parent company.
Merrill Lynch acted as an Initial Purchaser in connection with the original
offering of the Exchange Notes and received an Initial Purchasers' discount in
the aggregate amount of $3,000,000 in connection therewith. For information
regarding the involvement of Merrill Lynch and its affiliates in connection with
the Company and the recapitalization and the equity ownership by Merrill Lynch
and its affiliates of BBC, see "Certain Relationships and Related Transactions."
The Company and BBC have agreed, jointly and severally, to indemnify Merrill
Lynch against certain liabilities, including civil liabilities under the
Securities Act or to contribute to payments Merrill Lynch may be required to
make in respect thereof.
Merrill Lynch and the Company have entered into a Registration Rights
Agreement with respect to the use by Merrill Lynch of this Prospectus. Pursuant
to such agreement, the Company has agreed to bear all registration expenses
incurred under such agreement, and the Company has agreed to indemnify Merrill
Lynch against certain liabilities, including liabilities under the Securities
Act.
A-5
<PAGE>
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
LEGAL MATTERS
Certain legal matters in connection with the sale of the Exchange Notes were
passed upon for the Company and BBC by Wachtell, Lipton, Rosen & Katz, New York,
New York.
A-6
<PAGE>
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED 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
OR MERRILL LYNCH. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE NOTES IN ANY JURISDICTION IN
WHICH, 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 CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information............................. 3
Prospectus Summary................................ 5
Summary Financial Data............................ 11
Risk Factors...................................... 13
The Exchange Offer................................ 21
Certain Federal Income Tax Consequences of the
Exchange Offer.................................. 29
The Recapitalization.............................. 30
Use of Proceeds................................... 31
Capitalization.................................... 32
Selected Financial Data........................... 34
Management's Discussion and Analysis of Financial
Condition and Results of Operations............. 35
Business.......................................... 40
Management........................................ 53
Ownership of Capital Stock........................ 60
Certain Relationships and Related Transactions.... 62
Description of Debt Facilities.................... 63
Description of the Exchange Notes................. 67
Description of Certain Federal Income Tax
Consequences of an Investment in the Exchange
Notes........................................... 93
Book-Entry, Delivery and Form..................... 95
Exchange Offer; Registration Rights............... 97
Plan of Distribution.............................. 99
Legal Matters..................................... 100
Experts........................................... 100
Index to Consolidated Financial Statements........ F-1
</TABLE>
[LOGO]
BLUE BIRD BODY COMPANY
OFFER TO EXCHANGE
$100,000,000
10 3/4% SENIOR SUBORDINATED
NOTES DUE 2006
FOR
10 3/4% SENIOR SUBORDINATED
NOTES DUE 2006, SERIES B
-------------
PROSPECTUS
-------------
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation and By-Laws provide for
indemnification to the full extent permitted by the Georgia Business Corporation
Code against and with respect to threatened, pending or completed actions, suits
or proceedings to which any individual is made a party by reason of such
individual being or having been a director or executive officer of the Company
or who, while a director or executive officer of the Company, served or is
serving at the Company's request as a director, officer, partner, trustee,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, PROVIDED, in general, that such
individual acted in good faith and in the best interests of the Company.
BBC's Certificate of Incorporation provides for indemnification to the full
extent permitted by the General Corporation Law of the State of Delaware against
and with respect to actions, suits or proceedings to which any individual is
made or threatened to be made a party by reason of such individual being or
having been a director or officer of BBC or who served or is serving at BBC's
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
PROVIDED that the basis of such action, suit or proceeding is alleged action
occurring while such individual was a director, officer, employee or agent.
Generally, under Delaware law, indemnification will only be available where an
officer or director can establish that he or she acted in good faith and in a
manner that he or she reasonably believed to be in or not opposed to the best
interests of the corporation.
The Company maintains a directors' and officers' liability insurance policy
which insures directors and officers of the Company and its subsidiaries for
losses as a result of claims based upon their acts or omissions in the discharge
of their duties as directors and officers of the Company and its subsidiaries.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.1 Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
3.2 By-laws of the Company (incorporated by reference to Exhibit 3.2 to the Registrant's Registration
Statement on Form S-1 No. 33-49544 filed September 11, 1992).
3.3 Restated Certificate of Incorporation of BBC (incorporated by reference to Exhibit 3.3 to the
Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
3.4 By-laws of BBC (incorporated by reference to Exhibit 3.4 to the Registrant's Registration Statement on
Form S-1 No. 33-49544 filed September 11, 1992).
4.1 Indenture dated as of November 15, 1996 by and among the Company, BBC and the Chase Manhattan Bank, as
Trustee.
4.2 Form of Exchange Note (contained in Exhibit 4.1 as Exhibit A-2 thereto).
4.3 Purchase Agreement dated November 13, 1996 by and among the Company, BBC and Merrill Lynch and BT
Securities Corporation.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
5.1 Opinion of Wachtell, Lipton, Rosen & Katz.*
10.1 Registration Rights Agreement dated as of November 19, 1996 by and among the Company, BBC and Merrill
Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation.
10.2 First Amended and Restated Credit Agreement dated as of November 15, 1996 by and among the Company, BBC,
the lenders listed on the signature pages thereto and Bankers Trust Company, as Administrative Agent and
Merrill Lynch & Co., as Syndication Agent, including all exhibits thereto.
10.3 Amended and Restated Loan Agreement by and among Blue Bird Capital Corporation and LaSalle National
Bank, as agent, and the several financial institutions from time to time parties to the agreement dated
as of March 29, 1996 (incorporated by reference to Exhibit 10.22 to the Registrant's Form 10-Q No.
033-49544 filed June 11, 1996).
10.4 Executive Employment Agreement dated April 15, 1992 between Paul E. Glaske and the Company (incorporated
by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-1 No. 33-49544 filed
September 11, 1992).
10.5 Supplemental Retirement Plan of the Company (incorporated by reference to Exhibit 10.3 to the
Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.6 Form of Noncompetition and Nonsolicitation Agreement with Albert L. Luce, Jr. and Joseph P. Luce
(incorporated by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form S-1 No.
33-49544 filed September 11, 1992).
10.7 ML Stock Subscription Agreement dated as of April 15, 1992 (incorporated by reference to Exhibit 10.10
to the Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.8 Management Stock Subscription Agreement dated as of April 15, 1992 (incorporated by reference to Exhibit
10.11 to the Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.9 Stockholders' Agreement dated as of April 15, 1992 (incorporated by reference to Exhibit 10.14 to the
Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.10 BBC Management Stock Option Plan (incorporated by reference to Exhibit 10.15 to the Registrant's
Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.11 Form of Vested Option Agreement (incorporated by reference to Exhibit 10.16 to the Registrant's
Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.12 Form of Performance Option Agreement (incorporated by reference to Exhibit 10.17 to the Registrant's
Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.13 Chassis Supply Agreement dated as of May 8, 1991 between the Company and General Motors Corporation
(incorporated by reference to Exhibit 10.18 to the Registrant's Registration Statement on Form S-1 No.
33-49544 filed September 11, 1992).
10.14 Executive Employment Agreement dated April 15, 1993 between Bobby G. Wallace and the Company
(incorporated by reference to Exhibit 10.19 to the Registrant's Report on Form 10-K for the fiscal year
ended October 30, 1993 filed January 28, 1994).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.15 Amendment dated October 15, 1994, amending Executive Employment Agreement dated April 15, 1993 between
Bobby G. Wallace and the Company (incorporated by reference to Exhibit 10.20 to the Registrant's Report
on Form 10-K for the fiscal year ended October 29, 1994 and filed January 27, 1995).
10.16 Amended and Restated Vested Option Agreement dated September 13, 1994 between Bobby G. Wallace and the
Company (incorporated by reference to Exhibit 10.21 to the Registrant's Report on Form 10-K for the
fiscal year ended October 29, 1994 filed January 27, 1995).
12.1 Statements re Computation of Ratios.
21.1 Subsidiaries of BBC and the Company.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1).
24.1 Powers of Attorney of Directors and Officers of Blue Bird Corporation (included in the signature pages
in Part II of the Registration Statement).
24.2 Powers of Attorney of Directors and Officers of Blue Bird Body Company (included in the signature pages
in Part II of the Registration Statement).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of The Chase Manhattan Bank under the
Trust Indenture Act of 1939.
99.1 Form of Letter of Transmittal for the 10 3/4% Senior Subordinated Notes due 2006.
99.2 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
99.3 Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------------
* To be filed by amendment.
ITEM 22. UNDERTAKINGS
Each of the undersigned registrants hereby undertakes:
(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. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in "Calculation of Registration Fee"
table in the effective 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.
II-3
<PAGE>
(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) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within
one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(c) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
(d) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or controlling
person of the registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrants will, unless in
the opinion of their counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by them is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each Registrant
has duly caused this registration statement or amendment thereto to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Macon,
State of Georgia, on December , 1996.
BLUE BIRD BODY COMPANY
BY: /S/ PAUL E. GLASKE
-----------------------------------------
Paul E. Glaske
CHAIRMAN OF THE BOARD
AND PRESIDENT AND DIRECTOR
BLUE BIRD CORPORATION
BY: /S/ PAUL E. GLASKE
-----------------------------------------
Paul E. Glaske
CHAIRMAN OF THE BOARD
AND PRESIDENT AND DIRECTOR
Each person whose signature appears below constitutes and appoints Paul E.
Glaske and Bobby G. Wallace, his true and lawful attorney-in-fact and agent,
each acting alone, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capacities, to sign any or all
Amendments (including post-effective Amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, each acting alone, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed below by the
following persons in the capacities and on December , 1996.
BLUE BIRD BODY COMPANY
SIGNATURE TITLE
- ------------------------------ ---------------------------
Chairman of the Board and
/s/ PAUL E. GLASKE President and Director
- ------------------------------ (Principal Executive
Paul E. Glaske Officer)
Vice President--Finance and
Administration, Treasurer
/s/ BOBBY G. WALLACE and Secretary and
- ------------------------------ Director (Principal
Bobby G. Wallace Financial and Accounting
Officer)
/s/ GERALD S. ARMSTRONG Director
- ------------------------------
Gerald S. Armstrong
/s/ ALEXIS P. MICHAS Director
- ------------------------------
Alexis P. Michas
/s/ DONALD C. TRAUSCHT Director
- ------------------------------
Donald C. Trauscht
/s/ ALFRED C. DAUGHERTY Director
- ------------------------------
Alfred C. Daugherty
II-6
<PAGE>
BLUE BIRD BODY COMPANY
SIGNATURE TITLE
- ------------------------------ ---------------------------
Chairman of the Board and
/s/ PAUL E. GLASKE President and Director
- ------------------------------ (Principal Executive
Paul E. Glaske Officer)
Vice President and
/s/ BOBBY G. WALLACE Treasurer and Secretary
- ------------------------------ and Director (Principal
Bobby G. Wallace Financial and Accounting
Officer)
/s/ GERALD S. ARMSTRONG Director
- ------------------------------
Gerald S. Armstrong
/s/ ALEXIS P. MICHAS Director
- ------------------------------
Alexis P. Michas
/s/ DONALD C. TRAUSCHT Director
- ------------------------------
Donald C. Trauscht
/s/ ALFRED C. DAUGHERTY Director
- ------------------------------
Alfred C. Daugherty
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<C> <S> <C>
3.1 Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
3.2 By-laws of the Company (incorporated by reference to Exhibit 3.2 to the Registrant's Registration
Statement on Form S-1 No. 33-49544 filed September 11, 1992).
3.3 Restated Certificate of Incorporation of BBC (incorporated by reference to Exhibit 3.3 to the
Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
3.4 By-laws of BBC (incorporated by reference to Exhibit 3.4 to the Registrant's Registration
Statement on Form S-1 No. 33-49544 filed September 11, 1992).
4.1 Indenture dated as of November 15, 1996 by and among the Company, BBC and the Chase Manhattan
Bank, as Trustee.
4.2 Form of Exchange Note (contained in Exhibit 4.1 as Exhibit A-2 thereto).
4.3 Purchase Agreement dated November 13, 1996 by and among the Company, BBC and Merrill Lynch and BT
Securities Corporation.
5.1 Opinion of Wachtell, Lipton, Rosen & Katz.*
10.1 Registration Rights Agreement dated as of November 19, 1996 by and among the Company, BBC and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and BT Securities Corporation.
10.2 First Amended and Restated Credit Agreement dated as of November 15, 1996 by and among the
Company, BBC, the lenders listed on the signature pages thereto and Bankers Trust Company, as
Administrative Agent and Merrill Lynch & Co., as Syndication Agent, including all exhibits
thereto.
10.3 Amended and Restated Loan Agreement by and among Blue Bird Capital Corporation and LaSalle
National Bank, as agent, and the several financial institutions from time to time parties to the
agreement dated as of March 29, 1996 (incorporated by reference to Exhibit 10.22 to the
Registrant's Form 10-Q No. 033-49544 filed June 11, 1996).
10.4 Executive Employment Agreement dated April 15, 1992 between Paul E. Glaske and the Company
(incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement on Form S-1
No. 33-49544 filed September 11, 1992).
10.5 Supplemental Retirement Plan of the Company (incorporated by reference to Exhibit 10.3 to the
Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.6 Form of Noncompetition and Nonsolicitation Agreement with Albert L. Luce, Jr. and Joseph P. Luce
(incorporated by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form S-1
No. 33-49544 filed September 11, 1992).
10.7 ML Stock Subscription Agreement dated as of April 15, 1992 (incorporated by reference to Exhibit
10.10 to the Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11,
1992).
10.8 Management Stock Subscription Agreement dated as of April 15, 1992 (incorporated by reference to
Exhibit 10.11 to the Registrant's Registration Statement on Form S-1 No. 33-49544 filed September
11, 1992).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<C> <S> <C>
10.9 Stockholders' Agreement dated as of April 15, 1992 (incorporated by reference to Exhibit 10.14 to
the Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.10 BBC Management Stock Option Plan (incorporated by reference to Exhibit 10.15 to the Registrant's
Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.11 Form of Vested Option Agreement (incorporated by reference to Exhibit 10.16 to the Registrant's
Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.12 Form of Performance Option Agreement (incorporated by reference to Exhibit 10.17 to the
Registrant's Registration Statement on Form S-1 No. 33-49544 filed September 11, 1992).
10.13 Chassis Supply Agreement dated as of May 8, 1991 between the Company and General Motors
Corporation (incorporated by reference to Exhibit 10.18 to the Registrant's Registration Statement
on Form S-1 No. 33-49544 filed September 11, 1992).
10.14 Executive Employment Agreement dated April 15, 1993 between Bobby G. Wallace and the Company
(incorporated by reference to Exhibit 10.19 to the Registrant's Report on Form 10-K for the fiscal
year ended October 30, 1993 filed January 28, 1994).
10.15 Amendment dated October 15, 1994, amending Executive Employment Agreement dated April 15, 1993
between Bobby G. Wallace and the Company (incorporated by reference to Exhibit 10.20 to the
Registrant's Report on Form 10-K for the fiscal year ended October 29, 1994 and filed January 27,
1995).
10.16 Amended and Restated Vested Option Agreement dated September 13, 1994 between Bobby G. Wallace and
the Company (incorporated by reference to Exhibit 10.21 to the Registrant's Report on Form 10-K
for the fiscal year ended October 29, 1994 filed January 27, 1995).
12.1 Statements re Computation of Ratios.
21.1 Subsidiaries of BBC and the Company.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5.1).
24.1 Powers of Attorney of Directors and Officers of Blue Bird Corporation (included in the signature
pages in Part II of the Registration Statement).
24.2 Powers of Attorney of Directors and Officers of Blue Bird Body Company (included in the signature
pages in Part II of the Registration Statement).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of The Chase Manhattan Bank
under the Trust Indenture Act of 1939.
99.1 Form of Letter of Transmittal for the 10 3/4% Senior Subordinated Notes due 2006.
99.2 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
99.3 Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
================================================================================
BLUE BIRD BODY COMPANY, as Issuer
BLUE BIRD CORPORATION, as Guarantor
and
THE CHASE MANHATTAN BANK, as Trustee
--------------------
INDENTURE
Dated as of November 15, 1996
--------------------
$100,000,000
10 3/4% Senior Subordinated Notes due 2006
10 3/4% Senior Subordinated Notes due 2006, Series B
================================================================================
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939, as amended,
and Indenture, dated as of November 15, 1996
Trust Indenture Indenture
Act Section Section
- --------------- ---------
ss. 310(a)(1) ............................................. 6.09
(a)(2) ............................................. 6.09
(a)(3) ............................................. Not Applicable
(a)(4) ............................................. Not Applicable
(b) ............................................. 6.08, 6.10
ss. 311(a) ............................................. 6.13
(b) ............................................. 6.13
(c) ............................................. Not Applicable
ss. 312(a) ............................................ 7.01
(b) ............................................. 7.02
(c) ............................................. 7.02
ss. 313(a) ............................................. 7.03
(b) ............................................. 7.03
(c) ............................................. 7.03
(d) ............................................. 7.03
ss. 314(a) ............................................. 7.04
(a)(4) ............................................. 10.11
(b) ............................................. Not Applicable
(c)(1) ............................................. 1.04, 4.04
12.01(c)
(c)(2) ............................................. 1.04, 4.04
12.01(c)
(c)(3) ............................................. Not Applicable
(d) ............................................. Not Applicable
(e) ............................................. 1.04
ss. 315(a) ............................................. 6.01(a)
(b) ............................................. 6.02
(c) ............................................. 6.01(b)
(d) ............................................. 6.01(c)
(e) ............................................. 5.14
ss. 316(a) (last
sentence) ............................................. 1.01
(a)(1)(A) ............................................. 5.12, 5.13
(a)(1)(B) ............................................. 5.13
(a)(2) ............................................. Not Applicable
(b) ............................................. 5.08
ss. 317(a)(1) ............................................. 5.03
(a)(2) ............................................. 5.04
(b) ............................................. 10.03
ss. 318(a) ............................................. 1.08
- ----------
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
PARTIES................................................................... 1
RECITALS ................................................................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. Definitions............................................... 2
Section 1.02. Other Definitions........................................ 28
Section 1.03. Rules of Construction .................................. 28
Section 1.04. Form of Documents Delivered to Trustee................... 29
Section 1.05. Acts of Holders ......................................... 31
Section 1.06. Notices, etc., to the Trustee, the
Company and the Guarantor........................... 30
Section 1.07. Notice to Holders; Waiver ............................... 31
Section 1.08. Conflict with Trust Indenture Act ....................... 32
Section 1.09. Effect of Headings and Table of Contents ................ 32
Section 1.10. Successors and Assigns .................................. 32
Section 1.11. Separability Clause ..................................... 33
Section 1.12. Benefits of Indenture ................................... 33
Section 1.13. Governing Law ........................................... 33
Section 1.14. No Recourse Against Others .............................. 33
Section 1.15. Independence of Covenants ............................... 33
Section 1.16. Exhibits ................................................ 34
Section 1.17. Counterparts ............................................ 34
Section 1.18. Duplicate Originals ..................................... 34
ARTICLE TWO
SECURITY AND GUARANTEE FORMS
Section 2.01. Form and Dating....................................... 34
- ----------
Note: This table of contents shall not, for any purpose, be
deemed to be a part of this Indenture.
-i-
<PAGE>
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ARTICLE THREE
THE SECURITIES
Section 3.01. Title and Terms ......................................... 35
Section 3.02. Registrar and Paying Agent .............................. 36
Section 3.03. Execution and Authentication ............................ 37
Section 3.04. Temporary Securities .................................... 39
Section 3.05. Transfer and Exchange ................................... 39
Section 3.06. Mutilated, Destroyed, Lost and Stolen
Securities ......................................... 41
Section 3.07. Payment of Interest; Interest Rights
Preserved .......................................... 41
Section 3.08. Persons Deemed Owners ................................... 43
Section 3.09. Cancellation ............................................ 43
Section 3.10. Computation of Interest ................................. 44
Section 3.11. Legal Holidays .......................................... 44
Section 3.12. CUSIP Number ............................................ 44
Section 3.13. Paying Agent to Hold Money in Trust ..................... 44
Section 3.14. [Intentionally Omitted] .................................
Section 3.15. [Intentionally Omitted] .................................
Section 3.16. Book Entry Provisions for Global
Securities ......................................... 45
Section 3.17. Special Transfer Provisions ............................. 46
ARTICLE FOUR
DEFEASANCE AND COVENANT DEFEASANCE
Section 4.01. Company's Option To Effect Defeasance
or Covenant Defeasance.............................. 49
Section 4.02. Defeasance and Discharge ................................ 50
Section 4.03. Covenant Defeasance ..................................... 50
Section 4.04. Conditions to Defeasance or Covenant
Defeasance ......................................... 51
Section 4.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust;
Other Miscellaneous Provisions ..................... 54
Section 4.06. Reinstatement ........................................... 55
-ii-
<PAGE>
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ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default ....................................... 55
Section 5.02. Acceleration of Maturity; Rescission
and Annulment ...................................... 58
Section 5.03. Collection of Indebtedness and Suits
for Enforcement by Trustee ............................ 59
Section 5.04. Trustee May File Proofs of Claims ....................... 61
Section 5.05. Trustee May Enforce Claims Without
Possession of Securities .............................. 62
Section 5.06. Application of Money Collected .......................... 62
Section 5.07. Limitation on Suits ..................................... 63
Section 5.08. Unconditional Right of Holders To
Receive Principal, Premium and
Interest .............................................. 64
Section 5.09. Restoration of Rights and Remedies ...................... 64
Section 5.10. Rights and Remedies Cumulative .......................... 64
Section 5.11. Delay or Omission Not Waiver ............................ 65
Section 5.12. Control by Majority ..................................... 65
Section 5.13. Waiver of Past Defaults ................................. 65
Section 5.14. Undertaking for Costs ................................... 66
Section 5.15. Waiver of Stay, Extension or Usury
Laws .................................................. 66
Section 5.16. Unconditional Right of Holders to
Institute Certain Suits ............................... 67
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities ..................... 67
Section 6.02. Notice of Defaults ...................................... 68
Section 6.03. Certain Rights of Trustee ............................... 68
Section 6.04. Trustee Not Responsible for Recitals,
Dispositions of Securities or
Application of Proceeds Thereof ....................... 70
Section 6.05. Trustee and Agents May Hold
Securities; Collections; Etc. ......................... 70
Section 6.06. Money Held in Trust ..................................... 70
Section 6.07. Compensation and Indemnification of
Trustee and Its Prior Claim ........................... 71
Section 6.08. Conflicting Interests ................................... 71
Section 6.09. Corporate Trustee Required;
Eligibility ........................................... 72
-iii-
<PAGE>
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Section 6.10. Resignation and Removal; Appointment
of Successor Trustee .................................. 72
Section 6.11. Acceptance of Appointment by
Successor ............................................. 74
Section 6.12. Merger, Conversion, Amalgamation,
Consolidation or Succession to
Business .............................................. 75
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
Section 7.01. Preservation and Information; Company
To Furnish Trustee Names and
Addresses of Holders .................................. 76
Section 7.02. Communications of Holders .............................. 76
Section 7.03. Reports by Trustee ..................................... 77
Section 7.04. Reports by Company ..................................... 77
ARTICLE EIGHT
CONSOLIDATION, MERGER, SALE OF
ASSETS, ETC.,
Section 8.01. Company or Guarantor May Consolidate,
etc., Only on Certain Terms .......................... 78
Section 8.02. Successor Substituted .................................. 80
ARTICLE NINE
SUPPLEMENTAL INDENTURES AND WAIVERS
Section 9.01. Supplemental Indentures, Agreements
and Waivers Without Consent of
Holders .............................................. 81
Section 9.02. Supplemental Indentures, Agreements
and Waivers with Consent of Holders................... 81
Section 9.03. Execution of Supplemental Indentures,
Agreements and Waivers ............................... 84
Section 9.04. Effect of Supplemental Indentures ...................... 84
Section 9.05. Conformity with Trust Indenture Act .................... 84
Section 9.06. Reference in Securities to
Supplemental Indentures .............................. 85
Section 9.07. Effect on Senior Indebtedness .......................... 85
-iv-
<PAGE>
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----
Section 9.08. Record Date ............................................ 85
Section 9.09. Revocation and Effect of Consents ...................... 85
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and
Interest ............................................. 86
Section 10.02. Maintenance of Office or Agency ........................ 86
Section 10.03. Money for Security Payments To Be
Held in Trust ........................................ 87
Section 10.04. Corporate Existence .................................... 88
Section 10.05. Payment of Taxes and Other Claims ...................... 89
Section 10.06. Maintenance of Properties .............................. 89
Section 10.07. Insurance .............................................. 89
Section 10.08. Books and Records ...................................... 90
Section 10.09. Guarantees ............................................. 90
Section 10.10. Provision of Financial Statements ...................... 90
Section 10.11. Change of Control Triggering Event ..................... 90
Section 10.12. Limitation on Indebtedness ............................. 93
Section 10.13. Statement by Officers as to Default .................... 96
Section 10.14. Limitation on Restricted Payments ...................... 97
Section 10.15. Limitation on Transactions with
Affiliates ........................................... 100
Section 10.16. Disposition of Proceeds of Asset
Sales ............................................... 101
Section 10.17. Limitation on Liens ................................... 104
Section 10.18. Limitation on Other Senior
Indebtedness ........................................ 105
Section 10.19. Limitation on Guarantees by
Restricted Subsidiaries ............................. 105
Section 10.20. Limitation on Preferred Stock of
Subsidiaries ........................................ 106
Section 10.21. Limitation on Dividends and Other
Payment Restrictions Affecting
Restricted Subsidiaries ............................. 106
Section 10.22. Limitation on Designations of
Unrestricted Subsidiaries ........................... 106
Section 10.23. Compliance Certificates and Opinions................... 108
-v-
<PAGE>
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----
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 11.01. Right of Redemption ................................... 109
Section 11.02. Applicability of Article .............................. 109
Section 11.03. Election To Redeem; Notice to
Trustee ............................................. 109
Section 11.04. Selection by Trustee of Securities To
Be Redeemed ......................................... 109
Section 11.05. Notice of Redemption .................................. 110
Section 11.06. Deposit of Redemption Price ........................... 111
Section 11.07. Securities Payable on Redemption
Date ................................................ 112
Section 11.08. Securities Redeemed or Purchased in
Part ................................................ 112
ARTICLE TWELVE
SUBORDINATION OF SECURITIES
Section 12.01. Securities to Senior Indebtedness ..................... 113
Section 12.02. Payment over Proceeds upon
Dissolution, etc. ................................... 114
Section 12.03. Suspension of Payment When Senior
Indebtedness in Default.............................. 115
Section 12.04. Trustee's Relation to Senior
Indebtedness ........................................ 117
Section 12.05. Subrogation to Rights of Holders of
Senior Indebtedness ................................. 117
Section 12.06. Provisions Solely To Define Relative
Rights .............................................. 118
Section 12.07. Trustee To Effectuate Subordination.................... 118
Section 12.08. No Waiver of Subordination Provisions.................. 119
Section 12.09. Notice to Trustee ..................................... 120
Section 12.10. Reliance on Judicial Order or
Certificate of Liquidating Agent..................... 121
Section 12.11. Rights of Trustee as a Holder of
Senior Indebtedness; Preservation
of Trustee's Rights.................................. 121
Section 12.12. Article Applicable to Paying Agents.................... 122
Section 12.13. No Suspension of Remedies ............................. 122
-vi-
<PAGE>
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----
ARTICLE THIRTEEN
SATISFACTION AND DISCHARGE
Section 13.01. Satisfaction and Discharge of
Indenture ........................................... 122
Section 13.02. Application of Trust Money ............................ 123
ARTICLE FOURTEEN
GUARANTEE OF SECURITIES
Section 14.01. Guarantee ............................................. 124
Section 14.02. Execution and Delivery of Guarantee ................... 125
Section 14.03. Additional Guarantor .................................. 126
Section 14.04. Guarantor Obligations Subordinated to
Guarantor Senior Indebtedness........................ 126
Section 14.05. Payment Over Proceeds upon
Dissolution, etc. of a Guarantor .................... 127
Section 14.06. Suspension of Guarantee Obligations
When Guarantor Senior Indebtedness
in Default .......................................... 129
Section 14.07. Release of a Guarantor ................................ 130
Section 14.08. Waiver of Subrogation ................................. 131
Section 14.09. Guarantee Provisions Solely To Define
Relative Rights ..................................... 131
Section 14.10. Trustee to Effectuate Subordination
of Guarantee Obligations ............................ 132
Section 14.11. No Waiver of Guarantee Subordination
Provisions .......................................... 133
Section 14.12. Guarantors To Give Notice To Trustee .................. 134
Section 14.13. Reliance on Judicial Order or
Certificate of Liquidating Agent
Regarding Dissolution, etc. of
Guarantors........................................... 135
Section 14.14. Rights of Trustee as a Holder of
Guarantor Senior Indebtedness;
Preservation of Trustee's Rights .................... 135
Section 14.15. Article Fourteen Applicable to Paying
Agents .............................................. 136
Section 14.16. No Suspension of Remedies ............................. 136
Section 14.17. Trustee's Relation to Guarantor
Senior Indebtedness ................................. 136
Section 14.18. Limitation of Subsidiary Guarantor's
Liability ........................................... 137
-vii-
<PAGE>
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SIGNATURES ............................................................ 138
Exhibit A-1 - Form of Series A Security
Exhibit A-2 - Form of Series B Security
Exhibit B - Form of Legend for Book-Entry Securities
Exhibit C - Form of Certificate To Be Delivered in Connection
with Transfers to Non-QIB Accredited Investors
Exhibit D - Form of Certificate To Be Delivered in Connection
with Transfers Pursuant to Regulation S
Exhibit E - Form of Guarantee
-viii-
<PAGE>
INDENTURE, dated as of November 15, 1996, among Blue Bird Body
Company, a corporation incorporated under the laws of the State of Georgia (the
"Company"), as issuer, Blue Bird Corporation, a corporation incorporated under
the laws of the State of Delaware ("BBC" or a "Guarantor"), as guarantor, and
The Chase Manhattan Bank, a New York corporation, as trustee (the "Trustee").
RECITALS
The Company has duly authorized the creation of an issue of 10 3/4%
Senior Subordinated Notes due 2006 (the "Series A Securities"), and an issue of
10 3/4% Senior Subordinated Notes due 2006, Series B (the "Series B Securities,"
and together with the Series A Securities, the "Securities"), of substantially
the tenor and amount hereinafter set forth, and to provide therefor the Company
has duly authorized the execution and delivery of this Indenture.
BBC has duly authorized its senior subordinated guarantee of the
Securities and to provide therefor, BBC has duly authorized the execution and
delivery of this Indenture and its Guarantee (as hereinafter defined) under the
terms set forth herein.
All things necessary have been done to make the Securities and the
Guarantee, when executed by the Company and BBC, respectively, and authenticated
and delivered hereunder and duly issued by the Company and BBC, respectively,
the valid obligations of the Company and BBC and to make this Indenture a valid
agreement of each of the Company, BBC and the Trustee in accordance with the
terms hereof.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders (as hereinafter defined) of the
Securities, as follows:
<PAGE>
-2-
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a person (i) assumed
in connection with an Asset Acquisition from such person or (ii) existing at the
time such person becomes a Restricted Subsidiary of any other person (other than
any Indebtedness incurred in connection with, or in contemplation of, such Asset
Acquisition or such person becoming such a Restricted Subsidiary).
"Affiliate" means, with respect to any specified person, (i) any
other person, directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified person or (ii) any other
person that owns, directly or indirectly, 5% or more of any class or series of
such person's, or the parent of such person's, Capital Stock or any officer,
director or Affiliate of any such other person or, with respect to any other
natural person, any person having a relationship with such other person by
blood, marriage or adoption not more remote than first cousin. For the purposes
of this definition, "control" when used with respect to any specified person
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of Voting Stock, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent Member" has the meaning set forth in Section 3.16.
"Asset Acquisition" means (i) an Investment by the Company or any
Restricted Subsidiary in any other person pursuant to which such person will
become a Restricted Subsidiary or will be merged with the Company or any
Restricted Subsidiary or (ii) the acquisition by the Company or any Restricted
Subsidiary of the assets of any person which constitute all or substantially all
of the assets of such person, or any division or line of business of such
person.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease or other disposition to any person other than the
Company or a Restricted Subsidiary, in one or a series of related transactions,
of (i) any Capital
<PAGE>
-3-
Stock of any Restricted Subsidiary of the Company; (ii) all or substantially all
of the assets of any division or line of business of the Company or any
Restricted Subsidiary; or (iii) any other properties or assets of the Company or
any Restricted Subsidiary other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" will not include (i) any
sale, issuance, conveyance, transfer, lease or other disposition of properties
or assets that is governed by the provisions described in Article Eight hereof,
(ii) the sale of lease portfolio assets pursuant to the terms of any Lease
Portfolio Documents or (iii) sales of property or equipment that have become
worn out, obsolete or damaged or otherwise unsuitable for use in connection with
the business of the Company or any Restricted Subsidiary, as the case may be.
For purposes of Section 10.16 hereof, the term "Asset Sale" shall not include
any sale, conveyance, transfer, lease or other disposition of any property or
asset, whether in one transaction or a series of related transactions, either
(I) involving assets with a Fair Market Value not in excess of the equivalent of
$250,000 or (II) in connection with a Capitalized Lease Obligation.
"Average Life to Stated Maturity" means, with respect to any
Indebtedness, as at any date of determination, the quotient obtained by dividing
(i) the sum of the products of (a) the number of years from such date to the
date or dates of each successive scheduled principal payment (including, without
limitation, any sinking fund requirements) of such Indebtedness multiplied by
(b) the amount of each such principal payment by (ii) the sum of all such
principal payments.
"Bankruptcy Law" means Title 11, United States Code or any similar
federal or state law relating to bankruptcy, insolvency, receivership,
winding-up, liquidation, reorganization or relief of debtors or the law of any
other jurisdiction relating to bankruptcy, insolvency, receivership, winding-up,
liquidation, reorganization or relief of debtors or any amendment to, succession
to or change in any such law.
"Bankruptcy Order" means any court order made in a proceeding
pursuant to or within the meaning of any Bankruptcy Law, containing an
adjudication of bankruptcy or insolvency, or providing for liquidation,
receivership, winding-up, dissolution, "concordate" or reorganization, or
appointing a Custodian of a debtor or of all or any substantial part of a
debtor's property, or providing for the staying, arrangement, adjustment or
composition of indebtedness or other relief of a debtor.
<PAGE>
-4-
"BBC Guarantee" means the senior subordinated guarantee of BBC in
respect of the Securities pursuant to the terms of Article Fourteen hereof.
"Blue Bird Capital" means Blue Bird Capital Corporation, a
corporation incorporated under the laws of the State of Delaware.
"Board of Directors" means the board of directors of the Company or
any Guarantor, as the case may be, or any duly authorized committee of such
board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or any Guarantor, as the case
may be, to have been duly adopted by its respective Board of Directors and to be
in full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York,
State of New York are authorized or obligated by law, regulation or executive
order to close.
"Canadian Blue Bird" means Canadian Blue Bird Coach Ltd., a
corporation organized under the laws of the Province of Ontario, Canada.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations, rights in or other equivalents (however
designated) of such person's capital stock, and any rights, (other than debt
securities convertible into capital stock), warrants or options exchangeable for
or convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and, for the purpose of this Indenture, the
amount of such obligation at any date shall be the capitalized amount thereof at
such date, determined in accordance with GAAP.
"Cash Equivalents" means at any time, (i) any evidence of
Indebtedness with a maturity of one year or less
<PAGE>
-5-
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that the full faith
and credit of the United States of America is pledged in support thereof); (ii)
certificates of deposit or acceptances with a maturity of one year or less of
any financial institution that is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) commercial paper with a maturity of one year or less issued
by a corporation that is not an Affiliate of the Company (other than Merrill
Lynch and its Affiliates) organized under the laws of any state of the United
States or the District of Columbia and rated at least A-1 by Standard & Poor's
Corporation ("Standard & Poor's") or at least P-1 by Moody's Investor Services,
Inc. ("Moody's"); and (iv) repurchase agreements and reverse repurchase
agreements relating to marketable direct obligations issued or unconditionally
guaranteed by the government of the United States of America or issued by any
agency thereof and backed by the full faith and credit of the United States of
America, in each case, maturing within one year from the date of acquisition.
"Change of Control" means the occurrence of any of the following
events: (i) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) other than the Permitted Holders is or becomes
the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that a person will be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of a majority of the total Voting Stock of the Company or BBC, as
the case may be; (ii) the Company or BBC, as the case may be, consolidates with,
or merges with or into, another person or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to any
person, or any person consolidates with, or merges with or into, the Company or
BBC, as the case may be, in any such event pursuant to a transaction in which
the outstanding Voting Stock of the Company or BBC, as the case may be, is
converted into or exchanged for cash, securities or other property, other than
any such transaction where (a) the outstanding Voting Stock of the Company or
BBC, as the case may be, is converted into or exchanged for Voting Stock (other
than Redeemable Capital Stock) of the surviving or transferee corporation and
(b) the holders of the Voting Stock of the Company or BBC, as the case may be,
immediately prior to such transaction own, directly or
<PAGE>
-6-
indirectly, not less than a majority of the Voting Stock of the surviving or
transferee corporation immediately after such transaction; (iii) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Board of Directors of the Company or BBC (together with any new
directors whose election by the Boards of Directors or whose nomination for
election by the stockholders of the Company or BBC was approved by a vote of 66
2/3% of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) or such other directors as have been appointed by MLCP
cease for any reason to constitute a majority of the Board of Directors of the
Company or BBC, as the case may be, then in office; or (iv) any order, judgment
or decree shall be entered against the Company or BBC decreeing the dissolution
or split up of the Company or BBC and such order shall remain undischarged or
unstayed for a period in excess of 60 days.
"Change of Control Triggering Event" means the occurrence of both a
Change of Control and a Rating Decline.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, or if at any time after the execution of this
Indenture such Commission is not existing and performing the applicable duties
now assigned to it, then the body or bodies performing such duties at such time.
"Company" means the person named as the "Company" in the first
paragraph of this Indenture, until a successor person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by any one of its Chairman of the Board,
its Vice-Chairman, its Chief Executive Officer, its President or a Vice
President, and by its Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and delivered to the Trustee.
"Consolidated Cash Flow Available for Fixed Charges" means, for any
period, (i) the sum of, without duplication, the amounts for such period, taken
as a single accounting period, of (a) Consolidated Net Income, (b) Consolidated
Non-cash Charges, (c) to the extent reducing Consolidated Net Income,
<PAGE>
-7-
Consolidated Interest Expense, and (d) to the extent reducing Consolidated Net
Income, Consolidated Income Tax Expense less (ii) other non-cash items
increasing Consolidated Net Income for such period.
"Consolidated Fixed Charge Coverage Ratio" means the ratio of the
aggregate amount of Consolidated Cash Flow Available for Fixed Charges of the
Company for the four full fiscal quarters immediately preceding the date of the
transaction (the "Transaction Date") giving rise to the need to calculate the
Consolidated Fixed Charge Coverage Ratio (such four full fiscal quarter period
being referred to herein as the "Four Quarter Period") to the aggregate amount
of Consolidated Fixed Charges of the Company for the Four Quarter Period. For
purposes of this definition, if the Transaction Date occurs prior to the first
anniversary of the Issue Date, "Consolidated Cash Flow Available for Fixed
Charges" and "Consolidated Fixed Charges" will be calculated, in the case of the
Company, after giving effect on a pro forma basis as if the Recapitalization
occurred on the first day of the Four Quarter Period. In addition to and without
limitation of the foregoing, for purposes of this definition, "Consolidated Cash
Flow Available for Fixed Charges" and "Consolidated Fixed Charges" will be
calculated, without duplication, after giving effect on a pro forma basis for
the period of such calculation to (i) the incurrence of any Indebtedness of the
Company or any of the Restricted Subsidiaries during the period commencing on
the first day of the Four Quarter Period to and including the Transaction Date
(the "Reference Period"), including, without limitation, the incurrence of the
Indebtedness giving rise to the need to make such calculation, as if such
incurrence occurred on the first day of the Reference Period, (ii) an adjustment
to eliminate or include, as applicable, the Consolidated Cash Flow Available for
Fixed Charges and Consolidated Fixed Charges of the Company directly
attributable to assets which are the subject of any Asset Sale or Asset
Acquisition (including, without limitation, any Asset Acquisition giving rise to
the need to make such calculation as a result of the Company or one of the
Restricted Subsidiaries (including any person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness) occurring during the Reference
Period, as if such Asset Sale or Asset Acquisition occurred on the first day of
the Reference Period and (iii) the retirement of Indebtedness during the
Reference Period which cannot thereafter be reborrowed occurring as if retired
on the first day of the Reference Period. For purposes of calculating
Consolidated Fixed Charges for this definition
<PAGE>
-8-
of "Consolidated Fixed Charge Coverage Ratio," interest on Indebtedness incurred
during the Four Quarter Period under any revolving credit facility which can be
borrowed and repaid without reducing the commitments thereunder shall be the
actual interest during the Four Quarter Period. Furthermore, in calculating
Consolidated Fixed Charges for purposes of determining the denominator (but not
the numerator) of this definition of "Consolidated Fixed Charge Coverage Ratio,"
(i) interest on Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter will be
deemed to accrue at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (ii) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Reference Period; and (iii) notwithstanding clause (i) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Rate Protection Obligations, will be
deemed to accrue at the rate per annum resulting after giving effect to the
operation of such agreements. If the Company or any Restricted Subsidiary,
directly or indirectly, guarantees Indebtedness of a third person, the above
definition will give effect to the incurrence of such guaranteed Indebtedness as
if the Company or any Restricted Subsidiary had directly incurred or otherwise
assumed such guaranteed Indebtedness.
"Consolidated Fixed Charges" means, for any period, the sum of,
without duplication, the amounts for such period of (i) Consolidated Interest
Expense and (ii) the aggregate amount of cash dividends and other distributions
paid or accrued during such period in respect of Redeemable Capital Stock.
"Consolidated Income Tax Expense" means, for any period, the
provision for federal, state, local and foreign income taxes of the Company and
the Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP. To the extent that Blue Bird Capital is an
Unrestricted Subsidiary during such period and to the extent payments under the
Income Taxes Agreement reduce Consolidated Net Income, Consolidated Income Tax
Expense shall include such payments under the Income Taxes Agreement.
<PAGE>
-9-
"Consolidated Interest Expense" means, for any period, without
duplication, the sum of (i) the interest expense of the Company and the
Restricted Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP, including, without limitation, (a) any amortization of
debt discount attributable to such period, (b) the net cost under Interest Rate
Protection Obligations (including any amortization of discounts), (c) the
interest portion of any deferred payment obligation, (d) all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and (e) all accrued interest, and (ii) all but the
principal component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by the Company and the Restricted Subsidiaries
during such period and as determined on a consolidated basis in accordance with
GAAP.
"Consolidated Net Income" means, for any period, the consolidated
net income (or loss) of the Company and the Restricted Subsidiaries for such
period as determined in accordance with GAAP, adjusted, to the extent included
in calculating such net income (or loss), by excluding, without duplication, (i)
all extraordinary gains or losses (net of fees and expenses relating to the
transaction giving rise thereto), (ii) the portion of net income (or loss) of
the Company and the Restricted Subsidiaries allocable to minority interests in
unconsolidated persons to the extent that cash dividends or distributions have
not actually been received by the Company or one of the Restricted Subsidiaries,
(iii) net income (or loss) of any person combined with the Company or one of the
Restricted Subsidiaries in a "pooling of interests" basis attributable to any
period prior to the date of combination, (iv) any gain or loss, net of taxes,
realized upon the termination of any employee pension benefit plan, (v) gains or
losses in respect of any Asset Sales by the Company or one of the Restricted
Subsidiaries (net of fees and expenses relating to the transaction giving rise
thereto), and (vi) the net income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or indirectly,
by operation of the terms of its charter or of any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulations applicable to
that Restricted Subsidiary or its stockholders. Consolidated Net Income shall
not be reduced for any charges arising out of any transaction undertaken as part
of the Recapitalization, but shall be
<PAGE>
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reduced by dividends described under clause (iv) of the last paragraph of
Section 10.14(b) hereof.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the Company and the
Restricted Subsidiaries reducing net income for such period, determined on a
consolidated basis in accordance with GAAP.
"control" means, with respect to any specified person, the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 450 West 33rd Street, 15th Floor, New York, New York 10001, Attention:
Corporate Trustee Administration.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company against fluctuations in currency values.
"Custodian" means any receiver, interim receiver, receiver and
manager, receiver-manager, trustee, assignee, liquidator, sequestrator or
similar official under any Bankruptcy Law or any other law respecting secured
creditors and the enforcement of their security or any other person with like
powers whether appointed judicially or out of court and whether pursuant to an
interim or final appointment.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Designated Senior Indebtedness" means (i) all Senior Indebtedness
under the New Credit Agreement and (ii) any other Senior Indebtedness which, at
the time of the incurrence of such Indebtedness, is specifically designated in
the instrument
<PAGE>
-11-
evidencing such Senior Indebtedness as "Designated Senior Indebtedness" by the
Company.
"Designation" shall have the meaning specified in Section 10.22
hereof.
"Designation Amount" has the meaning specified in Section 10.22
hereof.
"Distribution" means the special cash dividend of the Company on all
shares of its common stock and the special cash dividend of BBC on all shares of
its common stock and cash payment in respect of options to purchase its common
stock, each paid in connection with the Recapitalization.
"Domestic Subsidiary" means a Restricted Subsidiary organized under
the laws of the United States, any State or territory thereof or the District of
Columbia.
"Event of Default" shall have the meaning specified in Section 5.01
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Securities" means the Series B Securities (the terms of
which are identical to the Series A Securities except that the Exchange
Securities shall be registered under the Securities Act, and shall not contain
the restrictive legend on the face of the form of Series A Securities) issued
pursuant to this Indenture.
"Fair Market Value" means, with respect to any asset, the price
which could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under pressure
or compulsion to complete the transaction. Fair Market Value will be determined
by the Board of Directors of the Company acting in good faith evidenced by a
Board Resolution thereof delivered to the Trustee.
"Fiscal Year" shall mean the fiscal year of the Company, which ends
on the Saturday nearest October 31 of each year.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting
<PAGE>
-12-
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 may be approved by a significant
segment of the accounting profession of the United States, which are applicable
as of the Issue Date and are consistently applied.
"Global Security" has the meaning provided in Section 3.03 hereof.
"guarantee" means, as applied to any obligation, (i) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantee" means the BBC Guarantee and any additional guarantees
created pursuant to the provisions of this Indenture of the Company's Indenture
Obligations pursuant to the guarantee included in this Indenture.
"Guarantor" means BBC and each other issuer of a Guarantee.
"Guarantor Senior Indebtedness" means with respect to the
Indebtedness of any Guarantor, any such Indebtedness represented by a guarantee
by such Guarantor of any Senior Indebtedness.
"Holder" or "Securityholder" means a person in whose name a Security
is registered in the Security Register.
"Income Taxes Agreement" means the agreement between the Company and
Blue Bird Capital, dated October 18, 1995, as in effect on the Issue Date or as
modified, amended or supplemented in any respect that is not materially adverse
in any respect to the Company.
"Indebtedness" means, with respect to any person, without
duplication, (i) all indebtedness of such person for borrowed money or for the
deferred purchase price of property or services, excluding any trade payable and
other accrued
<PAGE>
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current liabilities incurred in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such person in
connection with any letters of credit, bankers acceptance or other similar
credit transaction and in connection with any agreement to purchase, redeem,
exchange, convert or otherwise acquire for value any Capital Stock of such
person, or any warrants, rights or options to acquire such Capital Stock, now or
hereafter outstanding, (ii) all obligations of such person evidenced by bonds,
notes, debentures or other similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (iv) all Capitalized Lease
Obligations of such person, (v) all Indebtedness referred to in the preceding
clauses of other persons and all dividends of other persons, the payment of
which is secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon
property (including, without limitation, accounts and contract rights) owned by
such person, even though such person has not assumed or become liable for the
payment of such Indebtedness (the amount of such obligation being deemed to be
the lesser of the value of such property or asset or the amount of the
obligation so secured), (vi) all guarantees of Indebtedness of such person,
(vii) all Redeemable Capital Stock valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends,
(viii) all obligations under or in respect of currency exchange contracts and
Interest Rate Protection Obligations of such person, and (ix) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (i) through (viii) above. For
purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital
Stock which does not have a fixed repurchase price will be calculated in
accordance with the terms of such Redeemable Capital Stock as if such Redeemable
Capital Stock were purchased on any date on which Indebtedness will be required
to be determined pursuant to this Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Redeemable Capital Stock, such fair
market value to be determined in good faith by the Board of Directors of the
issuer of such Redeemable Capital Stock.
<PAGE>
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"Indenture" means this instrument as originally executed (including
all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Indenture Obligations" means the obligations of the Company and any
other obligor under this Indenture or under the Securities, including BBC, to
pay principal of, premium, if any, and interest on the Securities when due and
payable, whether at maturity, by acceleration, call for redemption or repurchase
or otherwise, and all other amounts due or to become due under or in connection
with this Indenture, the Securities or the Guarantees and the performance of all
other obligations to the Trustee (including, but not limited to, payment of all
amounts due the Trustee under Section 6.07 hereof) and the Holders of the
Securities under this Indenture, the Securities and the Guarantees, according to
the terms thereof.
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not have, a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Purchasers" means Merrill Lynch and BT Securities
Corporation.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest," when used with respect to any Security, means the amount
of all interest accruing on such Security, including all additional interest
payable on the Securities pursuant to the Registration Rights Agreement and all
interest accruing subsequent to the occurrence of any events specified in
Sections 5.01(h), (i) and (j) or which would have accrued but for any such
event, whether or not such claims are allowable under applicable law.
"Interest Payment Date" means, when used with respect to any
Security, the Stated Maturity of an installment of interest on such Security, as
set forth in such Security.
<PAGE>
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"Interest Rate Protection Obligations" means the obligations of any
person pursuant to any arrangement with any other person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such person
calculated by applying a fixed or a floating rate of interest on the same
notional amount or any other arrangement involving payments by or to such person
based upon fluctuations in interest rates.
"Investment" means, with respect to any person, any direct or
indirect advance, loan or other extension of credit (including by means of a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others or otherwise), or any purchase or acquisition by such person of
any Capital Stock, bonds, notes, debentures or other securities or evidences of
Indebtedness issued by any other person. Investments will exclude extensions of
trade credit on commercially reasonable terms in accordance with normal trade
practices. In addition to the foregoing, any foreign exchange
contract, currency swap, Interest Rate Protection Obligation or similar
agreement shall constitute an Investment.
"Issue Date" means the original date of issuance of the Securities.
"Lease Financing Transaction" means any transaction that may be
entered into by the Company or any Restricted Subsidiary on an arm's-length
basis and with no recourse to the Company or any Restricted Subsidiary (other
than (i) recourse limited to the Capital Stock of an Unrestricted Subsidiary
pledged by the Company or a Restricted Subsidiary in connection with a Lease
Financing Transaction and (ii) recourse limited to circumstances where a
governmental authority fails to allocate funds to a lease in its budget)
involving (a) the sale by the Company or a Subsidiary of the Company of lease
receivables (including a sale to any Unrestricted Subsidiary and
securitization transactions); (b) the sale by any Subsidiary of the Company
of lease receivables (including securitization transactions); (c) the sale by
the Company of buses and related equipment to any Subsidiary of the Company
to facilitate such Subsidiary subsequently selling or otherwise financing the
lease receivables arising from such buses and related equipment; (d) the sale
or lease by any Subsidiary of the Company of buses and related equipment for
which the receivables arising
<PAGE>
-16-
from such sales and leases will be sold or financed by such Subsidiary; or (e)
the financing of any of the foregoing.
"Lease Portfolio Documents" means (i) the Amended and Restated Loan
Agreement dated March 29, 1996 by and between Blue Bird Capital and LaSalle
National Bank and all agreements executed pursuant thereto, as the same may be
amended, renewed, extended, substituted, replaced, supplemented or otherwise
modified from time to time, or (ii) any documentation relating to any other
Lease Financing Transaction.
"Lien" means any mortgage, charge, pledge, lien (statutory or
other), privilege, security interest, hypothecation, cessation and transfer,
lease of real property, assignment for security, claim, deposit arrangement, or
preference or priority or other encumbrance upon or with respect to any property
of any kind, whether real, personal or mixed, moveable or immovable, now owned
or hereafter acquired. A person will be deemed to own subject to a Lien any
property which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement.
"Material Subsidiary" means Canadian Blue Bird and each other
Restricted Subsidiary of the Company that is a "significant subsidiary" as
defined in Rule 1-02 of Regulation S-X under the Securities Act and the Exchange
Act (as such regulation is in effect on the Issue Date).
"Maturity Date" means, with respect to any Security, the date on
which any principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity with respect to such principal
or by declaration of acceleration, call for redemption or purchase or otherwise.
"Merrill Lynch" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
"MLCP" means Merrill Lynch Capital Partners, Inc.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of cash or
Cash Equivalents (except to the extent that such obligations are financed or
sold with recourse to the Company or any Restricted Subsidiary)
<PAGE>
-17-
net of (i) brokerage commissions and other reasonable fees and expenses
(including fees and expenses of legal counsel and investment bankers) related to
such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset
Sale, (iii) amounts required to be paid to any person (other than the Company or
any Restricted Subsidiary) owning a beneficial interest in or having a Lien on
the assets subject to the Asset Sale and (iv) appropriate amounts to be provided
by the Company or any Restricted Subsidiary, as the case may be, as a reserve
required in accordance with GAAP consistently applied against any liabilities
associated with such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale.
"New Credit Agreement" means the Amended and Restated Credit
Agreement dated as of November 15, 1996 among the Company, BBC, Bankers Trust
& Co., as Administrative Agent, Merrill Lynch & Co., as Syndication Agent,
and the other financial institutions signatory thereto, as in effect on the
Issue Date, and as such agreement may be amended, renewed, extended,
substituted, refinanced, replaced, supplemented or otherwise modified from
time to time, and includes any agreement (i) extending the maturity of all or
any portion of the Indebtedness thereunder, (ii) adding additional borrowers
or guarantors thereunder and (iii) increasing the amount to be borrowed
thereunder; provided that in the case of clauses (i), (ii), and (iii), any
such agreement is not prohibited by this Indenture.
"Non-Global Purchasers" shall have the meaning specified in Section
3.03 hereof.
"Non-payment Default" means any event (other than a Payment Default)
the occurrence of which entitles one or more persons to act to accelerate the
maturity of any Designated Senior Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated November
13, 1996 pursuant to which the Series A Securities were offered, and any
supplement thereto.
"Officer" means, with respect to the Company or BBC, the Chairman of
the Board, a Vice Chairman, the President, a Vice President, the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer.
<PAGE>
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"Officers' Certificate" means a certificate signed by the Chairman
of the Board, a Vice Chairman, the President or a Vice President, and by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer, of
the Company or any Guarantor, as the case may be, and delivered to the Trustee.
"Offshore Physical Securities" shall have the meaning specified in
Section 3.03 hereof.
"Opinion of Counsel" means a written opinion of counsel who may be
counsel for the Company, a Guarantor, or the Trustee, and who shall be
reasonably acceptable to the Trustee.
"Outstanding" means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the Company or any
Guarantor or any Affiliate thereof) in trust or set aside and segregated
in trust by the Company or any Guarantor or any Affiliate thereof (if the
Company or such Guarantor or Affiliate shall act as Paying Agent) for the
Holders of such Securities; provided, however, that if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to
this Indenture or provision therefor satisfactory to the Trustee has been
made;
(iii) Securities with respect to which the Company has effected
defeasance or covenant defeasance as provided in Article Four, to the
extent provided in Sections 4.02 and 4.03; and
(iv) Securities in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this Indenture, other
than any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands the Securities are valid
obligations of the Company;
<PAGE>
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provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company, any Guarantor or any other obligor upon the Securities or any
Affiliate of the Company, any Guarantor or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that a
Responsible Officer of the Trustee knows to be so owned shall be so disregarded.
The Company shall notify the Trustee, in writing, when it repurchases or
otherwise acquires Securities, of the aggregate principal amount of such
Securities so repurchased or otherwise acquired. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company, any
Guarantor or any other obligor upon the Securities or any Affiliate of the
Company, any Guarantor or such other obligor. If the Paying Agent holds, in its
capacity as such, on any Maturity Date or on any optional redemption date money
sufficient to pay all accrued interest and principal with respect to such
Securities payable on that date and is not prohibited from paying such money to
the Holders thereof pursuant to the terms of this Indenture, then on and after
that date such Securities cease to be Outstanding and interest on them ceases to
accrue. Securities may also cease to be outstanding to the extent expressly
provided in Article Eight.
"Pari Passu Indebtedness" means any Indebtedness of the Company or
any Subsidiary Guarantor ranking pari passu in right of payment with the
Securities or the Guarantee of such Subsidiary Guarantor, as applicable.
"Paying Agent" shall have the meaning specified in Section 3.02
hereof.
"Payment Default" means any default in the payment of principal,
premium, if any, or interest on any Designated Senior Indebtedness beyond any
applicable grace period with respect thereto.
<PAGE>
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"Permitted Holders" means MLCP or any other person, directly or
indirectly, controlling, controlled by or under direct or indirect common
control with MLCP.
"Permitted Investment" means (i) Investments in any of the
Securities; (ii) Investments in Cash Equivalents; (iii) Investments by the
Company or any Restricted Subsidiary in a Restricted Subsidiary or another
person, if as a result of such Investment (a) such other person becomes a
Restricted Subsidiary or (b) such other person is merged or consolidated with or
into, or transfers or conveys all or substantially all of its assets to, the
Company or a Restricted Subsidiary; (iv) Investments received in connection with
the bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers, in
each case arising in the ordinary course of business; (v) Investments in lease
receivables, with respect to leases on terms consistent with the Company's prior
practices; (vi) Investments in any Subsidiary of the Company pursuant to the
terms of any Lease Portfolio Documents on a basis consistent with past practice;
provided such Subsidiary in engaged solely in the business of financing or
carrying lease receivables related to the Company's products; (vii) Investments
in Interest Rate Protection Obligations and currency exchange contracts
permitted by Section 10.12 hereof; (viii) loans or advances to officers or
employees of the Company and the Restricted Subsidiaries in the ordinary course
of business for bona fide business purposes of the Company and the Restricted
Subsidiaries (including travel and moving expenses) not in excess of $500,000 in
the aggregate at any one time outstanding; and (ix) Investments not otherwise
described in this definition in an aggregate amount not exceeding $5,000,000 at
any time outstanding.
"Permitted Junior Securities" shall have the meaning specified in
Section 12.02 hereof.
"person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Security" shall have the meaning specified in Section 3.03
hereof.
"Predecessor Security" means, with respect to any particular
Security, every previous Security evidencing all or
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a portion of the same debt as that evidenced by such particular Security; and,
for the purposes of this definition, any Security authenticated and delivered
under Section 3.06 hereof in exchange for a mutilated Security or in lieu of a
lost, destroyed or stolen Security shall be deemed to evidence the same debt as
the mutilated, lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any person, any and all
shares, interests, participation or other equivalents (however designated) of
such person's preferred or preference stock whether now outstanding, or issued
after the date of this Indenture, and including, without limitation, all classes
and series of preferred or preference stock of such person.
"Private Exchange Securities" shall have the meaning specified in
Section 3.03 hereof.
"Private Placement Legend" shall mean the first paragraph of the
legend initially set forth in the Securities in the form set forth on Exhibit
A-1.
"Public Equity Offering" means an underwritten public offering of
Capital Stock (other than Redeemable Capital Stock) of the Company or BBC made
on a primary basis by the Company or BBC pursuant to a registration statement
filed with and declared effective by the Commission in accordance with the
Securities Act.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Rating Agencies" means (i) Standard & Poor's, (ii) Moody's and
(iii) if Standard & Poor's or Moody's or both shall not make a rating of the
Securities publicly available, a nationally recognized securities rating agency
or agencies, as the case may be, selected by the Company, which shall be
substituted for Standard & Poor's or Moody's or both, as the case may be.
"Rating Category" means (i) with respect to Standard & Poor's, any
of the following categories: BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's, any of the following categories: Ba,
B, Caa, Ca, C and D (or equivalent successor categories); and (iii) the
equivalent of any such category of Standard & Poor's or Moody's used by another
Rating Agency. In determining whether the
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rating of the Securities has decreased by one or more gradations, gradations
within Rating Categories (+ and - for Standard & Poor's; 1, 2 and 3 for Moody's;
or the equivalent gradations for another Rating Agency) shall be taken into
account (e.g., with respect to Standard & Poor's, a decline in a rating from BB+
to BB, as well as from BB- to B+, will constitute a decrease of one gradation).
"Rating Date" means the date which is 90 days prior to the earlier
of (i) a Change of Control and (ii) public notice of the occurrence of a Change
of Control or of the intention by the Company or any Permitted Holder to effect
a Change of Control.
"Rating Decline" means the decrease (as compared with the Rating
Date) by one or more gradations (including gradations within Rating Categories
as well as between Rating Categories) of the rating of the Securities by either
Rating Agency on, or within six months after, the date of public notice of the
occurrence of a Change of Control or of the intention by the Company or any
Permitted Holder to effect a Change of Control (which period shall be extended
for so long as the rating of the Securities is under publicly announced
consideration for possible downgrade by any of the Rating Agencies).
"Recapitalization" means the Recapitalization of the Company, as
defined in the Offering Memorandum.
"Redeemable Capital Stock" means, with respect to any person, any
Capital Stock which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable, except to the extent
exchangeable at the option of such person subject to the terms of any debt
instrument to which such person is a party), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is exchangeable for Indebtedness (other than at the option of such
person), or is redeemable at the option of the holder thereof, in whole or in
part, in any such case, on or prior to the final maturity date of the
Securities.
"Redemption Date" means, with respect to any Security to be
redeemed, any date fixed for such redemption by or pursuant to this Indenture
and the terms of the Securities.
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"Redemption Price" means, with respect to any Security to be
redeemed, the price at which it is to be redeemed pursuant to this Indenture and
the terms of the Securities.
"Refinance" means, with respect to any Indebtedness, any
refinancing, redemption, retirement, renewal, extension or refunding of such
Indebtedness.
"Registered Exchange Offer" means the registration by the Company
and the Guarantors under the Securities Act of all Series B Securities and the
related Guarantees pursuant to a registration statement under which the Company
and the Guarantors offer each Holder of Series A Securities and the related
Guarantees the opportunity to exchange all Series A Securities (together with
the related Guarantees) held by such Holder for Series B Securities and the
related Guarantees in an aggregate principal amount equal to the aggregate
principal amount of Series A Securities held by such Holder, all in accordance
with the terms and conditions of the Registration Rights Agreement.
"Registrable Securities" shall have the meaning specified in the
Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of November 19, 1996 by and among the Company, BBC and the
Initial Purchasers, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date specified in the
Securities.
"Regulation S" means Regulation S under the Securities Act.
"Responsible Officer" means, with respect to the Trustee, the
chairman or vice chairman of the board of directors, the chairman or vice
chairman of the executive committee of the board of directors, the president,
any vice president, the secretary, any assistant secretary, the treasurer, any
assistant treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller and any assistant controller 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 of the Trustee to whom
any corporate trust matter is
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referred because of his or her knowledge of and familiarity with the particular
subject.
"Restricted Payment" has the meaning specified in Section 10.14
hereof.
"Restricted Security" shall have the meaning specified in Rule
144(a)(3) under the Securities Act; provided that the Trustee shall be entitled
to request and conclusively rely upon an Opinion of Counsel with respect to
whether a Security is a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been designated by the Board of Directors of the Company, by a Board
Resolution delivered to the Trustee, as an Unrestricted Subsidiary pursuant to
and in compliance with Section 10.22 hereof. Any such Designation may be revoked
by a Board Resolution of the Company delivered to the Trustee, subject to the
provisions of Section 10.22 hereof.
"Revocation" shall have the meaning specified in Section 10.22
hereof.
"Revolving Credit Facility" means the credit facility providing
working capital loans on a revolving basis in the New Credit Agreement.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities" shall have the meaning specified in the recitals of
this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" shall have the respective meanings specified in
Section 3.05 hereof.
"Security Registrar" or "Registrar" shall have the meaning specified
in Section 3.02 hereof.
"Senior Indebtedness" means the principal of, premium, if any, and
interest on any Indebtedness of the Company, whether outstanding on the Issue
Date or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides
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that such Indebtedness shall not be senior in right of payment to the
Securities. Without limiting the generality of the foregoing, "Senior
Indebtedness" will include the principal of, premium, if any, and interest
(including interest that would accrue but for the filing of a petition
initiating any proceeding under any Bankruptcy Law, whether or not such claim is
allowable in such proceeding) on all obligations of every nature of the Company
from time to time owed to the lenders under the New Credit Agreement, including,
without limitation, principal of and interest on, and all fees and expenses
payable under the New Credit Agreement. Notwithstanding the foregoing, "Senior
Indebtedness" does not include, to the extent constituting Indebtedness, (i)
Indebtedness evidenced by the Securities, (ii) Indebtedness that is subordinate
or junior in right of payment to any Indebtedness of the Company, (iii)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock, (v)
Indebtedness for goods, materials or services purchased in the ordinary course
of business or Indebtedness consisting of trade payables or other current
liabilities (other than any current liabilities owing under the New Credit
Agreement or the current portion of any long-term Indebtedness which would
constitute Senior Indebtedness but for the operation of this clause (v)), (vi)
Indebtedness of or amounts owed by the Company for compensation to employees or
for services rendered to the Company, (vii) any liability for federal, state,
local or other taxes owed or owing by the Company, (viii) Indebtedness of the
Company to a Restricted Subsidiary of the Company or any other Affiliate of the
Company or any of such Affiliate's Restricted Subsidiaries, other than
Indebtedness owed to Merrill Lynch or an Affiliate thereof by reason of its
ownership of securities of the Company acquired in the ordinary course of its
trading or underwriting activities, whether such securities are held by it for
its own account or as nominee, (ix) that portion of any Indebtedness which at
the time of issuance is issued in violation of this Indenture and (x) amounts
owing under leases (other than Capitalized Lease Obligations).
"Senior Representative" means the agent under the New Credit
Agreement or other representatives designated in writing to the Trustee of the
holders of any class or issue of Designated Senior Indebtedness.
"Series A Securities" has the meaning specified in the first recital
of this Indenture.
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"Series B Securities" has the meaning specified in the first recital
of this Indenture.
"Special Record Date" means, with respect to the payment of any
Defaulted Interest, a date fixed by the Trustee pursuant to Section 3.07 hereof.
"Stated Maturity" means, with respect to any Security or any
installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable, and when used with respect to any other
Indebtedness, means the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness, or
any installment of interest thereon, is due and payable.
"Subordinated Indebtedness" means, with respect to the Company,
Indebtedness of the Company which is expressly subordinated in right of payment
to the Securities or, with respect to any Subsidiary Guarantor, Indebtedness of
such Subsidiary Guarantor which is expressly subordinated in right of payment to
the Guarantee of such Subsidiary Guarantor.
"Subsidiary" means, with respect to any person, any other person of
which a majority of the equity ownership or the Voting Stock is, at the time,
owned, directly or indirectly, by such person.
"Subsidiary Guarantor" means each of the Company's Subsidiaries that
in the future executes a supplemental indenture in which such Subsidiary agrees
to be bound by the terms of this Indenture as a Guarantor.
"Term Facilities" means, collectively, the facilities providing term
loans in the New Credit Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939, as amended.
"Trustee" means the person named as the "Trustee" in the first
paragraph of this Indenture, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" means a Subsidiary of the Company (other
than a Subsidiary Guarantor) designated as such
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pursuant to and in compliance with Section 10.22 hereof. Any such Designation
may be revoked by a Board Resolution of the Company delivered to the Trustee,
subject to the provisions of Section 10.22 hereof. Blue Bird Capital will be
treated as an Unrestricted Subsidiary under this Indenture as of the Issue Date.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"Voting Stock" means any class or classes of Capital Stock pursuant
to which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any persons (irrespective of whether or not, at the time, stock
of any other class or classes will have, or might have, voting power by reason
of the happening of any contingency).
"Wholly-Owned Restricted Subsidiary" means any Restricted
Subsidiary of which 100% of the outstanding Capital Stock is owned by the
Company and/or another Wholly-Owned Restricted Subsidiary. For purposes of
this definition, any directors' qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of a Restricted Subsidiary.
"Wholly-Owned Unrestricted Subsidiary" means any Unrestricted
Subsidiary of which 100% of the outstanding
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Capital Stock is owned by the Company and/or a Wholly-Owned Restricted
Subsidiary and/or another Wholly-Owned Unrestricted Subsidiary. For purposes of
this definition, any directors' qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of an Unrestricted Subsidiary.
Section 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Act" 1.05
"Asset Sale Offer" 10.16
"Asset Sale Offer Price" 10.16
"Asset Sale Purchase Date" 10.16
"Change of Control Date" 10.11
"Change of Control Offer" 10.11
"Change of Control Payment Date" 10.11
"covenant defeasance" 4.03
"Defaulted Interest" 3.07
"defeasance" 4.02
"Defeased Securities" 4.01
"Excess Proceeds" 10.16
"Guarantor Payment Blockage Period" 14.06
"incur" 10.12
"insolvent person" 4.04
"Payment Blockage Period" 12.03
"Surviving Entity" 8.01
Section 1.03. Rules of Construction.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
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(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(e) all references to "$" or "dollars" shall refer to the lawful
currency of the United States of America; and
(f) the words "include," "included" and "including" as used herein
shall be deemed in each case to be followed by the phrase "without
limitation."
Section 1.04. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
person, or that they be so certified or covered by only one document, but one
such person may certify or give an opinion with respect to some matters and one
or more other persons as to other matters, and any such person may certify or
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or any
Guarantor may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or opinion
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company or any
Guarantor stating that the information with respect to such factual matters is
in the possession of the Company or any Guarantor, unless such counsel knows, or
in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to such matters are erroneous.
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Where any person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated, with
proper identification of each matter covered therein, and form one instrument.
Section 1.05. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution (as provided below in
subsection (b) of this Section 1.05) of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient.
(c) The ownership of Securities shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Security shall bind every future
Holder of the same Security or the Holder of every Security issued upon the
transfer thereof or in exchange therefor or in lieu thereof to the same extent
as the original Holder, in respect of anything done, suffered or omitted to be
done by the Trustee, any Paying Agent or the Company or any Guarantor in
reliance thereon, whether or not notation of such action is made upon such
Security.
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Section 1.06. Notices, etc., to the Trustee, the Company and the
Guarantors.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company or any Guarantor
shall be sufficient for every purpose hereunder if made, given, furnished
or filed, in writing, to or with the Trustee at 450 West 33rd Street, 15th
Floor, New York, New York 10001, Attention: Corporate Trustee
Administration or at any other address previously furnished in writing to
the Holders, the Company and the Guarantors by the Trustee;
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose (except as otherwise expressly provided herein)
hereunder if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at Blue Bird Body Company, 3920 Arkwright Road,
Macon, Georgia 31210, Attention: Chief Executive Officer, or at any other
address previously furnished in writing to the Trustee by the Company; or
(c) a Guarantor by the Trustee or by any Holder shall be sufficient
for every purpose (except as otherwise expressly provided herein)
hereunder if in writing and mailed, first-class postage prepaid, to such
Guarantor addressed to it at Blue Bird Corporation, 3920 Arkwright Road,
Macon, Georgia 31210, Attention: Chief Executive Officer, or other address
previously furnished in writing to the Trustee by such Guarantor.
Section 1.07. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise expressly provided
herein) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at the address of such Holder as it appears in the
Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
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sufficiency of such notice with respect to other Holders. Any notice when mailed
to a Holder in the aforesaid manner shall be conclusively deemed to have been
received by such Holder whether or not actually received by such Holder. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 1.08. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such provision or requirement of the Trust Indenture Act shall
control.
If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to this Indenture as so modified or
excluded, as the case may be.
Section 1.09. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by the Company, BBC
and any other Guarantors, shall bind their respective successors and assigns,
whether so expressed or not.
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Section 1.11. Separability Clause.
In case any provision in this Indenture or in the Securities or any
Guarantee issued pursuant hereto 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 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Securities or in any Guarantee
issued pursuant hereto, express or implied, shall give to any person (other than
the parties hereto and their successors hereunder, any Paying Agent and the
Holders) any benefit or any legal or equitable right, remedy or claim under this
Indenture.
Section 1.13. GOVERNING LAW.
THIS INDENTURE, THE SECURITIES AND THE GUARANTEE SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 1.14. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the
Company or of a Guarantor shall not have any liability for any obligations of
the Company or a Guarantor under the Securities, the Guarantee or this Indenture
or for any claim based on, in respect of or by reason of such obligations or
their creation.
Section 1.15. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or condition exists.
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Section 1.16. Exhibits.
All exhibits attached hereto are by this reference made a part
hereof with the same effect as if herein set forth in full.
Section 1.17. Counterparts.
This Indenture may be executed in any number of counterparts, each
of which shall be an original; but such counterparts shall together constitute
but one and the same instrument.
Section 1.18. Duplicate 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.
ARTICLE TWO
SECURITY AND GUARANTEE FORMS
Section 2.01. Form and Dating.
The Securities and the Trustee's certificate of authentication with
respect thereto and the Guarantees shall be in substantially the forms set
forth, or referenced, in Exhibit A-1, Exhibit A-2 and Exhibit E, respectively,
annexed hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any applicable law
or with the rules of the Depository, any clearing agency or any securities
exchange or as may, consistently herewith, be determined by the officers
executing such Securities and Guarantees, as evidenced by their execution
thereof.
The definitive Securities and Guarantees shall be printed,
typewritten, lithographed or engraved or produced by any combination of these
methods or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities and such Guarantees may be listed,
all as determined by the officers executing such Securities and
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Guarantees, as evidenced by their execution of such Securities and Guarantees.
Each Security shall be dated the date of its issuance and shall show
the date of its authentication. The terms and provisions contained in the
Securities shall constitute, and are expressly made, a part of this Indenture.
ARTICLE THREE
THE SECURITIES
Section 3.01. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $100,000,000 in
aggregate principal amount of Series A Securities and Series B Securities,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section
3.03, 3.04, 3.05, 3.06, 9.06, 10.11, 10.16 or 11.08.
The Series A Securities shall be known and designated as the "10
3/4% Senior Subordinated Notes due 2006" of the Company. The Series B Securities
shall be known and designated as the "10 3/4% Senior Subordinated Notes due
2006, Series B" of the Company. The final Stated Maturity of the Series A
Securities and the Series B Securities shall be November 15, 2006, and the
Series A Securities and Series B Securities shall each bear interest at the rate
of 10 3/4% per annum from the Issue Date or from the most recent Interest
Payment Date to which interest has been paid, as the case may be, payable on May
15, 1997 and semi-annually thereafter on November 15 and May 15, in each year,
until the principal thereof is paid or duly provided for. Subject to Article
Twelve, interest on any overdue principal, interest (to the extent lawful) or
premium, if any, shall be payable on demand.
Series B Securities may be issued only in exchange for a like
principal amount of Series A Securities pursuant to a Registered Exchange Offer.
The Securities shall be redeemable as provided in Article Eleven and
paragraph 5 of the Series A Securities and paragraph 4 of the Series B
Securities.
At the election of the Company, the entire Indebtedness on the
Securities or certain of the Company's obligations
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and covenants and certain Events of Default thereunder may be defeased as
provided in Article Four.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve. The Guarantee of each Guarantor
shall be subordinated in right of payment to Guarantor Senior Indebtedness of
such Guarantor as provided in Article Fourteen hereof.
Section 3.02. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Securities may be presented for registration of transfer or for exchange
(the "Security Registrar" or "Registrar"), an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Securities may be presented for payment (the "Paying Agent" or "Agent")
and an office or agency where notices and demands to or upon the Company in
respect of the Securities, the Guarantees and this Indenture may be served. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" or "Agent" includes any
additional paying agent. The Company may act as its own Paying Agent, except for
the purposes of payments on account of principal on the Securities pursuant to
Sections 10.11 and 10.16 hereof.
The Company shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall incorporate the provisions
of the Trust Indenture Act. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 6.07 hereof.
The Company initially appoints the Trustee as the Registrar and
Paying Agent and agent for service of notices and demands in connection with the
Securities.
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Section 3.03. Execution and Authentication.
Two Officers shall execute the Securities on behalf of the Company
by either manual or facsimile signature.
Securities bearing the manual or facsimile signature of individuals
who were at any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices on the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company many deliver Securities executed by the Company
to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as
provided in this Indenture and not otherwise.
A Security shall not be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose until the Trustee manually signs the
certificate of authentication on the Security. The Trustee's signature on such
certificate shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate Series A Securities for original
issue in an aggregate principal amount at maturity not to exceed $100,000,000,
upon receipt of a Company Order. In addition, on or prior to the date of the
Registered Exchange Offer, the Trustee or an authenticating agent shall
authenticate Exchange Securities (including any Private Exchange Securities
which will be in the form of Exhibit A-2 but which shall have the restrictive
legend contained in Exhibit A-1) to be issued at the time of the Registered
Exchange Offer in the aggregate principal amount at maturity of up to
$100,000,000 upon receipt of a Company Order of the Company. In each case, the
Company Order shall specify the amount of Securities to be authenticated, the
names of the persons in which such Securities shall be registered and the date
on which such Securities are to be authenticated and direct the Trustee to
authenticate such Securities together with an Officer's Certificate certifying
that all conditions precedent to the issuance of such Securities contained
herein have been complied with. The aggregate principal amount at maturity of
Securities Outstanding at any
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time may not exceed $100,000,000, except as provided in Section 3.04 hereof.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities on behalf of the Trustee.
Unless limited by the terms of such appointment, an authenticating agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. Such authenticating agent shall have the same authenticating rights and
duties as the Trustee in any dealings hereunder with the Company or with any
Affiliate of the Company.
The certificates representing the Securities will be issued in fully
registered form, without coupons and only in denominations of $1,000 and any
integral multiple thereof. Except as described below, the Series A Securities
will be deposited with, or on behalf of, the Depository, and registered in the
name of Cede & Co. as the Depository's nominee in the form of a global note
certificate substantially in the form of Exhibit A-1 (the "Global Security") or
will remain in the custody of the Trustee pursuant to the FAST Balance
Certificate Agreement between the Depository and the Trustee.
Series A Securities purchased by or transferred to (i) Institutional
Accredited Investors who are not Qualified Institutional Buyers, (ii) except as
described below, persons outside the United States pursuant to sales in
accordance with Regulation S under the Securities Act or (iii) any other persons
who are not Qualified Institutional Buyers (collectively, "Non-Global
Purchasers") will be issued in registered form without coupons substantially in
the form of Exhibit A-1 (the "U.S. Physical Securities"). Upon the transfer to a
Qualified Institutional Buyer of U.S. Physical Securities initially issued to a
Non-Global Purchaser, such U.S. Physical Security will be exchanged for an
interest in the Global Security or in the Securities in the custody of the
Trustee representing the principal amount of Securities being transferred.
Series A Securities purchased by persons outside the United States
pursuant to sales in accordance with Regulation S under the Securities Act will
be represented upon issuance by a temporary global note certificate
substantially in the form of Exhibit A-1 (the "Offshore Physical Securities"
and, together with the U.S. Physical Securities, the "Physical Securities")
which will not be exchangeable for U.S. Physical Securities
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until the expiration of the "40-day restricted period" within the meaning of
Rule 903(c)(3) of Regulation S under the Securities Act. The Offshore Physical
Securities will be registered in the name of, and be held by, an offshore
physical security holder (the "Offshore Physical Security Holder") until the
expiration of such 40-day period, at which time the Offshore Physical Securities
will be delivered to the Trustee in exchange for Securities registered in the
names requested by the Offshore Physical Security Holder. In addition, until the
expiration of such 40-day period, transfers of interests in the Offshore
Physical Securities can only be effected through the Offshore Physical Security
Holder in accordance with the requirements of Section 3.17 hereof.
Section 3.04. Temporary Securities.
Until definitive Securities are prepared and ready for delivery, the
Company may execute and upon a Company Order the Trustee shall authenticate and
deliver temporary Securities. Temporary Securities shall be substantially in the
form of definitive Securities, in any authorized denominations, but may have
variations that the Company reasonably considers appropriate for temporary
Securities as conclusively evidenced by the Company's execution of such
temporary Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay but in no event
later than the date that the Registered Exchange Offer is consummated. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 10.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of like tenor and of authorized
denominations. Until so exchanged the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as definitive Securities.
Section 3.05. Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 being sometimes referred
to herein as
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the "Securities Register") in which, subject to such reasonable regulations as
the Securities Registrar may prescribe, the Company shall provide for the
registration of Securities and of transfers and exchanges of Securities. The
Trustee is hereby initially appointed Security Registrar for the purpose of
registering Securities and transfers of Securities as herein provided.
When Securities are presented to the Registrar or a co-Registrar
with a request from the Holder of such Securities to register the transfer or
exchange for an equal principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested; provided that every Security presented or surrendered for
registration of transfer or exchange shall be duly endorsed or be accompanied by
a written instrument of transfer or exchange in form satisfactory to the Company
and the Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. Whenever any Securities are so presented for exchange,
the Company and any Guarantor shall execute, and the Trustee shall authenticate
and deliver, the Securities and Guarantees which the Holder making the exchange
is entitled to receive. No service charge shall be made to the Securityholder
for any registration of transfer or exchange. The Company may require from the
Securityholder payment of a sum sufficient to cover any transfer taxes or other
governmental charge that may be imposed in relation to a transfer or exchange,
but this provision shall not apply to any exchange pursuant to Section 3.09,
10.11, 10.16 or 9.06 hereof (in which events the Company will be responsible for
the payment of all such taxes which arise solely as a result of the transfer or
exchange and do not depend on the tax status of the Holder). The Trustee shall
not be required to exchange or register the transfer of any Security for a
period of 15 days immediately preceding the first mailing of notice of
redemption of Securities to be redeemed or of any Security selected, called or
being called for redemption except, in the case of any Security where public
notice has been given that such Security is to be redeemed in part, the portion
thereof not to be redeemed.
All Securities issued upon any registration of transfer or exchange
of Securities shall be the valid obligations of the Company, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
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Section 3.06. Mutilated, Destroyed, Lost and Stolen Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security of any series claims that the Security has been lost,
destroyed or wrongfully taken, the Company shall execute and upon a Company
Order, the Trustee shall authenticate and deliver a replacement Security of
like tenor and principal amount, bearing a number not contemporaneously
outstanding, if the Holder of such Security furnishes to the Company and to
the Trustee evidence reasonably acceptable to them of the ownership and the
destruction, loss or theft of such Security and an indemnity bond shall be
posted, sufficient in the judgment of the Company or the Trustee, as the case
may be, to protect the Company, the Trustee or any Agent from any loss that
any of them may suffer if such Security is replaced. The Company may charge
such Holder for the Company's expenses in replacing such Security (including
expenses of the Trustee charged to the Company) and the Trustee may charge
the Company for the Trustee's expenses in replacing such Security.
Every replacement Security issued pursuant to this Section in lieu
of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company and each Guarantor, whether or
not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 3.07. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then
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applicable interest rate borne by the Securities, to the extent lawful (such
defaulted interest and interest thereon herein collectively called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the Regular
Record Date; and such Defaulted Interest may be paid by the Company, at its
election in each case, as provided in subsection (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the persons entitled to
such Defaulted Interest as in this subsection (a) provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company in writing of such Special
Record Date. In the name and at the expense of the Company, the Trustee
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at its address as it appears in the Security
Register, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid
to the persons in whose names the Securities (or their respective
Predecessor Securities) are registered on such Special Record Date and
shall no longer be payable pursuant to the following subsection (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with
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the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, if,
after written notice given by the Company to the Trustee of the proposed
payment pursuant to this subsection (b), such payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 3.08. Persons Deemed Owners.
Prior to and at the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name any Security is registered in the Security
Register as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 3.07) interest on such
Security and for all other purposes whatsoever, whether or not such Security
shall be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Section 3.09. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Company and any Guarantor may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company or such Guarantor may
have acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer or exchange, redemption or payment. The Trustee and no one else shall
cancel all Securities surrendered for registration of transfer, exchange,
payment, replacement or cancellation. No Securities shall be authenticated in
lieu of or in exchange for any Securities cancelled as provided in this Section
3.09, except as expressly permitted by this Indenture. All cancelled Securities
held by the Trustee shall be destroyed and certification of their destruction
delivered to the Company unless by a Company Order the Company shall direct that
the
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cancelled Securities be returned to it. The Trustee shall provide the Company a
list of all Securities that have been cancelled from time to time as requested
by the Company.
Section 3.10. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year of twelve 30-day months.
Section 3.11. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date, date
established for the payment of Defaulted Interest or Stated Maturity of any
Security shall not be a Business Day, then (notwithstanding any other provision
of this Indenture or of the Securities) payment of principal, premium, if any,
or interest need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Redemption Date, date established for the payment of
Defaulted Interest or at the Stated Maturity, as the case may be, and no
interest shall accrue with respect to such payment for the period from and after
such Interest Payment Date, Redemption Date, date established for the payment of
Defaulted Interest or Stated Maturity, as the case may be, to the next
succeeding Business Day.
Section 3.12. CUSIP Number.
The Company in issuing the Securities may use a "CUSIP" number (if
then generally in use), and if so, the Trustee may use the CUSIP numbers in
notices of redemption or exchange as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company shall promptly notify the Trustee
in writing of any change in the CUSIP number of either series of Securities.
Section 3.13. Paying Agent To Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of, premium, if any, or interest on the Securities, and
shall notify the Trustee of
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any default by the Company in making any such payment. Money held in trust by
the Paying Agent need not be segregated except as required by law and in no
event shall the Paying Agent be liable for any interest on any money received by
it hereunder. The Company at any time may require the Paying Agent to pay all
money held by it to the Trustee and account for any funds disbursed and the
Trustee may at any time during the continuance of any Event of Default, upon a
Company Order to the Paying Agent, require such Paying Agent to pay forthwith
all money so held by it to the Trustee and to account for any funds disbursed.
Upon making such payment, the Paying Agent shall have no further liability for
the money delivered to the Trustee.
Section 3.16 Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set forth
in Exhibit B.
Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depository, or the Trustee as its custodian, or
under the Global Security, 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 the
Global Security 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 Agent Members, the operation of customary practices governing
the exercise of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 3.17. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
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Depository for any Global Security and a successor Depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a written request from
the Depository to issue Physical Securities.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in any Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to be
issued) reflect on its books and records the date and a decrease in the
principal amount at maturity of the Global Security in an amount equal to the
principal amount of the beneficial interest in the Global Security to be
transferred, and the Company shall execute, and the Trustee shall authenticate
and deliver, one or more Physical Securities of like tenor and principal amount
of authorized denominations.
(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount at
maturity of Physical Securities of like tenor of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to
subparagraphs (b) or (c) of this Section 3.16 shall, except as otherwise
provided by paragraphs (a)(l)(x) and (c) of Section 3.17, bear the legend
regarding transfer restrictions applicable to the Physical Securities set forth
in Exhibit A-1.
(f) The Holder of any Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
Section 3.17 Special Transfer Provisions.
(g) Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. persons. The following provisions shall apply with respect to the
registration of any proposed transfer
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of a Security constituting a Restricted Security to any Institutional Accredited
Investor which is not a QIB or to any non-U.S. person:
(1) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears the
Private Placement Legend, if (x) the requested transfer is not prior to
the date which is three years (or such shorter period as may be prescribed
by Rule 144(k) under the Securities Act or any successor provision
thereunder) after the later of the original Issue Date of such Security
(or of any Predecessor Security) or the last day on which the Company or
any Affiliate of the Company or any Guarantor was the owner of such
Security or any Predecessor Security or (y) (1) in the case of a transfer
to a person purporting to be an Institutional Accredited Investor which is
not a QIB (excluding non-U.S. persons), the proposed transferee has
delivered to the Registrar a certificate substantially in the form of
Exhibit C hereto or (2) in the case of a transfer to a person purporting
to be a non-U.S. person, the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit D hereto; and
(2) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Security, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (1) above and (y)
instructions given in accordance with the Depository's and the Registrar's
procedures;
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of Outstanding Physical Securities)
a decrease in the principal amount at maturity of a Global Security in an amount
equal to the principal amount at maturity of the beneficial interest in a Global
Security to be transferred, and (b) the Company shall execute and the Trustee
shall authenticate and deliver one or more Physical Securities of like tenor and
principal amount of authorized denominations.
(h) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Security
constituting a Restricted Security to a person purporting to be a QIB
(excluding transfers to non-U.S. persons):
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(1) the Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for
on the form of Security stating, or has otherwise advised the Company and
the Registrar in writing, that the transfer has been made in compliance
with the exemption from registration under the Securities Act provided
under Rule 144A to a transferee who has signed the certification provided
for on the form of Security stating, or has otherwise advised the Company
and the Registrar in writing, that such transferee represents and warrants
that it is purchasing the Security for its own account or an account with
respect to which it exercises sole investment discretion and that it and
any such account is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company
as it has requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
(2) if the proposed transferee is an Agent Member, and the
Securities to be transferred consist of Physical Securities which after
transfer are to be evidenced by an interest in the Global Security, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall reflect
on the Security Register the date and an increase in the principal amount
at maturity of the Global Security in an amount equal to the principal
amount at maturity of the Physical Securities to be transferred, and the
Trustee shall cancel the Physical Securities so transferred.
(i) Private Placement Legend. Upon the registration of transfer,
exchange or replacement of Securities not bearing the Private Placement Legend,
the Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the registration of transfer, exchange or replacement of Securities
bearing the Private Placement Legend, the Registrar shall deliver only
Securities that bear the Private Placement Legend unless (i) the circumstances
contemplated by paragraph (a)(l)(x) of this Section 3.17 exist, (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such
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legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act or (iii) such
Security has been sold pursuant to an effective registration statement under the
Securities Act.
(j) Other Transfers. If a Holder proposes to transfer a Security
constituting a Restricted Security pursuant to any exemption from the
registration requirements of the Securities Act other than as provided for by
Section 3.17(a) and (b), the Registrar shall only register such transfer or
exchange if such transferor delivers an Opinion of Counsel satisfactory to the
Company and the Registrar that such transfer is in compliance with the
Securities Act and the terms of this Indenture; provided that the Company may,
based upon the opinion of its counsel, instruct the Registrar by a Company Order
not to register such transfer in any case where the proposed transferee is not a
QIB, non-U.S. person or Institutional Accredited Investor.
(k) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 3.16 or this Section 3.17
for a period of two years at which time such letters, notices and other written
communications shall be delivered to the Company. The Company shall have the
right to inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable prior
written notice to the Registrar.
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Company's Option To Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at any time,
with respect to the Securities, elect to have either Section 4.02 or Section
4.03 be applied to all of the Outstanding Securities (the "Defeased
Securities"), upon
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compliance with the conditions set forth below in this Article Four.
Section 4.02. Defeasance and Discharge.
Upon the Company's exercise under Section 4.01 of the option
applicable to this Section 4.02, the Company and each Guarantor shall be deemed
to have been discharged from its obligations with respect to the Defeased
Securities on the date the conditions set forth below are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Defeased Securities, which shall thereafter be deemed to be
"Outstanding" only for the purposes of Section 4.05 and the other Sections of
this Indenture referred to in (a) and (b) below, and to have satisfied all its
other obligations under such Securities and this Indenture insofar as such
Securities are concerned (and the Trustee, at the expense of the Company, and,
upon Company Request, shall execute proper instruments acknowledging the same),
except for the following, which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of Defeased Securities to
receive, solely from the trust fund described in Section 4.04 and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any, and interest on such Securities when such payments are due, (b) the
Company's obligations with respect to such Defeased Securities under Sections
3.04, 3.05, 3.06, 10.02 and 10.03, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder, including, without limitation, the
Trustee's rights under Section 6.07, and (d) this Article Four. Subject to
compliance with this Article Four, the Company may exercise its option under
this Section 4.02 notwithstanding the prior exercise of its option under Section
4.03 with respect to the Securities.
Section 4.03. Covenant Defeasance.
Upon the Company's exercise under Section 4.01 of the option
applicable to this Section 4.03, the Company and each Guarantor shall be
released from its obligations under any covenant or provision contained in
Sections 10.06 through 10.22 and Sections 14.04 through 14.06 and 14.08 through
14.17 and the provisions of Articles Eight, Eleven and Twelve shall not apply,
with respect to the Defeased Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"), and the Defeased
Securities shall
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thereafter be deemed not to be "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"Outstanding" for all other purposes hereunder. For this purpose, such covenant
defeasance means that, with respect to the Defeased Securities, the Company and
each Guarantor may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such Section or Article,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such Section or Article or by reason of any reference in any such Section or
Article 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
5.01(c) or (d), but, except as specified above, the remainder of this Indenture
and such Defeased Securities shall be unaffected thereby.
Section 4.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 4.02 or Section 4.03 to the Defeased Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 6.09 who shall agree to comply with the provisions of this
Article Four applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (a)
money in an amount, or (b) U.S. Government Obligations which through the
scheduled payment of principal, premium, if any, and interest in respect
thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount, or (c) a
combination thereof, in any such case, sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee (or other qualifying
trustee) to pay and discharge, the principal of, premium, if any, and
interest on the Defeased Securities upon redemption or at the Stated
Maturity of such principal or installment of principal, premium, if any,
or interest; provided,
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however, that the Trustee shall have been irrevocably instructed to apply
such money or the proceeds of such U.S. Government Obligations to said
payments with respect to the Securities; and provided, further, that from
and after the time of deposit, the money or U.S. Government Obligations
deposited shall not be subject to the rights of the holders of other
Senior Indebtedness or Guarantor Senior Indebtedness pursuant to the
provisions of Article Twelve or Article Fourteen;
(2) No Default shall have occurred and be continuing on the date of
such deposit or, insofar as Sections 5.01(h), (i) or (j) are concerned, at
any time during the period ending on the ninety-first day after the date
of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(3) Neither the Company nor any Subsidiary of the Company is an
"insolvent person" within the meaning of any applicable Bankruptcy Law on
the date of such deposit or at any time during the period ending on the
ninety-first day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of such
period);
(4) Such defeasance or covenant defeasance shall not cause the
Trustee for the Securities to have a conflicting interest in violation of
Section 6.08 and for purposes of the Trust Indenture Act with respect to
any securities of the Company or any Guarantor;
(5) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other agreement or instrument to which the Company or any Guarantor is
a party or by which it is bound;
(6) In the case of an election under Section 4.02, the Company shall
have delivered to the Trustee an Opinion of Counsel stating that (x) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (y) since the date hereof, there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding Securities will not recognize income, gain or
loss for
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Federal income tax purposes as a result of such 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 defeasance had not
occurred;
(7) In the case of an election under Section 4.03, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Securities 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;
(8) The Company shall have delivered to the Trustee, an Opinion of
Counsel to the effect that, (x) the trust funds established pursuant to
this Article will not be subject to any rights of Holders of Senior
Indebtedness or Guarantor Senior Indebtedness, including, without
limitation, those arising under Articles Twelve and Fourteen of this
Indenture, and (y) immediately following the ninety-first day after the
deposit, the trust funds established pursuant to this Article will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally (for
the limited purpose of the Opinion of Counsel referred to in this clause
(8), such Opinion of Counsel may contain an assumption that the
conclusions contained in a customary solvency letter by a nationally
recognized appraisal firm, dated as of the date of the deposit and taking
into account such deposit, are accurate as of such date, provided,
however, that such solvency letter is also delivered to the Trustee);
(9) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Company pursuant to its
election under Section 4.02 or 4.03 was not made by the Company with the
intent of preferring the Holders or any Guarantor over the other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and
(10) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that (i) all
conditions precedent (other than
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conditions requiring the passage of time) provided for relating to either
the defeasance under Section 4.02 or the covenant defeasance under Section
4.03 (as the case may be) have been complied with as contemplated by this
Section 4.04 and (ii) if any other Indebtedness of the Company or any
Guarantor shall then be outstanding or committed, such defeasance or
covenant defeasance will not violate the provisions of the agreements or
instruments evidencing such Indebtedness.
Opinions required to be delivered under this Section may have such
qualifications as are customary for opinions of the type required and acceptable
to the Trustee.
Section 4.05. Deposited Money and U.S. Government Obligations To Be
Held in Trust; Other Miscellaneous Provisions.
Subject to the proviso of the last paragraph of Section 10.03, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of this
Section 4.05, the "Trustee") pursuant to Section 4.04 in respect of the Defeased
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent (other than the Company) as the Trustee may
determine, to the Holders of such Securities 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 and hold it harmless
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 4.04 or the principal,
premium, if any, 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
Defeased Securities.
Anything in this Article Four to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 4.04 which, in the opinion of an internationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the
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amount thereof which would then be required to be deposited to effect an
equivalent defeasance or covenant defeasance.
Section 4.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 4.02 or 4.03, 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
obligations of the Company and of any Guarantor under this Indenture, the
Securities and the Guarantees shall be revived and reinstated as though no
deposit had occurred pursuant to Section 4.02 or 4.03, as the case may be, until
such time as the Trustee or Paying Agent is permitted to apply all such money
and U.S. Government Obligations in accordance with Section 4.02 or 4.03, as the
case may be; provided, however, that if the Company makes any payment of
principal, premium, if any, or interest on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money and
U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Twelve or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of the principal of or premium, if any,
when due and payable, on any of the Securities (at its Stated Maturity,
upon optional redemption, required purchase, scheduled principal payment
or otherwise); or
(b) default in the payment of an installment of interest on any of
the Securities, when due and payable,
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and continuance of such default for a period of 30 days; or
(c) the Company or any Guarantor fails to comply with any of its
obligations described under Article Eight or Sections 10.11 or 10.16
hereof; or
(d) the Company or any Guarantor fails to perform or observe any
other term, covenant or agreement contained in the Securities, any
Guarantee or this Indenture (other than a default specified in (a), (b) or
(c) above) for a period of 30 days after written notice of such failure
requiring the Company to remedy the same and stating that such notice is a
"Notice of Default" hereunder shall have been given (x) to the Company by
the Trustee or (y) to the Company and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Securities then
Outstanding; or
(e) default or defaults under any agreement, indenture or instrument
under which the Company or any Restricted Subsidiary then has outstanding
Indebtedness in excess of $5,000,000 in the aggregate and either (i) such
Indebtedness is already due and payable in full or (ii) such default or
defaults results in the acceleration of the maturity of such Indebtedness;
or
(f) any Guarantee ceases to be in full force and effect or is
declared null and void, or any Guarantor denies that it has any further
liability under any Guarantee, or gives notice to such effect (other than
by reason of the termination of this Indenture or the release of any such
Guarantee in accordance with Sections 10.19 and 14.07 hereof) and such
condition shall have continued for a period of 30 days after written
notice of such condition requiring the same to be remedied and stating
that such notice is a "Notice of Default" hereunder shall have been given
(x) to the Company by the Trustee or (y) to the Company and the Trustee by
the Holders of at least 25% in aggregate principal amount of the
Securities then Outstanding; or
(g) one or more judgments, orders or decrees of any court or
regulatory or administrative agency for the payment of money in excess of
$5,000,000 either individually or in the aggregate shall have been entered
against the Company or any Restricted Subsidiary or any of their
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respective properties and shall not have been discharged and either (a)
any creditor shall have commenced an enforcement proceeding upon such
judgment, order or decree or (b) there shall have been a period of 60
consecutive days during which a stay of enforcement of such judgment,
order or decree, by reason of pending appeal or otherwise, will not be in
effect; or
(h) the Company, BBC or any Material Subsidiary of the Company
pursuant to or under or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the making of a Bankruptcy Order in an
involuntary case or proceeding or the commencement of any case
against it;
(iii) consents to the appointment of a Custodian of it or for
any substantial part of its property;
(iv) makes a general assignment for the benefit of its
creditors;
(v) files an answer or consent seeking reorganization or
relief;
(vi) shall admit in writing its inability to pay its debts
generally; or
(vii) consents to the filing of a petition in bankruptcy; or
(i) a court of competent jurisdiction in any involuntary case or
proceeding enters a Bankruptcy Order against the Company, BBC or any
Material Subsidiary, and such Bankruptcy Order remains unstayed and in
effect for 60 consecutive days; or
(j) a Custodian shall be appointed out of court with respect to the
Company, BBC or any Material Subsidiary or with respect to all or any
substantial part of the assets or properties of the Company or any
Subsidiary; or
(k) either (a) the collateral agent under the New Credit Agreement
or (b) if the New Credit Agreement shall no longer be in force and effect,
any holder of at least
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$5,000,000 in aggregate principal amount of Indebtedness of the Company or
any Restricted Subsidiary shall commence judicial proceedings to foreclose
upon assets of the Company or any of its Restricted Subsidiaries having an
aggregate Fair Market Value, individually or in the aggregate, in excess
of $5,000,000 or shall have exercised any right under applicable law or
applicable security documents to take ownership of any such assets in lieu
of foreclosure.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
If (x) an Event of Default (other than an Event of Default specified
in Section 5.01(h), (i) or (j) with respect to the Company) occurs and is
continuing then and in every such case the Trustee or the Holders of at least
25% in aggregate principal amount of the Securities then Outstanding may, and
the Trustee upon the request of the Holders of not less than 25% in aggregate
principal amount of the Securities then Outstanding shall, declare all principal
of all the Securities to be due and payable immediately in an amount equal to
the principal amount of the Securities, premium, if any, thereon plus accrued
and unpaid interest, if any, to the date the Securities become due and payable
by a notice in writing to the Company (and to the Trustee, if given by the
Holders) and upon any such declaration such principal, premium, if any, and
interest, shall become immediately due and payable provided, however, that so
long as the New Credit Agreement shall be in force and effect, if an Event of
Default shall have occurred and be continuing (other than an Event of Default
specified in Section 5.01 (h), (i) or (j) with respect to the Company), any such
acceleration shall not be effective until the earlier to occur of (i) five
Business Days following delivery of a notice of such acceleration to the Senior
Representative under the New Credit Agreement and (ii) the acceleration of any
Indebtedness under the New Credit Agreement. If an Event of Default specified in
Section 5.01(h), (i) or (j) with respect to the Company occurs and is
continuing, then the principal of, premium, if any, and accrued and unpaid
interest, if any, on all the Securities then Outstanding shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and
before a judgment or decree for payment of the
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money due has been obtained by the Trustee as hereinafter provided in this
Article, the Holders of a majority in aggregate principal amount of the
Securities then Outstanding, by written notice to the Company and the Trustee,
may rescind and annul such declaration of acceleration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all amounts due the Trustee under Section 6.07, including
the reasonable compensation, fees, expenses, disbursements and
advances of the Trustee, its agents and counsel,
(ii) all overdue interest on all Securities,
(iii) the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate then borne by the
Securities, and
(iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate then borne by the
Securities; and
(b) all Events of Default, other than the non-payment of principal
of, premium, if any, and any accrued and unpaid interest on, the
Securities which have become due solely as a result of such declaration of
acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent Default or impair any
right consequent thereon.
Notwithstanding the foregoing, in the event of a declaration of
acceleration in respect of the Securities because an Event of Default specified
in Section 5.01(e) shall have occurred and be continuing, such declaration of
acceleration shall be automatically annulled if the Indebtedness that is the
subject of such Event of Default has been discharged or paid or the requisite
holders thereof have rescinded their declaration of acceleration in respect of
such Indebtedness and written notice of such discharge or rescission, as the
case may be, shall have been given to the Trustee by the Company and by the
requisite holders of such Indebtedness or a trustee, fiduciary or agent for such
holders, within 60 days after such declaration of acceleration in respect of the
Securities and no other
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Event of Default has occurred which has not been cured or waived during such
60-day period.
Section 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Company and each Guarantor covenant that if:
(a) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days or more, or
(b) default is made in the payment of the principal of or premium,
if any, on any Security at the Stated Maturity thereof,
the Company and each Guarantor will, jointly and severally, upon demand of the
Trustee, pay to the Trustee, for the benefit of the Holders of such Securities,
the whole amount then due and payable on such Securities for principal, premium,
if any, and interest, with interest upon the overdue principal, premium, if any,
and, to the extent that payment of such interest shall be legally enforceable,
upon overdue installments of interest, at the rate then borne by the Securities;
and, in addition thereto, 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.
If the Company and each Guarantor, fail to pay such amounts
forthwith upon such demand, the Trustee, in its own name and as trustee of an
express trust, may, but is not obligated under this paragraph to, institute a
judicial proceeding for the collection of the sums so due and unpaid and may,
but is not obligated under this paragraph to, prosecute such proceeding to
judgment or final decree, and may, but is not obligated under this paragraph to,
enforce the same against the Company, any Guarantor or any other obligor upon
the Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any Guarantor or
any other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion, but is not obligated under this paragraph to, (i) proceed to
protect and enforce its rights and
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the rights of the Holders under this Indenture or any Guarantee by such
appropriate private or judicial proceedings as the Trustee shall deem most
effectual to protect and enforce such rights, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted herein, including, without limitation,
seeking recourse against any Guarantor or (ii) proceed to protect and enforce
any other proper remedy, including, without limitation, seeking recourse against
any Guarantor. No recovery of any such judgment upon any property of the Company
or any Guarantor shall affect or impair any rights, powers or remedies of the
Trustee or the Holders.
Section 5.04. Trustee May File Proofs of Claims.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities, including each Guarantor or the property of the Company or of such
other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the
Securities and to file such 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, fees, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
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 the
Trustee any amount due it for the reasonable compensation, expenses,
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disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07 hereof.
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 Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 5.05. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture, the Securities
or any Guarantee may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name and as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
fees, expenses, disbursements and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the Securities in respect
of which such judgment has been recovered.
Section 5.06. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, premium, if
any, or interest, upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.07;
Second: Subject to Articles Twelve and Fourteen hereof, to Holders
for interest accrued on the Securities, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for interest;
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Third: Subject to Articles Twelve and Fourteen hereof, to Holders
for principal and premium, if any, amounts owing under the Securities,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal and premium, if
any; and
Fourth: Subject to Articles Twelve and Fourteen hereof, the balance,
if any, to the Company.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Securityholders pursuant to this
Section 5.06.
Section 5.07. Limitation on Suits.
No Holder of any Securities shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 15 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 15-day period by the Holders of a
majority in aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture, any Security or
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any Guarantee to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, any Security or any Guarantee,
except in the manner provided in this Indenture and for the equal and ratable
benefit of all the Holders.
Section 5.08. Unconditional Right of Holders To Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive cash payment of the principal of, premium, if any, and (subject to
Section 3.07 hereof) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
respective Redemption Date) and to institute suit for the enforcement of any
such payment, and such rights shall not be impaired without the consent of such
Holder.
Section 5.09. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture, any Security or any Guarantee
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every
such case the Company, each of the Guarantor, the Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though no such
proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as provided in Section 3.06, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
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Section 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article Five or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12. Control by Majority.
The Holders of a majority in aggregate principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, provided, however, that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture, any Security or any Guarantee or expose the Trustee
to personal liability; and
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all the
Securities waive any past Default hereunder and its consequences, except a
Default
(a) in the payment of the principal of, premium, if any, or interest
on any Security or
(b) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security affected.
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
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Default or Event of Default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, 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,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of, premium, if any, or interest on any Security on or after the
respective Stated Maturities expressed in such Security (or, in the case of
redemption, on or after the respective Redemption Dates).
Section 5.15. Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantor covenants (to the extent that
it may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury or other law wherever enacted, now or at any time
hereafter in force, which would prohibit or forgive the Company or any Guarantor
from paying all or any portion of the principal of, premium, if any, or interest
on the Securities contemplated herein or in the Securities or which may affect
the covenants or the performance of this Indenture; and each of the Company and
the Guarantor (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
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Section 5.16. Unconditional Right of Holders To Institute Certain
Suits.
Nothwithstanding any other provision in this Indenture and any other
provision of any Security, the right of any Holder of any Security to receive
payment of the principal of, premium, if any, and interest on such Security on
or after the respective Stated Maturities (or the respective Redemption Dates,
in the case of redemption) expressed in such Security, or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) 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; but
in the case of any such certificates or opinions which by provision hereof
are specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or not they
conform to the requirements of this Indenture.
(b) In case 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 their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own
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willful misconduct, except that no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 6.01.
Section 6.02. Notice of Defaults.
Within 60 days after the occurrence of any Default, the Trustee
shall transmit by mail to all Holders, as their names and addresses appear in
the Security Register, notice of such Default hereunder known to the Trustee,
unless such Default shall have been cured or waived; provided, however, that,
except in the case of a Default in the payment of the principal of, premium, if
any, or interest on any Security, the Trustee shall be protected in withholding
such notice if and so long as a trust committee of Responsible Officers of the
Trustee in good faith determines that the withholding of such notice is in the
interest of the Holders.
Section 6.03. Certain Rights of Trustee.
Subject to Section 6.01 hereof and the provisions of Section 315 of
the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors of the Company or any Guarantor may
be sufficiently evidenced by a Board Resolution thereof;
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(c) the Trustee may consult with counsel and any written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon in
accordance with such advice or Opinion of Counsel;
(d) 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 pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by the
Trustee in compliance with such request or direction;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture other
than any liabilities arising out of its own negligence;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, appraisal, bond, debenture, note, coupon, security, other
evidence of indebtedness or other paper or document unless requested in
writing so to do by the Holders of not less than a majority in aggregate
principal amount of the Securities then Outstanding; provided, however,
that, if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of every
such investigation shall be paid by the Company or, if paid by the Trustee
or any predecessor Trustee, shall be repaid by the Company upon demand;
provided, further, the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may deem fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine
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the books, records and premises of the Company, personally or by agent or
attorney; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
Section 6.04. Trustee Not Responsible for Recitals, Dispositions of
Securities or Application of Proceeds Thereof.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company and the Guarantors, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities or of any Guarantee except
that the Trustee represents that it is duly authorized to execute and deliver
this Indenture, authenticate the Securities and perform its obligations
hereunder and that the statements made by it in a Statement of Eligibility and
Qualification on Form T-1, if any, to be supplied to the Company are true and
accurate subject to the qualifications set forth therein. The Trustee shall not
be accountable for the use or application by the Company of Securities or the
proceeds thereof.
Section 6.05. Trustee and Agents May Hold Securities; Collections;
Etc.
The Trustee, any Paying Agent, Security Registrar or any other agent
of the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities, with the same rights it would have if it were not the
Trustee, Paying Agent, Security Registrar or such other agent and, subject to
Sections 6.08 and 6.13 hereof and Sections 310 and 311 of the Trust Indenture
Act, may otherwise deal with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have if it were not
the Trustee, Paying Agent, Security Registrar or such other agent.
Section 6.06. Money Held in Trust.
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the
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purposes for which they were received, but need not be segregated from other
funds except to the extent required herein or by law. The Trustee shall not be
under any liability for interest on any moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of Trustee and Its
Prior Claim.
The Company and each Guarantor covenant and agree: (a) to pay to the
Trustee from time to time, and the Trustee shall be entitled to, reasonable
compensation for all services rendered by it hereunder (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust); (b) to reimburse the Trustee and each predecessor Trustee upon
its request for all reasonable expenses, fees, disbursements and advances
incurred or made by or on behalf of it in accordance with any of the provisions
of this Indenture (including the reasonable compensation, fees, and the expenses
and disbursements of its counsel and of all agents and other persons not
regularly in its employ), except any such expense, disbursement or advance as
may arise from its negligence or bad faith; and (c) to indemnify the Trustee and
each predecessor Trustee for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and its duties hereunder, including
enforcement of this Section 6.07. The obligations of the Company and each
Guarantor under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, fees, disbursements and advances shall constitute an
additional obligation hereunder and shall survive the satisfaction and discharge
of this Indenture. To secure the obligations of the Company and of each
Guarantor to the Trustee under this Section 6.07, the Trustee shall have a prior
Lien upon all property and funds held or collected by the Trustee as such,
except funds and property paid by the Company or any Guarantor and held in trust
for the benefit of the Holders of particular Securities.
Section 6.08. Conflicting Interests.
The Trustee shall be subject to and comply with the provisions of
Section 310(b) of the Trust Indenture Act.
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Section 6.09. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under Trust Indenture Act Sections 310(a)(1) and (2)
and which shall have a combined capital and surplus of at least $100,000,000,
and have a Corporate Trust Office in the Borough of Manhattan in The City of New
York, State of New York. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of any Federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment of Successor
Trustee.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees hereinafter appointed,
may at any time resign by giving written notice thereof to the Company at least
20 Business Days prior to the date of such proposed resignation. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee by written instrument executed by authority of the Board of Directors of
the Company, a copy of which shall be delivered to the resigning Trustee and a
copy to the successor Trustee. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 20 Business Days
after the giving of such notice of resignation, the resigning Trustee may, or
any Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper, appoint a
successor Trustee.
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(c) The Trustee may be removed at any time by an Act of the Holders
of a majority in principal amount of the Outstanding Securities, delivered to
the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of Section
310(b) of the Trust Indenture Act in accordance with Section 6.08 hereof
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.09 hereof
and shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any case, (i) the Company by a Board Resolution may remove the Trustee,
or (ii) subject to Section 5.14, the Holder of any Security who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution of its Board of Directors, shall promptly appoint
a successor Trustee. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the
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Holders of the Securities and accepted appointment in the manner hereinafter
provided, the Holder of any Security who has been a bona fide Holder for at
least six months may, subject to Section 5.14, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities as their names and addresses appear in the Security
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee as if originally named as
Trustee hereunder; but, nevertheless, on the written request of the Company or
the successor Trustee, upon payment of amounts due it pursuant to Section 6.07,
such retiring Trustee shall duly assign, transfer and deliver to the successor
Trustee all moneys and property at the time held by it hereunder and shall
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers, duties and obligations of the retiring Trustee. Upon request of
any such successor Trustee, the Company shall execute any and all instruments
for more fully and certainly vesting in and confirming to such successor Trustee
all such rights and powers. Any Trustee ceasing to act shall, nevertheless,
retain a prior claim upon all property or funds held or collected by such
Trustee to secure any amounts then due it pursuant to the provisions of Section
6.07.
No successor Trustee with respect to the Securities shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor Trustee shall be eligible to act as Trustee under this
Article.
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Upon acceptance of appointment by any successor Trustee as provided
in this Section 6.11, the successor shall give notice thereof to the Holders of
the Securities, by mailing such notice to such Holders at their addresses as
they shall appear on the Security Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the notice called for
by the preceding sentence may be combined with the notice called for by Section
6.10. If the Company fails to give such notice within 10 days after acceptance
of appointment by the successor Trustee, the successor Trustee shall cause such
notice to be given at the expense of the Company.
Section 6.12. Merger, Conversion, Amalgamation, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or amalgamated, or any corporation resulting
from any merger, conversion, amalgamation or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder without the execution or filing of any paper or any further
act on the part of any of the parties hereto, provided such corporation shall be
eligible under this Article to serve as Trustee hereunder.
In case at the time such successor to the Trustee under this Section
6.12 shall succeed to the trusts created by this Indenture any of the Securities
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee
and deliver such Securities so authenticated; and, in case at that time any of
the Securities shall not have been authenticated, any successor to the Trustee
under this Section 6.12 may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor Trustee; and in all
such cases such certificate shall have the full force which it is anywhere in
the Securities or in this Indenture provided that the certificate of the Trustee
shall have been authenticated.
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company To Furnish
Trustee Names and Addresses of Holders.
(a) The Trustee shall preserve the names and addresses of the
Securityholders and otherwise comply with TIA Section 312(a). If the Trustee is
not the Registrar, the Company shall furnish or cause the Registrar to furnish
to the Trustee before each Interest Payment Date, and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the
Securityholders. Neither the Company nor the Trustee shall be under any
responsibility with regard to the accuracy of such list.
(b) The Company will furnish or cause to be furnished to the Trustee
(i) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(ii) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished pursuant to this Subsection 7.01(b).
Section 7.02. Communications of Holders.
Holders may communicate with other Holders with respect to their
rights under this Indenture or under the Securities pursuant to Section 312(b)
of the Trust Indenture Act. The Company and the Trustee and any and all other
persons benefited by this Indenture shall have the protection afforded by
Section 312(c) of the Trust Indenture Act.
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Section 7.03. Reports by Trustee.
Within 60 days after May 15 of each year commencing with the first
May 15 following the date of this Indenture, the Trustee shall mail to all
Holders, as their names and addresses appear in the Security Register, a brief
report dated as of such May 15, in accordance with, and to the extent required
under Section 313 of the Trust Indenture Act. At the time of its mailing to
Holders, a copy of each such report shall be filed by the Trustee with the
Company, the Commission and with each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the Securities are listed on
any stock exchange.
Section 7.04. Reports by Company and Each Guarantor.
The Company and each Guarantor shall:
(a) file with the Commission, the copies of annual reports and of
the information, documents and other reports (or copies of such portions
of any of the foregoing as the Commission may from time to time by rules
and regulations prescribe) required to be filed with Commission pursuant
to Section 13 or Section 15 of the Exchange Act, whether or not the
Company or any Guarantor has a class of securities registered under the
Exchange Act;
(b) file with the Trustee within 15 days after it files or would be
required to file the information specified in subsection (a) of this
Section 7.04 reports and documents with the Commission copies of such
information;
(c) file with the Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance
by the Company and each Guarantor with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
(d) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing thereof
with the Trustee, such summaries of any information, documents and reports
required to be filed by the Company and each Guarantor pursuant to
subsections (a) and (c) of this Section as may be required
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by rules and regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 8.01. Company May Consolidate, etc., Only on Certain Terms.
The Company will not, in a single transaction or through a series of
related transactions, consolidate with, merge with or into any other person or
sell, assign, convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets to any other person or persons,
or permit any of the Restricted Subsidiaries to enter into any such transaction
or series of related transactions if such transaction or series of related
transactions, in the aggregate, would result in the sale, assignment,
conveyance, lease, transfer or disposition of all or substantially all of the
properties and assets of the Company and the Restricted Subsidiaries, taken as a
whole, to any person or persons, unless:
(i) either (A)(1) if the transaction or transactions is a merger or
consolidation involving the Company, the Company shall be the person
surviving such merger or consolidation or (2) if the transaction or
transactions is a merger or consolidation involving a Restricted
Subsidiary, such Restricted Subsidiary shall be the person surviving such
merger or consolidation and such person surviving shall be a Restricted
Subsidiary, or (B)(1) the person formed by such consolidation or into
which the Company or such Restricted Subsidiary is merged or to which the
properties and assets of the Company or such Restricted Subsidiary, as the
case may be, are transferred (any such surviving person or transferee
person being the "Surviving Entity") shall be a corporation organized and
validly existing under the laws of the United States of America, any State
thereof or the District of Columbia, and (2)(A) in the case of a
transaction involving the Company, the Surviving Entity shall expressly
assume, by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations under
this Indenture and the Securities, and in each case,
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the Indenture shall remain in full force and effect, or (B) in the case of
a transaction involving a Restricted Subsidiary that is a Subsidiary
Guarantor, the Surviving Entity shall expressly assume by a supplemental
indenture executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of such Restricted Subsidiary under its
Guarantee and related supplemental indenture, and in each case, such
Guarantee and supplemental indenture shall remain in full force and
effect;
(ii) immediately after giving effect to such transaction or series
of transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or
in respect of such transaction or series of transactions), no Default
shall have occurred and be continuing and the Company, or the Surviving
Entity, as the case may be, after giving effect to such transaction or
series of transactions on a pro forma basis, could incur $1.00 of
additional Indebtedness under Section 10.12 hereof;
(iii) each Guarantor, unless it is the other party to the
transaction or transactions described above, shall have by supplemental
indenture confirmed that its Guarantee shall apply to the obligations of
the Company or the Surviving Entity, as the case may be, under this
Indenture and the Securities; and
(iv) the Company or the Surviving Entity, as the case may be, shall
have delivered to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of
Counsel each stating that such transaction or series of related
transactions and, if a supplemental indenture is required in connection
with such transaction or series of related transactions to effectuate such
assumption, such supplemental indenture complies with this Indenture and
that all conditions precedent provided for in this Indenture relating to
such transaction or series of transactions have been satisfied.
Section 8.02. Successor Substituted.
Upon any consolidation, combination or merger, or any sale,
assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets
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of the Company and the Restricted Subsidiaries in accordance with Section 8.01
hereof in which the Company or such Restricted Subsidiary, as the case may be,
is not the Surviving Entity, such Surviving Entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company or such
Restricted Subsidiary, as the case may be, under this Indenture and the
Securities with the same effect as if such successor had been named as the
Company or such Restricted Subsidiary, as the case may be, herein, and in the
Securities and, thereafter, except in the case of (a) a lease or (b) any sale,
assignment, conveyance, transfer, lease or other disposition to a Restricted
Subsidiary of the Company, the Company shall be discharged from all obligations
and covenants under this Indenture and the Securities.
For all purposes of this Indenture and the Securities (including
this Article Eight and Sections 10.12, 10.14 and 10.17 hereof) Subsidiaries of
any Surviving Entity will, upon such transaction or series of related
transactions described in this Article Eight, become Restricted Subsidiaries or
Unrestricted Subsidiaries as provided pursuant to Section 10.22 and all
Indebtedness, and all Liens on property or assets, of the Company and the
Restricted Subsidiaries in existence immediately prior to such transaction or
series of related transactions will be deemed to have been incurred upon such
transaction or series of related transactions.
ARTICLE NINE
SUPPLEMENTAL INDENTURES AND WAIVERS
Section 9.01. Supplemental Indentures, Agreements and Waivers
Without Consent of Holders.
Without the consent of any Holders, the Company and the Guarantors,
when authorized by a Board Resolution of the Board of Directors of the Company
and each Guarantor, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto or agreements or other
instruments with respect to any Guarantee, in form and substance satisfactory to
the Trustee, or waiver for any of the following purposes:
(a) to evidence the succession of another person to the Company or a
Guarantor, and the assumption by any such successor of the covenants of
the Company or such
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Guarantor herein and in the Securities and/or in any Guarantee, as the
case may be;
(b) to add to the covenants of the Company or any Guarantor for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company or any Guarantor, as applicable, herein, in the
Securities or in any Guarantee, as the case may be;
(c) to cure any ambiguity, to correct or supplement any provision
herein, in the Securities or in any Guarantee which may be defective or
inconsistent with any other provision herein or to make any other
provisions with respect to matters or questions arising under this
Indenture, the Securities or any Guarantee; provided, however, that, in
each case, such provisions shall not materially adversely affect the
interests of the Holders;
(d) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act, as contemplated by Section 9.05 hereof or otherwise;
(e) to add a Guarantor pursuant to the requirements of Section 10.19
hereof;
(f) to evidence and provide the acceptance of the appointment of a
successor Trustee hereunder; or
(g) to mortgage, pledge, hypothecate or grant a security interest in
any property or assets in favor of the Trustee for the benefit of the
Holders as security for the payment and performance of the Indenture
Obligations;
provided, however, that the Company has delivered to the Trustee an Opinion of
Counsel stating that such change, agreement or waiver does not materially
adversely affect the interests or legal rights of any Holders.
Section 9.02. Supplemental Indentures, Agreements and Waivers with
Consent of Holders.
With the written consent of the Holders of not less than a majority
in aggregate principal amount of the Outstanding Securities delivered to the
Company, each Guarantor and the Trustee, the Company, and each Guarantor (if a
party thereto) when authorized by a Board Resolution, and the Trustee may
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enter into an indenture or indentures supplemental hereto or agreements or other
instruments with respect to any Guarantee satisfactory to the Trustee for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture, the Securities or any Guarantee, or of
modifying in any manner the rights of the Holders under this Indenture, the
Securities or any Guarantee. The Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities may waive compliance by
the Company and each Guarantor with any provision of this Indenture or the
Securities or any Guarantee. However, no such supplemental indenture, agreement
or instrument, including any waiver pursuant to Section 5.13, shall, without the
written consent or waiver of the Holder of each Outstanding Security affected
thereby:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, alter the redemption provisions of the Securities or
this Indenture, or change the coin or currency in which any Security or
Guarantee or any premium or the accrued interest thereon is payable, or
impair the right to institute suit for the enforcement of any payment
after the Stated Maturity thereof (or, in the case of either a redemption
or a purchase pursuant to Sections 10.11 or 10.16 of this Indenture, on or
after the applicable Redemption Date or purchase date, as the case may
be);
(b) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain Defaults
hereunder and their consequences) or consent provided for in this
Indenture or with respect to any Security or Guarantee;
(c) modify any of the provisions of this Section 9.02 or Sections
5.13 and 5.16, except to increase any such percentage, if applicable
thereto, or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of each
Security affected thereby;
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(d) consent to the assignment or transfer by the Company or any
Guarantor of any of their rights and obligations under this Indenture, the
Securities or the Guarantees;
(e) modify any of the provisions of this Indenture, the Securities
or any Guarantee relating to the subordination of the Securities or any
Guarantee in a manner adverse to the Holders thereof or otherwise affect
the ranking of the Securities or the Guarantees in a manner adverse to the
Holders;
(f) following (i) either (x) the mailing of a notice of a Change of
Control Offer or (y) the failure to mail such notice prior to the date set
forth in the second paragraph of Section 10.11, in either case, following
satisfaction of the condition precedent to the mailing of such notice set
forth in the first paragraph of Section 10.11, or (ii) the occurrence of
an Asset Sale, alter the Company's obligation to repurchase Securities in
accordance with the provisions of Sections 10.11 or 10.16, as the case may
be, or waive any default in the performance thereof;
(g) adversely affect the ranking of the Securities or any Guarantee
in a manner adverse to any Holder;
(h) release any Guarantor from any of its obligations under its
Guarantee or this Indenture;
(i) impair the right to institute suit for the enforcement of any
payment on or with respect to the Securities; or
(j) amend or modify the provisions of Section 10.08.
Upon the written request of the Company and each Guarantor
accompanied by a copy of a Board Resolution of the Board of Directors of each of
them authorizing the execution of any such supplemental indenture or other
agreement, instrument or waiver, and upon the filing with the Trustee of
evidence of the consent of Holders as aforesaid, the Trustee shall join with the
Company and each Guarantor in the execution of such supplemental indenture or
other agreement, instrument or waiver.
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It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture or other
agreement, instrument or waiver, but it shall be sufficient if such Act shall
approve the substance thereof.
Section 9.03. Execution of Supplemental Indentures, Agreements and
Waivers.
In executing, or accepting the additional trusts created by, any
supplemental indenture, agreement, instrument or waiver permitted by this
Article Nine or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
6.01 hereof) shall be fully protected in relying upon, an Opinion of Counsel and
an Officers' Certificate from each obligor under the Securities entering into
such supplemental indenture, agreement, instrument or waiver, each stating that
the execution of such supplemental indenture, agreement, instrument or waiver
(a) is authorized or permitted by this Indenture and (b) does not violate the
provisions of any agreement or instrument evidencing any other Indebtedness of
the Company, any Guarantor or any Subsidiary of the Company. The Trustee may,
but shall not be obligated to, enter into any such supplemental indenture,
agreement, instrument or waiver which affects the Trustee's own rights, duties
or immunities under this Indenture, the Securities, any Guarantee or otherwise.
Section 9.04. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article
Nine, this Indenture, the Securities, if applicable, and/or the applicable
Guarantee shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture, the Securities, if applicable,
and/or the applicable Guarantee, as the case may be, for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.05. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article Nine
shall conform to the requirements of the Trust Indenture Act as then in effect.
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Section 9.06. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors of the Company, to any such supplemental indenture may be
prepared and executed by the Company and each Guarantor and authenticated and
delivered by the Trustee upon a Company Order in exchange for Outstanding
Securities.
Section 9.07. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the rights of any
holder of Senior Indebtedness or any holder of Guarantor Senior Indebtedness
under Articles Twelve or Fourteen of this Indenture, without the consent of such
holder.
Section 9.08. Record Date.
The Company may, but shall not be obligated to, fix, a record date
for the purpose of determining the Holders entitled to consent to any
supplemental indenture, agreement or instrument or any waiver, and shall
promptly notify the Trustee of any such record date. If a record date is fixed
those persons who were Holders at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent to such
supplemental indenture, agreement or instrument or waiver or to revoke any
consent previously given, whether or not such persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
Section 9.09. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if a notation of the consent is not made
on any Security. However, any such Holder, or subsequent Holder, may revoke the
consent as to his Security or portion of a Security if the Trustee receives the
notice of revocation
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before the date the amendment or waiver becomes effective. An amendment or
waiver shall become effective in accordance with its terms and thereafter bind
every Holder.
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and Interest.
The Company will duly and punctually pay the principal of, premium,
if any, and interest on the Securities in accordance with the terms of the
Securities and this Indenture.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan in The City of
New York, State of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
office of the Trustee at its Corporate Trust Office will be such office or
agency of the Company, unless the Company shall designate and maintain some
other office or agency for one or more of such purposes. The Company will give
prompt written notice to the Trustee of any change in the location of any 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, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York, State of New York)
where the Securities may be presented or surrendered for any or all such
purposes, and may from time to time rescind such designation; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in The City of New York, State
of New York for such purposes. The Company will give prompt written notice to
the
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Trustee of any such designation or rescission and any change in the location of
any such other office or agency.
Section 10.03. Money for Security Payments To Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of, premium, if any, or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Holders entitled thereto a sum sufficient to pay the principal, premium,
if any, or interest so becoming due until such sums shall be paid to such
persons or otherwise disposed of as herein provided, and will promptly notify
the Trustee of its action or failure so to act.
If the Company is not acting as Paying Agent, the Company will, on
or before each due date of the principal of, premium, if any, or interest on,
any Securities, deposit with a Paying Agent a sum in same day funds sufficient
to pay the principal, premium, if any, or interest so becoming due, such sum to
be held in trust for the benefit of the Holders entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent will agree with the Trustee, subject to
the provisions of this Section 10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such Holders or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company or any
Guarantor (or any other obligor upon the Securities) in the making of any
payment of principal of, premium, if any, or interest on the Securities;
(c) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
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(d) acknowledge, accept and agree to comply in all aspects with the
provisions of this Indenture relating to the duties, rights and
liabilities of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent will be released from all further liability with respect to
such money.
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 Security and remaining unclaimed for two years after
such principal, premium, if any, or interest has become due and payable shall be
paid to the Company upon receipt of a Company Request therefor, or (if then held
by the Company) will be discharged from such trust; and the Holder of such
Security will thereafter, as an unsecured general 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, will 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 shall be repaid to the Company.
Section 10.04. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory), licenses and franchises of the
Company and each of the Restricted Subsidiaries; provided, however, that the
Company will not be required to preserve any such right, license or franchise if
the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
the
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Restricted Subsidiaries as a whole and that the loss thereof is not adverse in
any material respect to the Holders; provided, further, that the foregoing will
not prohibit a sale, transfer or conveyance of a Subsidiary of the Company or
any of its assets in compliance with the terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes, assessments and
governmental charges levied or imposed (i) upon the Company or any of its
Subsidiaries or (ii) upon the income, profits or property of the Company or any
of the Restricted Subsidiaries and (b) all material lawful claims for labor,
materials and supplies, which, if unpaid, could reasonably be expected to become
a Lien upon the property of the Company or any of the Restricted Subsidiaries;
provided, however, that the Company will not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicable or validity is being contested in good faith by appropriate
proceedings properly instituted and diligently conducted.
Section 10.06. Maintenance of Properties.
The Company will cause all material properties owned by the Company
or any of the Restricted Subsidiaries or used or held for use in the conduct of
their respective businesses to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section 10.06
will prevent the Company from discontinuing the maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business or the business of any of the Restricted
Subsidiaries and is not disadvantageous in any material respect to the Holders.
Section 10.07. Insurance.
The Company will at all times keep all of its and the Restricted
Subsidiaries' properties which are of an insurable nature insured with insurers,
believed by the Company in good
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faith to be financially sound and responsible, against loss or damage to the
extent that property of similar character is usually and customarily so insured
by corporations similarly situated and owning like properties.
Section 10.08. Books and Records.
The Company will, and will cause each of the Restricted Subsidiaries
to, keep proper books of record and account, in which full and correct entries
will be made of all financial transactions and the assets and business of the
Company and each Restricted Subsidiary of the Company in accordance with GAAP.
Section 10.09. Guarantees.
Each of the Guarantors and the Company will, and the Company will
cause each of the Restricted Subsidiaries to, ensure at all times that each
Guarantee will remain in full force and effect and shall not be subordinated in
right of payment to any Indebtedness of the Guarantors other than Guarantor
Senior Indebtedness.
Section 10.10. Provision of Financial Statements.
Whether or not the Company has a class of securities registered
under the Exchange Act, the Company and each Guarantor will supply, at their own
expense, to each Holder of the Securities and file with the Trustee within
fifteen days after the Company is required to file the same with the Commission,
copies of the annual reports and quarterly reports and of the information,
documents and other reports which the Company may be required to file with the
Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act. The
Company will also comply with the other provisions of Section 314(a) of the
Trust Indenture Act.
Section 10.11. Change of Control Triggering Event.
In the event of a Change of Control Triggering Event (the date of
such occurrence, the "Change of Control Date"), the Company will notify the
Holders of Securities in writing of such occurrence and will make an offer to
purchase (the "Change of Control Offer") on a Business Day (the "Change of
Control Purchase Date") not more than 40 nor less than 20 Business Days
following the Change of Control Date all Securities then Outstanding at a
purchase price equal to 101% of the principal
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amount thereof plus accrued and unpaid interest, if any, to the Change of
Control Purchase Date. Prior to the mailing of the notice of a Change of Control
Offer provided for below, the Company shall have (x) repaid in full all
Indebtedness under the New Credit Agreement, or offered to repay and have repaid
the lenders under the New Credit Agreement to the extent such offer has been
accepted under the New Credit Agreement, or (y) obtained the requisite consents
under the New Credit Agreement to permit the repurchase of the Securities as
provided for under this Section 10.11. Failure to mail the notice of a Change of
Control Offer on the date specified below or to have satisfied the foregoing
condition precedent by the date that such notice is required to be mailed will
constitute a covenant Default under Section 5.01(c); provided, however, the
Company will have no obligation to effect a repurchase of Securities under this
Section 10.11 if a notice of a Change of Control Offer has been mailed
notwithstanding that the foregoing condition precedent has not been satisfied on
or prior to the date specified below.
Notice of a Change of Control Offer shall be mailed by the Company
not more than 20 Business Days after the Change of Control Date to the Holders
of Securities at their last registered addresses with a copy to the Trustee and
the Paying Agent. The Change of Control Offer shall remain open from the time of
mailing for at least 20 Business Days and until 5:00 p.m., New York City time,
on the Change of Control Purchase Date. The notice, which shall govern the terms
of the Change of Control Offer, shall include such disclosures as are required
by law and shall state:
(a) that the Change of Control Offer is being made pursuant to this
Section 10.11 and that all Securities tendered into the Change of Control
Offer will be accepted for payment;
(b) the purchase price (including the amount of accrued interest, if
any) for each Security, the Change of Control Purchase Date and the date
on which the Change of Control Offer expires;
(c) that any Security not tendered for payment will continue to
accrue interest in accordance with the terms thereof;
(d) that, unless the Company shall default in the payment of the
purchase price, any Security accepted for
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payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date;
(e) that Holders electing to have Securities purchased pursuant to a
Change of Control Offer will be required to surrender their Securities to
the Paying Agent at the address specified in the notice prior to 5:00
p.m., New York City time, on the Change of Control Purchase Date and must
complete any form letter of transmittal proposed by the Company and
acceptable to the Trustee and the Paying Agent;
(f) that Holders of Securities will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the Change of Control Purchase Date, a facsimile
transmission or letter setting forth the name of the Holders, the
principal amount of Securities the Holders delivered for purchase, the
Security certificate number (if any) and a statement that such Holder is
withdrawing his election to have such Securities purchased;
(g) that Holders whose Securities are purchased only in part will be
issued Securities of like tenor equal in principal amount to the
unpurchased portion of the Securities surrendered;
(h) the instructions that Holders must follow in order to tender
their Securities; and
(i) information concerning the business of the Company, the most
recent annual and quarterly reports of the Company filed with the
Commission pursuant to the Exchange Act (or, if the Company is not
required to file any such reports with the Commission, the comparable
reports prepared pursuant to Section 10.10(a)), a description of material
developments in the Company's business, information with respect to pro
forma historical financial information after giving effect to such Change
of Control and such other information concerning the circumstances and
relevant facts regarding such Change of Control and Change of Control
Offer as would, in the good faith judgment of the Company, be material to
a Holder of Securities in connection with the decision of such Holder as
to whether or not it should tender Securities pursuant to the Change of
Control Offer.
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On the Change of Control Purchase Date, the Company will (i) accept
for payment Securities or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money, in immediately
available funds, sufficient to pay the purchase price of all Securities or
portions thereof so tendered and accepted and (iii) deliver to the Trustee the
Securities so accepted together with an Officers' Certificate setting forth the
Securities or portions thereof tendered to and accepted for payment by the
Company. The Paying Agent will promptly mail or deliver to the Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security of like tenor equal in principal amount to any unpurchased portion of
the Security surrendered. Any Securities not so accepted shall be promptly
mailed or delivered by the Company to the Holder thereof. The Company will
publicly announce the results of the Change of Control Offer not later than the
first Business Day following the Change of Control Purchase Date.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to a
Change of Control Offer. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section 10.11, the
Company will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under this Section 10.11 by
virtue thereof.
Section 10.12. Limitation on Indebtedness.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee or in
any manner become liable, contingently or otherwise (in each case, to "incur"),
for the payment of any Indebtedness (including any Acquired Indebtedness);
provided that (i) the Company and any Subsidiary Guarantor will be permitted to
incur Indebtedness (including Acquired Indebtedness) and (ii) a Restricted
Subsidiary will be permitted to incur Acquired Indebtedness, if immediately
after giving pro forma effect thereto, the Consolidated Fixed Charge Coverage
Ratio of the Company is at least equal to 2.00:1.00.
Notwithstanding the foregoing, the Company and, to the extent
specifically set forth below, the Restricted Subsidiaries may incur each and all
of the following:
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(i) Indebtedness of the Company or any Subsidiary Guarantor under
the New Credit Agreement in an aggregate principal amount at any one time
outstanding not to exceed the sum of (a) $175,000,000 with respect to
Indebtedness under the Term Facilities, less principal payments made by
the Company in respect of the Term Facilities, (b) $80,000,000 in the
aggregate with respect to Indebtedness under the Revolving Credit Facility
and the letter of credit facility, less the amount by which the aggregate
commitment under the Revolving Credit Facility has been permanently
reduced to the extent that any repayments required to be made in
connection with effecting such permanent reduction have been made and (c)
any Indebtedness incurred under the New Credit Agreement pursuant to and
in compliance with the provisions described under either (1) the proviso
of the first paragraph of this Section 10.12 or (2) clause (xii) below;
(ii) Indebtedness of the Company or any Subsidiary Guarantor under
this Indenture, the Securities and any Guarantees;
(iii) Indebtedness of the Company or any Restricted Subsidiary not
otherwise referred to in this paragraph that is outstanding on the Issue
Date, except Indebtedness to be repaid as described under "Use of
Proceeds" in the Offering Memorandum;
(iv) Indebtedness of the Company or any Restricted Subsidiary in
respect of performance bonds, bankers' acceptances, letters of credit of
the Company or any Restricted Subsidiary and surety bonds provided by the
Company or any Restricted Subsidiary in the ordinary course of business,
not to exceed at any given time $10,000,000 in the aggregate;
(v) subject to the covenant described in Section 10.14 hereof,
Indebtedness of any Restricted Subsidiary to the Company or any Restricted
Subsidiary which is not subordinated in right of payment of any
Indebtedness of such Restricted Subsidiary;
(vi) Indebtedness of the Company to any Restricted Subsidiary which
is unsecured and subordinated in right of payment from and after such time
as the Securities shall become due and payable (whether at Stated
Maturity, by acceleration or otherwise) to the payment and performance
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of the Company's obligations under this Indenture or the Securities;
(vii) any guarantees of Indebtedness by a Restricted Subsidiary
entered in compliance with the covenant under this Indenture described in
Section 10.19 hereof;
(viii) Interest Rate Protection Obligations of the Company or any
Restricted Subsidiary covering Indebtedness of the Company or any
Restricted Subsidiary (which Indebtedness (a) bears interest at
fluctuating interest rates and (b) is otherwise permitted to be incurred
under this covenant) to the extent the notional principal amount of such
Interest Rate Protection Obligations does not exceed the principal amount
of the Indebtedness to which such Interest Rate Protection Obligations
relate;
(ix) Indebtedness of the Company or any Restricted Subsidiary under
Currency Agreements relating to (a) Indebtedness of the Company or a
Restricted Subsidiary and/or (b) obligations to purchase or sell assets or
properties or, in each case, incurred in the ordinary course of business
of the Company or any Restricted Subsidiary; provided that such Currency
Agreements do not increase the Indebtedness or other obligations of the
Company and the Restricted Subsidiaries outstanding other than as a result
of fluctuations in foreign currency exchange rates or by reason of fees,
indemnities and compensation payable thereunder;
(x) Capitalized Lease Obligations of the Company or any Restricted
Subsidiary in an aggregate amount not exceeding $7,500,000 outstanding at
any time;
(xi) (a) Indebtedness of the Company or any Subsidiary Guarantor to
the extent the proceeds thereof are used to Refinance Indebtedness of the
Company or any Subsidiary Guarantor (including all or a portion of the
Securities) or any Restricted Subsidiary and (b) Indebtedness of any
Restricted Subsidiary that is not a Subsidiary Guarantor to the extent the
proceeds thereof are used to Refinance Indebtedness of any Restricted
Subsidiary that is not a Subsidiary Guarantor, in each case other than the
Indebtedness to be Refinanced as described under "Use of Proceeds" in the
Offering Memorandum and Indebtedness incurred under clauses (i), (ii) or
(v) above; provided that, in the case of either clause (a) or (b), (1) the
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principal amount of Indebtedness incurred pursuant to this clause (xi)
(or, if such Indebtedness provides for an amount less than the principal
amount thereof to be due and payable upon a declaration of acceleration of
the maturity thereof, the original issue price of such Indebtedness) shall
not exceed the sum of the principal amount of Indebtedness so Refinanced
(or, if such Indebtedness provides for an amount less than the principal
amount thereof to be due and payable upon a declaration of acceleration of
the maturity thereof, the original issue price of such Indebtedness plus
any accreted value attributable thereto since the original issuance of
such Indebtedness) plus the amount of any premium required to be paid in
connection with such Refinancing pursuant to the terms of such
Indebtedness or the amount of any premium reasonably determined by the
Company or a Restricted Subsidiary, as applicable, as necessary to
accomplish such Refinancing by means of a tender offer or privately
negotiated purchase, plus the amount of expenses in connection therewith;
and (2) except in the case of Refinancing or replacement of Senior
Indebtedness or Guarantor Senior Indebtedness or of any Indebtedness of
any Restricted Subsidiary that is not a Subsidiary Guarantor, does not
reduce the Average Life to Stated Maturity of such Indebtedness; and
(xii) additional Indebtedness of the Company or any Restricted
Subsidiary not described by any other clause of this definition, not to
exceed an aggregate principal amount at any time outstanding of
$25,000,000 (less the aggregate principal amount of Indebtedness incurred
under the New Credit Agreement under subclause (i)(c)(1) above).
Section 10.13. Statement by Officers as to Default.
(a) The Company will deliver to the Trustee, within 120 days after
the end of each fiscal year of the Company ending after the date hereof, a
written statement signed by the chairman or a chief executive officer, the
principal financial officer or principal accounting officer of the Company,
stating (i) that a review of the activities of the Company 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 (ii) that, to the knowledge
of each officer signing such certificate, the Company has kept, observed,
performed and fulfilled each and every covenant and condition contained in this
Indenture and is not in default in
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the performance or observance of any of the terms, provisions, conditions and
covenants hereof (or, if a Default shall have occurred, describing all such
Defaults of which such officers may have knowledge, their status and what action
the Company is taking or proposes to take with respect thereto).
(b) When any Default has occurred and is continuing, or if the
Trustee or any Holder or the trustee for or the holder of any other evidence of
Indebtedness of the Company or any Restricted Subsidiary gives any notice or
takes any other action with respect to a claimed default (other than with
respect to Indebtedness (other than Indebtedness evidenced by the Securities) in
the principal amount of less than $5,000,000), the Company will promptly notify
the Trustee of such Default, notice or action and will deliver to the Trustee by
registered or certified mail or by telegram, or facsimile transmission followed
by hard copy by registered or certified mail an Officers' Certificate specifying
such event, notice or other action within five Business Days after the Company
becomes aware of such occurrence and what action the Company is taking or
proposes to take with respect thereto.
Section 10.14. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any other distribution or
payment on or in respect of Capital Stock of the Company or any payment
made to the direct or indirect holders (in their capacities as such) of
Capital Stock of the Company (other than dividends or distributions
payable solely in rights to purchase Capital Stock of the Company (other
than Redeemable Capital Stock)); or
(ii) purchase, redeem, defease or otherwise acquire or retire for
value any Capital Stock of the Company (other than any such Capital Stock
owned by a Restricted Subsidiary); or
(iii) make any principal payment on, or purchase, defease,
repurchase, redeem or otherwise acquire or retire for value, prior to any
scheduled maturity, scheduled repayment, scheduled sinking fund payment or
other Stated Maturity, any Subordinated Indebtedness (other than any such
Subordinated Indebtedness owed to a Restricted Subsidiary); or
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(iv) make any Investment (other than a Permitted Investment) in any
person;
(such payments or Investments described in the preceding clauses (i),
(ii), (iii) and (iv) are collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to the proposed
Restricted Payment (the amount of any such Restricted Payment, if other
than in cash, shall be the Fair Market Value of the asset(s) proposed to
be transferred by the Company or such Restricted Subsidiary, as the case
may be, pursuant to such Restricted Payment), (a) no Default shall have
occurred and be continuing, (b) the aggregate amount of all Restricted
Payments declared or made from and after the Issue Date would not exceed
the sum of (1) 50% of the aggregate Consolidated Net Income of the Company
accrued on a cumulative basis during the period (treated as one accounting
period) beginning on September 29, 1996 and ending on the last day of the
fiscal quarter of the Company immediately preceding the date of such
proposed Restricted Payment (or, if such aggregate cumulative Consolidated
Net Income of the Company for such period shall be a deficit, minus 100%
of such deficit) plus (2) the aggregate net cash proceeds received by the
Company either (x) as capital contributions in the form of common equity
to the Company after the Issue Date or (y) from the issuance or sale of
Capital Stock (excluding Redeemable Capital Stock but including Capital
Stock issued upon the conversion of convertible Indebtedness, in exchange
for outstanding Indebtedness or from the exercise of options, warrants or
rights to purchase Capital Stock (other than Redeemable Capital Stock)) of
the Company to any person (other than to a Restricted Subsidiary of the
Company) after the Issue Date plus (3) in the case of the disposition or
repayment of any Investment constituting a Restricted Payment made after
the Issue Date, an amount equal to the lesser of the return of capital
with respect to such Investment and the initial amount of such Investment,
in either case, less the cost of the disposition of such Investment and
(iii) the Company could incur $1.00 of additional Indebtedness under the
proviso of the first paragraph of Section 10.12 hereof. For purposes of
the preceding clause (b)(2), upon the issuance of Capital Stock either
from the conversion of convertible Indebtedness or exchange for
outstanding Indebtedness or upon the exercise of options, warrants or
rights, the amount counted as net cash proceeds received will be the cash
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amount received by the Company at the original issuance of the
Indebtedness that is so converted or exchanged or from the issuance of
options, warrants or rights, as the case may be, plus the incremental
amount of cash received by the Company, if any, upon the conversion,
exchange or exercise thereof.
(b) None of the foregoing provisions of Section 10.14(a) will
prohibit (i) the payment of any dividend within 60 days after the date of its
declaration, if at the date of declaration such payment would be permitted by
the provisions of this Indenture; (ii) so long as no Default shall have occurred
and be continuing, the redemption, repurchase or other acquisition or retirement
of any shares of any class of Capital Stock of the Company in exchange for, or
out of the net proceeds of, a substantially concurrent issue and sale of other
shares of Capital Stock (other than Redeemable Capital Stock) of the Company to
any person (other than to a Restricted Subsidiary); provided that such net
proceeds are excluded from clause (b)(2) of the preceding paragraph; (iii) so
long as no Default shall have occurred and be continuing, any redemption,
repurchase or other acquisition or retirement of Subordinated Indebtedness made
by exchange for, or out of the net proceeds of, a substantially concurrent issue
and sale of (a) Capital Stock (other than Redeemable Capital Stock) of the
Company or (b) Indebtedness of the Company or any Guarantor so long as such
Indebtedness (1) is subordinated to Senior Indebtedness and the Securities or
Guarantor Senior Indebtedness and the Guarantees of such Guarantor, as the case
may be, at least to the same extent as the Subordinated Indebtedness so
purchased, exchanged, redeemed, repurchased, acquired or retired and (2) has no
Stated Maturity earlier than the Stated Maturity for the final scheduled
principal payment of the Securities; (iv) dividends paid or intercompany loans
made by the Company to BBC for the purpose of paying operating expenses of BBC
arising in the ordinary course of business, including, without limitation, for
the payment of taxes; (v) Investments constituting Restricted Payments made as a
result of the receipt of non-cash consideration from any Asset Sale made
pursuant to and in compliance with Section 10.16 hereof; (vi) the making of the
Distribution in connection with the Recapitalization or (vii) payment made by
the Company under the Income Taxes Agreement. In computing the amount of
Restricted Payments previously made for purposes of clause (b) of the preceding
paragraph, Restricted Payments under the immediately preceding clauses (i) and
(v) shall be included.
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Section 10.15. Limitation on Transactions with Affiliates.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, conduct any business or enter into or
suffer to exist any transaction or series of related transactions with, or for
the benefit of, any Affiliate of the Company (other than a Restricted Subsidiary
so long as no Affiliate of the Company or beneficial holder of 5% or more of any
class or series of Capital Stock of the Company shall beneficially own any
Capital Stock in such Restricted Subsidiary) or any beneficial holder of 10% or
more of any class of Capital Stock of the Company except (i) on terms that are
no less favorable to the Company or the Restricted Subsidiary, as the case may
be, than those which could have been obtained in a comparable transaction at
such time from persons who do not have such a relationship with the Company, and
(ii) with respect to any transaction or series of related transactions involving
aggregate payments or value equal to or greater than $1,000,000, the Company
shall have delivered an Officer's Certificate to the Trustee certifying that
such transaction or series of related transactions comply with the preceding
clause (i) and, with respect to any transaction or series of related
transactions involving aggregate payments or value equal to or greater than
$5,000,000, further certifying that such transaction or series of transactions
have been approved by a majority of the Board of Directors of the Company,
including a majority of the disinterested directors of the Board of Directors of
the Company. For the purposes of the foregoing, a director of the Company shall
not be considered "interested" with respect to a transaction solely by virtue of
being a director of the other party to such transaction. The Company shall be
deemed to have complied with the foregoing provisions if it has obtained a
written opinion from an Independent Financial Advisor stating that the terms of
such transaction or series of transactions are fair to the Company or such
Restricted Subsidiary, as the case may be, from a financial point of view. This
Section 10.15 shall not apply to (i) the payment of reasonable and customary
fees to directors of the Company, (ii) any customary provision for the
indemnification of officers or directors of the Company, (iii) any transactions
with a Wholly-Owned Unrestricted Subsidiary in connection with a Lease Financing
Transaction (including pursuant to the Income Taxes Agreement) and (d)
transactions related to the Recapitalization.
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Section 10.16. Disposition of Proceeds of Asset Sales.
(a) The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company or such Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value of the shares and/or assets subject
to such Asset Sale and (ii) at least 75% of the consideration for any such Asset
Sale is cash and/or Cash Equivalents (provided that the following shall be
deemed cash for purposes of this provision and be treated as Net Cash Proceeds,
subject to application as hereinafter provided: the amount of any liabilities
(as shown on the balance sheet or in the notes thereto of the Company or such
Restricted Subsidiary) of the Company or such Restricted Subsidiary that are
assumed (and from which the Company or such Restricted Subsidiary is
unconditionally released) in connection with such Asset Sale by the transferee
or purchaser of such assets or on behalf of such transferee or purchaser by a
third party). To the extent the Net Cash Proceeds of any Asset Sale are not
required to be applied to repay, and permanently reduce the commitments under,
any outstanding Indebtedness under the New Credit Agreement as required by the
terms thereof or are not so applied, then the Company may, within 12 months of
the Asset Sale, invest Net Cash Proceeds in properties and assets which replace
the properties and assets that were the subject of the Asset Sale or in
properties and assets (including inventory) that will be used in the business of
the Company and the Restricted Subsidiaries existing on the Issue Date or in
businesses reasonably related thereto. The amount of such Net Cash Proceeds in
excess of the amount (i) used to repay Indebtedness under the New Credit
Agreement and (ii) permitted to be invested and so invested as set forth above
is referred to herein as "Excess Proceeds."
(b) When the aggregate amount of Excess Proceeds equals or exceeds
$10,000,000, the Company will be obligated to make an offer (an "Asset Sale
Offer") to purchase from all holders of the Securities, on a day not more than
40 Business Days thereafter (the "Asset Sale Purchase Date"), the maximum
principal amount (expressed as a multiple of $1,000) of Securities that may be
purchased with the aggregate Excess Proceeds at a price, payable in cash, equal
to 100% of the principal amount of the Securities plus accrued and unpaid
interest, if any, to the date of purchase (the "Asset Sale Offer Price"). An
Asset Sale Offer will be required to be kept open for a period of at least 20
Business Days. To the extent that an
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Asset Sale Offer is not fully subscribed to, the Company will be entitled to
retain the unutilized portion of the Excess Proceeds.
(c) Whenever Excess Proceeds received by the Company exceed
$10,000,000, such Excess Proceeds will, prior to the purchase of Securities, be
set aside by the Company in a separate account pending (i) deposit with the
depositary of the amount required to purchase the Securities tendered in an
Asset Sale Offer or (ii) delivery by the Company of the Asset Sale Offer Price
to the Holders of the Securities validly tendered and not withdrawn pursuant to
an Asset Sale Offer. Such Excess Proceeds may be invested in Cash Equivalents,
as directed by the Company, having a maturity date which is not later than the
earliest possible date for purchase or redemption of Securities pursuant to the
Asset Sale Offer. The Company will be entitled to any interest or dividends
accrued, earned or paid on such Cash Equivalents.
(d) Notice of an Asset Sale Offer will be mailed by the Company to
all Holders of Securities not less than 20 Business Days nor more than 40
Business Days before the Asset Sale Purchase Date at their last registered
address with a copy to the Trustee and any Paying Agents. The Asset Sale Offer
will remain open from the time of mailing for at least 20 Business Days or such
longer period as required by law and until at least 5:00 p.m., New York City
time, on the Asset Sale Purchase Date. The notice, which will govern the terms
of the Asset Sale Offer, will include such disclosures as are required by law
and will state:
(i) that the Asset Sale Offer is being made pursuant to this Section
10.16;
(ii) the Asset Sale Offer Price (including the amount of accrued
interest, if any) for each Security, the Asset Sale Purchase Date and the
date on which the Asset Sale Offer expires;
(iii) that any Security not tendered or accepted for payment shall
continue to accrue interest in accordance with the terms thereof;
(iv) that, unless the Company shall default in the payment of the
Asset Sale Offer Price, any Security accepted for payment pursuant to the
Asset Sale Offer
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shall cease to accrue interest after the Asset Sale Purchase Date;
(v) that Holders electing to have Securities purchased pursuant to
an Asset Sale Offer shall be required to surrender their Securities to the
Paying Agent at the address specified in the notice prior to 5:00 p.m.,
New York City time, on the Asset Sale Purchase Date with the "Option of
Holder to Elect Purchase" on the reverse thereof completed;
(vi) that Holders shall be entitled to withdraw their election if
the Paying Agent receives, not later than 5:00 p.m., New York City time,
on the Asset Sale Purchase Date, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of Securities the
Holder delivered for purchase, the Security certificate number (if any)
and a statement that such Holder is withdrawing his election to have such
Securities purchased;
(vii) that if Securities in a principal amount in excess of the
Holder's pro rata share of the amount of Excess Proceeds are tendered
pursuant to the Asset Sale Offer, the Company shall purchase Securities on
a pro rata basis among the Securities tendered (with such adjustments as
may be deemed appropriate by the Company so that only Securities in
denominations of $1,000 or integral multiples of $1,000 shall be
acquired);
(viii) that Holders whose Securities are purchased only in part
shall be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered;
(ix) the instructions that Holders must follow in order to tender
their Securities; and
(x) information concerning the business of the Company, the most
recent annual and quarterly reports of the Company filed with the
Commission pursuant to the Exchange Act (or, if the Company is not
required to file any such reports with the Commission, the comparable
reports prepared pursuant to Section 10.10(a)), a description of material
developments in the Company's business, information with respect to pro
forma historical financial information after giving effect to such Asset
Sale and Asset Sale Offer and such other information as would be material
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to a Holder of Securities in connection with the decision of such Holder
as to whether or not it should tender Securities pursuant to the Asset
Sale Offer.
(e) On the Asset Sale Purchase Date, the Company will (i) accept for
payment, on a pro rata basis, Securities or portions thereof tendered pursuant
to the Asset Sale Offer, (ii) deposit with the Paying Agent money, in
immediately available funds, in an amount sufficient to pay the Asset Sale Offer
Price of all Securities or portions thereof so tendered and accepted and (iii)
deliver to the Trustee the Securities so accepted together with an Officers'
Certificate setting forth the Securities or portions thereof tendered to and
accepted for payment by the Company. The Paying Agent will promptly mail or
deliver to Holders of Securities so accepted payment in an amount equal to the
Asset Sale Offer Price, and the Trustee will promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
will be promptly mailed or delivered by the Company to the Holder thereof. The
Company will publicly announce the results of the Asset Sale Offer not later
than the first Business Day following the Asset Sale Purchase Date. To the
extent an Asset Sale Offer is not fully subscribed to by such Holders, the
Company may retain such unutilized portion of the Excess Proceeds. The Paying
Agent will promptly deliver to the Company the balance of any such Excess
Proceeds held by the Paying Agent after payment to the Holders of Securities as
aforesaid. For purposes of this Section 10.16, the Trustee will act as Paying
Agent.
(f) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to the
Asset Sale Offer. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 10.16, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Section 10.16 by virtue
thereof.
Section 10.17. Limitation on Liens.
The Company will not, and will not permit any Restricted Subsidiary
to, create, incur, assume or suffer to exist any Lien of any kind, upon any of
its property or assets,
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whether now owned or acquired after the Issue Date, or any proceeds therefrom,
which secures either (x) Subordinated Indebtedness unless the Securities and the
Guarantee, as applicable, are secured by a Lien on such property, assets or
proceeds that is senior in priority to the Liens securing such Subordinated
Indebtedness or (y) Pari Passu Indebtedness unless the Securities and the
Guarantees, as applicable, are equally and ratably secured with the Liens
securing such Pari Passu Indebtedness.
Section 10.18. Limitation on Other Senior Subordinated Indebtedness.
Neither the Company nor any Guarantor will create, incur, assume,
guarantee or in any other manner become liable with respect to any Indebtedness
(other than the Securities and the Guarantees) that is subordinate in right of
payment to any Indebtedness of the Company or of such Guarantor, as the case may
be, unless such Indebtedness is either (i) pari passu in right of payment with
the Securities or such Guarantee, as the case may be, or (ii) subordinate in
right of payment to the Securities or such Guarantee, as the case may be, in the
same manner and at least to the same extent as the Securities are subordinated
to Senior Indebtedness or as such Guarantee is subordinated to Guarantor Senior
Indebtedness, as the case may be.
Section 10.19. Limitation on Guarantees by Restricted Subsidiaries.
The Company will not permit any of the Domestic Subsidiaries,
directly or indirectly, to guarantee the payment of any Indebtedness of BBC, the
Company or any Restricted Subsidiary unless such Domestic Subsidiary (i) is a
Subsidiary Guarantor or (ii) simultaneously executes and delivers a supplemental
indenture to this Indenture pursuant to which it will become a Subsidiary
Guarantor under this Indenture. Notwithstanding the foregoing, any Guarantee by
a Restricted Subsidiary will provide by its terms (and on the basis set forth in
Section 14.07 hereof) that it will be automatically and unconditionally released
and discharged upon any sale, exchange or transfer, to any person not an
Affiliate of the Company, of all of the Capital Stock of such Restricted
Subsidiary, or all or substantially all the assets of such Restricted
Subsidiary, pursuant to a transaction which is in compliance with this
Indenture. The Company may, at any time, cause a Restricted Subsidiary to become
a Subsidiary Guarantor by executing and delivering a supplemental indenture
providing for the guarantee
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of payment of the Securities by such Restricted Subsidiary on the basis provided
in Section 14.03.
Section 10.20. Limitation on Preferred Stock of Restricted
Subsidiaries.
The Company will not permit any of the Restricted Subsidiaries to
issue any Preferred Stock (other than to the Company or to a Wholly-Owned
Restricted Subsidiary) or permit any person (other than the Company or a
Wholly-Owned Restricted Subsidiary) to own any Preferred Stock of any Restricted
Subsidiary.
Section 10.21. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist, or
enter into any agreement with any person that would cause to become effective,
any consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make any
other distributions on or in respect of its Capital Stock or any other interest
or participation in, or measured by, its profits, (b) pay any Indebtedness owed
to the Company or any other Restricted Subsidiary, (c) make loans or advances to
the Company or any other Restricted Subsidiary or (d) transfer any of its
property or assets to the Company or to any other Restricted Subsidiary, except
(i) any encumbrance or restriction existing under the security documentation for
the New Credit Agreement as in effect on the Issue Date relating to assets
subject to a Lien created thereby, (ii) any encumbrance or restriction, with
respect to a Restricted Subsidiary that is not a Restricted Subsidiary on the
Issue Date, in existence at the time such person becomes a Restricted Subsidiary
(but not created in contemplation thereof), and (iii) any encumbrance or
restriction existing under any agreement that refinances or replaces the
agreements containing the restrictions in the foregoing clauses (i) and (ii),
provided that the terms and conditions of any such restrictions permitted under
this clause (iii) are not materially less favorable to the Holders of Securities
than those under or pursuant to the agreement evidencing the indebtedness being
refinanced.
Section 10.22. Limitation on Designations of Unrestricted
Subsidiaries.
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The Company may designate any Subsidiary of the Company (other than
a Subsidiary Guarantor) as an "Unrestricted Subsidiary" under this Indenture (a
"Designation") only if:
(i) no Default shall have occurred and be continuing at the time of
or after giving effect to such Designation;
(ii) the Company would be permitted under this Indenture to make an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the "Designation Amount") equal to the Fair
Market Value of the Capital Stock of such Subsidiary on such date; and
(iii) the Company would be permitted under this Indenture to incur
$1.00 of additional Indebtedness pursuant to the proviso of the first
paragraph of Section 10.12 hereof at the time of Designation (assuming the
effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed to
have made an Investment constituting a Restricted Payment pursuant to the
covenant described in Section 10.14 hereof for all purposes of this Indenture in
the Designation Amount. The Company shall not, and shall not permit any
Restricted Subsidiary to, at any time, (a) provide credit support for, or a
guarantee of, any Indebtedness of any Unrestricted Subsidiary (including any
undertaking, agreement or instrument evidencing such Indebtedness), (b) be
directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (c) be directly or indirectly liable for any Indebtedness which
provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity upon the occurrence of a default
with respect to any Indebtedness of any Unrestricted Subsidiary (including any
right to take enforcement action against such Unrestricted Subsidiary), except
in the case of clause (a) or (b) to the extent permitted under the covenant
described in Section 10.14 hereof and to the extent set forth in the first
parenthetical in the definition of "Lease Financing Transaction." The Company
will not permit any Unrestricted Subsidiary to at any time guarantee or
otherwise provide credit support for any obligation of the Company or any
Restricted Subsidiary.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:
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(i) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions of the Company delivered to the Trustee certifying compliance with
the foregoing provisions.
Blue Bird Capital will be treated as an Unrestricted Subsidiary
under this Indenture as of the Issue Date.
Section 10.23. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company, BBC and any
other obligor on the Securities will furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture (including any covenants compliance with which constitutes a condition
precedent) relating to the proposed action have been complied with, and an
Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents,
certificates and/or opinions is specifically required by any provision of this
Indenture relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture will include:
(i) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(ii) 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;
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(iii) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether such covenant or condition
has been complied with; and
(iv) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 11.01. Right of Redemption.
The Securities may be redeemed at the option of the Company, in
whole or in part, on the bases and at the Redemption Prices specified in the
forms of Security, together with accrued but unpaid interest to the Redemption
Date.
Section 11.02. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, as permitted or required by any provision of this Indenture, shall be
made in accordance with such provision and this Article.
Section 11.03. Election To Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 11.01 shall be evidenced by a Board Resolution and an Officers'
Certificate. In case of any redemption at the election of the Company, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice period shall be satisfactory to the Trustee),
notify the Trustee in writing of such Redemption Date and of the principal
amount of Securities to be redeemed.
Section 11.04. Selection by Trustee of Securities To Be Redeemed.
If less than all the Securities are to be redeemed, the particular
Securities or portions thereof to be redeemed shall be selected not more than 60
days prior to the Redemption
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Date by the Trustee, from the Outstanding Securities not previously called for
redemption in compliance with the requirements of the principal national
securities exchange, if any, on which the Securities being redeemed are listed,
or, if the Securities are not listed on a national exchange, by such method as
the Trustee shall deem fair and appropriate; provided that no Securities of a
principal amount of $1,000 or less will be redeemed in part; provided, further,
that any such redemption pursuant to the provisions relating to a Public Equity
Offering shall be made on a pro rata basis or on as nearly a pro rata basis as
practicable (subject to the procedures of the Depository or any other
depository).
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for partial redemption and the
principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
Section 11.05. Notice of Redemption.
Notice of redemption will be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at the address of such Holder
appearing in the Security Register.
All notices of redemption will state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) if less than all Outstanding Securities are to be redeemed,
the identification of the particular Securities to be redeemed;
(iv) in the case of a Security to be redeemed in part, the principal
amount of such Security to be redeemed and that after the Redemption Date
upon surrender of such Security, a new Security or Securities in the
aggregate
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principal amount equal to the unredeemed portion thereof shall be issued;
(v) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(vi) that on the Redemption Date the Redemption Price shall become
due and payable upon each such Security or portion thereof, and that
(unless the Company shall default in payment of the Redemption Price)
interest thereon shall cease to accrue on and after said date;
(vii) the place or places where such Securities are to be
surrendered for payment of the Redemption Price;
(viii) the CUSIP number, relating to such Securities; and
(ix) the paragraph of the Securities pursuant to which the
Securities are being redeemed.
Notice of redemption of Securities to be redeemed at the election of
the Company will be given by the Company or, at the Company's written request,
by the Trustee in the name and at the expense of the Company.
The notice if mailed in the manner herein provided will be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Security designated for redemption as a whole or
in part will not affect the validity of the proceedings for the redemption of
any other Security.
Section 11.06. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company will deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.03) an
amount of money in same day funds sufficient to pay the Redemption Price of, and
accrued interest on, all the Securities or portions thereof which are to be
redeemed on that date.
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Section 11.07. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities
so to be redeemed will, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price) such Securities
will cease to bear interest. Upon surrender of any such Security for redemption
in accordance with said notice, such Security will be paid by the Company at the
Redemption Price; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders of
such Securities, or one or more Predecessor Securities, registered as such on
the relevant Regular Record Dates according to the terms and the provisions of
Section 3.07.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and premium, if any, shall,
until paid, bear interest from the Redemption Date at the rate then borne by
such Security.
Section 11.08. Securities Redeemed or Purchased in Part.
Any Security which is to be redeemed or purchased only in part shall
be surrendered to the Paying Agent at the office or agency maintained for such
purpose pursuant to Section 10.02 (with, if the Company, the Security Registrar
or the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to, the Company, the Security Registrar or the
Trustee duly executed by the Holder thereof or such Holder's attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder in aggregate principal amount equal to, and in exchange for, the
unredeemed portion of the principal of the Security so surrendered that is not
redeemed or purchased.
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ARTICLE TWELVE
SUBORDINATION OF SECURITIES
Section 12.01. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by
his acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article Twelve, the Indebtedness
represented by the Securities and the payment of the principal of, premium, if
any, and interest on the Securities are hereby expressly made subordinate and
subject in right of payment as provided in this Article to the prior payment in
full in cash or Cash Equivalents or, as acceptable to the holders of Senior
Indebtedness, in any other manner, of all Senior Indebtedness. Without limiting
the generality of the definition of Senior Indebtedness, "Senior Indebtedness"
shall include the payment of interest, including interest that would accrue but
for the filing of a petition initiating any proceeding under any Bankruptcy Law,
whether or not such claim is allowable in such proceeding.
This Article Twelve shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become holders of or continue to
hold Senior Indebtedness; and such provisions are made for the benefit of the
holders of Senior Indebtedness; and such holders are made obligees hereunder and
they or each of them may enforce such provisions.
Section 12.02. Payment Over of Proceeds upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other
winding-up of the Company, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshalling of assets or liabilities of the Company, then
and in any such event:
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents or, as acceptable to the
holders of Senior Indebtedness, in any other manner, of all amounts due on
or in
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respect of all Senior Indebtedness, or provision shall be made for such
payment, before the Holders of the Securities are entitled to receive any
payment or distribution of any kind or character (excluding securities of
the Company or any other person that are equity securities or are
otherwise subordinated in right of payment to all Senior Indebtedness that
may at the time be outstanding, to substantially the same extent as, or to
a greater extent than, the Securities as provided in this Article; such
securities are hereinafter collectively referred to as "Permitted Junior
Securities")) on account of principal of, premium, if any, or interest on
the Securities;
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (excluding Permitted
Junior Securities), by set-off or otherwise, to which the Holders or the
Trustee would be entitled but for the provisions of this Article shall be
paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or their representative or representatives or to the trustee
or trustees under any indenture under which any instruments evidencing any
of such Senior Indebtedness may have been issued, ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness
held or represented by each, to the extent necessary to make payment in
full in cash, Cash Equivalents or, as acceptable to the holders of Senior
Indebtedness, in any other manner, of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of
this Section 12.02, the Trustee or the Holder of any Security shall have
received any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, in respect of
principal, premium, if any, and interest on the Securities before all
Senior Indebtedness is paid in full or payment thereof provided for, then
and in such event such payment or distribution (excluding Permitted Junior
Securities) shall be paid over or delivered forthwith to the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other person making payment or
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distribution of assets of the Company for application to the payment of
all Senior Indebtedness remaining unpaid, to the extent necessary to pay
all Senior Indebtedness in full in cash, Cash Equivalents or, as
acceptable to the holders of Senior Indebtedness, any other manner, after
giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the Company
with or into, another person or the liquidation or dissolution of the Company
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another person upon the terms and conditions set
forth in Article Eight hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Article if the person formed by such consolidation or the Surviving Entity of
such merger or the person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in such Article Eight.
Section 12.03. Suspension of Payment When Senior Indebtedness in
Default.
(a) Unless Section 12.02 shall be applicable, upon (1) the
occurrence of a Payment Default and (2) receipt by the Trustee and the Company
from the Senior Representatives of written notice of such occurrence, then no
payment or distribution of any assets of the Company of any kind or character
(excluding Permitted Junior Securities) shall be made by the Company on account
of principal of, premium, if any, or interest on the Securities or on account of
the purchase or redemption or other acquisition of Securities unless and until
such Payment Default shall have been cured or waived or shall have ceased to
exist or such Senior Indebtedness shall have been discharged or paid in full,
after which the Company shall resume making any and all required payments in
respect of the Securities, including any missed payments.
(b) Unless Section 12.02 shall be applicable, upon (1) the
occurrence of a Non-payment Default and (2) receipt by the Trustee and the
Company from the Senior Representatives of written notice of such occurrence, no
payment or distribution of any assets of the Company of any kind or character
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(excluding Permitted Junior Securities) shall be made by the Company on account
of any principal of, premium, if any, or interest on the Securities or on
account of the purchase or redemption or other acquisition of Securities for a
period ("Payment Blockage Period") commencing on the date of receipt by the
Trustee of such notice unless and until the earliest to occur of the following
events (subject to any blockage of payments that may then be in effect under
subsection (a) of this Section 12.03) (w) 179 days will have elapsed since
receipt of such written notice by the Trustee (provided such Designated Senior
Indebtedness will not theretofore have been accelerated), (x) such Non-payment
Default is cured or waived or shall have ceased to exist, (y) such Designated
Senior Indebtedness is discharged or paid in full or (z) such Payment Blockage
Period will have been terminated by written notice to the Company and the
Trustee from the Senior Representatives of holders of Designated Senior
Indebtedness initiating such Payment Blockage Period, or the holders of at least
a majority in principal amount of such issue of Designated Senior Indebtedness,
after which, in the case of clause (w), (x), (y) or (z), the Company shall
resume making any and all required payments in respect of the Securities,
including any missed payments. Notwithstanding any other provision of this
Indenture, only one Payment Blockage Period may be commenced within any
consecutive 365-day period and no Non-payment Default with respect to Designated
Senior Indebtedness which existed or was continuing on the date of the
commencement of any Payment Blockage Period shall be, or be made, the basis for
the commencement of a second Payment Blockage Period unless such event of
default shall have been cured or waived for a period of not less than 90
consecutive days. In no event shall a Payment Blockage Period extend beyond 179
days from the date of the receipt of the notice referred to in clause (2) hereof
and there must be a 186 consecutive day period in any 365 consecutive day period
during which no Payment Blockage Period is in effect.
(c) In the event that, notwithstanding the foregoing, the Trustee or
the Holder of any Security shall have received any payment prohibited by the
foregoing provisions of this Section 12.03, then and in such event such payment
shall be paid over and delivered forthwith to the holders (or their Senior
Representatives) or as a court of competent jurisdiction shall otherwise direct.
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Section 12.04. Trustee's Relation to Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Twelve, and no implied covenants
or obligations with respect to the holders of Senior Indebtedness 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 Indebtedness and the Trustee shall
not be liable to any holder of Senior Indebtedness if it shall mistakenly pay
over or deliver to Holders, the Company or any other person moneys or assets to
which any holder of Senior Indebtedness shall be entitled by virtue of this
Article Twelve or otherwise.
Section 12.05. Subrogation to Rights of Holders of Senior
Indebtedness.
Upon the payment in full of all Senior Indebtedness, the Holders of
the Securities shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of,
premium, if any, and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of
Senior Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled except for the provisions of
this Article Twelve, and no payments over pursuant to the provisions of this
Article Twelve to the holders of Senior Indebtedness by Holders of the
Securities or the Trustee, shall, as among the Company, its creditors other than
holders of Senior Indebtedness, and the Holders of the Securities, be deemed to
be a payment or distribution by the Company to or on account of the Senior
Indebtedness.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Twelve shall have been
applied, pursuant to the provisions of this Article Twelve, to the payment of
all amounts payable under the Senior Indebtedness of the Company, then and in
such case the Holders shall be entitled to receive from the holders of such
Senior Indebtedness at the time outstanding any payments or distributions
received by such holders of such Senior Indebtedness in excess of the amount
sufficient
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to pay all amounts payable under or in respect of such Senior Indebtedness in
full in cash or Cash Equivalents.
Section 12.06. Provisions Solely To Define Relative Rights.
The provisions of this Article Twelve are and are intended solely
for the purpose of defining the relative rights of the Holders of the Securities
on the one hand and the holders of Senior Indebtedness on the other hand.
Nothing contained in this Article Twelve or elsewhere in this Indenture or in
the Securities is intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the Holders of the
Securities, the obligation of the Company, which is absolute and unconditional,
to pay to the Holders of the Securities the principal of, premium, if any, and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of the Securities and creditors of the Company other than
the holders of Senior Indebtedness; or (c) prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by applicable law
upon Default under this Indenture, subject to the rights, if any, under this
Article Twelve of the holders of Senior Indebtedness (1) in any case,
proceeding, dissolution, liquidation or other winding-up, assignment for the
benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 12.02, to receive, pursuant to and in accordance
with such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the conditions specified
in Section 12.03, to prevent any payment prohibited by such Section or enforce
their rights pursuant to Section 12.03(c).
The failure to make a payment on account of principal of, premium,
if any, or interest on the Securities by reason of any provision of this Article
Twelve shall not be construed as preventing the occurrence of a Default or an
Event of Default hereunder.
Section 12.07. Trustee To Effectuate Subordination.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article Twelve and
appoints the
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Trustee his attorney-in-fact for any and all such purposes, including, in the
event of any dissolution, winding-up, liquidation or reorganization of the
Company whether in bankruptcy, insolvency, receivership proceedings, or
otherwise, the timely filing of a claim for the unpaid balance of the
indebtedness of the Company owing to such Holder in the form required in such
proceedings and the causing of such claim to be approved. If the Trustee does
not file such a claim prior to 30 days before the expiration of the time to file
such a claim, the holders of Senior Indebtedness, or any Senior Representative,
may file such a claim on behalf of Holders of the Securities.
Section 12.08. No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof any such holder may have
or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section 12.08, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Securities to the
holders of Senior Indebtedness, do any one or more of the following: (1) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (2) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (3) release any person liable in any manner for
the collection or payment of Senior Indebtedness; and (4) exercise or refrain
from exercising any rights against the Company and any other person; provided,
however, that in no event shall any such actions limit the right of the Holders
of the Securities to take any action to accelerate the maturity of the
Securities pursuant to Article Five hereof or to pursue any rights or remedies
hereunder or under applicable laws if the
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taking of such action does not otherwise violate the terms of this Indenture.
Section 12.09. Notice to Trustee.
(a) The Company shall give prompt written notice to the Trustee of
any fact known to the Company which would prohibit the making of any payment to
or by the Trustee in respect of the Securities. Notwithstanding the provisions
of this Article Twelve or any other provision of this Indenture, the Trustee
shall not be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior Indebtedness or from any trustee,
fiduciary or agent therefor; and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Section 12.09, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 12.09 at least three Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose under this Indenture
(including, without limitation, the payment of the principal of, premium, if
any, or interest on any Security), then, anything herein contained to the
contrary notwithstanding but without limiting the rights and remedies of the
holders of Senior Indebtedness or any trustee, fiduciary or agent thereof, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within three
Business Days prior to such date; nor shall the Trustee be charged with
knowledge of the curing of any such default or the elimination of the act or
condition preventing any such payment unless and until the Trustee shall have
received an Officers' Certificate to such effect.
(b) Subject to the provisions of Section 6.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice to the Trustee and
the Company by a person representing himself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to establish that such
notice has been given by a holder of Senior Indebtedness (or a trustee,
fiduciary or agent therefor); provided, however, that failure to give such
notice to the Company shall not affect in any way the ability of the Trustee to
rely on such notice. In the event that the Trustee determines in good faith that
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further evidence is required with respect to the right of any person as a holder
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such person, the extent to which such person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such person under this Article Twelve, and if such evidence is not
furnished, the Trustee may defer any payment to such person pending judicial
determination as to the right of such person to receive such payment.
Section 12.10. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company referred
to in this Article Twelve, the Trustee, subject to the provisions of Section
6.01,and the Holders, shall be entitled to rely upon any order or decree entered
by any court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding-up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered to the
Trustee or to the Holders, for the purpose of ascertaining the persons entitled
to participate in such payment or distribution, the holders of Senior
Indebtedness 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; provided that the foregoing shall
apply only if such court has been fully apprised of the provisions of this
Article Twelve.
Section 12.11. Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Twelve with respect to any Senior Indebtedness
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder. Nothing in this Article Twelve shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 6.07.
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Section 12.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article Twelve shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article Twelve in addition to or in place of the Trustee;
provided, however, that Section 12.11 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Section 12.13. No Suspension of Remedies.
Nothing contained in this Article Twelve shall limit the right of
the Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article Five or to pursue any rights or
remedies hereunder or under applicable law, subject to the rights, if any, under
this Article Twelve of the holders, from time to time, of Senior Indebtedness.
ARTICLE THIRTEEN
SATISFACTION AND DISCHARGE
Section 13.01. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to
surviving rights or registration of transfer or exchange of Securities herein
expressly provided for) and the Trustee, on written demand of and at the expense
of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when either
(a) all Securities theretofore authenticated and delivered (other
than (A) Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 3.06 hereof and (B) Securities for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in
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Section 10.03) have been delivered to the Trustee for cancellation; or
(b) (i) all such Securities not theretofore delivered to the Trustee
for cancellation have become due and payable and the Company or any Guarantor
has irrevocably deposited or caused to be deposited with the Trustee in trust an
amount of money in dollars sufficient to pay and discharge the entire
Indebtedness on such Securities not theretofore delivered to the Trustee for
cancellation, for the principal of, premium, if any, and interest to the date of
such deposit;
(ii) the Company or any Guarantor has paid or caused to be paid all
other sums payable hereunder by the Company and the Guarantor; and
(iii) the Company and each of the Guarantors have delivered to the
Trustee (i) irrevocable instructions to apply the deposited money toward
payment of the Securities at the Stated Maturities and the Redemption
Dates thereof, and (ii) an Officers' Certificate and an Opinion of Counsel
each stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07 and, if money shall
have been deposited with the Trustee pursuant to subclause (a)(ii) of this
Section 13.01, the obligations of the Trustee under Section 13.02 and the last
paragraph of Section 10.03 shall survive.
Section 13.02. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.03,
all money deposited with the Trustee pursuant to Section 13.01 shall be held in
trust and applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the persons entitled thereto, of the principal of, premium, if
any, and interest on the Securities for whose payment such money has been
deposited with the Trustee.
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ARTICLE FOURTEEN
GUARANTEE OF SECURITIES
Section 14.01. Unconditional Guarantee.
Subject to the provisions of this Article Fourteen, each Guarantor
hereby jointly and severally unconditionally guarantees (such guarantee to be
referred to herein as a "Guarantee") to each Holder of a Security authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the
Securities or the obligations of the Company or any other Guarantor to the
Holders or the Trustee hereunder or thereunder, that: (a) the principal of,
premium, if any, and interest on the Securities will be duly and punctually paid
in full when due, whether at maturity, upon redemption at the option of the
Company pursuant to the provisions of the Securities relating thereto, by
acceleration or otherwise, and interest on the overdue principal and (to the
extent permitted by law) interest, if any, on the Securities and all other
obligations of the Company or the Guarantor to the Holders or the Trustee
hereunder or thereunder (including fees, expenses or other) and all other
Indenture Obligations will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Securities or any of such other Indenture
Obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed, or failing performance of any other obligation of the Company to
the Holders, for whatever reason, each Guarantor shall be obligated to pay, or
to perform or cause the performance of, the same immediately. An Event of
Default under this Indenture or the Securities shall constitute an event of
default under this Guarantee, and shall entitle the Holders of Securities to
accelerate the obligations of the Guarantor hereunder in the same manner and to
the same extent as the obligations of the Company. Each Guarantor hereby agrees
that its obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Securities or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Securities with respect to any provisions hereof or thereof, any release
of any other Guarantor, the recovery of any judgment against the Company, any
action to enforce the same, whether or not a
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Guarantee is affixed to any particular Security, or any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of a
guarantor. Each Guarantor hereby waives the benefit of diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that its
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture and this Guarantee. This
Guarantee is a guarantee of payment and not of collection. If any Holder or the
Trustee is required by any court or otherwise to return to the Company or to any
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or such Guarantor, any amount paid by the
Company or such Guarantor to the Trustee or such Holder, this Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor further agrees that, as between it, on the one hand, and the
Holders of Securities and the Trustee, on the other hand, (a) subject to this
Article Fourteen, the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Five hereof for the purposes of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (b) in
the event of any acceleration of such obligations as provided in Article Five
hereof, such obligations (whether or not due and payable) shall forthwith become
due and payable by the Guarantor for the purpose of this Guarantee.
Section 14.02. Execution and Delivery of Guarantee.
To further evidence the Guarantee set forth in Section 14.01, each
Guarantor hereby agrees that a notation of such Guarantee shall be endorsed on
each Security authenticated and delivered by the Trustee and executed by either
manual or facsimile signature of an Officer of each Guarantor.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 14.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or
a Guarantee no longer holds that office at the time the Trustee authenticates
such Security or at any time
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thereafter, such Guarantor's Guarantee of such Security shall be valid
nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of any Guarantee
set forth in this Indenture on behalf of each Guarantor.
Section 14.03. Additional Guarantor.
Any person that was not a Guarantor on the date of this Indenture
may become a Guarantor by executing and delivering to the Trustee (a) a
supplemental indenture in form and substance satisfactory to the Trustee, which
subjects such person to the provisions (including the representations and
warranties) of this Indenture as a Guarantor, (b) in the event that as of the
date of such supplemental indenture any Registrable Securities are outstanding,
an instrument in form and substance satisfactory to the Trustee which subjects
such person to the provisions of the Registration Rights Agreement with respect
to such outstanding Registrable Securities, and (c) an Opinion of Counsel to the
effect that such supplemental indenture has been duly authorized and executed by
such person and constitutes the legal, valid, binding and enforceable obligation
of such person (subject to such customary exceptions concerning creditors'
rights and equitable principles as may be acceptable to the Trustee in its
discretion).
Section 14.04. Guarantee Obligations Subordinated to Guarantor
Senior Indebtedness.
Each Guarantor covenants and agrees, and each Holder of a Security,
by its acceptance thereof, likewise covenants and agrees, that all payments
pursuant to the Guarantee by such Guarantor are hereby expressly made
subordinate and subject in right of payment as provided in this Article Fourteen
to the prior payment in full in cash or Cash Equivalents or, as acceptable to
the holders of Guarantor Senior Indebtedness of such Guarantor, in any other
manner, of all Guarantor Senior Indebtedness of such Guarantor. Without limiting
the generality of the definition of Guarantor Senior Indebtedness, "Guarantor
Senior Indebtedness" shall include the payment of interest, including interest
that would accrue but for the filing of a petition initiating any proceeding
under any Bankruptcy Law, whether or not such claim is allowable in such
proceeding.
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The following Sections 14.04 through 14.17 of this Article Fourteen
shall constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold Guarantor Senior Indebtedness
of any Guarantor; and such provisions are made for the benefit of the holders of
Guarantor Senior Indebtedness of each Guarantor; and such holders are made
obligees hereunder and they or each of them may enforce such provisions.
Section 14.05. Payment over of Proceeds upon Dissolution, etc. of a
Guarantor.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to any Guarantor or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution or
other winding-up of any Guarantor, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshaling of assets or liabilities of any Guarantor,
then and in any such event:
(1) the holders of all Guarantor Senior Indebtedness of such
Guarantor shall be entitled to receive payment in full in cash or Cash
Equivalents or, as acceptable to the holders of such Guarantor Senior
Indebtedness, in any other manner, of all amounts due on or in respect of
all such Guarantor Senior Indebtedness, or provision shall be made for
such payment, before the Holders of the Securities are entitled to
receive, pursuant to this Guarantee, any payment or distribution of any
kind or character by or on behalf of such Guarantor (excluding Permitted
Junior Securities) on account of principal of, premium, if any, or
interest on the Securities; and
(2) any payment or distribution of assets of such Guarantor of any
kind or character, whether in cash, property or securities (excluding
Permitted Junior Securities), by set-off or otherwise, to which the
Holders or the Trustee would be entitled but for the provisions of this
Article Fourteen shall be paid by the liquidating trustee or agent or
other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to
the holders of Guarantor Senior Indebtedness of such Guarantor or their
representative or representatives or to the trustee
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or trustees under any indenture under which any instruments evidencing any
of such Guarantor Senior Indebtedness may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of such
Guarantor Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full in cash, Cash Equivalents or, as
acceptable to the holders of such Guarantor Senior Indebtedness, in any
other manner, of all such Guarantor Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the
holders of such Guarantor Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing provisions of
this Section 14.05, the Trustee or the Holder of any Security shall have
received any payment or distribution of assets of such Guarantor of any
kind or character, whether in cash, property or securities, in respect of
any of the obligations of such Guarantor under this Guarantee before all
Guarantor Senior Indebtedness of such Guarantor is paid in full or payment
thereof provided for, then and in such event such payment or distribution
(excluding Permitted Junior Securities) shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other person making payment or distribution
of assets of such Guarantor for application to the payment of all such
Guarantor Senior Indebtedness remaining unpaid, to the extent necessary to
pay all of such Guarantor Senior Indebtedness in full in cash, Cash
Equivalents or, as acceptable to the holders of such Guarantor Senior
Indebtedness, any other manner, after giving effect to any concurrent
payment or distribution to or for the holders of such Guarantor Senior
Indebtedness.
The consolidation of a Guarantor with, or the merger of a Guarantor
with or into, another person or the liquidation or dissolution of a Guarantor
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another person upon the terms and conditions set
forth in Article Eight hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of such Guarantor for the purposes of this
Article Fourteen if the person formed by such consolidation or the surviving
entity of such merger or the person which acquires by conveyance, transfer or
lease such properties and assets substantially as an entirety, as the case may
be, shall, as a part of
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such consolidation, merger, conveyance, transfer or lease, comply with the
conditions set forth in Article Eight hereof.
Section 14.06. Suspension of Guarantee Obligations
When Guarantor Senior Indebtedness in Default.
(a) Unless Section 14.05 shall be applicable, upon (1) the
occurrence of a Payment Default with respect to any Senior Indebtedness
guaranteed by a Guarantor and (2) receipt by the Trustee, the Company and such
Guarantor from the Senior Representatives of written notice of such occurrence,
then no payment or distribution of any assets of such Guarantor of any kind or
character (excluding Permitted Junior Securities) shall be made by such
Guarantor on account of principal of, premium, if any, or interest on the
Securities or on account of the purchase, redemption or other acquisition of
Securities or any of the obligations of such Guarantor under this Guarantee
unless and until such Payment Default shall have been cured or waived or shall
have ceased to exist or such Guarantor Senior Indebtedness shall have been
discharged or paid in full, after which such Guarantor shall resume making any
and all required payments in respect of its obligations under this Guarantee.
(b) Unless Section 14.05 shall be applicable, upon (1) the
occurrence of a Non-payment Default with respect to any Senior Indebtedness
guaranteed by a Guarantor and (2) receipt by the Trustee, the Company and such
Guarantor from the Senior Representatives of written notice of such occurrence,
no payment or distribution of any assets of such Guarantor of any kind or
character (excluding Permitted Junior Securities) shall be made by such
Guarantor on account of principal, premium, if any, or interest on the
Securities or on account of the purchase, redemption or other acquisition of
Securities or on account of any of the other obligations of such Guarantor under
this Guarantee for a period ("Guarantor Payment Blockage Period") commencing on
the date of receipt by the Trustee of such notice unless and until the earlier
to occur of the following events (subject to any blockage of payments that may
then be in effect under subsection (a) of this Section 14.06) (w) 179 days shall
have elapsed since receipt of such written notice by the Trustee (provided such
Guarantor Senior Indebtedness shall theretofore not have been accelerated), (x)
such Non-payment Default shall have been cured or waived or shall have ceased to
exist, (y) such Guarantor Senior Indebtedness shall have been discharged or paid
in full or (z) such Guarantor Payment Blockage Period shall have been terminated
by written notice to the Guarantor and the Trustee from the Senior
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Representative initiating such Guarantor Payment Blockage Period, or the holders
of at least a majority in principal amount of such issue of such Guarantor
Senior Indebtedness, after which, in the case of clause (w), (x), (y) or (z),
the Guarantor shall resume making any and all required payments in respect of
its obligations under this Guarantee. Notwithstanding any other provision of
this Indenture, only one Guarantor Payment Blockage Period may be commenced
within any consecutive 365-day period and no Non-payment Default with respect to
Guarantor Senior Indebtedness of any Guarantor which existed or was continuing
on the date of the commencement of any Guarantor Payment Blockage Period shall
be, or be made, the basis for the commencement of a second Guarantor Payment
Blockage Period unless such event of default shall have been cured or waived for
a period of not less than 90 consecutive days. In no event shall a Guarantor
Payment Blockage Period extend beyond 179 days from the date of the receipt of
the notice referred to in clause (2) hereof and there must be a 186 consecutive
day period in any 365 consecutive day period during which no Guarantor Payment
Blockage Period is in effect.
(c) In the event that, notwithstanding the foregoing, the Trustee or
the Holder of any Security shall have received any payment prohibited by the
foregoing provisions of this Section 14.06, then and in such event such payment
shall be paid over and delivered forthwith to the Senior Representatives or as a
court of competent jurisdiction shall otherwise direct.
Section 14.07. Release of a Guarantor.
Upon the sale or other disposition (by merger or otherwise), other
than a lease, of a Subsidiary of the Company that is a Guarantor of all of the
Capital Stock of such Subsidiary or all, or substantially all, the assets of
such Subsidiary, to any person that is not an Affiliate of the Company, and
which sale or other disposition is otherwise in compliance with the terms of
this Indenture, such Guarantor shall be deemed automatically and unconditionally
released and discharged from all obligations under this Article Fourteen without
any further action required on the part of the Trustee or any Holder; provided,
however, that any such termination shall occur if and only to the extent that
all obligations of such Guarantor under all of its Guarantor Senior Indebtedness
shall also terminate upon such sale or other disposition. The Trustee shall
deliver an appropriate instrument evidencing such
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release upon receipt of a request of the Company accompanied by an Officers'
Certificate certifying as to the compliance with this Section and the Company's
rights of redemption in accordance with the terms of the Securities in this
Section 14.07. Any Guarantor not so released will remain liable for the full
amount of principal of, premium, if any, and interest on the Securities as
provided in this Article Fourteen.
Section 14.08. Waiver of Subrogation.
Until this Indenture is discharged and all of the Securities are
discharged and paid in full, each Guarantor hereby irrevocably waives and agrees
not to exercise any claim or other rights which it may now or hereafter acquire
against the Company that arise from the existence, payment, performance or
enforcement of the Company's obligations under the Securities or this Indenture
and such Guarantor's obligations under this Guarantee and this Indenture, in any
such instance including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim or remedy against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and any amounts owing to the Trustee or the Holders of Securities under
the Securities, this Indenture, or any other document or instrument delivered
under or in connection with such agreements or instruments, shall not have been
paid in full, such amount shall have been deemed to have been paid to such
Guarantor for the benefit of, and held in trust for the benefit of, the Holders
of the Securities, and shall, subject to the provisions of this Article Fourteen
and Article Twelve hereof, forthwith be paid to the Trustee for the benefit of
such Holders to be credited and applied to the Securities, whether matured or
unmatured, in accordance with the terms of this Indenture. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated by this Indenture and that the waiver set
forth in this Section 14.08 is knowingly made in contemplation of such benefits.
Section 14.09. Guarantee Provisions Solely To Define Relative
Rights.
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The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Guarantor Senior Indebtedness of each Guarantor on
the other hand. Nothing contained in this Article or elsewhere in this Indenture
or in the Securities is intended to or shall (a) impair, as among each
Guarantor, its creditors other than holders of its Guarantor Senior Indebtedness
and the Holders of the Securities, the obligation of such Guarantor, which is
absolute and unconditional, to make payments to the Holders in respect of its
obligations under this Guarantee as and when the same shall become due and
payable in accordance with their terms; or (b) affect the relative rights
against such Guarantor of the Holders of the Securities and creditors of such
Guarantor other than the holders of the Guarantor Senior Indebtedness of such
Guarantor; or (c) prevent the Trustee or the Holder of any Security from
exercising all remedies otherwise permitted by applicable law upon Default under
this Indenture, subject to the rights, if any, under this Article of the holders
of Guarantor Senior Indebtedness of the Guarantors hereunder (1) in any case,
proceeding, dissolution, liquidation or other winding-up, assignment for the
benefit of creditors or other marshaling of assets and liabilities of the
Company referred to in Section 14.05, to receive, pursuant to and in accordance
with such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the conditions specified
in Section 14.06, to prevent any payment prohibited by such Section or enforce
their rights pursuant to Section 14.06(c).
The failure by any Guarantor to make payment in respect of its
obligations under this Guarantee by reason of any provision of this Article
shall not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
Section 14.10. Trustee To Effectuate Subordination of Guarantee
Obligations.
Each Holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of any Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely
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filing of a claim for the unpaid balance of the indebtedness of such Guarantor
owing to such Holder in the form required in such proceedings and the causing of
such claim to be approved. If the Trustee does not file such a claim prior to 30
days before the expiration of the time to file such a claim, the holders of
Senior Indebtedness, or any Senior Representative, may file such a claim on
behalf of Holders of the Securities.
Section 14.11. No Waiver of Guarantee Subordination Provisions.
(a) No right of any present or future holder of any Guarantor Senior
Indebtedness of any Guarantor to enforce subordination as herein provided shall
at any time in any way be prejudiced or impaired by any act or failure to act on
the part of such Guarantor or by any act or failure to act, in good faith, by
any such holder, or by any non-compliance by such Guarantor with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section 14.11, the holders of Guarantor Senior Indebtedness of any Guarantor
may, at any time and from time to time, without the consent of or notice to the
Trustee or the Holders of the Securities, without incurring responsibility to
the Holders of the Securities and without impairing or releasing the
subordination provided in this Article Fourteen or the obligations hereunder of
the Holders of the Securities to the holders of such Guarantor Senior
Indebtedness, do any one or more of the following: (1) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Guarantor Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Guarantor Senior Indebtedness is outstanding; (2)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing such Guarantor Senior Indebtedness; (3) release any person
liable in any manner for the collection or payment of such Guarantor Senior
Indebtedness; and (4) exercise or refrain from exercising any rights against
such Guarantor and any other person; provided, however, that in no event shall
any such actions limit the right of the Holders of the Securities to take any
action to accelerate the maturity of the Securities pursuant to Article Five
hereof or to pursue any rights or remedies hereunder or under applicable laws if
the taking of such action does not otherwise violate the terms of this
Indenture.
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Section 14.12. Guarantors To Give Notice to Trustee.
(a) Each Guarantor shall give prompt written notice to the Trustee
of any fact known to such Guarantor which would prohibit the making of any
payment to or by the Trustee in respect of the Securities. Notwithstanding the
provisions of this Article Fourteen or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
which would prohibit the making of any payment to or by the Trustee in respect
of the Securities, unless and until the Trustee shall have received written
notice thereof from such Guarantor or a holder of its Guarantor Senior
Indebtedness or from any trustee, fiduciary or agent therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
this Section 14.12, shall be entitled in all respects to assume that no such
facts exist; provided, however, that if the Trustee shall not have received the
notice provided for in this Section 14.12 at least three Business Days prior to
the date upon which by the terms hereof any money may become payable for any
purpose under this Indenture (including, without limitation, the payment of the
principal of, premium, if any, or interest on any Security), then, anything
herein contained to the contrary notwithstanding but without limiting the rights
and remedies of the holders of such Guarantor Senior Indebtedness or any
trustee, fiduciary or agent thereof, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to such date; nor
shall the Trustee be charged with knowledge of the curing of any such default or
the elimination of the act or condition preventing any such payment unless and
until the Trustee shall have received an Officers' Certificate from such
Guarantor to such effect.
(b) Subject to the provisions of Section 6.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice to the Trustee and
the Company, by a person representing himself to be a holder of Guarantor Senior
Indebtedness of any Guarantor (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a holder of such Guarantor Senior
Indebtedness (or a trustee, fiduciary or agent therefor); provided, however,
that a failure to give such notice to the Company shall not affect in any way
the ability of the Trustee to rely on such notice. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any person as a holder
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of Guarantor Senior Indebtedness of any Guarantor to participate in any payment
or distribution pursuant to this Article Fourteen, the Trustee may request such
person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Guarantor Senior Indebtedness of each Guarantor held by such
person, the extent to which such person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
person under this Article Fourteen, and if such evidence is not furnished, the
Trustee may defer any payment to such person pending judicial determination as
to the right of such person to receive such payment.
Section 14.13. Reliance on Judicial Order or Certificate of
Liquidating Agent Regarding Dissolution, etc. of Guarantors.
Upon any payment or distribution of assets of any Guarantor referred
to in this Article Fourteen, the Trustee, subject to the provisions of Section
6.01, and the Holders, shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding-up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other person making such payment or distribution,
delivered to the Trustee or to the Holders, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
Guarantor Senior Indebtedness of such Guarantor and other Indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Fourteen; provided that the foregoing shall apply only if such court has been
fully apprised of the provisions of this Article Fourteen.
Section 14.14. Rights of Trustee as a Holder of Guarantor Senior
Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Fourteen with respect to any Guarantor Senior
Indebtedness of any Guarantor which may at any time be held by the Trustee, to
the same extent as any other holder of such Guarantor Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article
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Fourteen shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 6.07.
Section 14.15. Article Fourteen Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article Fourteen in addition to or in place of the Trustee;
provided, however, that Section 14.14 shall not apply to the Company or any
Affiliate of the Company if it or such Affiliate acts as Paying Agent.
Section 14.16. No Suspension of Remedies.
Nothing contained in this Article Fourteen shall limit the right of
the Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Article Five or to pursue any rights or
remedies hereunder or under applicable law, subject to the rights, if any, under
this Article Fourteen of the holders, from time to time, of Guarantor Senior
Indebtedness of the Guarantors.
Section 14.17. Trustee's Relation to Guarantor Senior Indebtedness.
With respect to the holders of Guarantor Senior Indebtedness of any
Guarantor, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article
Fourteen, and no implied covenants or obligations with respect to the holders of
Guarantor Senior Indebtedness of any Guarantor shall be read into this Indenture
against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Guarantor Senior Indebtedness of any Guarantor and the Trustee
shall not be liable to any holder of Guarantor Senior Indebtedness of any
Guarantor if it shall mistakenly pay over or deliver to Holders, the Company or
any other person moneys or assets to which any holder of Guarantor Senior
Indebtedness of any Guarantor shall be entitled by virtue of this Article
Fourteen or otherwise.
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Section 14.18. Limitation of Subsidiary Guarantor's Liability.
Each Guarantor that is a Subsidiary of the Company, and by its
acceptance hereof each Holder, hereby confirms that it is the intention of all
such parties that the Guarantee by such Guarantor pursuant to its Guarantee not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar Federal or state law. To effectuate the foregoing intention, the
Holders and such Guarantor hereby irrevocably agree that the obligations of such
Guarantor under this Guarantee shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor (including, but not limited to, the Guarantor Senior Indebtedness of
such Guarantor) and after giving effect to any collections from or payments made
by or on behalf of any other Guarantor in respect of the obligations of such
other Guarantor under its Guarantee, result in the obligations of such Guarantor
under the Guarantee not constituting such fraudulent transfer or conveyance.
[signatures on following pages]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the day and year first above written.
BLUE BIRD BODY COMPANY
By: /s/ Paul E. Glaske
----------------------------
Name: Paul E. Glaske
Title: President
By: /s/ Bobby G. Wallace
----------------------------
Name: Bobby G. Wallace
Title: Vice President --
Finance and Admin-
istration, Treasurer
and Secretary
BLUE BIRD CORPORATION
By: /s/ Paul E. Glaske
----------------------------
Name: Paul E. Glaske
Title: President
By: /s/ Bobby G. Wallace
----------------------------
Name: Bobby G. Wallace
Title: Vice President,
Treasurer and
Secretary
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ Anne G. Brenner
----------------------------
Name: Anne G. Brenner
Title: Vice President
<PAGE>
EXHIBIT A-1
[Form of Series A Security].
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO REGULATION S UNDER
THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE
WHICH IS THREE YEARS (OR SUCH SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE
144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR
OF THIS SECURITY) OR THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE
OF THE COMPANY OR ANY GUARANTOR WAS THE OWNER OF THIS SECURITY OR ANY
PREDECESSOR OF THIS SECURITY OR (Y) SUCH LATER DATE, IF ANY, AS MAY BE
REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION DATE"),
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER
OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON
IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO
RULE 904 OF REGULATION S, (E) TO AN ACCREDITED INVESTOR THAT IS ACQUIRING
THE SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO
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<PAGE>
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM
THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
A-2
<PAGE>
BLUE BIRD BODY COMPANY
-----------
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006
CUSIP No. __________
No. ___________ $
BLUE BIRD BODY COMPANY, a corporation incorporated under the laws of
the State of Georgia (herein called the "Company", which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _______________ or registered assigns, the
principal sum of _______________ Dollars on November 15, 2006, at the office or
agency of the Company referred to below, and to pay interest thereon on May 15
and November 15 (each an "Interest Payment Date"), of each year, commencing on
May 15, 1997, accruing from the Issue Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, at the rate
of 10 3/4% per annum, until the principal hereof is paid or duly provided for.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture referred to on
the reverse hereof, be paid to the person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the May 1
or November 1 (each a "Regular Record Date"), whether or not a Business Day, as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid, or duly provided for, and interest on such defaulted
interest at the then applicable interest rate borne by the Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may be paid to the person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice of which shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in such Indenture.
A-3
<PAGE>
Payment of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan in The City of New York, State of New York,
or at such other office or agency of the Company as may be maintained for such
purpose, 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; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the address of the person entitled thereto as such address shall
appear on the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture, or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: , BLUE BIRD BODY COMPANY
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
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<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
The Chase Manhattan Bank,
as Trustee
By:______________________________
Authorized Officer
A-5
<PAGE>
[REVERSE OF SERIES A SECURITY]
1. Indenture. This Security is one of a duly authorized issue of
Securities of the Company designated as its 10 3/4% Senior Subordinated Notes
due 2006 (herein called the "Series A Securities"), limited (except as otherwise
provided in the Indenture referred to below) in aggregate principal amount to
$100,000,000, which may be issued under an indenture (herein called the
"Indenture") dated as of November 15, 1996, among the Company, Blue Bird
Corporation ("BBC" or the "Guarantor") and The Chase Manhattan Bank, as trustee
(herein called the "Trustee," which term includes any successor Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the Company, the
Trustee, the Guarantor and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and delivered.
All capitalized terms used in this Series A Security which are
defined in the Indenture and not otherwise defined herein shall have the
meanings assigned to them in the Indenture.
No reference herein to the Indenture and no provisions of this
Series A Security or of the Indenture shall alter or impair the obligation of
the Company or any Guarantor, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Security at the times,
place, and rate, and in the coin or currency, herein prescribed.
2. Guarantees. This Security is initially entitled to the benefits
of the certain senior subordinated Guarantee of BBC and may thereafter be
entitled to certain other senior subordinated Guarantees made for the benefit of
the Holders. Reference is hereby made to Article Fourteen of the Indenture and
to the Guarantees endorsed on this Security for a statement of the respective
rights, limitations of rights, duties and obligations thereunder of the
Guarantors, the Trustee and the Holders.
3. Registration Rights. Pursuant to the Registration Rights
Agreement among the Company, BBC and the Holders of the Series A Securities, the
Company, BBC and any other Guarantor will be obligated to consummate an exchange
offer pursuant
A-6
<PAGE>
to which the Holder of this Security shall have the right to exchange this
Security together with the Guarantees hereof endorsed hereon for 10 3/4% Senior
Subordinated Notes due 2006, Series B, of the Company (herein called the "Series
B Securities") and the Guarantees endorsed thereon, which have been registered
under the Securities Act, in like principal amount and having identical terms as
the Series A Securities (other than as set forth in this paragraph) and the
Guarantees endorsed hereon, respectively. The Holders of Series A Securities
shall be entitled to receive certain additional interest payments in the event
such exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement. The Series A Securities and the Series B Securities are together
referred to herein as the "Securities."
4. Subordination. The Indebtedness evidenced by the Securities is,
to the extent and in the manner provided in the Indenture, subordinate and
subject in right of payment to the prior payment in full of all Senior
Indebtedness (including, without limitation, interest on such Senior
Indebtedness that would accrue but for the filing of a petition initiating any
proceeding under any Bankruptcy Law, whether or not such claim is allowable in
such proceeding) as defined in the Indenture, and this Series A Security is
issued subject to such provisions. Each Holder of this Series A Security, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose; provided, however, that the Indebtedness evidenced by
this Series A Security shall cease to be so subordinate and subject in right of
payment upon any defeasance of this Series A Security referred to below.
5. Redemption.
(a) Optional Redemption. The Securities are subject to redemption,
at the option of the Company, in whole or in part, in principal amounts of
$1,000 or any integral multiple of $1,000, at any time on or after November 15,
2001 upon not less than 30 nor more than 60 days prior notice, at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued interest to the redemption date, if redeemed during the 12-month period
beginning November 15 of the years indicated below:
A-7
<PAGE>
Year Redemption Price
---- ----------------
2001 105.375%
2002 103.583%
2003 101.792%
2004 and thereafter 100.000%
(b) Optional Redemption Upon Public Equity Offering. On or prior to
November 15, 1999, the Company may, at its option, use the net proceeds of a
Public Equity Offering to redeem up to an aggregate of 25% of the principal
amount of the Securities originally issued from Holders on a pro rata basis (or
as nearly pro rata as practicable), at a redemption price of 110.75 % of the
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of redemption; provided that not less than $75,000,000 in aggregate principal
amount of Securities would remain outstanding immediately after such redemption.
The Company must mail a notice of redemption complying with Section 11.05 of the
Indenture not later than 60 days after the consummation of the Public Equity
Offering. As used above, "Public Equity Offering" means an underwritten public
offering of Capital Stock (other than Redeemable Capital Stock) of the Company
or BBC made on a primary basis by the Company or BBC pursuant to a registration
statement filed with and declared effective by the Commission in accordance with
the Securities Act; provided that, in the event of an offering by BBC, BBC shall
contribute as equity to the Company proceeds from the Public Equity Offering of
not less than the amount necessary to redeem the Securities under the provisions
described in the Indenture.
(c) Interest Payments. In the case of any redemption of Series A
Securities, interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Date referred to on the face hereof. Securities (or portions thereof) for
whose redemption and payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption Date.
(d) Partial Redemption. In the event of redemption of this Series A
Security in part only, a new Series A Security or Securities for the unredeemed
portion hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof.
6. Offers to Purchase. Sections 10.11 and 10.16 of the Indenture
provide that upon the occurrence of a Change of
A-8
<PAGE>
Control Triggering Event and following certain Asset Sales, and subject to
certain conditions and limitations contained therein, the Company shall make an
offer to purchase certain amounts of the Securities in accordance with the
procedures set forth in the Indenture.
7. Defaults and Remedies. If an Event of Default occurs and is
continuing, the principal of all of the Outstanding Securities, plus all accrued
and unpaid interest, if any, to and including the date the Securities are paid,
may be declared due and payable in the manner and with the effect provided in
the Indenture.
8. Defeasance. The Indenture contains provisions (which provisions
apply to this Series A Security) for defeasance at any time of (a) the entire
indebtedness of the Company and the Guarantors on this Series A Security and (b)
certain restrictive covenants and related Defaults and Events of Default, in
each case upon compliance by the Company with certain conditions set forth
therein.
9. Amendments and Waivers. The Indenture permits, with certain
exceptions as provided therein, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past Defaults under the Indenture and this Series A
Security and their consequences. Any such consent or waiver by or on behalf of
the Holder of this Series A Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Series A Security and of any Series A
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof whether or not notation of such consent or waiver is made upon
this Series A Security.
10. Denominations, Transfer and Exchange. The Series A Securities
are issuable only in registered form without coupons in denominations of $1,000
and any integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Series A Securities are exchangeable
for a like aggregate principal amount of
A-9
<PAGE>
Series A Securities of a different authorized denomination, as requested by the
Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Series A Security is registrable on the
Security Register of the Company, upon surrender of this Series A Security for
registration of transfer at the office or agency of the Company maintained for
such purpose in the Borough of Manhattan in The City of New York, State of New
York, or at such other office or agency of the Company as may be maintained for
such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Series A Securities, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
No service charge shall be made for any registration of transfer or
exchange or redemption of Series A Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
11. Persons Deemed Owners. Prior to and at the time of due
presentment of this Series A Security for registration of transfer, the Company,
the Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Series A Security is registered as the owner hereof for all
purposes, whether or not this Series A Security shall be overdue, and neither
the Company, the Trustee nor any agent shall be affected by notice to the
contrary.
12. GOVERNING LAW. THE INDENTURE, THIS SECURITY AND EACH GUARANTEE
SET FORTH BELOW SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.
A-10
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's social security or tax ID number) ___________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code) and
irrevocably appoint
________________________________________________________________________________
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for such agent.
In connection with any transfer of this Security occurring prior to
the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), covering resales of this
Security (which effectiveness shall not have been suspended or terminated at the
date of the transfer) and (ii) the date three years (or such shorter period of
time as permitted by Rule 144(k) under the Securities Act or any successor
provision thereunder) after the later of the original issuance date appearing on
the face of this Security (or any Predecessor Security) or the last date on
which the Company or any Affiliate of the Company or any Guarantor was the owner
of this Security (or any Predecessor Security), the undersigned confirms that it
has not utilized any general solicitation or general advertising in connection
with the transfer and that:
A-11
<PAGE>
[Check One]
[ ] (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act provided by
Rule 144A thereunder.
or
[ ] (b) this Security is being transferred other than in accordance
with (a) above and documents, including a transferee certificate
substantially in the form attached hereto, are being furnished
which comply with the conditions of transfer set forth in this
Security and the Indenture.
If none of the foregoing boxes is checked and, in the case of (b) above, if the
appropriate document is not attached or otherwise furnished to the Trustee, the
Trustee or Registrar shall not be obligated to register this Security in the
name of any person other than the Holder hereof unless and until the conditions
to any such transfer of registration set forth herein and in Section 3.17 of the
Indenture shall have been satisfied.
________________________________________________________________________________
Date:______________ Your signature:_____________________________________________
(Sign exactly as your name
appears on the other side
of this Security)
By:______________________________________
NOTICE: To be executed
by an executive officer
Signature Guarantee:____________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on
A-12
<PAGE>
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A (including the
information specified in Rule 144A(d)(4)) or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated: __________________ ___________________________________
NOTICE: To be executed by
an executive officer
[The Transferee Certificates (Exhibits C and D to the Indenture)
will be attached to the Series A Security]
A-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant
to Section 10.11 or 10.16 of the Indenture, check the box: [ ]
If you wish to have a portion of this Security purchased by the
Company pursuant to Section 10.11 or 10.16 of the Indenture, state the amount:
$_______________
Date: _____________ Your Signature:_____________________________________________
(Sign exactly as your name
appears on the other side
of this Security)
By: ___________________________________________
NOTICE: To be executed by an
executive officer
Signature Guarantee: ______________________
A-14
<PAGE>
EXHIBIT A-2
[FORM OF SERIES B SECURITY]
BLUE BIRD BODY COMPANY
----------------
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006,
SERIES B
CUSIP No.________
No. _____________ $
BLUE BIRD BODY COMPANY, a corporation incorporated under the laws of
the State of Georgia (herein called the "Company", which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ___________________ or registered assigns,
the principal sum of _________________ Dollars on November 15, 2006, at the
office or agency of the Company referred to below, and to pay interest thereon
on May 15 and November 15 (each an "Interest Payment Date"), of each year,
commencing on May 15, 1997, accruing from the Issue Date or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, at
the rate of 10 3/4% per annum, until the principal hereof is paid or duly
provided for. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Indenture referred to on
the reverse hereof, be paid to the person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the May 1
and November 1 (each a "Regular Record Date"), whether or not a Business Day, as
the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid, or duly provided for, and interest on such defaulted
interest at the then applicable interest rate borne by the Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may be paid to the person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice of which shall be given to Holders of Securities not less
than 10 days prior to such Special Record Date, or may be paid at any time in
any other lawful
B-1
<PAGE>
manner not inconsistent with the requirements of any securities exchange on
which the Securities may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan in The City of New York, State of New York,
or at such other office or agency of the Company as may be maintained for such
purpose, 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; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the address of the person entitled thereto as such address shall
appear on the Security Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof.
Unless the certificate of authentication hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture, or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
Dated: , BLUE BIRD BODY COMPANY
By:________________________
Name:
Title:
By:________________________
Name:
Title:
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<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Securities referred to in the within-mentioned
Indenture.
The Chase Manhattan Bank,
as Trustee
By:__________________________________
Authorized Officer
B-3
<PAGE>
[REVERSE OF SERIES B SECURITY]
1. Indenture. This Security is one of a duly authorized issue of
Securities of the Company designated as its 10 3/4% Senior Subordinated Notes
due 2006, Series B (herein called the "Series B Securities"), limited (except as
otherwise provided in the Indenture referred to below) in aggregate principal
amount to $100,000,000, which may be issued under an indenture (herein called
the "Indenture") dated as of November 15, 1996, among the Company, Blue Bird
Corporation ("BBC" or the "Guarantor") and The Chase Manhattan Bank, as trustee
(herein called the "Trustee," which term includes any successor Trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitation of
rights, duties, obligations and immunities thereunder of the Company, the
Trustee, certain Guarantors thereunder and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.
All capitalized terms used in this Series B Security which are
defined in the Indenture and not otherwise defined herein shall have the
meanings assigned to them in the Indenture.
No reference herein to the Indenture and no provision of this Series
B Security or of the Indenture shall alter or impair the obligation of the
Company or any Guarantor, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Security at the times,
place, and rate, and in the coin or currency, herein prescribed.
The Series B Securities were issued pursuant to an exchange offer
pursuant to which 10 3/4% Senior Subordinated Securities due 2006 of the Company
(herein called the "Series A Securities"), in like principal amount and having
substantially identical terms as the Series B Securities, were exchanged for the
Series B Securities. The Series A Securities and the Series B Securities are
together referred to herein as the "Securities."
2. Guarantees. This Security is initially entitled to the benefits
of the senior subordinated Guarantees of BBC and may thereafter be entitled to
other senior subordinated Guarantees made for the benefit of the Holders.
Reference is hereby made to Article Fourteen and Section 10.09 of the Indenture
and to the Guarantees endorsed on this Security for a statement of the
respective rights, limitations of rights,
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<PAGE>
duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
3. Subordination. The Indebtedness evidenced by the Securities is, to
the extent and in the manner provided in the Indenture, subordinate and subject
in right of payment to the prior payment in full of all Senior Indebtedness
(including, without limitation, interest on such Senior Indebtedness that would
accrue but for the filing of a petition initiating any proceeding under any
Bankruptcy Law, whether or not such claim is allowable in such proceeding) as
defined in the Indenture, and this Series B Security is issued subject to such
provisions. Each Holder of this Security, by accepting the same, (a) agrees to
and shall be bound by such provisions, (b) authorizes and directs the Trustee,
on behalf of such Holder to take such action as may be necessary or appropriate
to effectuate the subordination as provided in the Indenture and (c) appoints
the Trustee attorney-in-fact of such Holder for such purpose; provided, however,
that the Indebtedness evidenced by this Series B Security shall cease to be so
subordinate and subject in right of payment upon any defeasance of this Series B
Security referred to below.
4. Redemption.
(a) Optional Redemption. The Securities are subject to redemption,
at the option of the Company, in whole or in part, in principal amounts of
$1,000 or any integral multiple of $1,000, at any time on or after November 15,
2001 upon not less than 30 nor more than 60 days prior notice at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued interest to the redemption date, if redeemed during the 12 month period
beginning November 15 of the years indicated below:
Year Redemption Price
---- ----------------
2001 105.374%
2002 103.583%
2003 101.792%
2004 and thereafter 100.000%
(b) Optional Redemption upon Public Equity Offering. On or prior to
November 15, 1999, the Company may, at its option, use the net proceeds of a
Public Equity Offering to redeem up to an aggregate of 25% of the principal
amount of the Securities originally issued from Holders on a pro rata basis (or
as nearly pro rata as practicable), at a redemption price
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<PAGE>
equal to 110.75% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of redemption; provided that not less than
$75,000,000 in aggregate principal amount of Securities would remain outstanding
immediately after such redemption. The Company must mail a notice of redemption
complying with Section 11.05 of the Indenture not later than 60 days after the
consummation of the Public Equity Offering. As used above, "Public Equity
Offering" means an underwritten public offering of Capital Stock (other than
Redeemable Capital Stock) of the Company or BBC made on a primary basis by the
Company or BBC pursuant to a registration statement filed with and declared
effective by the Commission in accordance with the Securities Act; provided
that, in the event of an offering by BBC, BBC shall contribute as equity to the
Company proceeds from the Public Equity Offering of not less than that amount
necessary to redeem the Securities under the provisions described in the
Indenture.
(c) Interest Payments. In the case of any redemption of Series B
Securities, interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Date referred to on the face hereof. Securities (or portions thereof) for
whose redemption and payment provision is made in accordance with the Indenture
shall cease to bear interest from and after the Redemption Date.
(d) Partial Redemption. In the event of redemption of this Series B
Security in part only, a new Series B Security or Securities for the unredeemed
portion hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof.
5. Offers to Purchase. Sections 10.11 and 10.16 of the Indenture
provide that upon the occurrence of a Change of Control Triggering Event and
following any Asset Sale, and subject to further limitations contained therein,
the Company shall make an offer to purchase certain amounts of the Securities in
accordance with the procedures set forth in the Indenture.
6. Defaults and Remedies. If an Event of Default occurs and is
continuing, the principal of all of the Outstanding Securities, plus all accrued
and unpaid interest, if any, to and including the date the Securities are paid,
may be declared due and in the manner and with the effect provided in the
Indenture.
B-6
<PAGE>
7. Defeasance. The Indenture contains provisions (which provisions
apply to this Series B Security) for defeasance at any time of (a) the entire
indebtedness of the Company and the Guarantors on this Series B Security and (b)
certain restrictive covenants and related Defaults and Events of Default, in
each case upon compliance by the Company with certain conditions set forth
therein.
8. Amendments and Waivers. The Indenture permits, with certain
exceptions as therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the Holders under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of not less than a majority in aggregate principal amount of the
Securities at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indentures and certain past Defaults under the Indenture and this Series B
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and their consequences. Any such consent or waiver by
or on behalf of the Holder of this Series B Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of any
Series B Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent or waiver is
made upon this Series B Security.
9. Denominations, Transfer and Exchange. The Series B Securities are
issuable only in registered form without coupons in denominations of $1,000 and
any integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Series B Securities are exchangeable
for a like aggregate principal amount of Series B Securities of a different
authorized denomination, as requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Series B Security is registrable on the
Security Register of the Company, upon surrender of this Series B Security for
registration of transfer at the office or agency of the Company maintained for
such purpose in the Borough of Manhattan in The City of New York, State of New
York, or at such other office or agency of the Company as may be maintained for
such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar
B-7
<PAGE>
duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Series B Securities, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
No service charge shall be made for any registration of transfer or
exchange or redemption of Series B Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
10. Persons Deemed Owners. Prior to and at the time of due
presentment of this Series B Security for registration of transfer, the Company,
the Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Series B Security is registered as the owner hereof for all
purposes, whether or not this Series B Security shall be overdue, and neither
the Company, the Trustee nor any agent shall be affected by notice to the
contrary.
11. GOVERNING LAW. THE INDENTURE, THIS SECURITY AND EACH GUARANTEE
SET FORTH BELOW SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.
B-8
<PAGE>
ASSIGNMENT FORM
If you the holder want to assign this Security, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's social security or tax ID number) ___________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code) and
irrevocably appoint
________________________________________________________________________________
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for such agent.
Date:______________ Your signature:_____________________________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee:____________________________________________________________
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Security purchased by the Company pursuant
to Section 10.11 or 10.16 of the Indenture, check the box: [ ]
B-9
<PAGE>
If you wish to have a portion of this Security purchased by the
Company, state the amount:
$_______________
Date: __________________ Your Signature:_______________________________________
(Sign exactly as your
name appears on the
other side of this
Security)
Signature Guarantee: _________________
B-10
<PAGE>
EXHIBIT B
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear
a legend (which would be in addition to any other legends required in the case
of a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY
(OTHER THAN A TRANSFER OF THIS SECURITY 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) MAY BE REGISTERED EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
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
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
C-1
<PAGE>
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, ____
THE CHASE MANHATTAN BANK
Attention: Corporate Trustee Administration
Re: Blue Bird Body Company
(the "Company") Senior Subordinated
Notes due 2006 (the "Securities") and
the related Indenture (the "Indenture")
---------------------------------------
Dear Sirs:
In connection with our proposed purchase of the Securities, we
confirm that:
1. We have received such information as we deem
necessary to make our investment decisions.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture
and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended
(the "Securities Act").
3. We understand that the offer and sale of the Securities have not
been registered under the Securities Act, and that the Securities may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except as permitted in the following sentence. We
agree, on our own behalf and on behalf of each account for which we
acquire any Securities, that, prior to (x) the date which is three years
after the later of the date of original issuance of the Securities (or
such shorter period as may be prescribed by Rule 144(k) under the
Securities Act or any successor provision) and (y) such later date, if
any, may be required by applicable laws, the Securities may be offered,
resold,
D-1
<PAGE>
pledged or otherwise transferred only (a) to the Company or any of its
subsidiaries, (b) inside the United States to a person whom we reasonably
believe to be a "qualified institutional buyer" (as defined in Rule 144A
under the Securities Act) in compliance with Rule 144A under the
Securities Act, (c) inside the United States to a person we reasonably
believe to be an institutional "accredited investor" (as defined below)
that, prior to such transfer, furnished to the Trustee a signed letter
substantially in the form hereof, (d) outside the United States to persons
other than U.S. persons in offshore transactions meeting the requirements
of Rule 904 under Regulation S under the Securities Act, (e) pursuant to
the exemption from registration provided by Rule 144 under the Securities
Act (if available), (f) pursuant to an effective registration statement
under the Securities Act or (g) pursuant to another available exemption
from the registration requirements of the Securities Act, and, in each
case, in accordance with any applicable securities laws of any state of
the United States or any other applicable jurisdiction, and we further
agree to provide to any person purchasing Securities from us a notice
advising such purchaser that resales of the Securities are restricted as
stated herein.
4. We understand that, on any proposed resale of any Securities, we
will be required to furnish to you and the Company such certification,
legal opinions and other information as you and the Company may reasonably
require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us
will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) and have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment, as the case may be.
6. We are acquiring the Securities purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
D-2
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:___________________________________
Authorized Signature
D-3
<PAGE>
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
___________, ____
THE CHASE MANHATTAN BANK
Attention: Corporate Trustee Administration
Re: Blue Bird Body Company (the "Company")
Senior Subordinated Notes due 2006
(the "Securities")
--------------------------------------
Dear Sirs:
In connection with our proposed sale of $ aggregate principal
amount at maturity of the Securities, we confirm that such sale has been
effected pursuant to and in accordance with Regulation S under the U.S.
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly,
we represent that:
(1) the offer of the Securities was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
E-1
<PAGE>
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities; and
(6) if the circumstances set forth in Rule 904(c) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if applicable) sending a confirmation or
other notice stating that the Securities may be offered and sold during
the restricted period specified in Rule 903(c)(2) or (3), as applicable;
in accordance with the provisions of Regulation S; pursuant to
registration of the Securities under the Securities Act; or pursuant to an
available exemption from the registration requirements under the
Securities Act.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_________________________________
Authorized Signature
E-2
<PAGE>
EXHIBIT E
FORM OF GUARANTEE
For value received, the undersigned hereby unconditionally
guarantees to the Holder of this Security the cash payments in United States
dollars of principal of, premium, if any, and interest on this Security in the
amounts and at the time when due and interest on the overdue principal, premium,
if any, and interest, if any, of this Security, if lawful, and the payment or
performance of all other obligations of the Company under the Indenture or the
Securities, to the Holder of this Security and the Trustee, all in accordance
with and subject to the terms and limitations of this Security, Article Fourteen
of the Indenture and this Guarantee. This Guarantee will become effective in
accordance with Article Fourteen of the Indenture and its terms shall be
evidenced therein. The validity and enforceability of any Guarantee shall not be
affected by the fact that it is not affixed to any particular Security.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Indenture dated as of November 15, 1996, among Blue Bird Body
Company, the undersigned and The Chase Manhattan Bank, as Trustee, as amended or
supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Securities
and to the Trustee pursuant to the Guarantee and the Indenture are expressly
set forth in Article Fourteen of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Guarantee and all of the other
provisions of the Indenture to which this Guarantee relates.
THIS GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. THE SUBSIDIARY GUARANTOR HEREUNDER AGREES TO SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE INDENTURE, THE SECURITIES OR THIS GUARANTEE.
F-1
<PAGE>
This Guarantee is subject to release upon the terms set forth in the
Indenture.
Date:
[NAME OF GUARANTOR], as Guarantor
By:_________________________________
Name:
Title:
F-2
<PAGE>
================================================================================
BLUE BIRD BODY COMPANY
$100,000,000
10 3/4% Senior Subordinated Notes due 2006
PURCHASE AGREEMENT
Dated: November 13, 1996
================================================================================
<PAGE>
$100,000,000
BLUE BIRD BODY COMPANY
(a Georgia corporation)
10 3/4% Senior Subordinated Notes due 2006
PURCHASE AGREEMENT
November 13, 1996
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
BT SECURITIES CORPORATION
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1305
Ladies and Gentlemen:
Blue Bird Body Company, a Georgia corporation (the "Company")
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and BT Securities Corporation (collectively
with Merrill Lynch, the "Initial Purchasers") with respect to the issue and sale
by the Company (the "Offering") and the purchase by the Initial Purchasers,
acting severally and not jointly, of the respective principal amounts set forth
in Schedule A of $100,000,000 aggregate principal amount of the Company's 10
3/4% Senior Subordinated Notes due 2006 (the "Notes"). The Notes are to be
issued pursuant to an indenture to be dated as of November 15, 1996 (the
"Indenture") among the Company, as issuer of the Notes, and guaranteed (the
"Guarantee" and, collectively with the Notes, the "Securities"), on a senior
subordinated basis by Blue Bird Corporation, a Delaware Corporation, which owns
all of the capital stock of the Company (the
<PAGE>
-2-
"Guarantor" or "BBC"), and Chase Manhattan Bank, as trustee (the "Trustee"). The
Company and the Guarantor are hereinafter referred to collectively as the
"Issuers" and this agreement (this "Agreement" or the "Purchase Agreement"), the
Indenture, the Securities, the Exchange Securities (as defined below), the
Private Exchange Securities (as defined below) and the Registration Rights
Agreement (as defined below) are referred to collectively as the "Operative
Documents."
As described in the Offering Memorandum (as defined below), the
Offering is part of an overall recapitalization of the Company, pursuant to
which (i) the Company's existing bank credit agreement will be replaced and
refinanced by an amended and restated credit agreement (the "New Credit
Agreement"), (ii) the Company will pay a special cash dividend to BBC (the "Blue
Bird Dividend") on all shares of its common stock, par value $ .01 per share,
and BBC will pay a special cash dividend on all shares of its common stock (the
"BBC Common Shares") and make payments to holders of options to purchase BBC
Common Shares (the "BBC Distribution" and, together with the Blue Bird Dividend,
the "Distribution") and (iii) all of the Company's outstanding 11 3/4% Senior
Subordinated Notes due 2002, Series B (the "Old Notes") will be retired pursuant
to the terms of letters providing for the sale of the Old Notes to the Company
executed by the holders of the Old Notes (the "Note Repurchase Letters"). The
Offering, the replacement of the Company's existing credit agreement with the
New Credit Agreement, the Distribution and the retirement of the Old Notes and ,
if required, the execution of a supplemental indenture in respect of the Old
Notes are collectively referred to herein as the "Recapitalization."
Capitalized terms used herein without definition have the respective
meanings specified in the Offering Memorandum referred to below.
The Securities will be offered and sold to the Initial Purchasers
without registration under the Securities Act of 1933, as amended (the "Act"),
in reliance upon an exemption from the registration requirements of the Act. The
Company has prepared and delivered to each Initial Purchaser copies of a
preliminary offering memorandum dated October 29, 1996 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to each Initial
Purchaser, on the date hereof, copies of a final offering memorandum dated
November 13, 1996 (the "Final Offering Memorandum"), each to be used by such
Initial Purchaser in connection with its solicitation of purchases of,
<PAGE>
-3-
or offering of, the Securities. "Offering Memorandum" means, with respect to
any date or time referred to in this Agreement, the most recent offering
memorandum (whether the Preliminary Offering Memorandum or the Final Offering
Memorandum, together with any amendment or supplement to either such
document), including exhibits thereto which have been prepared and delivered
by the Company to the Initial Purchasers in connection with their
solicitation of purchases of, or offering of, the Securities. The Company
hereby confirms that it has authorized the use of the Preliminary Offering
Memorandum and the Offering Memorandum in connection with the offer and
resale of the Securities by the Initial Purchasers.
The Company understands that the Initial Purchasers propose to make
an offering of the Securities only on the terms and in the manner set forth in
the Offering Memorandum and Section 4 hereof, as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, (i) to
persons in the United States whom the Initial Purchasers reasonably believe to
be qualified institutional buyers ("Qualified Institutional Buyers") as defined
in Rule 144A under the Act, as such rule may be amended from time to time ("Rule
144A"), in transactions under Rule 144A, (ii) to a limited number of other
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) and
(7) under Regulation D of the Act ("Accredited Investors")) in private sales
exempt from registration under the Act or (iii) pursuant to offers and sales to
non-U.S. persons that occur outside the United States within the meaning of
Regulation S under the Act ("Regulation S"), pursuant to Rule 904 of Regulation
S.
The Initial Purchasers and other holders of Securities (including
subsequent transferees) will be entitled to the benefits of the registration
rights agreement, to be dated as of November 19, 1996 (the "Registration Rights
Agreement"), between the Issuers and the Initial Purchasers, in the form
attached hereto as Exhibit A. Pursuant to the Registration Rights Agreement, the
Company will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein either (i) a
registration statement under the Act registering the Exchange Securities (as
defined in the Registration Rights Agreement) to be offered in exchange for the
Securities and to use its best efforts to cause such registration statement to
be declared effective or (ii) under certain circumstances set forth therein, to
file with the Commission a shelf registration statement pursuant to Rule 415
under the Act relating to the resale of the Securities
<PAGE>
-4-
by holders thereof or, if applicable, relating to the resale of Private Exchange
Securities (as defined in the Registration Rights Agreement) by the Initial
Purchasers pursuant to an exchange of the Securities for Private Exchange
Securities, and to use its best efforts to cause such shelf registration
statement to be declared effective.
SECTION 1. Representations and Warranties. (a) The Issuers, jointly
and severally, represent and warrant to each of the Initial Purchasers as of the
date hereof and as of the Closing Time (as defined in Section 3 hereof) that:
(i) As of their respective dates, none of the Offering Memorandum or
any amendment or supplement thereto, and at all times subsequent thereto
up to and as of the Closing Time, the Offering Memorandum, as amended or
supplemented to such time, contained or will contain an untrue statement
of a material fact or omitted or will omit 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; provided that
this representation and warranty does not apply to statements or omissions
made in reliance upon and in conformity with information furnished in
writing by the Initial Purchasers to the Company expressly for use in the
Offering Memorandum or any amendment or supplement thereto.
(ii) When the Securities are issued and delivered pursuant to this
Agreement, such securities will not be of the same class (within the
meaning of Rule 144A) as securities of any of the Issuers which are listed
on a national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
quoted in a U.S. automated inter-dealer quotation system. The Company has
been advised that the Securities have been designated PORTAL eligible
securities in accordance with the rules and regulations of the National
Association of Securities Dealers, Inc. (the "NASD").
(iii) Neither of the Issuers, nor any of their affiliates (as
defined in Rule 501(b) under the Act) has, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Act) which is or will be
integrated with the sale of the Securities in a manner
<PAGE>
-5-
that would require the registration of the Securities under the Act.
(iv) None of the Issuers or any of their respective affiliates (as
such term is defined in Rule 501(b) under the Act) or any person (other
than the Initial Purchasers, as to which the Issuers make no
representation) acting at the request of the Issuers has engaged, in
connection with the offering of the Securities, (A) in any form of general
solicitation or general advertising within the meaning of Rule 502(c)
under the Act, (B) in any directed selling efforts within the meaning of
Rule 902 under the Act in the United States in connection with the
Securities being offered and sold pursuant to Regulation S under the Act,
(C) in any manner involving a public offering within the meaning of
Section 4(2) of the Act or (D) in any action which would require the
registration of the offering and sale of the Securities pursuant to this
Agreement or which would violate applicable state securities or "blue sky"
laws.
(v) Assuming that the representations and warranties of the Initial
Purchasers contained in Section 4 are true, correct and complete, and
assuming compliance by the Initial Purchasers with their covenants in
Section 4, and assuming that the representations and warranties contained
in the Transferee Letters of Representation (the "Transferee Letters")
(substantially in the form of Appendix A to the Offering Memorandum)
completed by Accredited Investors or non-U.S. persons purchasing
Securities are true and correct as of the Closing Time, and assuming
compliance by such Accredited Investors or non-U.S. persons, as the case
may be, with the agreements in the Transferee Letters, it is not necessary
in connection with the offer, sale and delivery of the Securities to the
Initial Purchasers in the manner contemplated by, or in connection with
the initial resale of such Securities by the Initial Purchasers in
accordance with, this Agreement to register the Securities under the Act
or to qualify any indenture in respect of the Securities under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(vi) The only subsidiaries of the Company as of the date hereof are
those listed on Schedule B hereto (also referred to herein as the
"Subsidiaries"). Each of the Issuers and the Subsidiaries has been duly
organized or incorporated, as the case may be, and validly existing in
<PAGE>
-6-
good standing under the laws of its respective jurisdictions of
organization, with all requisite power and authority (corporate or
otherwise) under such laws, and all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from regulatory or
governmental officials, bodies and tribunals, (a) to own, lease and
operate their respective properties and to conduct their respective
businesses as now conducted and as described in the Offering Memorandum
and (b) to enter into, deliver, incur and perform their respective
obligations under the Operative Documents and (c) to consummate each
element of the Recapitalization, except, in the case of the foregoing
subclause (a) for authorizations, approvals, orders, leases, certificates
and permits, the failure of which to possess could not reasonably be
expected to have a Material Adverse Effect (as defined below); and are all
duly qualified to do business as foreign corporations in good standing in
all other jurisdictions where the ownership or leasing of their respective
properties or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified could not
reasonably be expected to have a material adverse effect (i) on the
business, condition (financial or otherwise), results of operations, or
business prospects of the Issuers and the Subsidiaries taken as a whole or
(ii) on the ability of either of the Issuers to perform any of their
respective obligations under the Operative Documents or to consummate any
of the transactions contemplated hereby or thereby (a "Material Adverse
Effect").
(vii) The Securities, the Exchange Securities and the Private
Exchange Securities have been duly authorized by each of the Issuers and
the Issuers have all requisite corporate power and authority to execute,
issue and deliver the Securities, the Exchange Securities and the Private
Exchange Securities and to incur and perform their respective obligations
provided for therein. The Notes, when executed, authenticated and issued
in accordance with the terms of the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee) and
when delivered against payment of the purchase price therefor as provided
in this Agreement, will constitute the valid and binding obligations of
the Company, entitled to the benefits of the Indenture, enforceable
against the Company in accordance with the terms thereof; and the
Guarantee, upon endorsement on the Notes by the Guarantor and upon
execution of the Notes by the
<PAGE>
-7-
Company and authentication thereof by the Trustee (assuming the due
authorization, execution and delivery of the Indenture by the Trustee),
and upon delivery of the Notes, and payment therefor in accordance with
the terms of this Agreement, will constitute a valid and binding
obligation of the Guarantor, enforceable against the Guarantor in
accordance with the terms of the Guarantee; and the Exchange Securities
and the Private Exchange Securities, if any, when executed, authenticated,
issued and delivered by the Issuers in exchange for the Securities, will
constitute valid and binding obligations of each of the Issuers, entitled
to the benefits of the Indenture, enforceable against each of the Issuers
in accordance with the terms thereof to the extent each is a party;
subject, in the case of each of the foregoing, to (a) applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and (b) general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) (clauses (a) and (b) being referred to
herein as the "Enforceability Limitations").
(viii) This Agreement has been, and, as of the Closing Time, the
Registration Rights Agreement and the Indenture will have been, duly
authorized, executed and delivered by the Issuers, and upon such execution
by the Issuers (assuming the due authorization, execution and delivery by
parties thereto other than the Issuers) this Agreement constitutes, and,
as of the Closing Time, the Registration Rights Agreement and the
Indenture will constitute, the valid and binding obligations of each of
the Issuers, enforceable against the Issuers in accordance with the terms
hereof or thereof, subject only to the Enforceability Limitations.
(ix) Each element of the Recapitalization has been or, as of the
Closing Date, will have been, duly authorized by the Issuers, and, as of
the Closing Date, the New Credit Agreement and the Supplemental Indenture,
upon execution and delivery by the Issuers (assuming due authorization,
execution and delivery by the parties thereto other than the Issuers) will
constitute the valid and binding obligations of each of the Issuers,
enforceable against the Issuers in accordance with the terms hereof or
thereof, subject only to the Enforceability Limitations.
<PAGE>
-8-
(x) No consent, authorization, approval, license or order of, or
filing, registration or qualification with, any court or governmental or
regulatory agency or body, domestic or foreign, is required for the
performance by the Issuers of their obligations under the Operative
Documents, or for the consummation of the transactions contemplated hereby
(including the other elements of the Recapitalization) or thereby except
such as may be required (A) in connection with the registration under the
Act of the Securities, the Exchange Securities or the Private Exchange
Securities pursuant to the Registration Rights Agreement (including any
filing with the NASD), (B) the qualification of the Indenture under the
Trust Indenture Act or (C) by state securities or "blue sky" laws in
connection with the offer and sale of the Securities or the registration
thereof or of the Private Exchange Securities or the Exchange Securities
pursuant to the Registration Rights Agreement.
(xi) The issuance, sale and delivery of the Securities, the Exchange
Securities and the Private Exchange Securities, if any, the execution,
delivery and performance by the Issuers of this Agreement, the
Registration Rights Agreement and the Indenture, the consummation by the
Issuers of the transactions contemplated hereby, thereby, by the
Recapitalization, and in the Offering Memorandum and the compliance by the
Issuers with the terms of the foregoing do not, and, at the Closing Time,
will not conflict with or constitute or result in a breach or violation by
any of the Issuers or the Subsidiaries of (A) any of the terms or
provisions of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) by any of the Company
or the Subsidiaries or give rise to any right to accelerate the maturity
or require the prepayment of any indebtedness under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Issuers or the Subsidiaries under any contract,
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, authorization, permit, certificate or other agreement
or document to which any of the Issuers or the Subsidiaries is a party or
by which any of them may be bound, or to which any of them or any of their
respective assets or businesses is subject (collectively, "Contracts")
(and the Issuers have no knowledge of any conflict, breach or violation of
such terms or provisions or of any such default, in any such
<PAGE>
-9-
case, which has occurred or will so result), (B) the articles or by-laws
(each, an "Organizational Document") of each of the Issuers and the
Subsidiaries or (C) any law, statute, rule or regulation, or any judgment,
decree or order, in any such case, of any domestic or foreign court or
governmental or regulatory agency or other body having jurisdiction over
the Issuers or any of the Subsidiaries or any of their respective
properties or assets.
(xii) The Securities, the Exchange Securities, the Registration
Rights Agreement and the Indenture will each conform in all material
respects to the descriptions thereof in the Offering Memorandum.
(xiii) The audited consolidated financial statements included in the
Offering Memorandum, including the notes thereto, present fairly the
financial position of BBC and its consolidated subsidiaries at the dates
indicated and the statement of operations, stockholders' equity and cash
flows of BBC and its consolidated subsidiaries for the periods have been
prepared in conformity with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved. The selected financial data and the summary financial
information included in the Offering Memorandum present fairly the
information shown therein and have been compiled on a basis consistent
with that of the financial statements included in the Offering Memorandum.
Arthur Andersen LLP, which has examined certain of such financial
statements as set forth in its report included in the Offering Memorandum,
is an independent public accounting firm with respect to the Issuers
within the meaning of Regulation S-X under the Act. The pro forma
financial information relating to BBC and its subsidiaries and the related
notes thereto included in the Offering Memorandum present fairly the
information shown therein, have been prepared in all material respects in
accordance with the Commission's rules and guidelines with respect to pro
forma financial adjustments and have been properly computed on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein.
(xiv) Since the respective dates as of which information is given in
the Offering Memorandum, except as otherwise specifically stated therein,
there has been no
<PAGE>
-10-
(A) material adverse change in the business, condition (financial or
otherwise), results of operations or business prospects of any of the
Issuers or the Subsidiaries taken as a whole, whether or not arising in
the ordinary course of business (a "Material Adverse Change"), (B)
transaction entered into by any of the Issuers or the Subsidiaries, other
than in the ordinary course of business, that is material to the Issuers
and the Subsidiaries, taken as a whole or (C) dividend or distribution of
any kind declared, paid or made by BBC or the Company on its capital
stock.
(xv) BBC has the authorized, issued and outstanding capitalization
set forth in the Offering Memorandum under the subheading "Historical"
under the caption "Capitalization"; all of the outstanding capital stock
of BBC has been duly authorized and validly issued, is fully paid and
nonassessable and was not issued in violation of any preemptive or similar
rights (whether provided contractually or pursuant to any Organizational
Document). None of the Issuers own, directly or indirectly, any material
amount of shares, or any other material amount of equity or long-term debt
securities or have any material equity interest in any firm, partnership,
joint venture or other entity other than the Subsidiaries, as set forth on
Schedule 1 hereto. No holder of any securities of BBC is entitled to have
such securities (other than the Securities, the Exchange Securities and
the Private Exchange Securities, if any) registered under any registration
statement contemplated by the Registration Rights Agreement. All of the
outstanding capital stock of each of the Subsidiaries has been duly
authorized and, to the knowledge of the Issuers, validly issued, is fully
paid and nonassessable and was not issued in violation of any preemptive
or similar rights (whether provided contractually or pursuant to any
Organizational Document) and the outstanding shares of the capital stock
owned by BBC of the Company are owned beneficially and of record by BBC
free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability or voting of, or the payment to BBC of
dividends or distributions on such capital stock, except as set forth in
the Offering Memorandum.
(xvi) None of the Issuers or the Subsidiaries is (A) in violation of
its respective Organizational Documents, (B) in default (or, with notice
or lapse of time or both, would be in default) in the performance or
<PAGE>
-11-
observance of any obligation, agreement, covenant or condition contained
in any Contract, or (C) in violation of any law, statute, judgment,
decree, order, rule or regulation of any domestic or foreign court with
jurisdiction over the Issuers or the Subsidiaries or any of their
respective assets or properties, or other governmental or regulatory
authority, agency or other body, other than, in the case of clause (B) or
(C), such defaults or violations which, individually or in the aggregate,
could not reasonably be expected to have or result in a Material Adverse
Effect; and any real property and buildings held under lease by either
Issuer or the Subsidiaries which are material (individually or in the
aggregate) to the Issuers and the Subsidiaries, are held by such Issuer or
such Subsidiary, as the case may be, under valid, subsisting and
enforceable leases with such exceptions that would not, individually or in
the aggregate, have or result in a Material Adverse Effect.
(xvii) The Issuers and the Subsidiaries own or possess, or can
acquire on reasonable terms, adequate licenses, trademarks, service marks,
trade names, copyrights and know-how (including trade secrets and other
proprietary or confidential information, systems or procedures)
(collectively, "intellectual property") necessary to conduct the business
now or proposed to be operated by each of them as described in the
Offering Memorandum, except where the failure to own, possess or have the
ability to acquire any such intellectual property could not, individually
or in the aggregate, be reasonably expected to have a Material Adverse
Effect; and none of the Issuers or the Subsidiaries has received any
notice of infringement of or conflict with (and none of them knows of any
such infringement of or conflict with) asserted rights of others with
respect to any of such intellectual property.
(xviii) The Issuers and the Subsidiaries have obtained all material
consents, approvals, orders, certificates, licenses, permits, franchises
and other authorizations of and from, and has made all material
declarations and filings with, all governmental and regulatory
authorities, all self-regulatory organizations and all courts and other
tribunals necessary to own, lease, license and use their respective
properties and assets and to conduct their respective businesses in the
manner described in the Offering Memorandum.
<PAGE>
-12-
(xix) There is no legal action, suit, proceeding inquiry or
investigation before or by any court or governmental body or agency,
domestic or foreign, now pending or, to the knowledge of the Issuers,
threatened against any of the Issuers or the Subsidiaries or affecting the
Issuers or the Subsidiaries or any of their respective properties which
would be required to be disclosed in a registration statement filed under
the Act which would, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth in the Offering Memorandum, none of
the Issuers or the Subsidiaries has received any notice or claim of any
material default (or event, condition or omission which with notice or
lapse of time or both would result in a default) under any of its
respective Contracts or has knowledge of any material breach of any of
such Contracts by the other party or parties thereto.
(xx) Each of the Issuers and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns, and
has paid all taxes shown as due thereon; and there is no tax deficiency
that has been asserted against any of the Issuers or the Subsidiaries.
(xxi) Each of the Company and the Subsidiaries has good and
marketable title to all real and personal property described in the
Offering Memorandum as being owned by it and good and marketable title to
a leasehold estate in the real and personal property described in the
Offering Memorandum as being leased by it, free and clear of all liens,
charges, encumbrances or restrictions, except to the extent the failure to
have such title or the existence of such liens, charges, encumbrances or
restrictions does not result in a Material Adverse Effect.
(xxii) Neither the Company nor any of the Subsidiaries is an
"investment company" or a company "controlled by" an "investment company"
as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(xxiii) Neither the Company nor any of the Subsidiaries nor any of
their respective directors, officers or controlling persons has taken,
directly or indirectly, any action designed, or which might reasonably be
expected, to cause or result, under the Act or otherwise, in, or which has
constituted, stabilization or manipulation of the
<PAGE>
-13-
price of any security of the Company to facilitate the sale or resale of
the Securities, the Exchange Securities or the Private Exchange
Securities.
(xxiv) No labor problem, dispute or disturbance with the employees
of the Company or any of the Subsidiaries exists or, to the knowledge of
the Issuers, is threatened which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(xxv) The Company has insurance in such amounts and covering such
risks and liabilities as are in accordance with normal industry practice.
(xxvi) None of the Company nor any Subsidiary has any material
profit sharing, deferred compensation, stock option, stock purchase,
phantom stock or similar plans, including agreements evidencing rights to
purchase securities or to share in the profits of the Company or any
Subsidiary.
(xxvii) A true and correct copy of the executed New Credit Agreement
has been delivered to the Initial Purchasers and counsel to the Initial
Purchasers on or prior to the Closing Time. There have been no amendments,
alterations, modifications or waivers of the provisions of the New Credit
Agreement. The New Credit Agreement conforms in all material respects to
the description thereof in the Offering Memorandum.
(xxviii) The Note Repurchase Letters received from holders of 100%
of the Old Notes have been received by the Company and the Note Repurchase
Letters do not conflict with or constitute or result in a breach or
violation of any of the terms of the Old Notes Indenture. The Note
Repurchase Letters were obtained by the Company in compliance with the Act
and the Exchange Act.
(xxix) The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources which the Company
believes to be reliable and accurate in all material respects or represent
the Company's good faith estimates that are made on the basis of data
derived from such sources.
(xxx) Each of the Company and BBC are, and immediately after the
Closing Time will be, Solvent. As used herein,
<PAGE>
-14-
the term "Solvent" means, with respect to the Issuers on a particular
date, that on such date (A) the fair market value of the assets of each of
the Issuers exceeds its respective liabilities (including without
limitation, stated liabilities and identified contingent liabilities), (B)
the present fair salable value of the assets of each of the Issuers will
exceed its respective probable liabilities on its debts (including without
limitation, stated liabilities and identified contingent liabilities), (C)
the fair market value of each of the Issuers' total assets exceeds its
total liabilities, including identified contingent liabilities, by an
amount at least equal to the total par value of its common stock, both
immediately prior to and after the Distribution, (D) each of the Issuers
is and will be able to pay its debts (including without limitation, stated
liabilities and identified contingent liabilities) as such debts mature
and (E) each of the Issuers will not have unreasonably small capital with
which to conduct its present and anticipated business.
(b) Any certificate signed by any officer of any of the Issuers and
delivered to the Initial Purchasers or to counsel for the Initial Purchasers
pursuant to the terms of this Agreement shall be deemed a representation and
warranty by the Issuers to the Initial Purchasers as to the matters covered
thereby.
SECTION 2. Purchase and Sale of the Securities. The Company agrees
to sell to the Initial Purchasers and, subject to the terms and conditions and
in reliance upon the representations and warranties of the Issuers herein set
forth, each of the Initial Purchasers agrees severally to purchase from the
Company, at a purchase price of 97% of the principal amount thereof, the
respective principal amount of Notes set forth in Schedule A attached hereto
opposite the name of such Initial Purchaser.
SECTION 3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at 9:00 A.M., New York City time, on November 19, 1996,
or such later date and time not more than two (2) business days thereafter as
the Initial Purchasers and the Company shall agree (such date and time of
delivery and payment for the Securities being herein called the "Closing Time").
Delivery of the Securities shall be made to the Initial Purchasers against
payment by the Initial Purchasers of the purchase price thereof by wire transfer
of immediately available funds to the order of the Company or as the
<PAGE>
-15-
Company may direct. Delivery of the Securities in definitive form shall be made
at such location as the Initial Purchasers shall reasonably designate at least
two business days in advance of the Closing Time and payment for the Securities
shall be made at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd
Street, New York, New York 10019. Certificates for the Securities shall be
registered in such names and in such denominations as the Initial Purchasers may
request not less than two full business days in advance of the Closing Time.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Initial Purchasers in New York, New York, not
later than 10:00 A.M. on the business day prior to the Closing Time.
SECTION 4. Resale of the Securities. The Initial Purchasers have
advised the Issuers that they propose to offer the Securities for resale upon
the terms and conditions set forth in this Agreement and in the Offering
Memorandum. Each Initial Purchaser hereby represents and warrants (as to itself
only) to, and agrees with, the Issuers that (i) it is purchasing the Securities
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is (a) a "qualified
institutional buyer" (a "QIB") within the meaning of Rule 144A under the Act and
is aware that the sale to it is being made in reliance on Rule 144A under the
Act, (b) an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Act (an "Accredited
Investor"), or (c) a person other than a U.S. person (a "foreign purchaser"),
which term shall include dealers or other professional fiduciaries in the U.S.
acting on a discretionary basis for foreign beneficial owners in offshore
transactions meeting the requirements of Rule 903 of Regulation S under the Act;
(ii) it acknowledges that the Securities have not been registered under the Act
and that none of the Securities may be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons except as set forth below;
(iii) it shall not resell or otherwise transfer any of such Securities prior to
(a) the date which is three years (or such shorter period of time as permitted
by Rule 144(k) under the Act or any successor provision thereunder) after the
later of the date of original issuance of the Securities and (b) such later
date, if any, as may be required by applicable laws except (a) to the Company or
its Subsidiaries, (b) inside the United States to an Accredited Investor that,
prior to such transfer, furnishes to the Trustee
<PAGE>
-16-
a signed letter containing certain representations and agreements (the form of
which letter can be obtained from the Trustee), (d) outside the United States to
foreign purchasers in offshore transactions meeting the requirements of Rule 904
of Regulation S, (e) pursuant to the exemption from registration provided by
Rule 144 under the Act (if available), (f) pursuant to an effective registration
statement under the Act or (g) pursuant to another available exemption from the
registration requirements of the Act; (iv) it agrees that it will give to each
person to whom it transfers the Securities notice of any restrictions on
transfer of such Securities; (v) it understands that all of the Securities will
bear a legend substantially similar to that in Section 5(j) hereof, unless
otherwise agreed by the Company and the Trustee; (vi) it acknowledges that the
Trustee will not be required to accept for registration of transfer any
Securities acquired by it, except upon presentation of evidence satisfactory to
the Company and the Trustee that the restrictions set forth herein have been
complied with; and (vii) it acknowledges that the Issuers, the Trustee, the
Initial Purchasers and others will rely upon the truth and accuracy of the the
foregoing acknowledgments, representations and agreements and agrees that if any
of the acknowledgments, representations or agreements deemed to have been made
by its purchase of the Securities are no longer accurate, it shall promptly
notify the Issuers, the Trustee and the Initial Purchasers. If it is acquiring
the Securities as a fiduciary or agent for one or more investor accounts, it
represents that it has sole investment discretion with respect to each such
account and it has full power to make the foregoing acknowledgments,
representations and agreements on behalf of each account.
SECTION 5. Covenants of the Issuers. Each of the Issuers covenant
with the Initial Purchasers as follows:
(a) The Issuers will furnish to the Initial Purchasers and counsel
for the Initial Purchasers, without charge, such number of copies of the
Preliminary Offering Memorandum and the Offering Memorandum and any
amendments or supplements thereto as the Initial Purchasers and their
counsel may reasonably request.
(b) The Issuers will not at any time make any amendment or
supplement to the Preliminary Offering Memorandum or the Offering
Memorandum without the prior written consent of the Initial Purchasers.
<PAGE>
-17-
(c) If at any time prior to completion of the distribution of the
Securities by the Initial Purchasers to purchasers who are not its
affiliates (as determined by the Initial Purchasers) any event shall occur
or condition shall exist as a result of which it is necessary, in the
opinion of the Initial Purchasers or counsel for the Initial Purchasers,
to amend or supplement the Offering Memorandum in order that the Offering
Memorandum, as then amended or supplemented, will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to a purchaser, not misleading or if
in the opinion of the Initial Purchasers or counsel to the Initial
Purchasers, such amendment or supplement is necessary to comply with
applicable law, the Issuers will, subject to paragraph (b) of this Section
5, promptly prepare, at their own expense, such amendment or supplement as
may be necessary to correct such untrue statement or omission or to effect
such compliance (in form and substance agreed upon by the Initial
Purchasers and counsel to the Initial Purchasers), so that as so amended
or supplemented, the statements in the Offering Memorandum will not
include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time it is delivered to a purchaser, not
misleading or so that such Offering Memorandum as so amended or
supplemented will comply with applicable law, as the case may be, and
furnish to the Initial Purchasers such number of copies of such amendment
or supplement as the Initial Purchasers may reasonably request. Each of
the Issuers agrees to notify the Initial Purchasers in writing to suspend
use of the Offering Memorandum as promptly as practicable after the
occurrence of an event specified in this paragraph (c), and the Initial
Purchasers hereby agree upon receipt of such notice from the Issuers to
suspend use of the Offering Memorandum until the Issuers have amended or
supplemented the Offering Memorandum to correct such misstatement or
omission or to effect such compliance.
(d) Notwithstanding any provision of paragraph (b) or (c) to the
contrary, however, the Issuers' obligations under paragraphs (b) and (c)
and the Initial Purchasers' obligations under paragraph (c) shall
terminate on the earliest to occur of (i) expiration of the Exchange Offer
<PAGE>
-18-
(as defined in the Registration Rights Agreement) pursuant to the
Registration Rights Agreement, (ii) the effective date of a shelf
registration statement with respect to the Securities filed pursuant to
the Registration Rights Agreement, (iii) the date upon which no Initial
Purchaser nor any of their respective affiliates continues to hold
Securities acquired as part of their initial distribution and (iv) the
date upon which no Initial Purchaser nor any of their respective
affiliates continues to hold Private Exchange Securities, if any.
(e) None of the Issuers nor any of their affiliates (as defined in
Rule 501(b) under the Act) will solicit any offer to buy or offer or sell
the Securities, the Exchange Securities or the Private Exchange
Securities, if any, by means of any form of general solicitation or
general advertising (as such terms are used in Regulation D under the
Act), or by means of any directed selling efforts (as defined in Rule 902
under the Act) in the United States in connection with the Securities
being offered and sold pursuant to Regulation S or in any manner involving
a public offering within the meaning of Section 4(2) of the Act prior to
the effectiveness of a registration statement with respect to the
Securities, the Exchange Securities or the Private Exchange Securities, as
applicable.
(f) None of the Issuers nor any of their affiliates (as defined in
Rule 501(b) under the Act) will offer, sell or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
which could be integrated with the sale of the Securities in a manner that
would require the registration of the Securities under the Act.
(g) The Company will, so long as the Securities are outstanding,
furnish to the Trustee on a timely basis, pursuant to the Indenture,
whether or not the Company has a class of securities registered under the
Exchange Act (i) audited year-end consolidated financial statements of BBC
(including a balance sheet, income statement and statement of changes of
cash flow) prepared in accordance with GAAP and substantially in the form
required under Regulation S-X under the Act and the information described
in Item 303 of Regulation S-K under the Act with respect to such period
and (ii) unaudited quarterly consolidated financial statements of BBC
(including a balance sheet, income statement and statement of changes of
cash flow)
<PAGE>
-19-
prepared in accordance with GAAP and substantially in the form required by
Regulation S-X under the Act and the information described in Item 303 of
Regulation S-K under the Act with respect to such period and will furnish
to the Initial Purchasers copies of all such reports and information,
together with such other documents, reports and information as shall be
furnished by the Company to the holders of the Securities or to the
Trustee. In the event the Company is not subject to Section 13 or 15(d) of
the Exchange Act, the Company will furnish to holders of Securities and
prospective purchasers of Securities designated by such holders, upon
request of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Act to
permit compliance with Rule 144A in connection with resales of the
Securities.
(h) Each of the Issuers will use its reasonable best efforts in
cooperation with the Initial Purchasers to (i) permit the Securities to be
eligible for clearance and settlement through The Depository Trust Company
and (ii) permit the Securities to be designated as PORTAL securities in
accordance with the rules and regulations of the NASD.
(i) Prior to the Closing Time, the Company, will furnish to the
Initial Purchasers, if and as soon as they have been prepared, a copy of
any unaudited interim consolidated financial statements of BBC for any
period subsequent to the period covered by the most recent financial
statements of BBC appearing in the Offering Memorandum which have been
prepared in the ordinary course of business.
(j) Each Security and Private Exchange Security, if any, will bear
the following legend until such legend shall no longer be necessary or
advisable because the Securities are no longer subject to the restrictions
on transfer described herein:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE OR OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
<PAGE>
-20-
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY
ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED
IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO
RULE 903 OF REGULATION S, (2) AGREES THAT IT WILL NOT, PRIOR TO (X)
THE DATE WHICH IS THREE YEARS (OR SUCH SHORTER PERIOD OF TIME AS
PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR
PROVISION THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF OR ANY PREDECESSOR OF THIS SECURITY OR THE LAST DATE ON WHICH
BLUE BIRD BODY COMPANY (THE "COMPANY") OR ANY AFFILIATE OF THE
COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS
SECURITY) OR (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY
APPLICABLE LAWS, (THE "RESALE RESTRICTION TERMINATION DATE"), OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR
ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-US PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
PURSUANT TO RULE 904 OF REGULATION S, (E) TO AN ACCREDITED INVESTOR
THAT IS ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH
<PAGE>
-21-
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO,
OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "US PERSON" HAVE
THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
(k) The Issuers will arrange for the registration and qualification
of the Securities for offering and sale under the applicable securities or
"blue sky" laws of such states and other jurisdictions as the Initial
Purchasers may designate in connection with the resale of the Securities
as contemplated by this Agreement and the Offering Memorandum and will
continue such qualifications in effect for as long as may be necessary to
complete the distribution of the Securities; provided that in no event
shall any of the Issuers be obligated to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to so qualify but for this Section 5(k),
(ii) file any general consent to service of process in any jurisdiction
where it is not at the Closing Time then so subject or (iii) subject
itself to taxation in any such jurisdiction if it is not so subject. The
Issuers will file such statements and reports as may be required by the
laws of each jurisdiction in which the Securities have been qualified as
above provided. The Issuers shall promptly advise the Initial Purchasers
of the receipt by any of the Issuers of any notification with respect to
the suspension of the qualification or exemption from qualification of the
Securities for offering or sale in any jurisdiction or the institution,
threatening or contemplation of any proceeding for such purpose.
(l) From the date hereof to the Closing Time, none of the Issuers
will issue any press release or other public communication directly or
indirectly or hold any press
<PAGE>
-22-
conference with respect to the Issuers or any of the Subsidiaries or the
business, financial condition, assets, liabilities (contingent or
otherwise), results of operations or prospects of the Issuers or any of
the Subsidiaries, without the prior consent of the Initial Purchasers
(which consent shall not be unreasonably withheld), unless in the judgment
of the Issuers and their counsel, and after notification to the Initial
Purchasers, such press release, communication or conference is required by
law.
(m) The Company will use the proceeds received from the sale of the
Securities in the manner specified in the Offering Memorandum under the
heading "Use of Proceeds."
(n) The Issuers shall not, for a period of 180 days from the date of
the Offering Memorandum, without the prior written consent the Initial
Purchasers, directly or indirectly, offer, sell, grant any option to
purchase or otherwise dispose of any debt securities of the Company or any
of the Subsidiaries (other than the Exchange Securities and the Private
Exchange Securities, if any).
(o) The Company agrees, at its expense, (i) as soon as practicable
after the Closing Time and concurrent with the filing of a registration
statement with respect to the Exchange Securities or the Securities, as
the case may be, under the Registration Rights Agreement, it will prepare
a registration statement under the Act in connection with the
market-making activities of Merrill Lynch with respect to the Exchange
Securities or the Securities, as the case may be, containing such
disclosures as are customary and appropriate for such a document and file
such registration statement and use its best efforts to cause such
registration statement to become effective under the Act as soon as
practicable thereafter or (ii) in lieu of the registration statement in
clause (i) hereof, the Company will cause the registration statement in
respect of the Exchange Securities or the Securities, as the case may be,
to contain alternative pages in connection with the market-making
activities of Merrill Lynch with respect to the Exchange Securities or the
Securities, as the case may be, and that, in the case of either clause (i)
or (ii) hereof, it will keep such registration statement in effect as long
as is required by the Act in the reasonable judgement of Merrill Lynch to
engage in market-making activities. The Company agrees to obtain from its
independent accountants, at its expense, on each effective date of
<PAGE>
-23-
such registration statement, a letter addressed to Merrill Lynch dated
such date covering matters described in Section 5(g) hereof, modified as
appropriate to reflect the registered nature of the Exchange Securities or
the Securities, as the case may be, in each case, in form and substance
satisfactory to Merrill Lynch. The Company agrees to furnish Merrill Lynch
as many copies of the registration statement and each report of the
Company filed with the Commission pursuant to Section 13 or 15 of the
Exchange Act as Merrill Lynch shall reasonably request in connection with
its market-making activities. If a "qualified independent underwriter" is
required by the National Association of Securities Dealers, Inc. (the
"NASD") in connection with such market-making activities, the Company
shall pay such underwriter's fee (in a customary amount for transactions
of this type and amount) and expenses and to indemnify such underwriter on
customary terms. Such qualified independent underwriter shall be a firm
selected by Merrill Lynch and reasonably agreed upon by the Company.
SECTION 6. Payment of Expenses. (a) Whether or not any sale of the
Securities is consummated, the Issuers agree jointly and severally to pay and
bear all costs and expenses incident to the performance of all of their
obligations under this Agreement, including (i) the preparation and printing of
the Preliminary Offering Memorandum, the Offering Memorandum and any amendments
or supplements thereto and the cost of furnishing copies thereof to the Initial
Purchasers, (ii) the preparation, issuance, printing and distribution of the
Securities, the Exchange Securities, the Private Exchange Securities, if any,
and any survey of state securities or "blue sky" laws or legal investment
memoranda, (iii) the delivery to the Initial Purchasers of the Securities, the
Exchange Securities or the Private Exchange Securities, (iv) the fees and
disbursements of the Issuers' counsel and accountants, (v) the qualification of
the Securities under the applicable state securities or "blue sky" laws in
accordance with the provisions of Section 5(k) hereof and any filing for review
of the offering with the NASD, if required, including filing fees and reasonable
fees and disbursements of counsel to the Initial Purchasers in connection
therewith and in connection with the preparation of any survey of state
securities or "blue sky" laws or legal investment memoranda, (vi) any fees
charged by rating agencies for rating the Securities, the Exchange Securities
and the Private Exchange Securities, if any, (vii) the fees and
<PAGE>
-24-
expenses of the Trustee, including the fees and disbursements of counsel for the
Trustee, (viii) all expenses (including travel expenses) of the Issuers and the
Initial Purchasers in connection with any meetings with prospective investors in
the Securities, (ix) all expenses in connection with the letter prepared by
Valuation Research Corporation, and (x) all expenses and listing fees in
connection with the application for designation of the Securities as PORTAL
securities and to permit the Securities, the Exchange Securities and the Private
Exchange Securities, as applicable, to be eligible for clearance through The
Depository Trust Company.
(b) If the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated pursuant to Section 11 hereof or because of any failure, refusal or
inability on the part of any of the Issuers to perform all obligations and
satisfy all conditions on their part to be performed or satisfied hereunder
other than by reason of a default by an Initial Purchaser in payment for the
Securities at the Closing Time, the Issuers agree jointly and severally to
reimburse the Initial Purchasers promptly upon demand for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of their
counsel) that shall have been incurred by it in connection with the proposed
purchase and sale of the Securities.
SECTION 7. Conditions of the Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase and pay for the Securities are
subject to the continued accuracy, as of the Closing Time, of the
representations and warranties of the Issuers herein contained, to the accuracy
of the statements of the Issuers and officers of the Issuers made in any
certificate pursuant to the provisions hereof, to the performance by the Issuers
of their respective obligations hereunder, and to the following further
conditions:
(a) At the Closing Time, the Initial Purchasers shall have received
the opinion of Wachtell, Lipton, Rosen & Katz, counsel to the Issuers,
dated as of the Closing Time, in the form set forth below and otherwise
reasonably satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers, to the effect that:
(1) BBC has been duly incorporated and is validly existing
under the laws of the State of
<PAGE>
-25-
Delaware, with corporate power and authority to own, lease and
operate its assets and properties and conduct its business as
described in the Offering Memorandum and to enter into and perform
its obligations under this Agreement and the other Operative
Documents; BBC is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect;
(2) BBC has all requisite corporate power and authority to
issue the Guarantee;
(3) the authorized, issued and outstanding capital stock of
BBC is as set forth in the Offering Memorandum under the caption
"Capitalization";
(4) BBC has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement,
the Registration Rights Agreement, the Securities, the Exchange
Securities, the Private Exchange Securities and the Indenture and to
consummate each other element of the Recapitalization to which it is
a party; and each of this Agreement, the Registration Rights
Agreement, the Securities, the Exchange Securities, the Private
Exchange Securities and the Indenture has been duly authorized by
BBC and each other element of the Recapitalization to which BBC is a
party has been duly authorized by BBC.
(5) no consent, approval, authorization, license,
qualification or order of or filing or registration with, any court
or governmental or regulatory agency or body of the United States or
the State of New York or the General Corporation Law of the State of
Delaware is required for the execution and delivery by the Issuers
of this Agreement, the Registration Rights Agreement or the
Indenture or for the issue and sale of the Securities, the Exchange
Securities or the Private Exchange Securities, if any, or the
issuance of the Guarantee by BBC or the consummation by the Issuers
of any of the transactions contemplated herein (including the other
elements of the
<PAGE>
-26-
Recapitalization) or therein, except such as may be required (A) in
connection with the registration under the Act of the Securities,
the Exchange Securities or the Private Exchange Securities, if any,
pursuant to the Registration Rights Agreement, (B) the qualification
of the Indenture under the Trust Indenture Act in connection with
the registration of the Securities, the Exchange Securities or the
Private Exchange Securities, if any, pursuant to the Registration
Rights Agreement and (C) under the "blue sky" laws of any
jurisdiction in connection with the purchase and distribution of the
Securities by the Initial Purchasers (as to which such counsel need
express no opinion);
(6) the issuance, sale and delivery of the Securities, the
Exchange Securities and the Private Exchange Securities, if any, the
execution, delivery and performance by the Issuers of this
Agreement, the Registration Rights Agreement and the Indenture (in
each case assuming due authorization and execution by each party
other than BBC), the declaration and payment of the BBC Distribution
and the consummation by the Issuers of the transactions contemplated
hereby (including each element of the Recapitalization) and thereby
and the compliance by the Issuers with the terms of the foregoing do
not, and, at the Closing Time, will not, conflict with or constitute
or result in a breach or violation by the Issuers or any of the
Subsidiaries of (A) any provision of the Certificate of
Incorporation or By-laws of BBC, (B) any of the terms or provisions
of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) by the Issuers, or give
rise to any right to accelerate the maturity or require the
prepayment of any indebtedness under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Issuers under any material agreements or instruments
known to such counsel or (C) any law, statute, rule, or regulation
of the United States or the State of New York or under the General
Corporation Law of the State of Delaware or any order, decree or
judgment known to such counsel to be applicable to the Issuers, of
any court or governmental or regulatory agency or body or arbitrator
in the United States or the States of New York or Delaware.
<PAGE>
-27-
(7) the statements in the Offering Memorandum under the
headings "Summary - The Offering," "Description of the Notes" and
"Exchange Offer; Registration Rights," insofar as such statements
purport to summarize certain provisions of the Securities, the
Exchange Securities, the Registration Rights Agreement and the
Indenture provide a fair summary of such provisions of such
agreements and instruments and are complete in all material
respects;
(8) all descriptions in the Offering Memorandum of Contracts
and other documents to which the Company or the Subsidiaries are a
party are accurate and complete in all material respects;
(9) each of the Indenture and the Registration Rights
Agreement (assuming due authorization and execution by each party
thereto other than BBC) constitutes a valid and binding agreement of
the Issuers, enforceable against the Issuers in accordance with its
terms, except (a) with respect to the Indenture and the Registration
Rights Agreement, the Enforceability Limitations, and (b) with
respect to the Registration Rights Agreement, that such counsel
expresses no opinion regarding the enforceability of the
indemnification provisions contained in Section 4 thereof;
(10) each of the Securities, when executed and authenticated in
accordance with the provisions of the Indenture and delivered and
paid for in accordance with the terms of this Agreement, and the
Exchange Securities and the Private Exchange Securities, if any,
when executed, authenticated and delivered in exchange for the
Securities in accordance with the terms of the Registration Rights
Agreement, will be entitled to the benefits of the Indenture and
will be valid and binding obligations of the Issuers, enforceable in
accordance with its terms except as the enforceability thereof may
be limited by the Enforceability Limitations;
(11) the Guarantee, when authenticated, executed and delivered
by BBC in accordance with the provisions of the Indenture (assuming
the due authentication of the Notes by the Trustee) will be entitled
to the benefits of the Indenture and will be a legal,
<PAGE>
-28-
valid and binding obligation of BBC enforceable against BBC in
accordance with its terms except as the enforceability thereof may
be limited by the Enforceability Limitations;
(12) The Note Repurchase Letters do not conflict with or
constitute or result in a breach or violation of any of the terms of
the Old Notes Indenture.
(13) to the knowledge of such counsel, other than as described
in the Offering Memorandum, no legal, regulatory or governmental
proceedings are pending to which any of the Issuers or the
Subsidiaries is a party or to which the assets of the Issuers or the
Subsidiaries are subject which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect or
which, individually or in the aggregate, would have a material
adverse effect on the power or ability of the Issuers to perform
their respective obligations under the Operative Documents or to
consummate the transactions contemplated thereby (including the
other elements of the Recapitalization) or by the Offering
Memorandum and no such material proceedings have been threatened
against any of the Issuers or with respect to any of their
respective assets or properties;
(14) assuming that the representations and warranties of the
Initial Purchasers contained in Section 4 of this Agreement are
true, correct and complete, and assuming compliance by the Initial
Purchasers with their covenants in Section 4 hereof, and assuming
that the representations and warranties contained in the Transferee
Letters (substantially in the form of Appendix A to the Offering
Memorandum) completed by Accredited Investors and non-U.S. persons
purchasing Securities from the Initial Purchasers are true and
correct as of the Closing Time, and assuming compliance by such
Accredited Investors and non-U.S. persons with the agreements in the
Transferee Letters, it is not necessary in connection with the
offer, sale and delivery of the Securities to the Initial Purchasers
under, or in connection with the initial resale of such Securities
by the Initial Purchasers in accordance with, this Agreement that
would require the Issuers to register the Securities under the Act
<PAGE>
-29-
or to qualify the Indenture under the Trust Indenture Act;
(15) neither Issuer nor any of the Subsidiaries is an
"investment company" or a company "controlled by" or required to
register as an investment company as such terms are defined in the
Investment Company Act of 1940, as amended, and the rules and
regulations thereunder; and
(16) when the Securities are issued and delivered pursuant to
this Agreement, such Securities will not be of the same class
(within the meaning of Rule 144A) as securities of any of the
Issuers which are listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S.
automated inter-dealer quotation system.
In addition such counsel shall state that such counsel has
participated in conferences with representatives of the Initial
Purchasers, officers and other representatives of the Issuers and
representatives of the independent certified accountants of the Issuers,
at which conferences the contents of the Offering Memorandum and related
matters were discussed, and although such counsel has not verified and
does not pass upon or assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Offering
Memorandum (except and only to the extent set forth in subclauses (7) and
(8) above), on the basis of the foregoing (relying as to materiality to a
large extent upon representations and opinions of officers and other
representatives of the Issuers), no facts have come to the attention of
such counsel which lead such counsel to believe that the Offering
Memorandum at the date thereof or as of the Closing Time, contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that such counsel need not express any comment with respect to
the financial statements, including the notes thereto and supporting
schedules, or any other financial or statistical data set forth or
referred to in the Offering Memorandum.
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of laws
<PAGE>
-30-
of any jurisdiction other than the Federal law of the United States and
the laws of the States of Delaware and New York, (B) may rely, as to
matters of fact, to the extent they deem proper on representations or
certificates of responsible officers of the Issuers and certificates of
public officials and (C) may rely to the extent they deem proper upon the
opinion of Rogers & Hardin contemplated by subsection (b).
References to the Offering Memorandum in this subsection (a) include
any supplements thereto at or prior to the Closing Time.
(b) At the Closing Time, the Initial Purchasers shall have received
the opinion of Rogers & Hardin, special counsel to the Company, dated as
of the Closing Time, in the form set forth below and otherwise reasonably
satisfactory to the Initial Purchasers and counsel for the Initial
Purchasers, to the effect that:
(1) the Company has been duly incorporated and is validly
existing under the laws of the State of Georgia, with corporate
power and authority to own, lease and operate its assets and
properties and conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under this
Agreement and the other Operative Documents; the Company is duly
qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property
or the conduct of business, except where the failure so to qualify
or to be in good standing would not result in a Material Adverse
Effect;
(2) all of the authorized, issued and outstanding capital
stock of the Company is owned by BBC as set forth in the Offering
Memorandum under the caption "Capitalization";
(3) the Company has the requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement, the Registration Rights Agreement, the Securities, the
Exchange Securities, the Private Exchange Securities and the
Indenture and to consummate each other element of the
<PAGE>
-31-
Recapitalization to which it is a party; and each of this Agreement,
the Registration Rights Agreement, the Securities, the Exchange
Securities, the Private Exchange Securities and the Indenture has
been duly authorized by the Company; the Company has the requisite
corporate power and authority to issue and deliver the Securities,
the Exchange Securities and the Private Exchange Securities; and the
Securities, the Exchange Securities and the Private Exchange
Securities have been duly authorized by the Company for issuance;
and each other element of the Recapitalization to which the Company
is a party has been duly authorized by the Company;
(4) no consent, approval, authorization, license,
qualification or order of or filing or registration with, any court
or governmental or regulatory agency or body of the State of Georgia
is required for the execution and delivery by the Company of this
Agreement, the Registration Rights Agreement or the Indenture or for
the issue and sale of the Securities, the Exchange Securities or the
Private Exchange Securities, if any, or the consummation by the
Company of any of the transactions contemplated herein (including
the other elements of the Recapitalization) or therein, except such
as may be required under the "blue sky" laws of any jurisdiction in
connection with the purchase and distribution of the Securities by
the Initial Purchasers (as to which such counsel need express no
opinion);
(5) the issuance, sale and delivery of the Securities, the
Exchange Securities and the Private Exchange Securities, if any, the
execution, delivery and performance by the Company of this
Agreement, the Registration Rights Agreement and the Indenture (in
each case assuming due authorization and execution by each party
other than the Company), the declaration and payment of the Blue
Bird Dividend and the consummation by the Issuers of the
transactions contemplated hereby (including the other elements of
the Recapitalization) and thereby and the compliance by the Issuers
with the terms of the foregoing do not, and, at the Closing Time,
will not, conflict with or constitute or result in a breach or
violation by the Issuers or any of the Subsidiaries of (A) any
provision of the Certificate of Incorporation or By-laws
<PAGE>
-32-
of the Company, (B) any law, statute, rule, or regulation of the
State of Georgia or any order, decree or judgment known to such
counsel to be applicable to the Issuers, of any court or
governmental or regulatory agency or body or arbitrator in the State
of Georgia or (C) any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) by any of the Issuers or the
Subsidiaries or give rise to any right to accelerate the maturity or
require the prepayment of any indebtedness under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Issuers or the Subsidiaries under any
Contracts.
In rendering such opinions, such counsel (A) need not express any
opinion with regard to the application of laws of any jurisdiction other
than the laws of the State of Georgia and (B) may rely, as to matters of
fact, to the extent they deem proper on representations or certificates of
responsible officers of the Issuers and certificates of public officials.
References to the Offering Memorandum in this subsection (b) include
any supplements thereto at or prior to the Closing Time.
(c) The Initial Purchasers shall have received the favorable
opinion, dated as of the Closing Time, of Cahill Gordon & Reindel, counsel
for the Initial Purchasers, with respect to certain matters set forth in
clauses (4), (7), (9), (10), (11) and (14) of subsection (a) of this
Section 7.
In rendering such opinion, such counsel (A) need not express any
opinion with regard to the application of laws of any jurisdiction other
than the Federal laws of the United States and the laws of the State of
New York and (B) may rely, as to matters of fact, to the extent they deem
proper on representations or certificates of responsible officers of the
Company and certificates of public officials.
In addition, such counsel shall additionally state that such counsel
has participated in conferences with officers and other representatives of
the Issuers and representatives of the independent accountants for the
<PAGE>
-33-
Issuers at which conferences the contents of the Offering Memorandum and
related matters were discussed, and although such counsel has not verified
and does not pass upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Offering Memorandum, on the basis of the foregoing (relying as to
materiality to a large extent upon the representations and opinions of
officers and other representatives of the Issuers), no facts have come to
the attention of such counsel which lead such counsel to believe that the
Offering Memorandum, at the date thereof, contained an untrue statement of
a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need
express no comment with respect to the financial statements, including the
notes thereto, or any other financial or statistical data found in or
derived from the internal accounting and other records of BBC and its
subsidiaries set forth or referred to in the Offering Memorandum).
(d) The following conditions contained in clauses (i) and (ii) of
this subsection (d) shall have been satisfied at and as of the Closing
Time and each of the Issuers shall have furnished to the Initial
Purchasers a certificate, signed by the Chairman of the Board or the
President and the principal financial or accounting officer of each of the
Issuers, dated as of the Closing Time, to the effect that the signers of
such certificate have carefully examined the Offering Memorandum, any
amendment or supplement to the Offering Memorandum, and this Agreement and
that:
(i) the representations and warranties of the Issuers in this
Agreement are true and correct in all material respects on and as of
the Closing Time with the same effect as if made at the Closing Time
and the Issuers have complied with all the agreements and satisfied
all the conditions under this Agreement on its part to be performed
or satisfied in all material respects at or prior to the Closing
Time; and
(ii) since the date of the most recent financial statements
included in the Offering Memorandum (exclusive of any amendment or
supplement thereto), there has been no Material Adverse Change,
whether or
<PAGE>
-34-
not arising in the ordinary course of business. As used in this
subparagraph, the term "Offering Memorandum" means the Offering
Memorandum in the form first used to confirm sales of the
Securities.
(e) At the time that this Agreement is signed and at the Closing
Time, Arthur Andersen LLP shall have furnished to the Initial Purchasers a
letter or letters, dated respectively as of the date of this Agreement and
as of the Closing Time, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent certified public
accountants within the meaning of the Act and the applicable published
rules and regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements included
in the Offering Memorandum comply as to form in all material
respects with the applicable accounting requirements of the Act and
the rules and regulations promulgated thereunder;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Issuers; carrying out
certain specified procedures (but not an examination in accordance
with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the shareholders, the board of directors and committees
thereof of each of the Issuers; and inquiries of certain officials
of each of the Issuers who have responsibility for financial and
accounting matters of BBC and the Company as to transactions and
events subsequent to July 27, 1996, and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention which caused them to believe that:
(A) the unaudited financial statements included in the
Offering Memorandum do not comply as to form in all material
respects with applicable accounting requirements of the Act
and with the published rules and regulations of the
Commission; and said unaudited financial statements are not in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
<PAGE>
-35-
audited financial statements included in the Offering
Memorandum; or
(B) with respect to the period subsequent to July 27,
1996, that at a specified date not more than three business
days prior to the date of the letter, there were any changes
in the capital stock or there were any increases in the
long-term debt or any decreases in the net current assets, or
shareholders' equity of BBC, as compared with the amounts
shown on the unaudited balance sheet at July 27, 1996 included
in the Offering Memorandum, or for the period from July 28,
1996 to such specified date there were any decreases, as
compared with the corresponding period in the preceding year,
in net sales, income before extraordinary items or net income
of BBC (on a consolidated basis), except in all instances for
increases or decreases that the Offering Memorandum discloses
have occurred or may occur; and
(iii) they have performed certain other specified procedures,
not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the
general accounting records or other unaudited schedules of the
Issuers and are included in the Offering Memorandum, and have
compared such amounts, percentages and financial information with
such records of the Issuers and with information derived from such
records and have found them to be in agreement, excluding any
questions of legal interpretation. References to the Offering
Memorandum in this subsection (e) include any supplement thereto at
the date of the applicable letter.
(f) Subsequent to the date hereof or, if earlier, the dates as of
which information is given in the Offering Memorandum (exclusive of any
amendment or supplement thereto), there shall not have been any change, or
any development involving a prospective change, in or affecting the
business or properties of the Issuers the effect of which is, in the sole
judgment of the Initial Purchasers, so material and adverse as to make it
impractical or inadvisable to proceed with the purchase and the delivery
of the Securities as contemplated by the Offering Memorandum (exclusive of
any amendment or supplement thereto).
<PAGE>
-36-
(g) At the Closing Time, counsel for the Initial Purchasers shall
have been furnished with such information, certificates and documents as
they may reasonably require for the purpose of enabling them to pass upon
the issuance and sale of the Securities as contemplated herein and related
proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all opinions and certificates mentioned
above or elsewhere in this Agreement shall be reasonably satisfactory in
form and substance to the Initial Purchasers and counsel for the Initial
Purchasers.
(h) The Issuers and the Trustee shall have entered into the
Indenture.
(i) The Issuers and the Initial Purchasers shall have entered into
the Registration Rights Agreement.
(j) On or prior to the Closing Time, the Company shall have amended
and restated its Existing Credit Agreement (as defined in the Offering
Memorandum) on the terms described in the Offering Memorandum; all
conditions to the availability and the initial borrowing under the New
Credit Agreement (as defined in the Offering Memorandum) shall have been
satisfied; and the funding under the New Credit Agreement shall occur on
or prior to the Closing Time.
(k) On or prior to the Closing Time, the Initial Purchasers shall
have received a letter from Valuation Research Corporation with respect to
the Issuers in form and substance reasonably satisfactory to the Initial
Purchasers and counsel to the Initial Purchasers.
(l) On or prior to the Closing Time, the Board of Directors of the
Company shall have declared the Blue Bird Dividend and the Board of
Directors of BBC shall have declared the BBC Dividend as described in the
Offering Memorandum.
(m) All of the conditions to the sale to the Company by the holders
of 90% or more of the Company's Old Notes shall have been satisfied on or
prior to the Closing Time and, on or prior to the Closing Time, the
Company shall have received 90% or more of the outstanding Old Notes from
the holders of the Old Notes who are parties to the
<PAGE>
-37-
Note Repurchase Letters. In the event that less than all of the Old Notes
are received by the Company from the holders of the Old Notes, the Company
will (i) cause a supplemental indenture in respect of the Old Notes to be
executed by the Company and the trustee under the indenture governing the
Old Notes as contemplated by the Note Repurchase Letters and (ii) deliver
to the Initial Purchasers and to counsel for the Initial Purchasers legal
opinions and other documents reasonably required by, and acceptable in
form and substance to, the Initial Purchasers and counsel for the Initial
Purchasers.
If any condition specified in this Section 7 shall not have been
fulfilled in all material respects when and as required to be fulfilled, this
Agreement may be terminated by the Initial Purchasers by notice to the Issuers,
and such termination shall be without liability of any party to any other party
except as provided in Section 6. Notwithstanding any such termination, the
provisions of Sections 8 and 9 shall remain in effect. Notice of such
cancellation shall be given to the Issuers in writing or by telephone, facsimile
transmission or telegraph confirmed in writing. The Issuers shall furnish to the
Initial Purchasers such conformed copies of such opinions, certificates, letters
and documents in such quantities as the Initial Purchasers and counsel for the
Initial Purchasers shall reasonably request.
SECTION 8. Indemnification.
(a) The Issuers agree, jointly and severally, to indemnify and hold
harmless the Initial Purchasers, their respective affiliates, and each person,
if any, who controls any Initial Purchaser or their respective affiliates within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, and
their respective directors, officers, employees and agents, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Memorandum, the Final Offering Memorandum or
"market-making prospectus" (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
<PAGE>
-38-
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
of any claim whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred (including
reasonable fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser expressly for use in the Preliminary Offering Memorandum, the
Final Offering Memorandum or "market-making prospectus" (or any amendment or
supplement thereto).
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Issuers, their respective directors and each
person, if any, who controls the Issuers within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section 8, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Preliminary
Offering Memorandum, Final Offering Memorandum or "market-making prospectus" (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Issuers by such Initial Purchaser expressly
for use in the Preliminary Offering Memorandum, Final Offering Memorandum or
"market-making prospectus" (or any amendment or supplement thereto).
<PAGE>
-39-
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, enclosing a
copy of all papers properly served on such indemnified party, but failure to so
notify an indemnifying party shall not relieve such indemnifying party from any
liability hereunder to the extent it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability which it may
have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 8(a) above, counsel to the indemnified
parties shall be selected by Merrill Lynch, and, in the case of parties
indemnified pursuant to Section 8(b) above, counsel to the indemnified parties
shall be selected by the Issuers. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. Notwithstanding the foregoing,
if it so elects within a reasonable time after receipt of such notice, an
indemnifying party, jointly with any other indemnifying parties receiving such
notice, may assume the defense of such action with counsel chosen by it and
approved by the indemnified parties defendant in such action (which approval
shall not be unreasonably withheld), unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal defenses
available to them which are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying parties be liable for the fees
and expenses of more than one counsel (in addition to local counsel) for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental
<PAGE>
-40-
agency or body, commenced or threatened, or any claim whatsoever in respect of
which indemnification or contribution could be sought under this Section 8 or
Section 9 hereof (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as to which such indemnified party is liable pursuant to Section 8(a) or
(b), as the case may be, such indemnifying party agrees that it shall be liable
for any settlement of the nature contemplated by Section 8(a)(ii) effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
SECTION 9. Contribution. If the indemnification provided for in
Section 8 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Issuers on the one hand and of the
Initial Purchasers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
<PAGE>
-41-
The relative benefits received by the Issuers on the one hand and
the Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Issuers on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Issuers or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Issuers and the Initial Purchasers agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 9. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 9, no Initial
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Initial Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be
<PAGE>
-42-
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
For purposes of this Section 9, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act shall have the same rights to contribution as such Initial
Purchaser, and each director of any of the Issuers, each officer of any of the
Issuers and each person, if any, who controls any of the Issuers within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Issuers. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 9 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 10. Representations, Warranties and Agreements To Survive
Delivery. All representations, warranties, indemnities, agreements and other
statements of the Issuers and their respective officers and of the Initial
Purchasers contained in or made pursuant to this Agreement shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Initial Purchaser or controlling person, or by or on behalf
of the Issuers, and shall survive delivery and payment for the Securities to the
Initial Purchasers.
SECTION 11. Termination of Agreement.
(a) Termination: General. (a) The Initial Purchasers may terminate
this Agreement, by notice to any of the Issuers, at any time at or prior to the
Closing Time if (i) there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Offering Memorandum and on or prior to the Closing Time, any Material Adverse
Change with respect to the Issuers and the Subsidiaries, taken as a whole
whether or not arising in the ordinary course of business, or (iii) since the
date of this Agreement and on or prior to the Closing Time, (A) there has
occurred any outbreak of hostilities or escalation of existing hostilities or
other national or international calamity or crisis, the effect of which on the
financial securities markets of the United States is such as to make it, in the
judgment of any Initial Purchaser, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (B) trading generally on
the New York Stock Exchange, the American
<PAGE>
-43-
Stock Exchange or the over-the-counter market has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities generally have been required, by any such exchange or by order of the
Commission, the NASD or any other governmental authority or (C) a general
banking moratorium has been declared by either Federal or New York authorities.
As used in this Section 11(a), the term "Offering Memorandum" means the Offering
Memorandum in the form first used to confirm sales of the Securities.
(b) If this Agreement is terminated pursuant to this Section 11,
such termination shall be without liability of any party to any other party
except as provided in Section 6 hereof, and provided further that Sections 1, 8,
9 and 16 shall survive such termination and remain in full force and effect.
(c) This Agreement may also terminate pursuant to the provisions of
Section 7, with the effect stated in such Section.
SECTION 12. Default By One of the Initial Purchasers. If one of the
Initial Purchasers shall fail at the Closing Time to purchase the Securities
which it is obligated to purchase under this Agreement (the "Defaulted
Securities"), the other Initial Purchaser shall have the right, but not the
obligation, within 24 hours thereafter, to make arrangements for the
nondefaulting Initial Purchaser, or any other Initial Purchasers, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the other
Initial Purchaser shall not have completed such arrangements within such 24-hour
period, then this Agreement shall terminate without liability on the part of any
nondefaulting Initial Purchaser.
No action pursuant to this Section shall relieve any defaulting
Initial Purchaser from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the non-defaulting Initial Purchaser or an
Issuer shall have the right to postpone the Closing Time for a period not
exceeding seven days in order to effect any required changes in the Offering
Memorandum or in any other documents or arrangement.
<PAGE>
-44-
SECTION 13. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Initial Purchasers c/o Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Merrill Lynch World
Headquarters, North Tower, World Financial Center, New York, New York
10281-1305, attention: Bennett Rosenthal, Managing Director; and notices to the
Issuers shall be directed to Blue Bird Body Company, 3920 Arkwright Road, Macon,
Georgia, 31210, attention: Paul Glaske, with a copy to Wachtell, Lipton, Rosen &
Katz, 51 West 52nd Street, New York, New York 10019, attention: David A. Katz.
SECTION 14. Information Supplied by the Initial Purchasers. The
statements set forth in the last paragraph on the front cover page and under the
heading "Plan of Distribution" in the Preliminary Offering Memorandum or the
Offering Memorandum (to the extent such statements relate to the Initial
Purchasers) constitute the only information furnished by the Initial Purchasers
to the Company for the purposes of Sections 1 and 8 hereof.
SECTION 15. Parties. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers and the Issuers and their respective
successors and legal representatives. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Initial Purchasers, their respective affiliates and
the Issuers and their respective successors and legal representatives and the
controlling persons and officers, directors, employees and agents referred to in
Sections 8 and 9 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under, by virtue of or in respect of this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the Initial Purchasers their respective affiliates and the Issuers and their
respective successors and legal representatives, and said controlling persons
and officers, directors, employees and agents and their heirs and legal
representatives, and said controlling persons and officers, directors, employees
and agents and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any Initial
Purchaser shall be deemed to be a successor by reason merely of such purchase.
<PAGE>
-45-
SECTION 16. Governing Law and Time. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. Specified times
of day refer to New York City time.
SECTION 17. Counterparts. This Agreement may be executed in one or
more counterparts and, when each party has executed a counterpart, all such
counterparts taken together shall constitute one and the same agreement.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement by
and among the Initial Purchasers, the Company and the Guarantor in accordance
with its terms.
Very truly yours,
BLUE BIRD BODY COMPANY
By: /s/ Paul E. Glaske
--------------------------------
Name: Paul E. Glaske
Title: President
BLUE BIRD CORPORATION
By: /s/ Paul E. Glaske
--------------------------------
Name: Paul E. Glaske
Title: President
Confirmed and accepted as of
the date first above
written:
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ Bennett Rosenthal
-----------------------------------
Name: Bennett Rosenthal
Title: Director
BT SECURITIES CORPORATION
By: /s/ Patrice M. Daniels
-----------------------------------
Name: Patrice M. Daniels
Title: Managing Director
<PAGE>
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of November 19, 1996
by and among
BLUE BIRD BODY COMPANY
and
BLUE BIRD CORPORATION
and
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
and
BT SECURITIES CORPORATION
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of November 19, 1996 by and among BLUE BIRD BODY COMPANY, a
Georgia corporation (the "Company") BLUE BIRD CORPORATION, a Delaware
corporation, (the "Guarantor" and, together with the Company, the "Issuers"),
and MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED ("Merrill Lynch") and BT
SECURITIES CORPORATION ("BT" and, together with Merrill Lynch, the "Initial
Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated
November 13, 1996 by and among the Company, the Guarantor and the Initial
Purchasers (the "Purchase Agreement"), which provides for, among other things,
the sale by the Company to the Initial Purchasers of an aggregate of
$100,000,000 principal amount of the Company's 10 3/4% Senior Subordinated Notes
due 2006 (the "Notes") and the Guarantee thereof by the Guarantor (the
"Guarantee" and, together with the Notes, the "Securities"). In order to induce
the Initial Purchasers to enter into the Purchase Agreement, the Company has
agreed to provide to the Initial Purchasers and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
and delivery of this Agreement is a condition to the closing under the Purchase
Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following capitalized
defined terms shall have the following meanings:
"Additional Interest" shall have the meaning set forth in Section
2(e) hereof.
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"Applicable Period" shall have the meaning set forth in Section 3(t)
hereof.
"Business Day" shall mean a day that is not a Saturday, a Sunday, or
a day on which banking institutions in New York, New York or Macon,
Georgia are required to be closed.
<PAGE>
-2-
"Closing Time" shall mean the Closing Time as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted
assigns.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Issuers; provided, however, that such
depositary must have an address in the Borough of Manhattan, in The City
of New York.
"Effectiveness Period" shall have the meaning set forth in Section
2(b) hereof.
"Event Date" shall have the meaning set forth in Section 2(e)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Securities for Securities pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-1 or S-4 (or, if applicable, on another
appropriate form), and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a)
hereof.
"Exchange Securities" shall mean the 10 3/4% Senior Subordinated
Notes due 2006, issued by the Company under the Indenture containing terms
identical to the Securities (except that (i) interest thereon shall accrue
from the last date on which interest was paid on the Securities or, if no
such interest has been paid, from November 15, 1996 and (ii) the transfer
restrictions thereon shall be
<PAGE>
-3-
eliminated) to be offered to Holders of Securities in exchange for
Securities pursuant to the Exchange Offer.
"Guarantee" shall have the meaning set forth in the preamble to this
Agreement.
"Guarantor" shall have the meaning set forth in the preamble of this
Agreement.
"Holder" shall mean the Initial Purchasers, for so long as they own
any Registrable Securities, and each of their successors, assigns and
direct and indirect transferees who become registered owners of
Registrable Securities under the Indenture.
"Indenture" shall mean the Indenture relating to the Securities
dated as of November 15, 1996 between the Issuers, and Chase Manhattan
Bank, as trustee, as the same may be amended from time to time in
accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the
preamble to this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n)
hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities.
"Market-Making Prospectus" shall mean the market-making prospectus
required to be delivered in connection with offers and sales in the
Exchange Notes if and when Merrill Lynch conducts any market making
activities in respect of the Exchange Notes.
"Notes" shall have the meaning set forth in the preamble of this
Agreement.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(t) hereof.
"Person" shall mean an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
<PAGE>
-4-
"Private Exchange" shall have the meaning set forth in Section 2(a)
hereof.
"Private Exchange Securities" shall have the meaning set forth in
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble to this Agreement.
"Records" shall have the meaning set forth in Section 3(n) hereof.
"Registrable Securities" shall mean the Securities and, if issued,
the Private Exchange Securities; provided, however, that Securities or
Private Exchange Securities, as the case may be, shall cease to be
Registrable Securities when (i) a Registration Statement with respect to
such Securities or Private Exchange Securities for the resale thereof, as
the case may be, shall have been declared effective under the Securities
Act and such Securities or Private Exchange Securities, as the case may
be, shall have been disposed of pursuant to such Registration Statement,
(ii) such Securities or Private Exchange Securities, as the case may be,
shall have been sold to the public pursuant to Rule 144(k) (or any similar
provision then in force, but not Rule 144A) under the Securities Act,
(iii) such Securities or Private Exchange Securities, as the case may be,
shall have ceased to be outstanding or (iv) with respect to the
Securities, such Securities have been exchanged for Exchange Securities
upon consummation of the Exchange Offer and are thereafter freely
tradeable by the holder thereof that is not an affiliate of the Issuers.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the
<PAGE>
-5-
Issuers with this Agreement, including without limitation: (i) all SEC,
stock exchange or National Association of Securities Dealers, Inc. (the
"NASD") registration and filing fees, including, if applicable, the fees
and expenses of any "qualified independent underwriter" (and its counsel)
that is required to be retained by any Initial Purchaser holding
Registrable Securities in accordance with the rules and regulations of the
NASD, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters or any Holder that was an
Initial Purchaser in connection with blue sky qualification of any of the
Exchange Securities or Registrable Securities) and compliance with the
rules of the NASD, (iii) all expenses of any Persons in preparing or
assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus and any amendments or supplements
thereto, and in preparing or assisting in preparing, printing and
distributing any underwriting agreements, securities sales agreements and
other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) the fees and disbursements of
counsel for the Issuers and of the independent certified public
accountants of the Issuers, including the expenses of any "cold comfort"
letters required by or incident to such performance and compliance, (vi)
the fees and expenses of the Trustee, and any exchange agent or custodian,
(vii) all fees and expenses incurred in connection with the listing, if
any, of any of the Registrable Securities on any securities exchange or
exchanges, and (viii) any fees and disbursements of any underwriter
customarily required to be paid by issuers or sellers of securities and
the reasonable fees and expenses of any special experts retained by the
Issuers in connection with any Registration Statement, but excluding fees
of counsel to the underwriters or Holders and underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or
disposition of Registrable Securities by a Holder.
"Registration Statement" shall mean any registration statement of
the Issuers which covers any of the Exchange Securities or Registrable
Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the
<PAGE>
-6-
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble to
this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Issuers pursuant to the provisions of Section 2(b) hereof
which covers all of the Registrable Securities or all of the Private
Exchange Securities, as the case may be, on an appropriate form under Rule
415 under the Securities Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
2. Registration Under the Securities Act.
(a) Exchange Offer. To the extent not prohibited by any applicable
law or applicable interpretation of the staff of the SEC, the Issuers shall, for
the benefit of the Holders, at the Issuers' cost, use their best efforts to (i)
cause to be filed with the SEC within 60 days after the Closing Time an Exchange
Offer Registration Statement on an appropriate form under the Securities Act
covering the offer by the Issuers to the Holders to exchange all of the
Registrable Securities (other than Private Exchange Securities) for a like
principal amount of Exchange Securities, (ii) have such Exchange Offer
Registration Statement declared effective under the Securities Act by the SEC
not later than the date which is 120 days after
<PAGE>
-7-
the Closing Time, (iii) have such Registration Statement remain effective
until the closing of the Exchange Offer and (iv) cause the Exchange Offer to
be consummated not later than 150 days after the Closing Time. The Exchange
Securities will be issued under the Indenture. Upon the effectiveness of the
Exchange Offer Registration Statement, the Issuers shall promptly commence
the Exchange Offer, it being the objective of such Exchange Offer is to
enable each Holder eligible and electing to exchange Registrable Securities
for Exchange Securities (assuming that such Holder is not an affiliate of the
Issuers within the meaning of Rule 405 under the Securities Act and is not a
broker-dealer tendering Registrable Securities acquired directly from the
Issuers for its own account, acquires the Exchange Securities in the ordinary
course of such Holder's business and has no arrangements or understandings
with any Person to participate in the Exchange Offer for the purpose of
distributing (within the meaning of the Securities Act) the Exchange
Securities) and to transfer such Exchange Securities from and after their
receipt without any limitations or restrictions under the Securities Act and
under state securities or blue sky laws.
In connection with the Exchange Offer, the Issuers shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders
(or longer if required by applicable law) (such period referred to herein
as the "Exchange Period");
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last Business Day of
the Exchange Period, by sending to the institution specified in the
notice, a telegram, telex, facsimile transmission or letter setting forth
the name of such Holder, the principal amount of Securities delivered for
exchange, and a statement that
<PAGE>
-8-
such Holder is withdrawing his election to have such Securities exchanged;
(v) notify each Holder that any Security not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Agreement (except in the case of the Initial Purchasers
and Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer the Initial
Purchasers hold any Securities acquired by them and having the status of an
unsold allotment in the initial distribution, the Issuers upon the request of
any Initial Purchaser shall, simultaneously with the delivery of the Exchange
Securities in the Exchange Offer, issue and deliver to such Initial Purchaser in
exchange (the "Private Exchange") for the Securities held by such Initial
Purchaser, a like principal amount of debt securities of the Company, guaranteed
by the Guarantor on a senior subordinated basis, that are identical (except that
such securities shall bear appropriate transfer restrictions) to the Exchange
Securities (the "Private Exchange Securities") and which are issued pursuant to
the Indenture (which will provide that the Exchange Securities will not be
subject to the transfer restrictions set forth in the Indenture and that the
Exchange Securities, the Private Exchange Securities and the Securities will
vote and consent together on all matters as one class and that neither the
Exchange Securities, the Private Exchange Securities nor the Securities will
have the right to vote or consent as a separate class on any matter). The
Private Exchange Securities shall be of the same series as and shall bear the
same CUSIP number as the Exchange Securities.
As soon as practicable after the close of the Exchange Offer and/or
the Private Exchange, as the case may be, the Issuers shall:
(i) accept for exchange all Securities or portions thereof tendered
and not validly withdrawn pursuant to the Exchange Offer;
(ii) accept for exchange all Securities duly tendered pursuant to
the Private Exchange; and
<PAGE>
-9-
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation all Securities or portions thereof so accepted for exchange
by the Issuers, and issue, and cause the Trustee under the Indenture to
promptly authenticate and deliver to each Holder, a new Exchange Security
or Private Exchange Security, as the case may be, equal in principal
amount to the principal amount of the Securities surrendered by such
Holder.
To the extent not prohibited by any law or applicable interpretation of the
staff of the SEC, the Issuers shall use their best efforts to complete the
Exchange Offer as provided above, and shall comply with the applicable
requirements of the Securities Act, the Exchange Act and other applicable laws
in connection with the Exchange Offer. The Exchange Offer shall not be subject
to any conditions, other than that the Exchange Offer does not violate
applicable law or any applicable interpretation of the staff of the SEC. Each
Holder of Registrable Securities who wishes to exchange such Registrable
Securities for Exchange Securities in the Exchange Offer will be required to
make certain customary representations in connection therewith, including
representations that such Holder is not an affiliate of the Issuers within the
meaning of Rule 405 under the Securities Act, that any Exchange Securities to be
received by it will be acquired in the ordinary course of business and that at
the time of the commencement of the Exchange Offer it has no arrangement with
any Person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Securities. The Issuers shall inform the Initial
Purchasers, after consultation with the Trustee and the Initial Purchasers, of
the names and addresses of the Holders to whom the Exchange Offer is made, and
the Initial Purchasers shall have the right to contact such Holders and
otherwise facilitate the tender of Registrable Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Securities that are Private
Exchange Securities and Exchange Securities held by Participating
Broker-Dealers, and the Issuers shall have no further obligation to register
Registrable Securities (other than Private Exchange Securities) pursuant to
Section 2(b) hereof.
(b) Shelf Registration. In the event that (i) the Issuers or the
Majority Holders reasonably determine, after conferring with counsel, that the
Exchange Offer Registration
<PAGE>
-10-
provided in Section 2(a) hereof is not available or may not be consummated as
soon as practicable after the last day of the Exchange Period because it would
violate applicable securities laws or because the applicable interpretations of
the staff of the SEC would not permit the Issuers to effect the Exchange Offer,
or (ii) the Exchange Offer is not for any other reason consummated within 150
days of the Closing Time, or (iii) the Issuers or the Majority Holders
reasonably determine, after conferring with counsel, that the Exchange
Securities would not, upon receipt, be freely tradeable by such Holders which
are not affiliates of the Issuers without restriction under the Securities Act
and without restrictions under applicable blue sky or state securities laws, or
a Holder is not permitted by applicable law to participate in the Exchange Offer
or (iv) upon the request of any Initial Purchaser with respect to any
Registrable Securities which it acquired directly from the Company and, with
respect to other Registrable Securities held by it, if such Initial Purchaser is
not permitted, in the opinion of counsel to such Initial Purchaser, pursuant to
applicable law or applicable interpretations of the Staff of the SEC, to
participate in the Exchange Offer and thereby receive securities that are freely
tradeable without restriction under the Securities Act and applicable blue sky
or state securities laws, the Issuers shall, at their cost, use their best
efforts to cause to be filed as promptly as practicable after such determination
or date, as the case may be, and, in any event, within 30 days thereafter, a
Shelf Registration Statement providing for the sale by the Holders of all of the
Registrable Securities, and shall use their best efforts to have such Shelf
Registration Statement declared effective by the SEC as soon as practicable. No
Holder of Registrable Securities may include any of its Registrable Securities
in any Shelf Registration pursuant to this Agreement unless and until such
Holder furnishes to the Issuers in writing, within 15 days after receipt of a
request therefor, such information as the Issuers may, after conferring with
counsel with regard to information relating to Holders that would be required by
the SEC to be included in such Shelf Registration Statement or Prospectus
included therein, reasonably request for inclusion in any Shelf Registration
Statement or Prospectus included therein. Each Holder as to which any Shelf
Registration is being effected agrees to furnish to the Issuers all information
with respect to such Holder necessary to make the information previously
furnished to the Issuers by such Holder not materially misleading.
The Issuers agree to use their best efforts to keep the Shelf
Registration Statement continuously effective for a
<PAGE>
-11-
period of three years from the date of issuance of the Securities (subject to
extension pursuant to the last paragraph of Section 3 hereof) (the
"Effectiveness Period"); provided; however, that if such Shelf Registration
Statement has been filed solely at the request of any Initial Purchaser pursuant
to clause (iv) above, the Issuers shall only be required to use their best
efforts to keep such Shelf Registration Statement continuously effective for a
period of one year from the date of issuance of the Securities (subject to
extension pursuant to the last paragraph of Section 3 hereof) or for such
shorter period which will terminate when all of the Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding. The Issuers shall not permit
any securities other than Registrable Securities to be included in the Shelf
Registration. The Issuers further agree, if necessary, to supplement or amend
the Shelf Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by the Issuers for such
Shelf Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and the Issuers agree to furnish
to the Holders of Registrable Securities copies of any such supplement or
amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Issuers shall pay all Registration Expenses in
connection with the registration pursuant to Section 2(a) or 2(b) hereof and any
one counsel designated in writing by the Majority Holders to act as counsel for
the Holders of the Registrable Securities in connection with a Shelf
Registration Statement. Except as provided herein, each Holder shall pay all
expenses of its counsel, underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Holder's Registrable
Securities pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer Registration
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
effective during the period of such interference, until
<PAGE>
-12-
the offering of Registrable Securities may legally resume. The Issuers will be
deemed not to have used their best efforts to cause the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
to become, or to remain, effective during the requisite period if they
voluntarily take any action that would result in any such Registration Statement
not being declared effective or in the Holders of Registrable Securities covered
thereby not being able to exchange or offer and sell such Registrable Securities
during that period unless such action is required by applicable law.
(e) Additional Interest. In the event that (i) the Exchange Offer
Registration Statement is not filed with the SEC on or prior to the 60th
calendar day following the Closing Time, (ii) the Exchange Offer Registration
Statement is not declared effective on or prior to the 120th calendar day
following the Closing Time, (iii) the Exchange Offer is not consummated on or
prior to the 150th calendar day following the Closing Time or (iv) if the law or
applicable interpretations of the SEC thereof prohibit a Holder from
participating in the Exchange Offer or if such Holder does not receive freely
tradeable Exchange Securities pursuant to the Exchange Offer or if for any
reason the Exchange Offer is not consummated within 150 days of the Closing
Time, and if by 180 days after the Closing Time a Shelf Registration Statement
is not declared effective, the interest rate borne by the Securities shall be
increased (the "Additional Interest") by one-quarter of one percent (0.25%) per
annum from and including the 61st day following the Closing Time in the case of
(i) above, from and including the 121st day following the Closing Time in the
case of clause (ii) above, from and including the 151st day following the
Closing Time in the case of (iii) above or, solely with respect to Securities
which could not be exchanged as set forth above, Exchange Securities that are
not freely tradeable and Private Exchange Securities, from and including the
181st day after the Closing Time in the case of clause (iv) above. Upon (w) the
filing of the Exchange Offer Registration Statement in the case of clause (i)
above, (x) the effectiveness of the Exchange Offer Registration Statement in the
case of clause (ii) above, (y) the date of the consummation of the Exchange
Offer in the case of clause (iii) above or (z) the effectiveness of a Shelf
Registration Statement in the case of clause (iv) above, and provided, however,
that none of the conditions set forth in clauses (i), (ii), (iii) and (iv) above
continues to exist, the interest rate borne by the Securities from the date of
such filing, effectiveness or consummation, as the case may be, will be reduced
to the original interest rate. In addition, such
<PAGE>
-13-
interest rate shall be increased by an additional one-quarter of one percent
(0.25%) per annum for each 90-day period that any Additional Interest continues
to accrue pursuant to this Section 2(e); provided, however, that the aggregate
increase in such interest rate pursuant to this Section 2(e) will in no event
exceed one percent (1.00%) per annum.
In the event that the Shelf Registration Statement has been declared
effective and subsequently ceases to be effective prior to the end of the
Effectiveness Period or if such a Shelf Registration Statement was filed solely
at the request of either Initial Purchaser pursuant to Section 2(b)(iv) hereof,
one year after the date of issuance of the Securities (in each instance, to
extension pursuant to the last paragraph of Section 3 hereof), for a period in
excess of 30 days, whether or not consecutive, in any given year, then, the
interest rate borne by the Securities, or the Private Exchange Securities, as
the case may be, shall be increased by an additional one-quarter of one percent
(0.25%) per annum on the 16th day in the applicable year such Shelf Registration
Statement ceases to be effective. Such interest rate shall be increased by an
additional one-quarter of one percent (0.25%) per annum for each additional 90
days that such Shelf Registration Statement is not effective, subject to the
same aggregate maximum increase in the interest rate per annum of one percent
(1.00%) per annum referred to above. Upon the effectiveness of a Shelf
Registration Statement, the interest rate borne by the Securities, or the
Private Exchange Securities, as the case may be, shall be reduced to their
original interest rate unless and until increased as described in this
paragraph.
The Issuers shall notify the Trustee within three Business Days
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Additional
Interest shall be paid by depositing with the Trustee, in trust, for the benefit
of the Holders of Securities or of Private Exchange Securities, as the case may
be, on or before the applicable semiannual interest payment date, immediately
available funds in sums sufficient to pay the Additional Interest then due. The
Additional Interest due shall be payable on each interest payment date to the
record Holder of Securities entitled to receive the interest payment to be paid
on such date as set forth in the Indenture. Each obligation to pay Additional
Interest shall be deemed to accrue from and including the day following the
applicable Event Date.
<PAGE>
-14-
(f) Specific Enforcement. Without limiting the remedies available to
the Initial Purchasers and the Holders, the Issuers acknowledge that any failure
by the Issuers to comply with their obligations under Section 2(a) and Section
2(b) hereof may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy at law, that it would not
be possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Initial Purchasers or any Holder may obtain such
relief as may be required to specifically enforce the Issuers' obligations under
Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. In connection with the obligations of
the Issuers with respect to the Registration Statements pursuant to Sections
2(a) and 2(b) hereof, the Issuers shall:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be
selected by the Issuers, (ii) shall, in the case of a Shelf Registration,
be available for the sale of the Registrable Securities by the selling
Holders thereof and (iii) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith; and use their best
efforts to cause such Registration Statement to become effective and
remain effective in accordance with Section 2 hereof; provided, however,
that if (1) such filing is pursuant to Section 2(b), or (2) a Prospectus
contained in an Exchange Offer Registration Statement filed pursuant to
Section 2(a) is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities, before
filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Issuers shall furnish to and afford the Holders
of the Registrable Securities and each such Participating Broker-Dealer,
as the case may be, covered by such Registration Statement, their counsel
and the managing underwriters, if any, a reasonable opportunity to review
copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be
filed (at least 10 Business Days prior to such filing). The Issuers shall
not file any Registration Statement or
<PAGE>
-15-
Prospectus or any amendments or supplements thereto in respect of which
the Holders must be afforded an opportunity to review prior to the filing
of such document if the Majority Holders or such Participating
Broker-Dealer, as the case may be, their counsel or the managing
underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the Effectiveness Period or the
Applicable Period, as the case may be; and cause each Prospectus to be
supplemented by any required prospectus supplement and as so supplemented
to be filed pursuant to Rule 424 (or any similar provision then in force)
under the Securities Act, and comply with the provisions of the Securities
Act, the Exchange Act and the rules and regulations promulgated thereunder
applicable to it with respect to the disposition of all securities covered
by each Registration Statement during the Effectiveness Period or the
Applicable Period, as the case may be, in accordance with the intended
method or methods of distribution by the selling Holders thereof described
in this Agreement (including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities, at least three Business Days prior to filing, that
a Shelf Registration Statement with respect to the Registrable Securities
is being filed and advising such Holder that the distribution of
Registrable Securities will be made in accordance with the method selected
by the Majority Holders; and (ii) furnish to each Holder of Registrable
Securities and to each underwriter of an underwritten offering of
Registrable Securities, if any, without charge, as many copies of each
Prospectus, including each preliminary Prospectus, and any amendment or
supplement thereto and such other documents as such Holder or underwriter
may reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities; and (iii) subject to the last
paragraph of Section 3 hereof, hereby consent to the use of the Prospectus
or any amendment or supplement thereto by each of the selling Holders of
Registrable Securities in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;
<PAGE>
-16-
(d) in the case of a Shelf Registration, use their best efforts to
register or qualify the Registrable Securities under all applicable state
securities or "blue sky" laws of such jurisdictions by the time the
applicable Registration Statement is declared effective by the SEC as any
Holder of Registrable Securities covered by a Registration Statement and
each underwriter of an underwritten offering of Registrable Securities
shall reasonably request in advance of such date of effectiveness, and do
any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder and underwriter to consummate the
disposition in each such jurisdiction of such Registrable Securities owned
by such Holder; provided, however, that neither of the Issuers shall be
required to (i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (ii) file any general consent to
service of process or (iii) subject itself to taxation in any such
jurisdiction if it is not so subject;
(e) in the case of (1) a Shelf Registration or (2) Participating
Broker-Dealers who have notified the Issuers that they will be utilizing
the Prospectus contained in the Exchange Offer Registration Statement as
provided in Section 3(t) hereof, notify each Holder of Registrable
Securities, or such Participating Broker-Dealers, as the case may be,
their counsel and the managing underwriters, if any, promptly and confirm
such notice in writing (i) when a Registration Statement has become
effective and when any post-effective amendments and supplements thereto
become effective, (ii) of any request by the SEC or any state securities
authority for amendments and supplements to a Registration Statement or
Prospectus or for additional information after the Registration Statement
has become effective, (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) in the case of a Shelf Registration, if, between the
effective date of a Registration Statement and the closing of any sale of
Registrable Securities covered thereby, the representations and warranties
of the Issuers contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to such offering
cease to be true and correct in all material respects, (v) if the Issuers
receive any notification with
<PAGE>
-17-
respect to the suspension of the qualification of the Registrable
Securities or the Exchange Securities to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction or the initiation of
any proceeding for such purpose, (vi) of the happening of any event or the
failure of any event to occur or the discovery of any facts or otherwise,
during the period a Shelf Registration Statement is effective which makes
any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which causes such
Registration Statement or Prospectus to omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and (vi) the
Issuers' reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement as soon as
practicable;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of
each Registration Statement relating to such Shelf Registration and any
post-effective amendment thereto (without documents incorporated therein
by reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold
and not bearing any restrictive legends; and cause such Registrable
Securities to be in such denominations (consistent with the provisions of
the Indenture) and registered in such names as the selling Holders or the
underwriters may reasonably request at least two Business Days prior to
the closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by
Section 3(e)(ii), 3(e)(iii), 3(e)(v), 3(e)(vi) or 3(e)(vii) hereof, use
their best efforts to prepare a supplement or post-effective amendment to
a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter
<PAGE>
-18-
delivered to the purchasers of the Registrable Securities, such Prospectus
will not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and to
notify each Holder to suspend use of the Prospectus as promptly as
practicable after the occurrence of such an event, and each Holder hereby
agrees to suspend use of the Prospectus until the Issuers have amended or
supplemented the Prospectus to correct such misstatement or omission;
(j) in the case of a Shelf Registration, upon the filing of any
document which is to be incorporated by reference into a Registration
Statement or a Prospectus after the initial filing of a Registration
Statement, provide a reasonable number of copies of such document to the
Holders;
(k) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with certificates for the
Exchange Securities or the Registrable Securities, as the case may be, in
a form eligible for deposit with the Depositary;
(l) cause the Indenture to be qualified under the Trust Indenture
Act of 1939, as amended, (the "TIA") in connection with the registration
of the Exchange Securities or Registrable Securities, as the case may be,
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in
accordance with the terms of the TIA and execute, and use their best
efforts to cause the Trustee to execute, all documents as may be required
to effect such changes, and all other forms and documents required to be
filed with the SEC to enable the Indenture to be so qualified in a timely
manner;
(m) in the case of a Shelf Registration, enter into such agreements
(including underwriting agreements) as are customary in underwritten
offerings and take all such other appropriate actions as are reasonably
requested in order to expedite or facilitate the registration or the
disposition of such Registrable Securities, and in such connection,
whether or not an underwriting agreement is entered into and whether or
not the registration is an underwritten registration: (i) make such
representations
<PAGE>
-19-
and warranties to Holders of such Registrable Securities and the
underwriters (if any), with respect to the business of the Issuers and
their subsidiaries as then conducted or proposed to be conducted and the
Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) obtain opinions of counsel to
the Issuers and updates thereof in form and substance reasonably
satisfactory to the managing underwriters (if any) and the Holders of a
majority in principal amount of the Registrable Securities being sold,
addressed to each selling Holder and the underwriters (if any) covering
the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such
Holders and underwriters; (iii) obtain "cold comfort" letters and updates
thereof in form and substance reasonably satisfactory to the managing
underwriters (if any) from the independent certified public accountants of
the Issuers (and, if necessary, any other independent certified public
accountants of any subsidiary of the Issuers or of any business acquired
by the Issuers for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed to
the selling Holders of Registrable Securities and to each of the
underwriters (if any), such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings and such other matters as
reasonably requested by such selling Holders and underwriters; and (iv) if
an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable than those set
forth in Section 4 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of
Registrable Securities covered by such Registration Statement and the
managing underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section (including, without limitation, such
underwriters and selling Holders). The above shall be done at each closing
under such underwriting agreement, or as and to the extent required
thereunder;
(n) if (1) a Shelf Registration is filed pursuant to Section 2(b) or
(2) a Prospectus contained in an Exchange Offer Registration Statement
filed pursuant to Section
<PAGE>
-20-
2(a) is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during
the applicable period, make available for inspection by any selling Holder
of such Registrable Securities being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any
such disposition of Registrable Securities, if any, and any attorney,
accountant or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of the Issuers and their
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the
Issuers and their subsidiaries to supply all information in each case
reasonably requested by any such Inspector in connection with such
Registration Statement. Records which the Issuers determine, in good
faith, to be confidential and any Records which they notify the Inspectors
are confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in such Registration Statement, (ii) the release
of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or (iii) the information in such Records
has been made generally available to the public. Each selling Holder of
such Registrable Securities and each such Participating Broker-Dealer will
be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Issuers
unless and until such is made generally available to the public. Each
selling Holder of such Registrable Securities and each such Participating
Broker-Dealer will be required to further agree that it will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Issuers and allow the Issuers at their
expense to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(o) comply with all applicable rules and regulations of the SEC and
make generally available to their security-holders earnings statements
satisfying the provisions of
<PAGE>
-21-
Section 11(a) of the Securities Act and Rule 158 thereunder (or any
similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any
12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Issuers after the
effective date of a Registration Statement, which statements shall cover
said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Issuers addressed to the Trustee for
the benefit of all Holders of Registrable Securities participating in the
Exchange Offer or the Private Exchange, as the case may be, and which
includes an opinion that (i) the Issuers have duly authorized, executed
and delivered the Exchange Securities and Private Exchange Securities and
the Indenture, and (ii) each of the Exchange Securities or the Private
Exchange Securities, as the case may be, and the Indenture constitute a
legal, valid and binding obligation of the Issuers, enforceable against
the Issuers in accordance with its respective terms (in each case, with
customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Issuers (or
to such other Person as directed by the Issuers) in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may
be, the Issuers shall mark, or cause to be marked, on such Registrable
Securities delivered by such Holders that such Registrable Securities are
being cancelled in exchange for the Exchange Securities or the Private
Exchange Securities, as the case may be; in no event shall such
Registrable Securities be marked as paid or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Registrable Securities and their respective
counsel in connection with any filings required to be made with the NASD;
<PAGE>
-22-
(s) use their best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by a
Registration Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled
"Plan of Distribution," which section shall be reasonably acceptable to
the Initial Purchasers or another representative of the Participating
Broker-Dealers, and which shall contain a summary statement of the
positions taken or policies made by the staff of the SEC with respect to
the potential "underwriter" status of any broker-dealer (a "Participating
Broker-Dealer") that holds Registrable Securities acquired for its own
account as a result of market-making activities or other trading
activities and that will be the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of Exchange Securities to be received by such
broker-dealer in the Exchange Offer, whether such positions or policies
have been publicly disseminated by the staff of the SEC or such positions
or policies, in the reasonable judgment of the Initial Purchasers or such
other representative, represent the prevailing views of the staff of the
SEC, including a statement that any such broker-dealer who receives
Exchange Securities for Registrable Securities pursuant to the Exchange
Offer may be deemed a statutory underwriter and must deliver a prospectus
meeting the requirements of the Securities Act in connection with any
resale of such Exchange Securities, (ii) furnish to each Participating
Broker-Dealer who has delivered to the Issuers the notice referred to in
Section 3(e), without charge, as many copies of each Prospectus included
in the Exchange Offer Registration Statement, including any preliminary
prospectus, and any amendment or supplement thereto, as such Participating
Broker-Dealer may reasonably request (iii) hereby consent to the use of
the Prospectus forming part of the Exchange Offer Registration Statement
or any amendment or supplement thereto, by any Person subject to the
prospectus delivery requirements of the SEC, including all Participating
Broker-Dealers, in connection with the sale or transfer of the Exchange
Securities covered by the Prospectus or any amendment or supplement
thereto, (iv) use their best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the
Prospectus contained therein in order to permit such Prospectus to be
<PAGE>
-23-
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons
must comply with such requirements in order to resell the Exchange
Securities; provided, however, that such period shall not be required to
exceed 180 days (or such longer period if extended pursuant to the last
sentence of Section 3 hereof) (the "Applicable Period"), and (iv) include
in the transmittal letter or similar documentation to be executed by an
exchange offeree in order to participate in the Exchange Offer (x) the
following provision:
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-making
activities or other trading activities, it will deliver a prospectus
meeting the requirements of the Securities Act in connection with
any resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, such broker-dealer
will not be deemed to admit that it is an underwriter within the meaning
of the Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Issuers agree to deliver to the Initial Purchasers or to Participating
Broker-Dealers upon consummation of the Exchange Offer (i) an opinion of
counsel substantially in the form attached hereto as Exhibit A, and (ii)
an officers' certificate containing certifications substantially similar
to those set forth in Section 7(c) of the Purchase Agreement and such
additional certifications as are customarily delivered in a public
offering of debt securities.
The Issuers may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Issuers such
information regarding such seller and the proposed distribution of such
Registrable Securities, as the Issuers may from time to time reasonably request
in writing. The Issuers may exclude from such registration the Registrable
Securities of any seller who unreasonably fails to
<PAGE>
-24-
furnish such information within a reasonable time after receiving such request
and shall be under no obligation to compensate any such seller for any lost
income, interest or other opportunity forgone, or any liability incurred, as a
result of the Issuers' decision to exclude such seller.
In the case of (1) a Shelf Registration Statement or (2)
Participating Broker-Dealers who have notified the Issuers that they will be
utilizing the Prospectus contained in the Exchange Offer Registration Statement
as provided in Section 3(t) hereof, that are seeking to sell Exchange Securities
and are required to deliver Prospectuses, each Holder agrees that, upon receipt
of any notice from the Issuers of the happening of any event of the kind
described in Section 3(e)(ii), 3(e)(iii), 3(e)(v), 3(e)(vi) or 3(e)(vii) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to a Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 3(i) hereof or
until it is advised in writing (the "Advice") by the Issuers that the use of the
applicable Prospectus may be resumed, and, if so directed by the Issuers, such
Holder will deliver to the Issuers (at the Issuers' expense) all copies in such
Holder's possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities or Exchange
Securities, as the case may be, current at the time of receipt of such notice.
If the Issuers shall give any such notice to suspend the disposition of
Registrable Securities or Exchange Securities, as the case may be, pursuant to a
Registration Statement, the Issuers shall use their best efforts to file and
have declared effective (if an amendment) as soon as practicable an amendment or
supplement to the Registration Statement and, in the case of an amendment, have
such amendment declared effective as soon as practicable and shall extend the
period during which such Registration Statement shall be maintained effective
pursuant to this Agreement by the number of days in the period from and
including the date of the giving of such notice to and including the date when
the Issuers shall have made available to the Holders (x) copies of the
supplemented or amended Prospectus necessary to resume such dispositions or (y)
the Advice.
4. Indemnification and Contribution. (a) The Issuers shall indemnify
and hold harmless each Initial Purchaser, each Holder, each Participating
Broker-Dealer, each underwriter who participates in an offering of Registrable
Securities, their respective affiliates, each Person, if any,
<PAGE>
-25-
who controls any of such parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and each of their respective
directors, officers, employees and agents, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment or supplement thereto), covering
Registrable Securities or Exchange Securities, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any court or governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission,
if such settlement is effected with the prior written consent of the
Issuers; and
(iii) against any and all expenses whatsoever, as incurred
(including reasonable fees and disbursements of counsel chosen by the
Initial Purchasers, such Holder, such Participating Broker-Dealer or any
underwriter (except to the extent otherwise expressly provided in Section
4(c) hereof)), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any court or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) of this Section 4(a);
<PAGE>
-26-
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made in reliance upon and
in conformity with written information furnished in writing to the Issuers by
such Initial Purchaser, such Holder, such Participating Broker-Dealer or any
underwriter with respect to such Initial Purchaser, Holder, Participating
Broker-Dealer or underwriter, as the case may be, expressly for use in the
Registration Statement (or any amendment or supplement thereto) or any
Prospectus (or any amendment or supplement thereto) or (ii) contained in any
preliminary prospectus if such Initial Purchaser, such Holder, such
Participating Broker-Dealer or such underwriter failed to send or deliver a copy
of the Prospectus (in the form it was first provided to such parties for
confirmation of sales) to the Person asserting such losses, claims, damages or
liabilities on or prior to the delivery of written confirmation of any sale of
securities covered thereby to such Person in any case where such delivery is
required by the Securities Act and a court of competent jurisdiction in a
judgment not subject to appeal or final review shall have determined that such
Prospectus would have corrected such untrue statement or omission. Any amounts
advanced by the Issuers to an indemnified party pursuant to this Section 4 as a
result of such losses shall be returned to the Issuers if it shall be finally
determined by such a court in a judgment not subject to appeal or final review
that such indemnified party was not entitled to indemnification by the Issuers.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Issuers, each Initial Purchaser, each underwriter who
participates in an offering of registrable Securities and the other selling
Holders and each of their respective directors, officers (including each officer
of each of the Issuers who signed the Registration Statement), employees and
agents and each Person, if any, who controls either of the Issuers, any Initial
Purchaser, ay underwriter or any other selling Holder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, against any and all
loss, liability, claim, damage and expense whatsoever described in the indemnity
contained in Section 4(a) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment thereto) in reliance upon and in conformity with written information
furnished to the Issuers by such selling Holder with respect to such Holder
expressly for use in the
<PAGE>
-27-
Registration Statement (or any supplement thereto), or any such Prospectus (or
any amendment thereto); provided, however, that, in the case of the Shelf
Registration Statement, no such Holder shall be liable for any claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale of
Registrable Securities pursuant to the Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 4(a) above, counsel to the indemnified
parties shall be selected by Merrill Lynch, and, in the case of parties
indemnified pursuant to Section 4(b) above, counsel to the indemnified parties
shall be selected by the Issuers. An indemnifying party may participate at its
own expense in the defense of any such action; provided, however, that counsel
to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 4 (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
<PAGE>
-28-
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel pursuant to Section 4(a)(iii) above, such indemnifying party
agrees that it shall liable for any settlement of the nature contemplated by
Section 4(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Issuers, the Initial
Purchasers and the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Issuers, the Initial Purchasers and the
Holders, as incurred; provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person that was not guilty of such
fraudulent misrepresentation. As between the Issuers and the Initial Purchasers
and the Holders, such parties shall contribute to such aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement in such proportion as shall be appropriate to reflect the
relative fault of the Issuers on the one hand and of the Holder of Registrable
Securities, the Participating Broker-Dealer or Initial Purchaser, as the case
may be, on the other hand in connection with the statements or omissions which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative fault of the Issuers on the one hand and the Holder of
Registrable Securities, the Participating Broker-Dealer or the Initial
Purchasers, as the case may be, 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 Issuers, or by the Holder of Registrable
Securities, the Participating
<PAGE>
-29-
Broker-Dealer or the Initial Purchasers, as the case may be, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Issuers and the Holders of the Registrable Securities and the
Initial Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 4 were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 4.
For purposes of this Section 4, each affiliate of any Initial
Purchaser or Holder, and each director, officer, employee, agent and Person, if
any, who controls a Holder of Registrable Securities, a Initial Purchaser or a
Participating Broker-Dealer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such other Person, and each director of the Issuers, each officer of the
Issuers who signed the Registration Statement, and each Person, if any, who
controls either of the Issuers within the meaning of Section 15 of the
Securities act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Issuers.
5. Participation in Underwritten Registrations. No Holder may
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Registrable 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 and other documents
reasonably required under the terms of such underwriting arrangements. The
Issuers shall be under no obligation to compensate any Holder for lost income,
interest or other opportunity foregone, or other liability incurred, as a result
of the Issuers' decision to exclude such Holder from any underwritten
registration if such Holder has not complied with the provisions of this Section
5 in all material respects following 10 business days' written notice of
non-compliance and the Issuers' decision to exclude such Holder.
6. Selection of Underwriters. The Holders of Registrable Securities
covered by the Shelf Registration Statement who desire to do so may sell the
securities covered by such Shelf Registration in an underwritten offering. In
any such
<PAGE>
-30-
underwritten offering, the underwriter or underwriters and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount of the Registrable Securities included in such
offering; provided, however, that such underwriters and managers must be
reasonably satisfactory to the Issuers.
7. Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Issuers are subject
to the reporting requirements of Section 13 or 15 of the Exchange Act and any
Registrable Securities remain outstanding, the Issuers covenant that they will
file the reports required to be filed by them under the Securities Act and
Section 13(a) or 15(d) of the Exchange Act and the rules and regulations adopted
by the SEC thereunder, that if they ceases to be so required to file such
reports, they will upon the request of any Holder of Registrable Securities (a)
make publicly available such information as is necessary to permit sales
pursuant to Rule 144 under the Securities Act, (b) deliver such information to a
prospective purchaser as is necessary to permit sales pursuant to Rule 144A
under the Securities Act and they will take such further action as any Holder of
Registrable Securities may reasonably request, and (c) take such further action
that is reasonable in the circumstances, in each case, to the extent required
from time to time to enable such Holder to sell its Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such rule may
be amended from time to time, (ii) Rule 144A under the Securities Act, as such
rule may be amended from time to time, or (iii) any similar rules or regulations
hereafter adopted by the SEC. Upon the reasonable request of any Holder of
Registrable Securities, the Issuers will deliver to such Holder a written
statement as to whether they have complied with such requirements.
(b) No Inconsistent Agreements. The Issuers have not entered into
nor will the Issuers on or after the date of this Agreement enter into any
agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities 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 Issuers' other issued and outstanding securities under any such agreements.
<PAGE>
-31-
(c) Amendments and Waivers. The provisions of this Agreement,
including provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the Issuers
and Holders of not less than a majority in aggregate principal amount of the
then outstanding Registrable Securities; provided, however, that no amendment,
modification, or supplement or waiver or consent to the departure with respect
to the provisions of Section 4 hereof shall be effective as against any Holder
of Registrable Securities unless consented to in writing by such Holder of
Registrable Securities.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Issuers by means of a notice given in accordance with the provisions of this
Section 7(d), which address initially is, with respect to the Initial
Purchasers, the address set forth in the Purchase Agreement; and (ii) if to the
Issuers, initially at the Issuers' address set forth in the Purchase Agreement
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 7(d).
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 is acknowledged, if telecopied; and
on the next Business Day, if timely delivered to an air courier guaranteeing
overnight delivery.
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 Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of the
Initial Purchasers, including, without limitation and without the need for an
express assignment, subsequent Holders; provided, however, that nothing herein
shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Purchase Agreement or
the Indenture. If any
<PAGE>
-32-
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiary. Each of the Initial Purchasers shall be
a third party beneficiary of the agreements made hereunder between the Issuers,
on the one hand, and the Holders, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) 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.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. Specified times of day refer to
New York City time.
(j) 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.
(k) Securities Held by the Issuers or any of their Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Securities is required hereunder, Registrable Securities held by the
Issuers or any of their affiliates (as such term is defined in Rule 405 under
the Securities Act) shall not be counted in determining whether
<PAGE>
-33-
such consent or approval was given by the Holders of such required percentage.
<PAGE>
-34-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
BLUE BIRD BODY COMPANY
By: /s/ Paul E. Glaske
---------------------------------
Name: Paul E. Glaske
Title: President
BLUE BIRD CORPORATION
By: /s/ Paul E. Glaske
---------------------------------
Name: Paul E. Glaske
Title: President
Confirmed and accepted as of
the date first above
written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Bennett Rosenthal
----------------------------------
Name: Bennett Rosenthal
Title: Director
BT SECURITIES CORPORATION
By: /s/ Patrice M. Daniels
----------------------------------
Name: Patrice M. Daniels
Title: Managing Director
<PAGE>
Exhibit A
Form of Opinion of Counsel
1. Each of the Exchange Offer Registration Statement and the
Prospectus (other than the financial statements, notes or schedules thereto and
other financial and statistical information and supplemental schedules included
or referred to therein or omitted therefrom and the Form T-1, as to which such
counsel need express no opinion), complies as to form in all material respects
with the applicable requirements of the Securities Act and the applicable rules
and regulations promulgated under the Securities Act.
2. In the course of such counsel's review and discussion of the
contents of the Exchange Offer Registration Statement and the Prospectus with
certain officers and other representatives of the Issuers and representatives of
the independent certified public accountants of the Issuers, but without
independent check or verification or responsibility for the accuracy,
completeness or fairness of the statements contained therein, on the basis of
the foregoing (relying as to materiality to a large extent upon representations
and opinions of officers and other representatives of the Issuers), no facts
have come to such counsel's attention which cause such counsel to believe that
the Exchange Offer Registration Statement (other than the financial statements,
notes and schedules thereto and other financial and statistical information
contained or referred to therein and the Form T-1, as to which such counsel need
express no belief), at the time the Exchange Offer Registration Statement became
effective and at the time of the consummation of the Exchange Offer, 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 contained
therein not misleading, or that the Prospectus (other than the financial
statements, notes and schedules thereto and other financial and statistical
information contained or referred to therein, as to which such counsel need
express no belief) contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading.
<PAGE>
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF NOVEMBER 15, 1996
by and among
BLUE BIRD CORPORATION,
as a Guarantor,
BLUE BIRD BODY COMPANY,
as Borrower,
THE LENDERS LISTED ON THE SIGNATURE PAGES HEREOF,
BANKERS TRUST COMPANY,
as Administrative Agent
and
MERRILL LYNCH & CO.,
as Syndication Agent
<PAGE>
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of November 15, 1996
TABLE OF CONTENTS
Page
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RECITALS............................................................ 1
SECTION 1. DEFINITIONS.......................................... 2
1.1 Certain Defined Terms................................ 2
1.2 Accounting Terms; Utilization of GAAP................ 35
1.3 References; Interpretation........................... 35
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS
AND LOANS.............................. 36
2.1 Term Loans........................................... 36
2.2 Working Capital Loans and Swing Line Loans........... 39
2.3 Interest on the Loans................................ 45
2.4 Fees................................................. 50
2.5 Prepayments and Payments; Reductions in Commitments.. 51
2.6 Use of Proceeds...................................... 58
2.7 Special Provisions Governing Eurodollar Rate Loans... 58
2.8 Capital Adequacy Adjustment.......................... 63
2.9 Letters of Credit.................................... 64
2.10 Taxes................................................ 72
SECTION 3. CONDITIONS TO LOANS AND LETTERS OF
CREDIT................................ 73
3.1 Conditions to Loans on the Restatement Effective
Date ................................................ 73
3.2 Conditions to Initial Working Capital Loans and
Swing Line Loans..................................... 80
3.3 Conditions to All Loans.............................. 80
3.4 Conditions to Letters of Credit...................... 81
SECTION 4. REPRESENTATIONS AND WARRANTIES....................... 82
4.1 Organization, Powers, Good Standing, Business and
Subsidiaries......................................... 82
4.2 Authorization of Borrowing, etc...................... 83
4.3 Financial Condition.................................. 84
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4.4 No Material Adverse Change; No Stock Payments........ 85
4.5 Title to Properties; Liens........................... 85
4.6 Litigation; Adverse Facts............................ 85
4.7 Payment of Taxes..................................... 86
4.8 Materially Adverse Agreements; Performance of
Agreements........................................... 86
4.9 Governmental Regulation.............................. 86
4.10 Securities Activities................................ 86
4.11 Employee Benefit Plans............................... 87
4.12 Representations and Warranties Incorporated From
Subordinated Debt Documents.......................... 87
4.13 Disclosure........................................... 87
4.14 Licenses, Permits and Authorizations................. 88
4.15 Intangible Property.................................. 88
4.16 Certain Fees......................................... 88
4.17 Environmental Matters................................ 89
SECTION 5. AFFIRMATIVE COVENANTS................................ 91
5.1 Financial Statements and Other Reports............... 91
5.2 Corporate Existence, etc............................. 96
5.3 Payment of Taxes and Claims; Tax Consolidation....... 96
5.4 Maintenance of Properties; Insurance................. 97
5.5 Inspection; Lender Meeting........................... 97
5.6 Equal Security for Obligations; No Further
Negative Pledges..................................... 98
5.7 Compliance with Laws, etc............................ 98
5.8 Real Property Security............................... 98
5.9 Environmental Disclosure and Inspection.............. 98
5.10 Hazardous Materials; Remedial Action................. 99
5.11 Further Assurances; New Subsidiaries; Intellectual
Property............................................. 100
5.12 Payment of Obligations............................... 101
5.13 Interest Rate Agreements............................. 101
5.14 Post-Closing Covenants............................... 101
SECTION 6. NEGATIVE COVENANTS................................... 101
6.1 Indebtedness......................................... 101
6.2 Liens................................................ 103
6.3 Investments.......................................... 104
6.4 Contingent Obligations............................... 105
6.5 Restricted Junior Payments........................... 106
6.6 Financial Covenants ................................. 108
6.7 Restriction on Fundamental Changes................... 112
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Page
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6.8 Sales and Leasebacks................................. 114
6.9 Sale or Discount of Receivables...................... 114
6.10 Transactions with Shareholders and Affiliates........ 114
6.11 Disposal of Subsidiary Stock......................... 115
6.12 Conduct of Business; Limitations on Subsidiaries..... 115
6.13 Amendments or Waivers of Certain Documents;
Changes Relating to Subordinated Debt................ 116
6.14 Designation of Senior Indebtedness................... 117
SECTION 7. GUARANTY OF HOLDING.................................. 117
7.1 Guaranty by Holding.................................. 117
7.2 Terms of Guaranty.................................... 117
SECTION 8. EVENTS OF DEFAULT.................................... 120
8.1 Failure to Make Payments When Due.................... 120
8.2 Default in Other Agreements.......................... 121
8.3 Breach of Certain Covenants.......................... 121
8.4 Breach of Warranty................................... 121
8.5 Other Defaults Under Agreement or Loan Documents..... 121
8.6 Involuntary Bankruptcy; Appointment of Receiver,
etc. ................................................ 122
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc... 122
8.8 Judgments and Attachments............................ 123
8.9 Dissolution.......................................... 123
8.10 Employee Benefit Plans............................... 123
8.11 Invalidity of Guaranties............................. 124
8.12 Change in Control.................................... 124
8.13 Impairment of Collateral............................. 124
8.14 Default Under Subordinated Debt Documents............ 125
SECTION 9. ADMINISTRATIVE AGENT; SYNDICATION AGENT.............. 126
9.1 Appointment.......................................... 126
9.2 Powers; General Immunity............................. 127
9.3 Representations and Warranties; No Responsibility
For Appraisal of Creditworthiness.................... 128
9.4 Right to Indemnity................................... 129
9.5 Registered Persons Treated as Owner.................. 129
9.6 Collateral Documents and Intercreditor Agreements;
Appointment of Collateral Agent...................... 129
9.7 Successor Administrative Agents...................... 130
SECTION 10. MISCELLANEOUS........................................ 131
10.1 Representation of Lenders............................ 131
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Page
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10.2 Assignments and Participations in Loans and
Letters of Credit.................................... 131
10.3 Expenses............................................. 133
10.4 Indemnity............................................ 134
10.5 Set Off.............................................. 135
10.6 Ratable Sharing...................................... 135
10.7 Amendments and Waivers............................... 136
10.8 Independence of Covenants............................ 138
10.9 Notices.............................................. 138
10.10 Survival of Warranties and Certain Agreements........ 139
10.11 Failure or Indulgence Not Waiver; Remedies
Cumulative .......................................... 139
10.12 Severability......................................... 139
10.13 Obligations Several; Independent Nature of Lenders'
Rights............................................... 139
10.14 Headings; Table of Contents.......................... 140
10.15 Applicable Law....................................... 140
10.16 Successors and Assigns; Subsequent Holders of Notes.. 140
10.17 Consent to Jurisdiction and Service of Process....... 140
10.18 Waiver of Jury Trial................................. 141
10.19 Counterparts; Effectiveness.......................... 142
iv
<PAGE>
EXHIBITS
I Form of Notice of Borrowing
II Form of Notice of Issuance of Letter of Credit
III Form of Notice of Conversion/Continuation
IV Form of Tranche A Term Note
V Form of Tranche B Term Note
VI Form of Working Capital Note
VII Form of Swing Line Note
VIII Form of Borrowing Base Certificate
IX Form of Financial Condition Certificate
X Form of Borrower Security Agreement
XI Form of Borrower Pledge Agreement
XII Form of Holding Security Agreement
XIII Form of Holding Pledge Agreement
XIV Form of Environmental Indemnity
XV Form of Assignment Agreement
XVI Form of Opinion of Loan Parties' Counsel
XVII Form of Compliance Certificate
XVIII Form of Mortgage
XIX Form of Acknowledgement and Confirmation
v
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SCHEDULES
<PAGE>
BLUE BIRD CORPORATION
BLUE BIRD BODY COMPANY
FIRST AMENDED AND RESTATED
CREDIT AGREEMENT
This FIRST AMENDED AND RESTATED CREDIT AGREEMENT is dated as of
November 15, 1996 and entered into by and among BLUE BIRD CORPORATION, a
Delaware corporation ("Holding"), BLUE BIRD BODY COMPANY, a Georgia corporation
("Borrower"), the LENDERS LISTED ON THE SIGNATURE PAGES HEREOF (together with
each lender that may become a party to this Credit Agreement as herein provided,
referred to herein individually as a "Lender" and collectively as "Lenders"),
and BANKERS TRUST COMPANY, as administrative agent for Lenders (in such
capacity, together with any successors thereto in such capacity, "Administrative
Agent"), and MERRILL LYNCH & CO., as syndication agent (in such capacity,
"Syndication Agent").
RECITALS
WHEREAS, Borrower and Holding desire to amend and restate that
certain Credit Agreement dated as of April 15, 1992 among Borrower (as successor
to B B Acquisition Corporation), Holding, the lenders party thereto and Bankers
Trust Company, as agent (as amended, supplemented and otherwise modified to the
date hereof, the "Existing Credit Agreement") in order to, among other things
(i) convert certain term loans outstanding under the Existing Credit Agreement
to term loans outstanding under this Agreement (capitalized terms used in these
Recitals without definition shall have the respective meanings assigned in
subsection 1.1 hereof) and to increase the aggregate principal amount of term
loans outstanding under this Agreement to $100,000,000 under the Tranche A Term
Loan Commitment and $75,000,000 under the Tranche B Term Loan Commitment, (ii)
to convert certain Existing Working Capital Loans outstanding under the Existing
Credit Agreement to Working Capital Loans under this Agreement and increase the
aggregate amount of the Working Capital Loan Commitments to $80,000,000, (iii)
extend the scheduled maturity of the Loans and (iv) otherwise amend and modify
the Existing Credit Agreement as provided herein;
WHEREAS, Holding desires to affirm its guaranty of the Obligations
pursuant to the Holding Guaranty;
WHEREAS, Holding and Borrower desire to secure their respective
Obligations by confirming the pledges and security interests granted pursuant to
the Collateral Documents in substantially all of their real and personal
property, including without
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limitation, (i) the pledge by Holding of 100% of the capital stock of Borrower
and (ii) the pledge by Borrower of 66% of the capital stock of Canadian Blue
Bird.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Holding, Borrower, Lenders,
Administrative Agent and Syndication Agent agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Defined Terms
The following terms used in this Agreement shall have the following
meanings:
"Accounts Receivable" means, as at any date of determination
thereof, the unpaid portion of the obligations as stated on the respective
invoice issued to a customer of Borrower with respect to Inventory sold and
shipped or services performed in the ordinary course of business, net of any
credits, rebates or offsets owed by Borrower to the respective customer and net
of any commissions payable by Borrower to third parties; provided, however, that
this definition shall not include any receivables related to the Lease
Portfolio.
"Acknowledgement and Confirmation" means that certain
Acknowledgement and Confirmation dated as of the date hereof and executed by
Borrower and Holding in substantially the form attached as Exhibit XIX hereto.
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date, the rate (rounded upward to the next highest one hundredth
of one percent) obtained by dividing (i) the Eurodollar Rate for that date by
(ii) a percentage equal to 100% minus the stated maximum rate of all reserves
required to be maintained against "Eurocurrency liabilities" as specified in
Regulation D (or against any other category of liabilities that includes
deposits by reference to which the interest rate on Eurodollar Rate Loans is
determined or any category of extensions of credit or other assets that includes
loans by a non-United States office of a Lender to United States residents).
"Administrative Agent" has the meaning assigned to that term in the
introductory paragraph to this Agreement.
"Affected Lender" means any Lender affected by any of the events
described in subsections 2.7B or 2.7C.
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms
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"controlling", "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities or by contract or otherwise.
"Agents" means, collectively, Administrative Agent, Collateral Agent
and Syndication Agent.
"Aggregate Amounts Due" has the meaning assigned to that term in
subsection 10.6.
"Agreement" means this First Amended and Restated Credit Agreement,
as it may be amended, amended and restated, supplemented or otherwise modified
from time to time.
"Applicable Base Rate Margin" means (i) with respect to any Working
Capital Loan or Tranche A Term Loan, a per annum rate equal to 1.50% and (ii)
with respect to any Tranche B Term Loan, a per annum rate equal to 2.00%;
provided that the rates set forth in this definition may be reduced from time to
time pursuant to subsection 2.3A.
"Applicable Eurodollar Rate Margin" means (i) with respect to any
Working Capital Loan or Tranche A Term Loan, a per annum rate equal to 2.50% and
(ii) with respect to any Tranche B Term Loan, a per annum rate equal to 3.00%;
provided that the rates set forth in this definition may be reduced from time to
time pursuant to subsection 2.3A.
"Asset Sale" means the sale, lease, assignment or other transfer for
value by Holding or any of its Subsidiaries to any Person, whether in a single
transaction or a series of related transactions, of (i) any of the stock of
Borrower or any of its Subsidiaries, (ii) all or substantially all of the assets
of any division or line of business of Holding or any of its Subsidiaries, or
(iii) any other assets or rights, or related group of assets or rights, of
Holding or any of its Subsidiaries (x) having a book value or market value in
excess of $250,000 (it being understood that if the book value or sales price
thereof exceeds $250,000, the entire value and not just the portion thereof in
excess of $250,000 shall be subject to subsection 2.5A(ii)(a)) or (y) having an
aggregate book value or market value in excess of $500,000 during any Fiscal
Year (aggregating for purposes of this clause (y) only sales, leases,
assignments or other transfers of assets or rights having a book or market value
in excess of $25,000 and not included in clause (x)), other than the sale in the
ordinary course of business of Inventory of Holding or any of its Subsidiaries;
provided that the term "Asset Sale" shall not include (a) the sale of the Lease
Portfolio pursuant to the Lease Portfolio Documents, (b) the sale of lease
portfolio assets permitted to be held by Borrower pursuant to subsection
6.3(viii), and (c) Asset Sales with respect to equipment that Holding or the
applicable Subsidiary reasonably expects to be replaced within one hundred and
eighty (180) days;
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provided, that the Net Cash Proceeds of any Asset Sale excluded pursuant to this
clause (c) shall be applied in accordance with subsection 2.5A(ii)(a).
"Bankers" means Bankers Trust Company, a New York banking
corporation.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy" from time to time in effect, or any successor statute.
"Base Rate" means at any time, the higher of (i) the Prime Rate and
(ii) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"Base Rate Loans" means Loans made by Lenders bearing interest at
rates determined by reference to the Base Rate as provided in subsection 2.3A.
"BB Capital" means Blue Bird Capital Corporation, a Delaware
corporation.
"BBCC" means Blue Bird Credit Company, a division of Borrower.
"Blue Bird Central America" means Blue Bird Centro Americana, SA, a
corporation organized under the federal laws of Guatemala.
"Blue Bird Mexico" means Blue Bird de Mexico, S.A. de C.V., a
Mexican corporation.
"Borrower" has the meaning assigned to that term in the introductory
paragraph of this Agreement.
"Borrower Pledge Agreement" means that certain Pledge Agreement
dated as of April 15, 1992 by and between Borrower and Collateral Agent, a copy
of which is attached as Exhibit XI hereto, as amended by that certain Fourth
Amendment to Credit Agreement and First Amendment to Borrower Pledge Agreement
dated as of October 20, 1995 and as such agreement may be further amended,
amended and restated, supplemented or otherwise modified from time to time.
"Borrower Security Agreement" means the Security Agreement dated as
of April 15, 1992 by and between Borrower and Collateral Agent, a copy of which
is attached as Exhibit X hereto, as amended by that certain First Amendment to
Borrower Security Agreement dated as of November 15, 1996 and as such agreement
may be further amended, amended and restated, supplemented or otherwise modified
from time to time.
"Borrower Security Agreements" means any or all of the Borrower
Security Agreement, the Borrower Pledge Agreement and the Mortgages.
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"Borrowing Base" means, as at any date of determination, the sum of
(i) 60% of Eligible Inventory and (ii) 85% of Eligible Accounts Receivable.
"Borrowing Base Certificate" means a certificate substantially in
the form of Exhibit VIII annexed hereto delivered to Administrative Agent and
Lenders by Borrower pursuant to subsection 5.1(iv).
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which either
is a legal holiday under the laws of the State of New York, the State of Georgia
or the State of California or is a day on which banking institutions located in
any such state are authorized or required by law or other governmental action to
close, and (ii) with respect to all notices, determinations, fundings and
payments in connection with the Eurodollar Rate, any day that is a Business Day
described in clause (i) and that is also a day for trading by and between banks
in Dollar deposits in the applicable interbank Eurodollar market.
"CAGUASA" means Carrocerias Assemblajadores Guatemalteca, SA, a
corporation organized under the federal laws of Guatemala.
"Canadian Blue Bird" means Canadian Blue Bird Coach, Ltd., a
corporation organized under the laws of Ontario, Canada.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" means, with respect to any Person, any capital
stock, partnership, limited liability company or joint venture interests of such
Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights, warrants or options to
purchase any of the foregoing.
"Cash Equivalents" means (i) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's or Moody's Investors Service, Inc.; and (iii)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any commercial bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia having combined capital and surplus of not less than $500,000,000 or by
any Lender.
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"Cash Proceeds" means, with respect to any Asset Sale or any
issuance or sale of equity or debt securities, cash payments (including cash
received by way of deferred payment pursuant to, or monetization of, a note
receivable or otherwise, but only as and when so received) received from such
Asset Sale or such issuance or sale of equity or debt securities.
"Certificate of Exemption" has the meaning assigned to that term in
subsection 2.10B.
"Class" means, as applied to Lenders, each of the following three
classes of Lenders: (i) Lenders having Tranche A Term Loan Exposure, (ii)
Lenders having Tranche B Term Loan Exposure and (iii) Lenders having Working
Capital Loan Commitments.
"Closing Date" means the Closing Date under and as defined in the
Existing Credit Agreement.
"Collateral" means all the real, personal and mixed property made
subject to a Lien pursuant to the Collateral Documents.
"Collateral Agent" means Bankers, in its capacity as collateral
agent under subsection 9.6, the Intercreditor Agreements and the Collateral
Documents or any successor collateral agent.
"Collateral Documents" means the Borrower Security Agreements, the
Holding Pledge Agreement, the Holding Security Agreement, the Acknowledgement
and Confirmation and all other instruments or documents now or hereafter
granting Liens on property of Holding or any of its Subsidiaries to Collateral
Agent, for the benefit of Administrative Agent and Lenders.
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by Borrower in
the ordinary course of business.
"Commitment Letter" means that certain letter executed by Borrower,
Holding, Bankers, MLCC and Merrill Lynch dated October 8, 1996 regarding the
commitments to lend set forth in this Agreement.
"Commitments" means the commitments of Lenders as set forth in
subsections 2.1A, 2.2A, 2.2B and 2.9C.
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"Compliance Certificate" means a certificate substantially in the
form annexed hereto as Exhibit XVII delivered to Administrative Agent and
Lenders by Holding and Borrower pursuant to subsection 5.1(v).
"Consolidated Capital Expenditures" means, for any period, the
aggregate of all expenditures (whether in cash or accrued as liabilities) by
Holding and its Subsidiaries during such period that, in conformity with GAAP,
are included or required to be included in the property, plant or equipment
reflected in the consolidated balance sheet of Holding and its Subsidiaries.
"Consolidated Cash Interest Expense" means, for any period,
Consolidated Interest Expense minus any amounts which are not payable in cash
(including amortization of discount).
"Consolidated EBITDA" means, for any period, the sum (without
duplication) of (i) Consolidated Net Income, (ii) provisions for taxes based on
income, (iii) Consolidated Interest Expense, (iv) to the extent Consolidated Net
Income has been reduced thereby, amortization expense, depreciation expense and
other non-cash expenses, (v) losses on Asset Sales, (vi) other non-cash items
reducing Consolidated Net Income (excluding write-offs of inventory and accounts
receivable), and (vii) to the extent Consolidated Net Income has been reduced
thereby, all transaction costs and other items (whether Cash or non-cash and
including all compensation to members of the Management Group) related to the
Refinancing less the sum (without duplication) of (x) gains on Asset Sales, (y)
other non-cash items increasing Consolidated Net Income, and (z) to the extent
Consolidated Net Income has been increased thereby, all transaction costs and
other items (whether Cash or non-cash and including all compensation to members
of the Management Group) related to the Refinancing, all as determined on a
consolidated basis for Holding and its Subsidiaries in conformity with GAAP;
provided further that, for purposes of determining compliance with the
provisions of subsections 6.6A, 6.6B and 6.6C, the Indebtedness and interest
income of BB Capital shall be excluded.
"Consolidated Excess Cash Flow" means, for any period, an amount
equal to Consolidated EBITDA plus the sum of (a) decreases in Consolidated
Working Capital during such period and (b) to the extent not otherwise reflected
in Consolidated Working Capital, decreases in Investments in lease receivables
permitted pursuant to subsection 6.3(viii) hereof minus the sum of (i)
Consolidated Cash Interest Expense, (ii) Consolidated Capital Expenditures
actually made in cash (net of any proceeds of any related financing with respect
to such capital expenditures or of proceeds of Asset Sales which proceeds are
used to acquire other productive assets in accordance with subsection
2.5A(ii)(a)), (iii) voluntary and scheduled repayments and purchases of Funded
Debt of Borrower (excluding repayments of Working Capital Loans, except to the
extent the Working Capital Loan Commitment is permanently reduced concurrently
with such repayments) actually paid, (iv) taxes based on income actually paid by
Holding and its Subsidiaries, (v) increases in Consolidated Working
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Capital during such period and (vi) to the extent not otherwise reflected in
Consolidated Working Capital, increases in Investments in lease receivables
permitted pursuant to subsection 6.3(viii); provided, however, that, to the
extent included above, cash flow from Canadian operations in an aggregate amount
not to exceed $5,000,000 shall be excluded from the calculation of Consolidated
Excess Cash Flow.
"Consolidated Interest Expense" means, for any period, interest
expense with respect to all outstanding Indebtedness (including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit) of Holding and its Subsidiaries (other than BB
Capital) for such period determined on a consolidated basis in conformity with
GAAP; provided that Consolidated Interest Expense shall not include any
Transaction Costs and amortization thereof.
"Consolidated Liabilities" means, as at any date of determination,
the total liabilities of Holding and its Subsidiaries on a consolidated basis
determined in accordance with GAAP (including, without limitation, (i) any
balance sheet liability with respect to a Pension Plan recognized pursuant to
Financial Accounting Standards Board Statements 87 or 88, and (ii) any
withdrawal liability under Section 4201 of ERISA with respect to a withdrawal
from a Multiemployer Plan, as such liability may be set forth in a notice of
withdrawal liability under Section 4219 of ERISA, and as adjusted from time to
time subsequent to the date of such notice).
"Consolidated Net Income" means, for any period, the net income (or
loss) of Holding and its Subsidiaries, after provisions for taxes, on a
consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP; provided that there shall be excluded (i)
the income (or loss) of any Person (other than a Subsidiary of Holding), except
to the extent of the amount of dividends or other distributions actually paid to
Holding or any of its Subsidiaries by such Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date it becomes a Subsidiary
of Holding or is merged into or consolidated with Holding or any of its
Subsidiaries or that Person's assets are acquired by Holding or any of its
Subsidiaries, and (iii) the income of any Subsidiary of Holding (other than
Borrower) to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary.
"Consolidated Net Worth" means, as at any date of determination, the
sum of (i) the capital stock (including without limitation all redeemable common
stock held by members of the Management Group) plus (ii) additional paid-in
capital plus (iii) retained earnings (or minus accumulated deficit).
"Consolidated Working Capital" means, as of any date of
determination, on a consolidated basis, the average for the preceding thirty
(30) days of current assets (net of
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any related reserves) of Holding and its Subsidiaries, after excluding therefrom
cash and Cash Equivalents, minus the average for the preceding thirty (30) days
of current liabilities of Holding and its Subsidiaries, after excluding
therefrom the current portion of Funded Debt.
"Contingent Obligation", as applied to any Person, means, without
duplication, any direct or indirect liability, contingent or otherwise, of that
Person (i) with respect to any indebtedness, lease, dividend or other obligation
of another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation
of another that such obligation of another will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part) against loss in respect
thereof or (ii) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of
drawings. Contingent Obligations shall include, without limitation, (a) the
direct or indirect guaranty, endorsement (other than for collection or deposit
in the ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of another, (b) any Interest
Rate Agreement, (c) any Currency Agreement and (d) any liability of such Person
for the obligations of another through any agreement (contingent or otherwise)
(x) to purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise), (y) to maintain the solvency or any balance sheet item, level of
income or financial condition of another, or (z) to make take-or-pay or similar
payments if required regardless of non-performance by any other party or parties
to an agreement, if in the case of any agreement described under subclauses (x)
or (y) of this sentence the primary purpose or intent thereof is as described in
the preceding sentence. The amount of any Contingent Obligation shall be equal
to the amount of the obligation to the extent so guaranteed or otherwise
supported.
"Contractual Obligation", as applied to any Person, means any
provision of any security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any material amount of its
properties is bound or to which it or any material amount of its properties is
subject.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement designed to protect Holding or any of its
Subsidiaries against fluctuations in currency values.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
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"Distribution" means, collectively, the dividend by Borrower to
Holding in the aggregate amount of not to exceed $202,000,000 and the dividend
by Holding to the holders of Holding Common Stock and related payments to
holders of options to purchase Holding Common Stock on the Restatement Effective
Date in the aggregate amount not to exceed $202,000,000.
"Dollars" and the sign "$" means the lawful money of the United
States of America.
"Eligible Accounts Receivable" means, as at any date of
determination, the aggregate dollar value of all Accounts Receivable; provided,
however, that unless otherwise agreed by Administrative Agent, the following
Accounts Receivable are not Eligible Accounts Receivable:
(i) Accounts Receivable which, at the date of issuance of the
respective invoice therefor, were payable more than sixty (60) days after
the date of issuance of such invoice;
(ii) Accounts Receivable which remain unpaid for more than sixty
(60) days after the due date specified in the original invoice or for more
than one hundred and twenty (120) days after invoice date if no due date
was specified;
(iii) Accounts Receivable due from a customer whose principal place
of business is located outside the United States of America unless such
Account Receivable is backed by a letter of credit issued or confirmed by
a bank that is organized under the laws of the United States of America or
a State thereof and has capital and surplus in excess of $250,000,000;
provided that such letter of credit has been delivered to Collateral Agent
as additional collateral under the Collateral Documents; provided,
further, that upon the receipt by Collateral Agent, Administrative Agent
and Lenders of a legal opinion satisfactory in form and substance to
Collateral Agent from Borrower's Canadian counsel regarding the perfection
under Canadian law of the security interest granted in favor of Collateral
Agent pursuant to the Borrower Security Agreement and such other related
matters as Collateral Agent may request, Accounts Receivable due from a
customer whose principal place of business is located in the province of
Ontario, Canada shall not be excluded pursuant to this clause (iii);
(iv) Accounts Receivable with respect to which the customer is the
United States of America or any department, agency or instrumentality
thereof unless, with respect to such Accounts Receivable, the Federal
Assignment of Claims Act (31 U.S.C. Section 3727) has been complied with;
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(v) Accounts Receivable with respect to which the customer is an
Affiliate of Borrower or a director, officer, agent, stockholder or
employee of Borrower or any of its Affiliates, other than Accounts
Receivable resulting from arms-length transactions in the ordinary course
of business with other companies managed by MLCP which satisfy the
requirements set forth in subsection 6.10 and, during the months of July,
August and September, accounts receivable (net of all related credits,
rebates, offsets and commissions) resulting from arms-length transactions
with BB Capital in the ordinary course of Borrower's business; provided
that such Accounts Receivable are not subject to the LaSalle Subordination
Agreement;
(vi) Accounts Receivable due from a customer if more than
twenty-five percent (25%) of the aggregate amount of Accounts of such
customer have at the time remained unpaid for more than ninety (90) days
after invoice date or sixty (60) days after the due date specified in the
original invoice;
(vii) Accounts Receivable evidenced by an instrument (as defined in
Article 9 of the UCC) not in the possession of Collateral Agent;
(viii) Accounts Receivable with respect to which Collateral Agent
does not have a valid, first priority and fully perfected security
interest and Accounts subject to any Lien except those in favor of
Collateral Agent and Permitted Encumbrances junior to the Liens in favor
of Collateral Agent;
(ix) Accounts Receivable with respect to which the customer is the
subject of any bankruptcy or other insolvency proceeding;
(x) Accounts Receivable due from a customer to the extent that such
Accounts Receivable exceed in the aggregate an amount equal to twenty-five
percent (25%) of the aggregate of all Accounts Receivable at said date;
(xi) Accounts Receivable with respect to which the customer's
obligation to pay is conditional or subject to a repurchase obligation or
contractual right to return, including bill and hold sales, guaranteed
sales, sale or return transactions, sales on approvals or consignment
sales;
(xii) Accounts Receivable with respect to which there is any
unresolved dispute with the respective customer (but only to the extent of
such dispute);
(xiii) Accounts Receivable with respect to which the customer is
located in New Jersey, Minnesota or any other state denying creditors
access to its courts in the absence of a Notice of Business Activities
Report or other similar filing, unless Borrower has either qualified as a
foreign corporation authorized to transact business
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in such state or has filed a Notice of Business Activities Report or
similar filing with the applicable state agency for the then current
year; and
(xiv) Accounts Receivable which Administrative Agent determines in
its reasonable discretion to be unacceptable for borrowing purposes.
"Eligible Assignee" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act) which extends credit or buys loans as
one of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies; and (B) any Lender and any Affiliate of any
Lender; provided that no Affiliate of Holding or Borrower shall be an Eligible
Assignee.
"Eligible Inventory" means as at any date of determination, the
value (determined at the lower of cost or market on a first-in, first-out basis)
of all Inventory (including work-in-process Inventory) owned by and in the
possession of Borrower and located in the United States of America or the
province of Ontario, Canada; provided, however that unless otherwise agreed by
Administrative Agent, the following Inventory is not Eligible Inventory:
(i) finished goods which do not meet specifications of the purchase
order for such goods in any material respect;
(ii) Inventory with respect to which Collateral Agent does not have
a valid, first priority and fully perfected security interest;
(iii) Inventory with respect to which there exists any Lien in favor
of any Person other than Collateral Agent, except Permitted Encumbrances
junior to the Liens in favor of Collateral Agent;
(iv) Inventory produced in violation of the Fair Labor Standards Act
or subject to the so-called "hot goods" provisions contained in Title 29
U.S.C. 215(a)(i); and
(v) Inventory which Administrative Agent determines, in the exercise
of reasonable discretion, to be unacceptable for borrowing purposes;
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provided, further, that no Inventory located in the province of Ontario, Canada
shall be included in Eligible Inventory until after the receipt by Collateral
Agent, Administrative Agent and Lenders of a legal opinion satisfactory in form
and substance to Collateral Agent from Borrower's Canadian counsel regarding the
perfection under Canadian law of the security interest granted in favor of
Collateral Agent pursuant to the Borrower Security Agreement and such other
related matters as Collateral Agent may request.
"Employee Benefit Plan" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was maintained or contributed to Holding or
any of its ERISA Affiliates other than a Multiemployer Plan.
"Environmental Claim" means any written notice of violation, claim,
demand or other order or direction (conditional or otherwise) by any
governmental authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to the
environment, nuisance, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, resulting from or based
upon (i) the existence, or the continuation of the existence, of a Release
(whether sudden or non-sudden or accidental or non-accidental), of, or exposure
to, any Hazardous Material, in, into or onto the environment at, in, by, from or
related to any Facility, (ii) the transportation, storage, treatment or disposal
of Hazardous Materials in connection with the operation of any Facility, or
(iii) the violation, or alleged violation, of any statutes, ordinances, orders,
rules, regulations, permits or licenses of or from any governmental authority,
agency or court relating to Hazardous Materials with respect to the Facilities.
"Environmental Indemnity" means that certain Environmental Indemnity
dated as of April 15, 1992 executed and delivered by Borrower and Holding, a
copy of which is attached as Exhibit XIV hereto, as it may be amended, amended
and restated, supplemented or otherwise modified from time to time.
"Environmental Laws" means all laws relating to fines, orders,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened Release of Hazardous
Materials and to the generation, storage, transportation, or disposal of
Hazardous Materials, in any manner applicable to Holding or any of its
Subsidiaries or any or their respective properties, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. ss. 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water Pollution Control
Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C. ss. 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et seq.), the
Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) and the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. ss. 11001 et seq.), each as
amended or supplemented, and any analogous future or present local, state and
federal statutes and regulations promulgated pursuant thereto, each as in effect
as the date of determination.
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"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute.
"ERISA Affiliate", as applied to any Person, means (i) any
corporation which is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Internal Revenue Code of which that Person is a
member; (ii) any trade or business (whether or not incorporated) which is a
member of a group of trade or businesses under common control within the meaning
of Section 414(c) of the Internal Revenue Code of which that Person is a member;
and (iii) any member of an affiliated service group within the meaning of
Section 414(m) or (o) of the Internal Revenue Code of which that Person, any
corporation described in clause (i) above or any trade or business described in
clause (ii) above is a member.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan which is not subject to the provision for waiver of the 30-day
notice requirement to the PBGC; (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make on its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension
Plan which would result in the imposition of a Lien under Section 412(n) of the
Code if "$750,000" were substituted for "$1,000,000" in Section 412(n) of the
Code or the failure to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan pursuant to Section
4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the withdrawal by
Holding or any of its ERISA Affiliates from any Pension Plan with two or more
contributing sponsors or the termination of any such Pension Plan resulting in
liability pursuant to Sections 4063 or 4064 or ERISA; (v) the institution by the
PBGC of proceedings to terminate any Pension Plan, or the occurrence of any
event or condition which might constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of liability on Holding or any of its ERISA Affiliates
pursuant to Sections 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of Holding or any of its ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by Holding or any of its ERISA Affiliates of
notice from any Multiemployer Plan that it is in reorganization or insolvency
pursuant to Sections 4241 or 4245 of ERISA, or that it intends to terminate or
has terminated under Sections 4041A or 4042 of ERISA; (viii) the occurrence of
an act or omission which could give rise to the imposition on Holding or any of
its ERISA Affiliates of any material fines, penalties, taxes or related charges
under Chapter 43 of the Internal Revenue Code or under Sections 409, 502(c), (i)
or (l) or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a
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Multiemployer Plan or the assets thereof, or against Holding or any of its ERISA
Affiliates in connection with any such plan which could reasonably be expected
to be successful; or (x) receipt from the IRS of notice of the failure of any
Pension Plan to qualify under Section 401(a) of the Internal Revenue Code, or
the failure of any trust forming part of any Pension Plan to fail to qualify for
exemption from taxation under Section 401(a) of the Internal Revenue Code if the
resulting fines, penalties and related charges could reasonably be expected to
be material; or (xi) the imposition of a Lien pursuant to Sections 401(a)(29) or
412(n) of the Internal Revenue Code or pursuant to ERISA; provided that any
event described in the foregoing clauses shall not be an ERISA Event if Holding
and/or its Subsidiaries are (or would be) liable for any potential liability
resulting from such event solely because of their affiliation with an ERISA
Affiliate (excluding Holding and all Subsidiaries) and (i) such events,
individually or in the aggregate, result in or could reasonably be expected to
result in liability (including joint and several liability) of Holding and its
Subsidiaries of less than $1,000,000, or (ii) neither Holding nor any Subsidiary
could reasonably be expected to be liable (either individually or on a joint and
several basis) for any potential liability resulting from such event, provided
further that any event described in the foregoing proviso shall be an ERISA
Event if the PBGC or any other governmental authority notifies Holding or one of
its Subsidiaries that Holding or one of its Subsidiaries is liable for any
potential liability resulting from such event.
"Estimated Net Cash Proceeds" means, with respect to any Asset Sale,
an amount equal to the amount estimated in good faith by Borrower to be the Net
Cash Proceeds of Asset Sale (excluding any deferred payment to be received
pursuant to a note receivable or otherwise).
"Eurodollar Rate" means, for any Interest Rate Determination Date,
the arithmetic average (rounded upwards, if necessary, to the nearest 1/16 of
1%) of the offered quotation, if any, to first class banks in the Eurodollar
market by each Reference Bank for Dollar deposits of amounts in immediately
available funds comparable to the principal amount of the Eurodollar Rate Loan
of such Reference Bank for which the Eurodollar Rate is being determined with
maturities comparable to the Interest Period for which such Eurodollar Rate will
apply as of approximately 10:00 A.M. (New York time) two (2) Business Days prior
to the commencement of such Interest Period.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Eurodollar Rate as provided in subsection 2.3A.
"Eurodollar Rate Taxes" has the meaning assigned to that term in
subsection 2.7H(i).
"Event of Default" means each of the events set forth in Section 8.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"Existing Credit Agreement" has the meaning assigned to that term in
the Recitals to this Agreement.
"Existing Letters of Credit" means Letters of Credit issued under
and as defined in the Existing Credit Agreement.
"Existing Subordinated Debt Intercreditor Agreement" means that
certain Intercreditor Agreement dated as of April 15, 1992 by and among
Collateral Agent, Administrative Agent and The Chase Manhattan Bank (as
successor to Manufacturers Hanover Trust Company), as trustee under the Existing
Subordinated Indenture, as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time to the extent permitted
herein and therein.
"Existing Subordinated Indenture" means that certain Indenture dated
as of April 15, 1992 by and between Blue Bird Body Company (as successor to BB
Acquisition Corp.), as issuer, Holding, as guarantor, and The Chase Manhattan
Bank (as successor to Manufacturers Hanover Trust Company), as trustee, as such
Indenture has been amended, supplemented or otherwise modified to the date
hereof.
"Existing Subordinated Notes" means the senior subordinated notes
issued pursuant to the Existing Subordinated Indenture.
"Existing Term Loans" means Term Loans under and as defined in the
Existing Credit Agreement.
"Existing Working Capital Loans" means Working Capital Loans under
and as defined in the Existing Credit Agreement.
"Expiry Date" means the earlier of (i) November 19, 2002 and (ii)
the date on which the Term Loans are paid in full.
"Facilities" means, as at any date of determination, any and all
real property (including all buildings, fixtures or other improvements located
thereon) owned, leased or operated by Holding or any of its Subsidiaries as at
such date.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not
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so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by Administrative Agent from three
Federal funds brokers of recognized standing selected by Administrative Agent.
"Fee Collateral" means the real property owned in fee by Holding and
any of its Subsidiaries (other than Blue Bird Mexico) designated as "Fee
Collateral" on Schedule 1.1A annexed hereto.
"Fee Title Policies" has the meaning assigned thereto in subsection
3.1H.
"Final Maturity Date" means November 19, 2003.
"Financial Condition Certificate" means the certificate delivered by
Borrower pursuant to subsection 3.1J and substantially in the form annexed
hereto as Exhibit X.
"First Adjustment Requirements" shall mean the requirements that (i)
the aggregate principal amount of Funded Debt of Holding and its Subsidiaries on
a consolidated basis outstanding is less than $255,000,000 and (ii) the ratio of
Funded Debt of Holding and its Subsidiaries on a consolidated basis to
Consolidated EBITDA for the four consecutive Fiscal Quarter period ending on or
immediately preceding the applicable date of determination is less than 4.0 to
1.0.
"Fiscal Month" means a fiscal month of Holding and its Subsidiaries
as set forth in Schedule 1.1B.
"Fiscal Quarter" means a fiscal quarter of Holding and its
Subsidiaries as set forth in Schedule 1.1B annexed hereto.
"Fiscal Year" means the fiscal year of Holding and its Subsidiaries,
as set forth in Schedule 1.1B annexed hereto.
"Foreign Lender" shall have the meaning assigned that term in
subsection 2.10B.
"Funded Debt", as applied to any Person, means all Indebtedness of
that Person which by its terms or by the terms of any instrument or agreement
related thereto matures more than one year from, or is directly renewable or
extendable at the option of the debtor to a date more than one year from
(including an option of the debtor under a revolving credit or similar agreement
obligating the lender or lenders to extend credit over a period of one year or
more from), the date of the creation thereof; provided however, that, for
purposes of calculating the applicable Interest Rate Adjustment (if any) and
determining compliance with the provisions of subsection 6.6B, the term "Funded
Debt" shall not include any Working Capital Loans or any Indebtedness of BB
Capital.
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"Funding Date" means the date of the funding of a Loan.
"GAAP" means United States 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 may be approved by a significant segment of
the accounting profession, that are applicable to the circumstances as of the
date of determination.
"GM Intercreditor Agreement" means that certain Intercreditor
Agreement dated as of April 15, 1992, by and between General Motors Acceptance
Corporation and Administrative Agent, as such agreement may be amended, amended
and restated, supplemented or otherwise modified from time to time.
"Government Acts" has the meaning assigned thereto in subsection
2.9H.
"Guatemalan Subsidiaries" means Blue Bird Central America and
CAGUASA.
"Hazardous Materials" means (i) any oil, petroleum or petroleum
derived substance, any drilling fluids, produced waters and other wastes
associated with the exploration, development or production of crude oil, any
flammable substances or explosives, any radioactive materials, any hazardous
wastes or substances, any toxic wastes or substances or any other materials or
pollutants which (a) pose a hazard to any property of Holding or any of its
Subsidiaries or to Persons on or about such property or (b) cause such property
to be in violation of any Environmental Laws, (ii) asbestos in any form which is
or could become friable, urea formaldehyde foam insulation, electrical equipment
which contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; (iii) any chemical, material or
substance defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," or "toxic substances" or words of similar import
under any applicable local, state or federal law or under the regulations
adopted or publications promulgated pursuant thereto, including, without
limitation, Environmental Laws, and (iv) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority having jurisdiction over Holding or any of its
Subsidiaries or any of their respective properties.
"Holding" has the meaning set forth in the introductory paragraph to
this Agreement.
"Holding Common Stock" means the common stock of Holding, par value
$.01 per share.
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"Holding Guaranty" means the guaranty of Holding set forth in
Section 7 of this Agreement.
"Holding Pledge Agreement" means that certain Pledge Agreement dated
as of April 15, 1992 between Holding and Collateral Agent, a copy of which is
attached as Exhibit XIII hereto, as such agreement may be amended, amended and
restated, supplemented or otherwise modified from time to time.
"Holding Security Agreement" means that certain Security Agreement
dated as of April 15, 1992 between Holding and Collateral Agent, a copy of which
is attached as Exhibit XII hereto, as such agreement may be amended, amended and
restated, supplemented or otherwise modified from time to time.
"Indebtedness", as applied to any Person, means, without
duplication, (i) all indebtedness for borrowed money whether or not evidenced by
a promissory note, draft or similar instrument, (ii) that portion of obligations
with respect to Capital Leases that is properly classified as a liability on a
balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit, (iv) any obligation owed for all or any part
of the deferred purchase price of property or services, which purchase price is
due more than six months from the date of incurrence of the obligation in
respect thereof, and (v) all indebtedness to the extent secured by any Lien on
any property or asset owned or held by that Person regardless of whether such
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person; provided, however, that all
indebtedness owed to General Motors Acceptance Corporation for purchases of
inventory from General Motors Acceptance Corporation in the ordinary course of
Borrower's business consistent with past practices shall be excluded from this
definition.
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not have, a direct or
indirect financial interest in Borrower and (ii) which, in the judgment of the
board of directors of Borrower, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Intercreditor Agreements" means, collectively, the Existing
Subordinated Debt Intercreditor Agreement, the GM Intercreditor Agreement and
the LaSalle Intercreditor Agreement.
"Interest Payment Date" means with respect to any Eurodollar Rate
Loan the last day of each Interest Period applicable to such Loan; provided that
in the case of each Interest Period in excess of three months, "Interest Payment
Date" shall also mean each Interest Period Anniversary Date for such Interest
Period.
"Interest Period" means any interest period applicable to a Loan as
determined pursuant to subsection 2.3B.
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"Interest Period Anniversary Date" means for each Interest Period
which is in excess of three months, each three-month anniversary of the
commencement of that Interest Period.
"Interest Rate Adjustment" shall mean, as of any date of
determination, (i) 0.25% per annum if the First Adjustment Requirements are
satisfied but the Second Adjustment Requirements are not, (ii) 0.50% per annum
if the Second Adjustment Requirements are satisfied but the Third Adjustment
Requirements are not and (iii) 1.00% if the Third Adjustment Requirements are
satisfied.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Holding or any of its Subsidiaries
against fluctuations in interest rates with respect to the Obligations; provided
that the calculation of payments for early termination shall be made on a
commercially reasonable basis in accordance with industry practice.
"Interest Rate Determination Date" means each date for calculating
the Eurodollar Rate for purposes of determining the interest rate in respect of
an Interest Period. The Interest Rate Determination Date shall be the second
Business Day prior to the first day of the related Interest Period for a
Eurodollar Rate Loan.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter and any successor
statute.
"Inventory" means, on a consolidated basis, all goods, merchandise
and other personal property which are held for sale or lease by Holding and its
Subsidiaries, including those held for display or demonstration or out on lease
or consignment or to be furnished under a contract of service, or are raw
materials, components, work in process or materials used or consumed, or to be
used or consumed in the business of Holding or any of its Subsidiaries.
"Investment", as applied to any Person, means any direct or indirect
purchase or other acquisition by that Person of, or of a beneficial interest in,
stock or other Securities of any other Person, or any direct or indirect loan,
advance (other than advances to employees for moving and travel expenses,
drawing accounts and similar expenditures made in the ordinary course of
business) or capital contribution by that Person to any other Person, including
all indebtedness and accounts receivable from that other Person that are not
current assets or did not arise from sales of goods or services to that other
Person in the ordinary course of business. The amount of any Investment shall be
the original cost of such Investment plus the cost of all additions thereto and
minus the amount of any portion of such Investment repaid to such Person in cash
as a return of capital, but without any other adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.
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"Issuing Lender" means, with respect to any Letter of Credit,
Administrative Agent or any Lender that issues such Letter of Credit, determined
as provided in subsection 2.9; provided that, notwithstanding anything to the
contrary contained herein, any Letter of Credit may be issued by an Affiliate of
Administrative Agent or any Lender; provided, further, that to the extent that a
Letter of Credit is issued by an Affiliate of Administrative Agent or any
Lender, such Person shall, for all purposes under this Agreement, the Loan
Documents and all other instruments and documents referred to herein and therein
be deemed to be the "Issuing Lender" with respect to such Letter of Credit.
"Junior Subordinated Notes" means the junior subordinated notes
issued to members of the Management Group in payment, in whole or in part, for
the repurchase of Holding Common Stock, which form of note shall be satisfactory
in form and substance to Administrative Agent.
"LaSalle Documents" means the LaSalle Loan Agreement, the LaSalle
Note, the LaSalle Pledge Agreement, the LaSalle Subordination Agreement and the
other documents executed in connection therewith.
"LaSalle Loan Agreement" means that certain Loan Agreement dated on
or about October 27, 1995 by and between BB Capital and LaSalle National Bank,
as amended, amended and restated, supplemented or otherwise modified from time
to time to the extent permitted under this Agreement.
"LaSalle Note" means that certain revolving credit note dated on or
about October 27, 1995 executed by BB Capital in favor of LaSalle National Bank,
as amended, amended and restated, supplemented or otherwise modified from time
to time to the extent permitted under this Agreement.
"LaSalle Pledge Agreement" means that certain Pledge Agreement dated
on or about October 27, 1995 by and between BB Borrower and LaSalle National
Bank, as amended, supplemented or otherwise modified from time to time to the
extent permitted under this Agreement.
"LaSalle Subordination Agreement" means that certain Subordination
Agreement dated on or about October 27, 1995 by and between LaSalle National
Bank and Blue Bird Body Company, as amended, amended and restated, supplemented
or otherwise modified from time to time to the extent permitted under this
Agreement.
"Lease Portfolio" means the tax-exempt and taxable lease finance
assets of Borrower in existence from time to time on or after the Restatement
Effective Date.
"Lease Portfolio Documents" means that certain Business Agreement,
those certain Sale and Assignment Agreements and those certain Servicing
Agreements each dated
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as of April 15, 1992, and those certain Sale and Assignment Agreements and
Servicing Agreements executed from time to time pursuant to such Business
Agreement by and between Borrower and LaSalle National Bank pursuant to which
Borrower (i) has sold on a nonrecourse basis the Lease Portfolio in existence on
the Closing Date for cash in an amount which is not less than the par value of
such Lease Portfolio, (ii) will sell to LaSalle National Bank from time to time
some or all of the Lease Portfolio in existence after the Closing Date, and
(iii) has obtained a commitment from LaSalle National Bank to purchase, in
accordance with the terms of the Lease Portfolio Documents, lease receivables
generated by Borrower in connection with the sale of Inventory by Blue Bird, as
such Lease Portfolio Documents may hereafter be amended, amended and restated,
supplemented or otherwise modified from time to time, to the extent permitted
under this Agreement.
"Lender" and "Lenders" have the meanings assigned to such terms in
the introduction to this Agreement; provided that "Lender" and "Lenders" shall
also include the successors and permitted assignees of Lenders pursuant to
subsections 2.9 and 10.2.
"Letter of Credit" means any of the letters of credit issued or to
be issued by Issuing Lenders for the account of Borrower pursuant to subsection
2.9 and for the purposes described in subsection 2.6C.
"Letter of Credit Usage" means, with respect to any Letter of
Credit, as at any date of determination, the sum of (i) the maximum aggregate
amount which is or at any time thereafter may become available for drawing under
such Letter of Credit then outstanding plus (ii) the aggregate amount of all
drawings under such Letter of Credit honored by any Issuing Lender and not
theretofore reimbursed by Borrower.
"Letter of Non-Exemption" has the meaning assigned to that term in
subsection 2.10B.
"Lien" means any lien, mortgage, deed of trust, deed to secure debt,
pledge, security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"Loan" or "Loans" means one or more of the Term Loans, the Working
Capital Loans or Swing Line Loans, or any combination thereof.
"Loan Documents" means this Agreement, the Letters of Credit, the
Holding Guaranty, the Collateral Documents, any Notes issued by Borrower, the
Intercreditor Agreements and the Subsidiary Documents.
"Loan Party" means any of Holding or Borrower and any other
Subsidiary of a Loan Party which is or becomes a party to a Loan Document.
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"Management Documents" means the Subscription Agreement, Management
Stock Option Plan, Performance Option Agreements, Vested Option Agreements, ML
Stock Subscription Agreement and Stockholders' Agreement.
"Management Group" means the members of the management of Holding
and its Subsidiaries set forth on Schedule 3.10D annexed hereto, as such
schedule may be amended or supplemented from time to time.
"Management Stock Option Plan" means that certain Management Stock
Option Plan of Holding dated as of April 15, 1992, as such plan may be amended,
amended and restated, supplemented or otherwise modified from time to time to
the extent permitted herein.
"Margin Stock" has the meaning assigned to that term in Regulations
G and U of the Board of Governors of the Federal Reserve System as in effect
from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, operations, properties, assets, prospects or condition (financial
or otherwise) of Holding and its Subsidiaries taken as a whole or (ii) the
material impairment of the ability of any Loan Party to perform its obligations
under any Loan Document or of Administrative Agent or any Lender to enforce or
collect the Obligations, including the obligation of any Loan Party to perform
its guaranty of the Obligations.
"Merrill Lynch" means Merrill Lynch & Co., a Delaware corporation.
"MLCC" means Merrill Lynch Capital Corporation, a Delaware
corporation.
"MLCP" means Merrill Lynch Capital Partners, Inc., a Delaware
corporation.
"ML Stock Subscription Agreement" means that certain Stock
Subscription Agreement dated as of April 15, 1992 between Holding and the ML
Investors listed in Schedule I thereto, as such agreement may be amended,
amended and restated, supplemented or otherwise modified from time to time to
the extent permitted herein.
"Mortgage" means any or all of the mortgages, deeds of trust, deed
to secure debt, or other security instruments now or hereafter granting Liens on
the real property described in Schedule 1.1A annexed hereto or on any other real
property of Holding or its Subsidiaries to Collateral Agent for the benefit of
Administrative Agent and Lenders, substantially in the form of Exhibit XVIII
annexed hereto, as any such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 3(37) of ERISA to which Holding or any of its ERISA Affiliates is
contributing or ever has
23
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contributed or to which Holding or any of its ERISA Affiliates has, or ever has
had, an obligation to contribute.
"Net Cash Proceeds of Asset Sale" means Cash Proceeds received from
any Asset Sale net of the direct costs relating to such Asset Sale (including,
without limitation, (i) amounts provided as a reserve in accordance with GAAP
against any liabilities associated with such Asset Sale and retained after such
Asset Sale including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to Environmental Laws and liabilities
under any indemnification obligations associated with such Asset Sale; provided,
however, that to the extent any such amount set aside as a reserve is
subsequently decreased or discontinued as a reserve, other than by reason of the
payment of the liability represented thereby, such amounts shall constitute Net
Cash Proceeds of Asset Sale and (ii) legal, accounting and investment banking
fees and sales commissions), taxes actually paid or income taxes reasonably
estimated to be actually payable as a result of such Asset Sale within two years
of the date of the Asset Sale, amounts required to be applied to the repayment
of Indebtedness (other than the Obligations) secured by a Lien on the asset or
assets which are the subject of such Asset Sale and any reserve for adjustment
in respect of the sale price of such asset or assets.
"Notes" means, as the context requires, a Term Note or Notes, a
Working Capital Note or Notes and/or a Swing Line Note.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit III annexed hereto with respect to a proposed conversion or
continuation.
"Notice of Issuance of Letter of Credit" means a notice
substantially in the form of Exhibit II annexed hereto with respect to a
proposed issuance of a Letter of Credit.
"Obligations" means all obligations of every nature of Holding
and/or Borrower and their respective Subsidiaries from time to time owed to
Agents, Lenders, Issuing Lenders or any of them under this Agreement, the Notes
or any of the other Loan Documents or reimbursement obligations with respect to
the Letters of Credit or obligations owed to Administrative Agent or any Lender
under Interest Rate Agreements for principal and interest on the Loans or
reimbursement obligations owed to Administrative Agent or Lenders with respect
to the Letters of Credit and all interest thereon or obligations owed to
Wachovia Bank of Georgia, N.A., under the Reimbursement and Security Agreement
dated as of March 1, 1991, with respect to a standby letter of credit in the
stated amount of $2,942,500, issued with respect to the Development Authority of
Lafayette Tax-Exempt Industrial Revenue Bonds (Blue Bird Body Company Project)
Series 1991 or for fees or expenses, reimbursements and indemnifications and
other amounts due or to become due
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hereunder or thereunder. Time is of the essence in the performance of all
Obligations, except as otherwise expressly provided in this Agreement.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the Board
(if an officer) or its President or one of its Vice Presidents and by its Chief
Financial Officer or its Treasurer or its Controller; provided that any
Officers' Certificate required to be delivered by any Loan Party on the
Restatement Effective Date may be executed on behalf of such Loan Party by any
one of the foregoing officers; and provided, further, that every Officers'
Certificate with respect to the compliance with a condition precedent to the
making of any Loans hereunder shall include (i) a statement that the officer or
officers making or giving such Officers' Certificate have read such condition
and any definitions or other provisions contained in this Agreement and the
other Loan Documents relating thereto, (ii) a statement that, in the opinion of
the signers, they have made or have caused to be made such examination or
investigation as is necessary to enable them to express an informed opinion as
to whether or not such condition has been complied with, and (iii) a statement
as to whether, in the opinion of the signers, such condition has been complied
with.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"Performance Option Agreements" means those certain Performance
Option Agreements between Holding and members of the Management Group, issued
pursuant to the Management Stock Option Plan, as such agreements may be amended,
amended and restated, supplemented or otherwise modified from time to time to
the extent permitted herein.
"Permitted Encumbrances" means the following types of Liens (other
than any Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Code or by
ERISA):
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by subsection 5.3;
(ii) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made
therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of
25
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social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(iv) any attachment or judgment Lien not in excess (either
individually or together with all other attachment or judgment Liens) of
$2,000,000 unless the judgment it secures shall, within 30 days after the
entry thereof, not have been discharged or execution thereof stayed
pending appeal, or shall not have been discharged within 30 days after the
expiration of any such stay, unless such judgment is fully and adequately
covered by insurance and with respect to which the insurer has
acknowledged coverage in writing;
(v) easements, rights-of-way, restrictions, encroachments,
covenants, conditions, licenses, zoning requirements, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of Holding or any of its Subsidiaries;
(vi) any interest or title of a lessor or lessee under any lease
permitted by this Agreement (including any Lien granted by such lessor or
lessee);
(vii) unperfected purchase-money Liens on Inventory incurred in the
ordinary course of business and unperfected Liens on goods for sale on
consignment or a similar basis; and
(viii) Liens in favor of customs and revenue authorities arising as
a matter of law to secure payment of customs duties in connection with the
importation of goods.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability corporations, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, vehicle trusts, business trusts, or other organizations,
whether or not legal entities, and agencies and governments and political
subdivisions thereof.
"Potential Event of Default" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or cure
period.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participation or other equivalents (however designated) of
such Person's preferred or preference stock whether now outstanding, or issued
after the Restatement Effective Date, and including, without limitation, all
classes and series of preferred or preference stock.
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<PAGE>
"Prime Rate" means the rate that Bankers announces from time to time
as its prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers may make commercial loans or other
loans at rates of interest at, above or below the Prime Rate.
"Pro Rata Share" means, (i) with respect to matters relating to a
particular Commitment (including the making or payments of Loans pursuant to
that Commitment) of a Lender, the percentage obtained by dividing (y) such
Commitment of that Lender by (z) all such Commitments of all Lenders and (ii)
with respect to all other matters, the percentage designated as such Lender's
Pro Rata Share set forth opposite the name of such Lender on Schedule 1.1C
annexed hereto; provided that Schedule 1.1C shall be amended and Lenders' Pro
Rata Shares shall be adjusted from time to time to give effect to the addition
of any new Lenders pursuant to the proviso set forth in the definition of
"Lender". The sum of the Pro Rata Shares of all Lenders at any date of
determination shall equal 100%.
"Purchase" means the purchase by Borrower pursuant to the Purchase
Documents of a portion of the Existing Subordinated Notes.
"Purchase Documents" means, collectively, the Tender and Consent
Letters, each dated on or prior to the Restatement Effective Date between
Borrower and the respective holder named therein, and each of the documents and
instruments executed pursuant thereto.
"Reference Banks" means Bankers and Wachovia Bank of Georgia, N.A.
"Refinancing" means the refinancing of the Indebtedness of Borrower
and the consummation of the transactions contemplated hereby, including the
purchase and retirement of certain Existing Subordinated Notes, the issuance of
the Subordinated Notes, the amendment and restatement of the Existing Credit
Agreement pursuant to this Agreement and the Distribution.
"Register" has the meaning assigned to that term in subsection 2.3G.
"Registration Rights Agreement" means that certain Registration
Rights Agreement dated as of November 15, 1996 by and among Holding, Borrower,
Merrill, Lynch, Pierce, Fenner & Smith Incorporated and BT Securities
Corporation, as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time to the extent permitted
herein.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as in effect from time to time.
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<PAGE>
"Related Agreements" means the Lease Portfolio Documents,
Subordinated Debt Documents, the LaSalle Documents, the Tax Allocation
Agreement, the Securitization Documents, Purchase Documents, and Management
Documents.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration in,
by, from or related to any Facility into the indoor or outdoor environment,
including the movement of any Hazardous Material through the air, soil, surface
water, groundwater or property.
"Requisite Class Lenders" means, at any time of determination (i)
for the Class of Lenders having Tranche A Term Loan Exposure, Lenders having or
holding 51% or more of the aggregate Tranche A Term Loan Exposure of all
Lenders, (ii) for the Class of Lenders having Tranche B Term Loan Exposure,
Lenders having or holding 51% or more of the aggregate Tranche B Term Loan
Exposure of all Lenders and (iii) for the Class of Lenders having Working
Capital Loan Commitments, Lenders having or holding 51% or more of the aggregate
Working Capital Loan Commitments of all Lenders.
"Requisite Lenders" means Lenders holding 51% or more of the sum of
(i) the aggregate Working Capital Loan Commitments (or, if such Commitments have
terminated or expired, the Total Utilization of Working Capital Loan
Commitments) plus (ii) the aggregate Tranche A Term Loan Exposure and (iii) the
aggregate Tranche B Term Loan Exposure.
"Restatement Effective Date" means the date on or before December
31, 1996 on which the conditions set forth in subsection 3.1 are satisfied.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of Holding or Borrower now or hereafter outstanding, except a
dividend payable solely in rights to purchase that class of Capital Stock to the
holders of that class, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of stock of Holding or Borrower now or hereafter
outstanding, (iii) any payment or prepayment of principal of, premium, if any,
or interest on, redemption, purchase, repurchase, retirement, defeasance,
sinking fund or similar payment or deposit for payment with respect to, the
Subordinated Debt, and (iv) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Holding, Borrower or any of their Subsidiaries
now or hereafter outstanding.
"Scheduled Tranche A Term Loan Repayment Amount" means, for the last
date of each Fiscal Quarter set forth below, the correlative amount set forth
opposite thereto as adjusted by the operation of the succeeding sentence:
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Scheduled Tranche A
Date Term Loan Repayment Amount
---- --------------------------
Third Fiscal Quarter 1997 $ 3,000,000
Fourth Fiscal Quarter 1997 5,000,000
First Fiscal Quarter 1998 2,000,000
Second Fiscal Quarter 1998 3,000,000
Third Fiscal Quarter 1998 3,000,000
Fourth Fiscal Quarter 1998 4,000,000
First Fiscal Quarter 1999 3,000,000
Second Fiscal Quarter 1999 3,000,000
Third Fiscal Quarter 1999 4,000,000
Fourth Fiscal Quarter 1999 6,000,000
First Fiscal Quarter 2000 4,000,000
Second Fiscal Quarter 2000 4,000,000
Third Fiscal Quarter 2000 5,000,000
Fourth Fiscal Quarter 2000 7,000,000
First Fiscal Quarter 2001 4,000,000
Second Fiscal Quarter 2001 5,000,000
Third Fiscal Quarter 2001 5,000,000
Fourth Fiscal Quarter 2001 8,000,000
First Fiscal Quarter 2002 4,000,000
Second Fiscal Quarter 2002 5,000,000
Third Fiscal Quarter 2002 5,000,000
Fourth Fiscal Quarter 2002 8,000,000
On the date the Tranche A Term Loans are required to be prepaid pursuant to
subsections 2.5A(ii)(a)-(e), the amount required to be prepaid shall be applied
to reduce the amounts of the Scheduled Tranche A Term Loan Repayment Amounts set
forth above (as previously adjusted) for dates occurring after the date of such
prepayment as provided in subsection 2.5A(iii).
"Scheduled Tranche B Term Loan Repayment Amount" means, for the last
date of each Fiscal Quarter set forth below, the correlative amount set forth
opposite thereto as adjusted by the operation of the succeeding sentence:
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<PAGE>
Scheduled Tranche B
Date Term Loan Repayment Amount
---- --------------------------
Third Fiscal Quarter 1997 $ 375,000
Fourth Fiscal Quarter 1997 375,000
First Fiscal Quarter 1998 187,500
Second Fiscal Quarter 1998 187,500
Third Fiscal Quarter 1998 187,500
Fourth Fiscal Quarter 1998 187,500
First Fiscal Quarter 1999 187,500
Second Fiscal Quarter 1999 187,500
Third Fiscal Quarter 1999 187,500
Fourth Fiscal Quarter 1999 187,500
First Fiscal Quarter 2000 187,500
Second Fiscal Quarter 2000 187,500
Third Fiscal Quarter 2000 187,500
Fourth Fiscal Quarter 2000 187,500
First Fiscal Quarter 2001 187,500
Second Fiscal Quarter 2001 187,500
Third Fiscal Quarter 2001 187,500
Fourth Fiscal Quarter 2001 187,500
First Fiscal Quarter 2002 187,500
Second Fiscal Quarter 2002 187,500
Third Fiscal Quarter 2002 187,500
Fourth Fiscal Quarter 2002 187,500
First Fiscal Quarter 2003 17,625,000
Second Fiscal Quarter 2003 17,625,000
Third Fiscal Quarter 2003 17,625,000
Fourth Fiscal Quarter 2003 17,625,000
On the date the Tranche B Term Loans are required to be prepaid pursuant to
subsections 2.5A(ii)(a)-(e), the amount required to be prepaid shall be applied
to reduce the amounts of the Scheduled Tranche B Term Loan Repayment Amounts set
forth above (as previously adjusted) for dates occurring after the date of such
prepayment as provided in subsection 2.5A(iii).
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"Second Adjustment Requirements" shall mean the requirements that
(i) the aggregate principal amount of Funded Debt of Holding and its
Subsidiaries on a consolidated basis outstanding is less than $240,000,000 and
(ii) the ratio of Funded Debt of Holding and its Subsidiaries on a consolidated
basis to Consolidated EBITDA for the four consecutive Fiscal Quarter period
ending on or immediately preceding the applicable date of determination is less
than 3.5 to 1.0.
"Securities" means any stock, shares, voting trust certificates,
bonds, debentures, options, warrants, notes, or other evidences of indebtedness
(other than accounts receivable), secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Securitization Documents" has the meaning assigned to that term in
subsection 6.1(xii).
"Standby Letter of Credit" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) workers'
compensation liabilities of Borrower, (ii) the obligations of Borrower to third
party insurers arising by virtue of the laws of any jurisdiction requiring third
party insurers, (iii) Indebtedness in respect of industrial revenue bonds set
forth on Schedule 6.1 annexed hereto or development bonds or financings, (iv)
obligations with respect to leases, (v) performance, payment, deposit or surety
obligations of Borrower, in any case if required by law or government rule or
regulation or in accordance with custom or practice in the industry, (vi) the
payment of insurance premiums or (vii) reserve or hold back obligations in
respect of lease receivables incurred pursuant to the Lease Portfolio Documents.
"Stockholders' Agreement" means that certain Stockholders' Agreement
dated as of April 15, 1992, among the common stockholders of Holding as such
agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time to the extent permitted herein.
"Subordinated Debt" means collectively, the Existing Subordinated
Notes and the Subordinated Notes.
"Subordinated Debt Documents" means collectively, the Existing
Subordinated Notes, the Existing Subordinated Indenture, the Subordinated
Indenture, the Subordinated Notes, the Registration Rights Agreement and all
other documents and agreements, in form and substance satisfactory to
Administrative Agent and Requisite Lenders, pursuant to which the Subordinated
Debt is issued, as such Subordinated Debt Documents may hereafter be amended,
amended and restated, supplemented or otherwise modified from time to time, to
the extent permitted under this Agreement.
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"Subordinated Indenture" means that certain Indenture dated as of
November 15, 1996 by and among Borrower, as issuer, Holding, as guarantor and
The Chase Manhattan Bank, as the trustee, and/or other agreements or documents
pursuant to which the Subordinated Notes are issued, in form and substance
reasonably satisfactory to Agents and Requisite Lenders.
"Subordinated Notes" means the senior subordinated notes of each
series issued by Borrower pursuant to the Subordinated Indenture.
"Subscription Agreement" means that certain Management Stock
Subscription Agreement dated the Closing Date between Holding and any or all of
the management investors party thereto, as such agreement may be amended,
amended and restated, supplemented or otherwise modified from time to time, to
the extent permitted herein.
"Subsidiary" means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof.
"Subsidiary Documents" means the Subsidiary Note, Subsidiary
Mortgage and Subsidiary Security Agreement.
"Subsidiary Mortgage" means any or all of the mortgages, deeds of
trust or other security instruments now or hereafter granting Liens on any real
property of Canadian Blue Bird in favor of Borrower, in form and substance
satisfactory to Collateral Agent, as any such agreement may be amended, amended
and restated, supplemented or otherwise modified from time to time to the extent
permitted herein.
"Subsidiary Note" means that certain promissory note dated April 15,
1992 executed by Canadian Blue Bird in favor of Borrower, in form and substance
satisfactory to Collateral Agent, as such promissory note may be amended,
amended and restated, supplemented or otherwise modified from time to time to
the extent permitted herein.
"Subsidiary Security Agreement" means that certain security
agreement dated April 15, 1992 by and between Canadian Blue Bird and Borrower,
in form and substance satisfactory to Collateral Agent, as such security
agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time to the extent permitted herein.
"Swing Line Commitment" means the commitment of Administrative Agent
to make Swing Line Loans as set forth in subsection 2.2B.
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"Swing Line Loan" or "Swing Line Loans" means one or more of the
loans (other than Working Capital Loans) made by Administrative Agent to
Borrower pursuant to subsection 2.2B.
"Swing Line Note" means the amended and restated promissory note of
Borrower issued to Administrative Agent pursuant to subsection 2.3H and
substantially in the form of Exhibit VII annexed hereto.
"Syndication Agent" has the meaning assigned to that term in the
introductory paragraph of this Agreement.
"Tax Allocation Agreement" means that certain Income Taxes Agreement
dated on or about October 27, 1995 by and between Borrower and BB Capital, as
amended, supplemented or otherwise modified from time to time to the extent
permitted under this Agreement.
"Term Loan Commitment" or "Term Loan Commitments" means
collectively, the Tranche A Term Loan Commitment and Tranche B Term Loan
Commitment.
"Term Loans" means, collectively, the Tranche A Term Loans and the
Tranche B Term Loans.
"Term Note" means an amended and restated promissory note of
Borrower issued pursuant to subsection 2.3H and substantially in the form of
Exhibit IV annexed hereto.
"Third Adjustment Requirements" shall mean the requirements that (i)
the aggregate principal amount of Funded Debt of Holding and its Subsidiaries on
a consolidated basis outstanding is less than $220,000,000 and (ii) the ratio of
Funded Debt of Holding and its Subsidiaries on a consolidated basis to
Consolidated EBITDA for the four consecutive Fiscal Quarter period ending on or
immediately preceding the applicable date of determination is less than 3.0 to
1.0.
"Total Utilization of Working Capital Loan Commitments" means, as at
any date of determination, the sum of (i) the aggregate principal amount of all
outstanding Working Capital Loans, (ii) the aggregate principal amount of all
outstanding Swing Line Loans and (iii) the Letter of Credit Usage.
"Tranche A Term Loan Commitment" means the commitment of a Lender to
convert its Pro Rata Share of Existing Term Loans to a Tranche A Term Loan and
to make a Tranche A Term Loan to Borrower pursuant to subsection 2.1A(i), and
"Tranche A Term Loan Commitments" means such commitments of all Lenders in the
aggregate.
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"Tranche A Term Loan Exposure" means, with respect to any Lender as
of any date of determination, the outstanding principal amount of the Tranche A
Term Loan of that Lender.
"Tranche A Term Loans" means the Loans converted and made by
Lenders, as applicable, to Borrower pursuant to subsection 2.1A(i).
"Tranche A Term Notes" means (i) the amended and restated promissory
notes of Borrower issued pursuant to subsection 2.1D(i)(a) on the Restatement
Effective Date and (ii) any promissory notes issued by Borrower pursuant to the
last sentence of subsection 10.1B(i) in connection with assignments of the
Tranche A Term Loan Commitments or Tranche A Term Loans of any Lenders, in each
case substantially in the form of Exhibit IV annexed hereto, as they may be
amended, amended and restated, supplemented or otherwise modified from time to
time.
"Tranche B Term Loan Commitment" means the commitment of a Lender to
make a Tranche B Term Loan to Borrower pursuant to subsection 2.1A(ii), and
"Tranche B Term Loan Commitments" means such commitments of all Lenders in the
aggregate.
"Tranche B Term Loan Exposure" means, with respect to any Lender as
of any date of determination, the outstanding principal amount of the Tranche B
Term Loan of that Lender.
"Tranche B Term Loans" means the Loans made by Lenders to Borrower
pursuant to subsection 2.1A(ii).
"Tranche B Term Notes" means (i) the promissory notes of Borrower
issued pursuant to subsection 2.1D(i)(b) on the Restatement Effective Date and
(ii) any promissory notes issued by Borrower pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Tranche B Term Loan
Commitments or Tranche B Term Loans of any Lenders, in each case substantially
in the form of Exhibit V annexed hereto, as they may be amended, amended and
restated, supplemented or otherwise modified from time to time.
"Transaction Costs" means the fees, costs and expenses payable by
Holding or Borrower pursuant hereto and other fees, costs and expenses payable
by Holding or any of its Subsidiaries in connection with the Refinancing.
"Vested Option Agreements" means those certain Vested Option
Agreements between Holding and members of the Management Group, issued pursuant
to the Management Stock Option Plan, as such agreements may be amended, amended
and restated, supplemented or otherwise modified from time to time to the extent
permitted herein.
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"Working Capital Loan Commitment" or means the commitment of a
Lender to make Working Capital Loans as set forth in subsection 2.2A, 2.2B and
2.9C, and "Work Capital Loan Commitments" means such commitments of all Lenders
in the aggregate.
"Working Capital Loans" means the Loans converted or made by Lenders
to Borrower pursuant to subsection 2.2A, the fourth paragraph of subsection 2.2B
and subsection 2.9C.
"Working Capital Notes" means the promissory notes of Borrower
issued pursuant to subsection 2.3H on the Restatement Effective Date and (ii)
any promissory notes issued by Borrower pursuant to the last sentence of
subsection 10.1B(i) in connection with assignments of the Working Capital Loan
Commitments or Working Capital Loans of any Lenders, in each case in
substantially in the form of Exhibit VI annexed hereto, as the case may be
amended, amended and restated, supplemented or otherwise modified from time to
time.
1.2 Accounting Terms; Utilization of GAAP
For purposes of this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with GAAP.
Financial statements and other information required to be delivered pursuant to
subsection 5.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation; provided, that, compliance with covenants shall be
tested in accordance with GAAP as in effect on the Restatement Effective Date;
provided further, that for the purpose of testing compliance with the provisions
of subsection 6.6, BB Capital shall be excluded from all calculations prepared
on a consolidated basis for Holding and its Subsidiaries.
1.3 References; Interpretation
Any reference in this Agreement (i) to a Section, a Schedule or an
Exhibit is a reference to a section hereof, a schedule hereto or an exhibit
hereto, respectively; and (ii) to a subsection or a clause is, unless otherwise
stated, a reference to a subsection or a clause of the Section or subsection in
which the reference appears. In this Agreement the singular includes the plural
and the plural the singular; "hereof," "herein," "hereto," "hereunder" and the
like means and refer to this Agreement as a whole and not merely to the specific
section, paragraph or clause in which the respective word appears. Words
importing any gender include the other genders; references to statutes are to be
construed as including all statutory provisions consolidating, amending or
replacing such statute. References to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible visible form. The
words "including," "includes," and "include" shall be deemed to be followed by
the words "without limitation." References to agreements and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
supplements, assignments and other modifications thereto, but only to the extent
such amendments,
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restatements, supplements, assignments, and other modifications are not
prohibited by the terms of this Agreement. References to Persons include their
respective permitted successors and assigns or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such Persons.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Term Loans
A. Term Loan Commitments.
(i) Tranche A Term Loans. Subject to the terms and conditions
of this Agreement and in reliance upon the representations and warranties herein
set forth, each Lender hereby severally agrees to (i) convert the Existing Term
Loans, if any, of such Lender, outstanding on the Restatement Effective Date to
Tranche A Term Loans and to maintain such converted Existing Term Loans as
Tranche A Term Loans under this Agreement and (ii) lend to Borrower on the
Restatement Effective Date an amount equal to the remainder of (a) such Lender's
Pro Rata Share of the aggregate Tranche A Term Loan Commitments minus (b) the
aggregate amount of Existing Term Loans of such Lender converted into Tranche A
Term Loans pursuant to clause (i) above. The original amount of each Lender's
Tranche A Term Loan Commitment is set forth on Schedule 1.1C annexed hereto and
the aggregate original amount of the Tranche A Term Loan Commitments is
$100,000,000. Borrower may make only one borrowing under the Tranche A Term Loan
Commitments and such borrowing shall be on the Restatement Effective Date.
Amounts borrowed under this subsection 2.1A(i) and repaid may not be reborrowed.
(ii) Tranche B Term Loans. Subject to the terms and conditions
of this Agreement, and in reliance upon the representations and warranties
herein set forth, each Lender hereby severally agrees to lend to Borrower on the
Restatement Effective Date an amount equal to such Lender's Pro Rata Share of
the aggregate Tranche B Term Loan Commitments. The original amount of each
Lender's Tranche B Term Loan Commitment is set forth on Schedule 1.1C annexed
hereto and the aggregate original amount of the Tranche B Term Loan Commitments
is $75,000,000. Borrower may make only one borrowing under the Tranche B Term
Loan Commitments and such borrowing shall be on the Restatement Effective Date.
Amounts borrowed under this subsection 2.1A(ii) and repaid may not be
reborrowed.
B. Notice of Borrowing. Borrower shall deliver to Administrative
Agent a Notice of Borrowing with respect to borrowings under this subsection 2.1
no later than 11:00 A.M. (New York time) one (1) Business Day in advance of the
proposed Funding Date. The Notice of Borrowing shall specify (i) the proposed
Funding Date (which shall be the Restatement Effective Date), (ii) the amount
and type of Loans requested, (iii) whether
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the Loans shall be Base Rate Loan or Eurodollar Rate Loan and (iv) the Interest
Periods requested; provided, however that with respect to Loans to be made on
the Restatement Effective Date, all such Loans shall be made and continued as
Base Rate Loans for at least thirty (30) days after the Restatement Effective
Date unless Administrative Agent otherwise consents in writing. Term Loans may
be continued as Base Rate Loans or converted into Eurodollar Rate Loans in the
manner provided in subsection 2.3D on and after the date thirty (30) days after
the Restatement Effective Date unless Administrative Agent otherwise consents in
writing to the earlier conversion date. In lieu of delivering the above
described Notice of Borrowing, Borrower may give Administrative Agent telephonic
notice by the required time of the proposed borrowing under this subsection 2.1;
provided that such notice shall be promptly confirmed in writing by delivery of
a Notice of Borrowing to Administrative Agent on or prior to the Restatement
Effective Date.
Neither Administrative Agent nor any Lender shall incur any
liability to Borrower in acting upon any telephonic notice referred to above
that Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Borrower or
for otherwise acting in good faith under this subsection 2.1B, and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any telephonic
notice, Borrower shall have effected Loans hereunder.
Except as provided in subsection 2.7D, a Notice of Borrowing for a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Borrower shall be
bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. Except to the extent necessary to give
effect to the conversion of Existing Term Loans and Existing Working Capital
Loans, all Loans under this Agreement shall be made by Lenders simultaneously
and proportionately to their Pro Rata Shares of the Commitments for the
particular type of Loan requested, it being understood that no Lender shall be
responsible for any default by any other Lender in that Lender's obligation to
make a Loan requested hereunder nor shall the Commitment of any Lender to make
the particular type of Loan requested be increased or decreased as a result of
the default by any other Lender in that other Lender's obligation to make a Loan
requested hereunder. Promptly after receipt of the Notice of Borrowing pursuant
to subsection 2.1B (or telephonic notice in lieu thereof), Administrative Agent
shall notify each Lender of the proposed borrowing. Each Lender shall make the
amount of its Loans available to Administrative Agent, in same day funds, at the
office of Administrative Agent located at One Bankers Trust Plaza, New York, New
York (or at any other location designated in writing by Administrative Agent to
Lenders) not later than 11:00 A.M. (New York time) on the Restatement Effective
Date. Upon satisfaction or waiver of the conditions precedent specified in
subsections 3.1 and 3.3, Administrative Agent shall make the proceeds of such
Loans available to Borrower on the Restatement Effective Date by causing an
amount of same day funds equal to the proceeds of all such Loans received by
Administrative Agent at its office
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located at One Bankers Trust Plaza, New York, New York (or at any other
location designated in writing by Administrative Agent to Lenders) to be
credited to the account of Borrower at such office of Administrative Agent.
Unless Administrative Agent shall have been notified by any Lender
prior to the Restatement Effective Date that such Lender does not intend to make
available to Administrative Agent such Lender's Loan requested on the
Restatement Effective Date (which such notice, if so received by Administrative
Agent, shall promptly be communicated to Borrower), Administrative Agent may
assume that such Lender has made such amount available to Administrative Agent
on the Restatement Effective Date and Administrative Agent in its sole
discretion may, but shall not be obligated to, make available to Borrower a
corresponding amount on the Restatement Effective Date. If such corresponding
amount is not in fact made available to Administrative Agent by such Lender and
Administrative Agent makes such corresponding amount available to Borrower,
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from the
Restatement Effective Date until the date such amount is paid to Administrative
Agent, at the customary rate set by Administrative Agent for the correction of
errors among banks for three (3) Business Days and thereafter at the Prime Rate.
If such Lender does not pay such corresponding amount forthwith upon
Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Borrower, and Borrower shall immediately pay such corresponding amount to
Administrative Agent. Nothing in this subsection 2.1C shall be deemed to relieve
any Lender from its obligation to fulfill its Tranche A Term Loan Commitment or
its Tranche B Term Loan Commitment hereunder or to prejudice any rights that
Borrower may have against any Lender as a result of any default by such Lender
hereunder.
D. Scheduled Payments of Term Loans. Borrower shall make a principal
payment (i) in the amount of the applicable Scheduled Tranche A Term Loan
Repayment Amount upon the dates and in the amounts set forth in the definition
of Scheduled Tranche A Term Loan Repayment Amount and (ii) in the amount of the
applicable Scheduled Tranche B Term Loan Repayment Amount upon the dates and in
the amounts set forth in the definition of Scheduled Tranche B Term Loan
Repayment Amount; provided that the Tranche A Term Loans and all other amounts
owed hereunder with respect to the Tranche A Term Loans shall be paid in full no
later than the Expiry Date and the Tranche B Term Loans and all other amounts
owed hereunder with respect to the Tranche B Term Loans shall be paid in full no
later than the Final Maturity Date; provided, further, that if any payment under
this subsection is stated to be due on a day that is not a Business Day,
Borrower may, at Borrower's option and without limiting the provisions contained
in subsection 2.5D, elect to make such payment on the immediately preceding
Business Day.
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2.2 Working Capital Loans and Swing Line Loans
A. Working Capital Loan Commitments. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Borrower herein set forth, each Lender hereby severally agrees to
(i) convert the Existing Working Capital Loans, if any, made by such Lender and
outstanding on the Restatement Effective Date and to maintain such Existing
Working Capital Loans as Working Capital Loans under this Agreement and (ii)
lend to Borrower from time to time during the period from the Restatement
Effective Date to but excluding the Expiry Date Working Capital Loans in an
aggregate amount equal to (a) such Lender's Pro Rata Share of the aggregate
Working Capital Loan Commitments minus (b) the aggregate amount of converted
Existing Working Capital Loans of such Lender converted pursuant to clause (i)
above then outstanding. Each Lender's commitment to convert and make Working
Capital Loans to Borrower pursuant to this subsection 2.2A is herein called its
"Working Capital Loan Commitment" and such commitments of all Lenders in the
aggregate are herein called the "Working Capital Loan Commitments". The original
amount of each Lender's Working Capital Loan Commitment is set forth on Schedule
1.1C annexed hereto and the aggregate initial amount of the Working Capital Loan
Commitments is $80,000,000. Each Lender's Working Capital Loan Commitment shall
expire on the Expiry Date and all Working Capital Loans and all other amounts
owed hereunder with respect to the Working Capital Loans shall be paid in full
no later than that date; provided that each Lender's Working Capital Loan
Commitment shall expire immediately and without further action on the
Restatement Effective Date if the Tranche A Term Loans and Tranche B Term Loans
are not made in the full amount of the Tranche A Term Loan Commitments and
Tranche B Term Loan Commitments, respectively on that date. The amount of the
Working Capital Loan Commitments shall be reduced by the amount of all
reductions thereof made pursuant to subsections 2.5A, 2.5F and 2.5G through the
date of determination. In no event shall the aggregate outstanding principal
amount of the Working Capital Loans from any Lender (whether converted or made
hereunder) at any time exceed its Working Capital Loan Commitment then in
effect.
Subject to subsection 2.7D and except to the extent necessary to
give effect to the conversion of Existing Working Capital Loans, all Working
Capital Loans under this Agreement shall be made by Lenders simultaneously and
proportionately to their Pro Rata Shares, it being understood that no Lender
shall be responsible for any default by any other Lender in that other Lender's
obligation to make Working Capital Loans hereunder nor shall the Working Capital
Loan Commitment of any Lender be increased or decreased as a result of the
default by any other Lender in that other Lender's obligation to make Working
Capital Loans hereunder.
Notwithstanding the foregoing provisions of this subsection 2.2A and
the provisions of subsection 2.2B, the extensions of credit under the Working
Capital Loan Commitments shall be subject to the following limitations in the
amounts and during the periods indicated:
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(i) For thirty (30) consecutive days, at any time, during each
twelve (12) consecutive month period after the Restatement Effective Date
the aggregate principal amount of outstanding Working Capital Loans and
Swing Line Loans shall not exceed $15,000,000;
(ii) The amount otherwise available for borrowing under the Working
Capital Loan Commitments as of any time of determination (other than to
reimburse Issuing Lender for the amount of any drawings under any Letters
of Credit honored by Issuing Lender and not theretofore reimbursed by
Borrower) shall be reduced by (a) Letter of Credit Usage as of such time
of determination plus (b) the aggregate principal amount of all
outstanding Swing Line Loans (other than Swing Line Loans being repaid
with the proceeds of the Working Capital Loans being made) as of such time
of determination;
(iii) At no time shall the Total Utilization of Working Capital Loan
Commitments exceed the aggregate Working Capital Loan Commitments then in
effect;
(iv) In no event shall any Lender's Pro Rata Share of the Total
Utilization of Working Capital Loan Commitments as of any date of
determination exceed its Working Capital Loan Commitment then in effect;
(v) At no time shall the Total Utilization of Working Capital Loan
Commitments exceed the then applicable Borrowing Base.
Working Capital Loans borrowed by Borrower may be repaid and, to but
excluding the Expiry Date, reborrowed. Each Working Capital Loan shall be repaid
not later than thirty-five months after the date such advance was made. Working
Capital Loans made on any Funding Date shall be in an aggregate minimum amount
of $1,000,000 and integral multiples of $500,000 in excess of that amount;
provided, that the amount of Eurodollar Rate Loans made on any Funding Date
shall be in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of that amount.
B. Swing Line Commitment. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of
Borrower set forth herein, Administrative Agent hereby agrees to make a portion
of the Working Capital Loan Commitments available to Borrower from time to time
during the period after the Restatement Effective Date through but excluding the
Expiry Date, in an aggregate principal amount of up to $10,000,000 by making
Swing Line Loans to Borrower, notwithstanding the fact that such Swing Line
Loans, together with Administrative Agent's Pro Rata Share of the Total
Utilization of Working Capital Loan Commitments, may exceed Administrative
Agent's Working Capital Loan Commitment. Administrative Agent's commitment to
make Swing Line Loans to Borrower pursuant to this subsection 2.2B is hereby
called its "Swing Line
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Commitment." In no event shall the aggregate principal amount of Swing Line
Loans outstanding at any time exceed the Swing Line Commitment. In no event
shall the Swing Line Commitment exceed the Working Capital Loan Commitments and
any reduction of the Working Capital Loan Commitments made pursuant to
subsections 2.5A, 2.5F or 2.5G which reduces the Working Capital Loan
Commitments below the then current amount of the Swing Line Commitment shall
result in an automatic corresponding reduction of the Swing Line Commitment to
the amount of the Working Capital Loan Commitments, as so reduced, without any
further action on the part of Administrative Agent.
Administrative Agent's Swing Line Commitment shall expire on the
Expiry Date and all Swing Line Loans shall be paid in full no later than that
date.
Swing Line Loans borrowed by Borrower under this subsection 2.2B may
be repaid and, to but excluding the Expiry Date, reborrowed. Each Swing Line
Loan shall be repaid not later than thirty-five months after the date such
advance was made. All Swing Line Loans shall be Base Rate Loans and bear
interest as provided in subsection 2.3A. Swing Line Loans made on any Funding
Date may be made in any amount, subject to the terms and conditions of this
Agreement.
Administrative Agent, at any time in its sole and absolute
discretion may, on one (1) Business Day's notice, require each Lender, and each
Lender hereby agrees, subject to subsection 2.2A(iv) and this subsection 2.2B,
to make a Working Capital Loan (which shall initially be funded as a Base Rate
Loan) in an amount equal to such Lender's Pro Rata Share of the amount of the
outstanding Swing Line Loans ("Refunded Swing Line Loans") with respect to which
notice is given by Administrative Agent; provided, however, the obligation of
each Lender to make any such Working Capital Loan is subject to the condition
that (i) Administrative Agent believed in good faith that all conditions under
Section 3 to the making of such Swing Line Loan were satisfied at the time such
Swing Line Loan was made, or (ii) such Lender shall have actual knowledge, by
receipt of the statements required pursuant to subsection 5.1 of this Agreement
or otherwise, that any such condition has not been satisfied but shall have
failed to notify Administrative Agent in writing that it has no obligation to
make Working Capital Loans until such condition has been satisfied (any such
notice shall be effective as of the date of receipt by Administrative Agent), or
(iii) the satisfaction of any such condition not satisfied had been waived by
Requisite Lenders prior to or at the time such Swing Line Loan was made. In the
event that Working Capital Loans are made by Lenders under the immediately
preceding sentence, each such Lender shall make the amount of its Working
Capital Loan available to Administrative Agent, in same day funds, at the office
of Administrative Agent located at One Bankers Trust Plaza, New York, New York
(or at any other location designated in writing by Administrative Agent to
Lenders), not later than 12:00 Noon (New York time) on the Business Day next
succeeding the date such notice is given. The proceeds of such Working Capital
Loans shall be immediately delivered to Administrative Agent (and not to
Borrower) and applied to repay the Refunded Swing Line Loans. Borrower
authorizes Administrative Agent to charge
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Borrower's accounts with Administrative Agent (up to the amount available in
each such account) in order to immediately pay Administrative Agent the amount
of such Refunded Swing Line Loans to the extent amounts received from the
Lenders are not sufficient to repay in full such Refunded Swing Line Loans;
provided, however, that such action shall not prejudice any rights which
Borrower may have against any Lender as a result of any default by that Lender
hereunder. If any portion of any such amount paid to Administrative Agent should
be recovered by or on behalf of Borrower from Administrative Agent in
bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of
the amount so recovered shall be ratably shared among all Lenders in the manner
contemplated by subsection 10.6. Subject to the proviso contained in the first
sentence of this paragraph, each Lender's obligation to make the Working Capital
Loans referred to in this paragraph shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any set-off, counterclaim, recoupment, defense or other right which such Lender
may have against Administrative Agent, Borrower or anyone else for any reason
whatsoever; (ii) the occurrence or continuance of an Event of Default or a
Potential Event of Default; (iii) any adverse change in the condition (financial
or otherwise) or prospects of Borrower; (iv) any breach of this Agreement by
Borrower or any other Lender; (v) the acceleration or maturity of any Loans or
the termination of the Working Capital Loan Commitments after the making of any
Swing Line Loan; or (vi) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. A copy of each notice given by
Administrative Agent to Lenders pursuant to this paragraph shall be promptly
delivered by Administrative Agent to Borrower.
In the event that Holding or any of its Subsidiaries has filed for
protection under the Bankruptcy Code or otherwise if Administrative Agent
requests and, in any event subject to satisfaction of the conditions set forth
in the proviso to the first sentence of the preceding paragraph, each Lender
shall acquire without recourse or warranty an undivided participation interest
equal to such Lender's Pro Rata Share of any Swing Line Loan otherwise required
to be repaid by such Lender pursuant to the preceding paragraph by paying to
Administrative Agent on the date on which such Lender would otherwise have been
required to make a Working Capital Loan in respect of such Swing Line Loan
pursuant to the preceding paragraph, in immediately available funds, an amount
equal to such Lender's Pro Rata Share of such Swing Line Loan, and no Working
Capital Loans shall be made by such Lender pursuant to the preceding paragraph.
If such amount is not in fact made available to Administrative Agent by a Lender
on the date when Working Capital Loans would otherwise be required to be made
pursuant to the preceding paragraph, Administrative Agent shall be entitled to
recover such amount on demand from that Lender together with interest accrued
from such date at the customary rate set by Administrative Agent for the
correction of errors among banks for three (3) Business Days and thereafter at
the rate of interest then applicable to Base Rate Loans. From and after the date
on which any Lender purchases an undivided participation interest in a Swing
Line Loan pursuant to this paragraph, Administrative Agent shall promptly
distribute to such Lender such Lender's Pro Rata Share of all payments of
principal and interest in respect of such Swing Line Loan.
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Upon the making of a Working Capital Loan by a Lender pursuant to
this subsection 2.2B, Administrative Agent shall make such entries in the
Register and Lenders shall make entries in their respective internal records as
appropriate in accordance with subsection 2.3G to reflect the funding of such
Working Capital Loan and the associated repayment of any Refunded Swing Line
Loan.
Notwithstanding anything herein to the contrary, Administrative
Agent shall not be obligated to make any Swing Line Loans if it has elected in
its sole discretion not to make Swing Line Loans and has notified Borrower in
writing or by telephone of such election.
C. Notice of Borrowing. Subject to subsection 2.2A and 2.2B,
whenever Borrower desires to borrow under this subsection 2.2, it shall deliver
to Administrative Agent a Notice of Borrowing no later than 11:00 A.M. (New York
time) (i) one (1) Business Day in advance of the proposed Funding Date, in the
case of a requested Base Rate Loan, (ii) three (3) Business Days in advance in
the case of a requested Eurodollar Rate Loan, of the proposed Funding Date and
(iii) on the proposed Funding Date, in the case of a Swing Line Loan. The Notice
of Borrowing shall specify (a) the proposed Funding Date (which shall be a
Business Day), (b) the amount of the proposed Working Capital Loans and the
amount of the proposed Swing Line Loans, (c) in the case of any Working Capital
Loans requested to be made on or within thirty (30) days after the Restatement
Effective Date, that such Working Capital Loans shall initially be Base Rate
Loans, (d) in the case of Working Capital Loans requested to be made after the
date thirty (30) days after the Restatement Effective Date, whether such Working
Capital Loans are initially to consist of Base Rate Loans or Eurodollar Rate
Loans or a combination thereof, (e) if such Working Capital Loans, or any
portion thereof, are initially to be Eurodollar Rate Loans, the amounts thereof
and the initial Interest Periods therefor, (f) that after giving effect to the
proposed borrowing, the Total Utilization of Working Capital Loan Commitments
will not exceed the aggregate Working Capital Loan Commitments in effect on the
proposed Funding Date, (g) if a Swing Line Loan is requested, that the aggregate
principal amount of outstanding Swing Line Loans will not exceed the Swing Line
Commitment then in effect, and (h) after giving effect to the proposed
borrowing, the Total Utilization of Working Capital Loan Commitments will not
exceed the then applicable Borrowing Base.
Working Capital Loans may be continued as or converted into Base
Rate Loans and Eurodollar Rate Loans in the manner provided in subsection 2.3D;
provided that unless Administrative Agent otherwise consents in writing, the
Working Capital Loans made during the period from and including the Restatement
Effective Date until the date thirty (30) days after the Restatement Effective
Date may not be converted until thirty (30) days after the Restatement Effective
Date. In lieu of delivering the above-described Notice of Borrowing, Borrower
may give Administrative Agent telephonic notice by the required time of any
proposed borrowing of Working Capital Loans under this subsection 2.2; provided
that such notice shall be promptly confirmed in writing by delivery of a Notice
of Borrowing to
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Administrative Agent on or prior to the Funding Date of the requested Working
Capital Loans.
Neither Administrative Agent nor any Lender shall incur any
liability to Borrower in acting upon any telephonic notice referred to above
that Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Borrower or
for otherwise acting in good faith under this subsection 2.2C and upon funding
of Loans by Lenders in accordance with this Agreement pursuant to any such
telephonic notice, Borrower shall have effected Loans hereunder.
Except as provided in subsection 2.7D, a Notice of Borrowing for a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Borrower shall be
bound to make a borrowing in accordance therewith.
D. Disbursement of Funds. Promptly after receipt of a Notice of
Borrowing (or telephonic notice thereof), Administrative Agent shall notify
Bankers of the proposed borrowing if the Loan to be made pursuant to such
proposed borrowing will be a Swing Line Loan and, if the proposed borrowing will
be a Working Capital Loan, Administrative Agent shall notify each Lender of the
proposed borrowing. Each Lender shall make the amount of its Working Capital
Loan available to Administrative Agent, in same day funds, at the office of
Administrative Agent located at One Bankers Trust Plaza, New York, New York (or
at any other location designated in writing by Administrative Agent to Lenders)
not later than 12:00 Noon (New York time) on the Funding Date. Upon satisfaction
or waiver of the conditions precedent specified in subsections 3.2 (in the case
of Working Capital Loans made on the Restatement Effective Date) and 3.3 (in the
case of all Working Capital Loans), Administrative Agent shall make the proceeds
of such Loans available to Borrower on such Funding Date by causing an amount of
same day funds equal to the proceeds of all such Loans received by
Administrative Agent to be credited to the account of Borrower at such office of
Administrative Agent.
Unless Administrative Agent shall have been notified by any Lender
prior to any Funding Date in respect of any Working Capital Loans that such
Lender does not intend to make available to Administrative Agent such Lender's
Working Capital Loan on such Funding Date (which such notice, if so received by
Administrative Agent, shall promptly be communicated to Borrower),
Administrative Agent may assume that such Lender has made such amount available
to Administrative Agent on such Funding Date and Administrative Agent in its
sole discretion may, but shall not be obligated to, make available to Borrower a
corresponding amount on such Funding Date. If such corresponding amount is not
in fact made available to Administrative Agent by such Lender and Administrative
Agent makes such corresponding amount available to Borrower, Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Funding Date until
the date such amount is paid to
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Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three (3) Business Days and thereafter at
the Prime Rate. If such Lender does not pay such corresponding amount forthwith
upon Administrative Agent's demand therefor, Administrative Agent shall promptly
notify Borrower, and Borrower shall immediately pay such corresponding amount to
Administrative Agent. Nothing in this subsection 2.2D shall be deemed to relieve
any Lender from its obligation to fulfill its Working Capital Loan Commitment
hereunder or to prejudice any rights that Borrower may have against any Lender
as a result of any default by such Lender hereunder.
2.3 Interest on the Loans
A. Rate of Interest. Subject to the provisions of subsections 2.1B,
2.2C, 2.3E and 2.7H, each Tranche A Term Loan, Tranche B Term Loan and Working
Capital Loan shall bear interest on the unpaid principal amount thereof from the
date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Prime Rate or the Adjusted Eurodollar Rate. The
applicable basis for determining the rate of interest shall be selected by
Borrower initially at the time a Notice of Borrowing is given pursuant to
subsection 2.1B or 2.2B, as applicable. The basis for determining the interest
rate with respect to any Tranche A Term Loan, Tranche B Term Loan or Working
Capital Loan may be changed from time to time pursuant to subsection 2.3D. If on
any day a Tranche A Term Loan, Tranche B Term Loan or a Working Capital Loan is
outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the basis for determining the rate of interest, then for that day that Loan
shall bear interest determined by reference to the Prime Rate.
The Loans shall bear interest through maturity as follows:
(i) if a Base Rate Loan, then at a per annum rate equal to the sum
of the Base Rate plus the Applicable Base Rate Margin;
(ii) if a Eurodollar Rate Loan, then at a per annum rate equal to
the sum of the Adjusted Eurodollar Rate plus the Applicable Eurodollar
Rate Margin; and
(iii) if a Swing Line Loan, then at a per annum rate equal to the
sum of the Base Rate plus the Applicable Base Rate Margin minus the
applicable rate payable with respect to commission fees pursuant to
subsection 2.4A;
provided that, with respect to Working Capital Loans, Swing Line Loans and
Tranche A Term Loans, the Applicable Eurodollar Rate Margin and the Applicable
Base Rate Margin shall be decreased by the applicable Interest Rate Adjustment
(if any) for the period commencing on the first day after which Borrower
delivers a Compliance Certificate pursuant to subsection 5.1(v) with respect to
financial statements delivered pursuant to subsection 5.1(ii) demonstrating that
the applicable conditions for an Interest Rate Adjustment have been
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satisfied and ending on the day on which Borrower delivers a Compliance
Certificate demonstrating that such conditions are no longer satisfied or on
which Borrower is required to deliver a Compliance Certificate but fails to
deliver such Compliance Certificate; provided further, notwithstanding anything
to the contrary contained herein, in no event shall a Base Rate Loan bear
interest at a per annum rate less than the Prime Rate or shall a Swing Line Loan
bear interest at a per annum rate less than the Base Rate minus the then current
rate of the commitment fee (as determined in accordance with subsection 2.4A).
B. Interest Periods. In connection with each Eurodollar Rate Loan,
Borrower shall elect an interest period (each an "Interest Period") to be
applicable to such Loan, which Interest Period shall be either a one, two,
three, six or, if available in the sole discretion of Lenders, a nine month
period; provided that:
(i) the initial Interest Period for any Loan shall commence on the
Funding Date of such Loan;
(ii) in the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the day on which the next
preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to part (v) below, end on the last Business Day of
a calendar month;
(v) no Interest Period with respect to any Term Loan or any Working
Capital Loan shall extend beyond the scheduled maturity of such Loan;
(vi) no Interest Period may extend beyond a date on which Borrower
is required to make a scheduled payment of principal of the Loans unless
the aggregate principal amount of Loans that are Base Rate Loans or that
have Interest Periods expiring on or before such date equals or exceeds
the principal amount required to be paid on the Loans on such date;
(vii) the Interest Period for a Loan that is converted pursuant to
subsection 2.7D shall commence on the date of such conversion and shall
expire on the date on
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which the Interest Period for the Loans of the other Lenders that were not
converted expires; and
(viii) there shall be no more than ten (10) Interest Periods
relating to Eurodollar Rate Loans outstanding at any time; and
(ix) no Eurodollar Rate Loan shall have an Interest Period of nine
months unless each Lender shall agree to permit such Interest Period;
provided that a Lender's funding a Eurodollar Rate Loan subsequent to
receipt by such Lender of a Notice of Borrowing indicating that the
applicable Eurodollar Rate Loan shall have an Interest Period of nine
months shall be conclusive evidence of such Lender's agreement.
C. Interest Payments. Subject to subsection 2.3E, interest shall be
payable on the Loans as follows:
(i) interest on each Base Rate Loan shall be payable in arrears on
and to (but not including) each January 31, April 30, July 31 and October
31, commencing with January 31, 1997, upon any prepayment of any such Loan
other than pursuant to subsection 2.5A(i) (to the extent accrued on the
amount being prepaid) and at maturity; provided that in the event any
Swing Line Loans or any Working Capital Loans that are Base Rate Loans are
prepaid pursuant to subsection 2.5A(i), interest accrued on such Swing
Line Loans or Working Capital Loans through the date of such prepayment
shall be payable on the next succeeding Interest Payment Date applicable
to Base Rate Loans (or, if earlier, at final maturity); and
(ii) interest on each Eurodollar Rate Loan shall be payable in
arrears on and to (but not including) each Interest Payment Date
applicable to that Loan, upon any prepayment of that Loan (to the extent
accrued on the amount being prepaid) and at maturity.
D. Conversion or Continuation. Subject to the provisions of
subsection 2.7, Borrower shall have the option to (i) convert at any time all or
any part of (a) outstanding Loans which are Base Rate Loans equal to $5,000,000
and integral multiples of $1,000,000 in excess of that amount and (b)
outstanding Eurodollar Rate Loans equal to $1,000,000 and integral multiples of
$500,000 in excess thereof, from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis, or (ii) upon the expiration of any Interest
Period applicable to a Eurodollar Rate Loan, to continue all or any portion of
such Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess of
that amount as a Eurodollar Rate Loan and the succeeding Interest Period(s) of
such continued Loan shall commence on the last day of the Interest Period of the
Loan to be continued; provided, however, Eurodollar Rate Loans may only be
converted into Loans bearing interest determined by reference to an
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alternative basis on the expiration date of an Interest Period applicable
thereto; and provided, further, that no outstanding Loan may be continued as, or
be converted into, a Eurodollar Rate Loan when any Event of Default or Potential
Event of Default has occurred and is continuing; provided further that the Loans
made on the Restatement Effective Date may not be converted prior to thirty (30)
days after the Restatement Effective Date, unless Administrative Agent otherwise
consents in writing and; provided further that, subject to the provisions of
subsection 2.7, no outstanding Loan may be converted into a Base Rate Loan
during the period from December 15 of any year to, and including, January 15 of
the immediately succeeding year except any Base Rate Loan made pursuant to
subsections 2.2B and 2.9C.
Borrower shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 12:00 Noon (New York time) at least one (1)
Business Day in advance of the proposed conversion/continuation date (in the
case of a conversion to a Base Rate Loan), and at least three (3) Business Days
in advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of
Conversion/Continuation shall certify (i) the proposed conversion/continuation
date (which shall be a Business Day), (ii) the amount of the Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
(iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, the requested Interest Period, and (v) that no Potential Event of Default
or Event of Default has occurred and is continuing or would result from the
proposed conversion/continuation. In lieu of delivering the above-described
Notice of Conversion/Continuation, Borrower may give Administrative Agent
telephonic notice by the required time of any proposed conversion/continuation
under this subsection 2.3D; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Conversion/Continuation to
Administrative Agent on or before the proposed conversion/continuation date.
Neither Administrative Agent nor any Lender shall incur any
liability to Borrower in acting upon any telephonic notice referred to above
that Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Borrower or
for otherwise acting in good faith under this subsection 2.3D and upon
conversion/continuation by Administrative Agent in accordance with this
Agreement, pursuant to any telephonic notice Borrower shall have effected such
conversion or continuation as the case may be, hereunder.
Except as provided in subsection 2.7D, a Notice of
Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate
Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after
the related Interest Rate Determination Date, and Borrower shall be bound to
convert or continue in accordance therewith.
E. Default Rate; Post Maturity Interest. Upon the occurrence of an
Event of Default, the interest rate payable by Borrower with respect to
principal of Loans
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and, to the extent permitted by law, interest payments thereon not paid when
due, shall be increased, effective from and after the date of occurrence of such
Event of Default, to a rate that is two percent (2%) per annum in excess of the
rate otherwise payable under this Agreement (or, in the case of fees and other
amounts due hereunder, at the Prime Rate plus 3.50%); provided that, in the case
of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect
at the time any such increase in interest rate is effective, such Eurodollar
Rate Loans shall thereupon become Base Rate Loans and thereafter bear interest
payable upon demand at a rate which is two percent (2%) per annum in excess of
the interest rate otherwise payable under this Agreement for Base Rate Loans.
The rate provided in this subsection 2.3E shall be reduced by two percent (2%)
per annum to the rate otherwise payable under this Agreement effective upon the
cure pursuant to the terms of this Agreement of all Events of Default giving
rise to the increase provided herein. No waiver of any Event of Default and no
amendment to this Agreement shall operate as a cure of any Event of Default
unless expressly stated in writing in such waiver or amendment. The payment or
acceptance of the increased rate provided by this subsection 2.3E shall not
constitute a waiver of any Event of Default or an amendment to this Agreement or
otherwise prejudice or limit any rights or remedies of Administrative Agent or
any Lender.
F. Computation of Interest. Interest on the Loans shall be computed
on the basis of a 360-day year and the actual number of days elapsed in the
period during which it accrues. In computing interest on any Loan, the date of
the making of such Loan or the first day of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar
Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, shall be included; and the date of payment of such Loan or the expiration
date of an Interest Period applicable to such Loan, or with respect to a Base
Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of
such Base Rate Loan to such Eurodollar Rate Loan, shall be excluded; provided
that if a Loan is repaid on the same day on which it is made, one day's interest
shall be paid on that Loan.
G. Register.
(i) Administrative Agent shall maintain a register (the
"Register") on which it will record the Commitments from time to time of each of
the Lenders (including the Working Capital Loan Commitments), the Loans made by
each of the Lenders (including the Working Capital Loans) and each repayment in
respect of the principal amount of the Loans of each Lender. Any such
recordation shall be conclusive and binding, absent manifest error.
(ii) Each Lender will record on its internal records the
amount of each Loan made by it and each payment in respect thereof. Failure to
make any such recordation, or any error in such recordation, shall not affect
the Obligations of Borrower in respect of such Loans. Any such recordation shall
be conclusive and binding, absent manifest
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error; provided, that in the event of any discrepancy between the Register and a
Lender's internal records, the Register shall be conclusive and binding absent
manifest error.
H. Note Option. Any Lender or Administrative Agent may, by notice to
Administrative Agent and Borrower, request that all or part of the principal
amount of the Borrower's Obligations to such Lender or Administrative Agent in
respect of Term Loans and/or Working Capital Loan Commitments and/or Swing Line
Commitment hereunder be evidenced by a Term Note and/or a Working Capital Note
and/or a Swing Line Note, as applicable. Within three (3) Business Days of
Borrower's receipt of such notice, Borrower shall execute and deliver to
Administrative Agent for delivery to the appropriate Lender or Administrative
Agent a Note or Notes in the principal amount(s) specified in such notice,
payable to the notifying Lender or Administrative Agent or, if so specified in
such notice, any Person who is an assignee of such Lender or Administrative
Agent pursuant to subsection 10.2 hereof.
2.4 Fees
A. Commitment Fee. Borrower agrees to pay to Administrative Agent,
for distribution to each Lender in proportion to that Lender's Pro Rata Share of
the Working Capital Loan Commitments, commitment fees for the period from and
including the Restatement Effective Date to but excluding the Expiry Date equal
to the average of the daily unused portion of the Commitments multiplied by .50%
per annum, such commitment fees to be calculated on the basis of a 360-day year
and the actual number of days elapsed and to be payable in arrears on and to
(but not including) each January 31, April 30, July 31 and October 31,
commencing on the first such date to occur after the Restatement Effective Date,
and upon the termination of the Commitments; provided that the applicable rate
set forth above shall be decreased by .125% per annum for the period commencing
on the day after Borrower delivers a Compliance Certificate pursuant to
subsection 5.1(v) with respect to financial statements delivered pursuant to
subsection 5.1(ii) demonstrating that the Second Adjustment Requirements are
satisfied and ending on the day on which Borrower delivers a Compliance
Certificate demonstrating that such conditions are no longer satisfied or on
which Borrower is required to deliver a Compliance Certificate but fails to
deliver such Compliance Certificate. Anything contained in this Agreement to the
contrary notwithstanding, for purposes of calculating the commitment fees
payable by Borrower pursuant to this subsection 2.4A, the "unused portion of the
Commitments", as of any date of determination, shall be an amount equal to the
aggregate amount of Commitments as of such date minus the aggregate principal
amount of all outstanding Loans (excluding Swing Line Loans) on such date, and
the unused portion of the Commitments shall not be reduced by reason of
outstanding Swing Line Loans, the issuance of Letters of Credit or by any
limitation of the amount available for borrowing thereunder set forth in the
numbered paragraphs of subsection 2.2A.
B. Other Fees. Borrower agrees to pay to Bankers, MLCC and Merrill
Lynch, for their respective accounts, the fees set forth, and upon the terms set
forth, in the
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letter regarding fees dated October 8, 1996 among Borrower, Holding, Bankers,
MLCC and Merrill Lynch.
2.5 Prepayments and Payments; Reductions in Commitments
A. Prepayments.
(i) Voluntary Prepayments of Loans. Borrower may, upon not less than
three (3) Business Days' prior written or telephonic notice confirmed in
writing to Administrative Agent (which notice Administrative Agent will
promptly transmit by telegram, telex or telephone to each Lender, any such
telephonic notice to be promptly confirmed by Administrative Agent in
writing) specifying the Loan or Loans to which such prepayment is to be
applied, at any time and from time to time prepay Term Loans in whole or
in part in an aggregate minimum amount of $1,000,000 and integral
multiples of $1,000,000 in excess of that amount or, if such amount is
less than $1,000,000, in the then remaining amount of the Term Loans, and
prepay Working Capital Loans in an aggregate minimum amount of $500,000
and integral multiples of $500,000 in excess of that amount or, if such
amount is less than $500,000, in the then remaining amount of the Working
Capital Loans; provided, however, that a Eurodollar Rate Loan may only be
prepaid on the expiration date of the Interest Period applicable thereto.
If the notice of prepayment does not specify how such prepayment shall be
applied, it shall be applied first to Base Rate Loans to the full extent
thereof before application to Eurodollar Rate Loans, as determined by
Administrative Agent. Notice of prepayment having been given as aforesaid,
the principal amount of the Loans specified in such notice shall become
due and payable on the prepayment date. Voluntary prepayments of Term
Loans shall be applied as provided in subsection 2.5A(iii).
(ii) Mandatory Prepayments. Borrower shall make the following
prepayments, as applicable:
(a) Prepayments from Asset Sales. Upon receipt by Holding or
any of its Subsidiaries of Cash Proceeds from Asset Sales in excess
of $1,000,000 in the aggregate, measured on a cumulative basis from
the Restatement Effective Date, Borrower shall prepay the Loans in
an amount equal to Estimated Net Cash Proceeds of such Asset Sales
on the date of the receipt of Cash Proceeds of Asset Sale which
causes the aggregate Cash Proceeds from Asset Sales to equal or
exceed $1,000,000 in the manner specified in subsection 2.5A(iii)
and, on the 30th day after receipt of such Cash Proceeds, Borrower
shall make an additional prepayment of the Loans in the manner
specified in subsection 2.5A(iii) in an amount equal to the excess,
if any, of Net Cash Proceeds of Asset Sale over Estimated Net Cash
Proceeds of such Asset Sale; and, within one (1) Business Day of the
receipt of any cash
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payment on any note constituting Net Cash Proceeds of Asset Sale,
Borrower shall prepay the Loans in the manner specified in
subsection 2.5A(iii) in an amount equal to such additional Net Cash
Proceeds of Asset Sale; provided that, nothing in this subsection
2.5A(ii)(a) shall be construed to permit any such sale, financing or
other disposition other than as otherwise expressly permitted by
this Agreement unless otherwise approved by Requisite Lenders in
writing; provided further that, concurrently with the making of any
prepayment pursuant to this subsection 2.5A(ii)(a), Borrower shall
deliver an Officers' Certificate demonstrating the derivation of Net
Cash Proceeds of Asset Sale from the gross sales price of any
correlative Asset Sale. Notwithstanding anything to the contrary
contained in this subsection 2.5A(ii)(a), but provided that no Event
of Default or Potential Event of Default has occurred and is
continuing, in the event any prepayment pursuant to this subsection,
which is applied in accordance with the provisions of subsection
2.5A(iii), would result in the incurrence by Borrower of liability
pursuant to subsection 2.7E(ii), Borrower shall be permitted to
retain and shall not be required to make a prepayment in respect of
that portion of the Cash Proceeds from Asset Sales which would
result in the incurrence of such liability; provided, however, that
Borrower shall, on the last day of each subsequent Interest Period,
make prepayments, in an aggregate amount not to exceed the aggregate
amount of Cash Proceeds from Asset Sales retained by Borrower
pursuant to this sentence, to the extent such prepayments do not
result in the incurrence of liability pursuant to subsection
2.7E(ii).
In the event that Holding or the applicable Subsidiary
reasonably expects the proceeds of a sale of equipment of Holding or
such Subsidiary to be reinvested within 180 days from the receipt of
Cash Proceeds in similar productive assets used or useable in the
business of Holding or such Subsidiary, then Borrower shall either
(y) deliver cash in an amount equal to the Estimated Net Cash
Proceeds of such sale or the portion thereof expected to be
reinvested to Administrative Agent to be held by Administrative
Agent as collateral in accordance with the terms of this paragraph
or (z) prepay Working Capital Loans and reduce the Working Capital
Loan Commitments in accordance with the terms of the immediately
succeeding paragraph. Upon Borrower's request and provided that no
Event of Default has occurred and is continuing, Administrative
Agent shall release such proceeds or a portion thereof to Borrower
for reinvestment as described above. In the event Borrower fails to
reinvest such Cash Proceeds on or prior to the end of the applicable
180-day period, Administrative Agent shall apply such amount as a
prepayment pursuant to this subsection 2.5A(ii)(a) and it shall be
applied in the order set forth in subsection 2.5A(iii).
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In the event that Borrower elects to prepay Working Capital
Loans in accordance with clause (z) of the immediately preceding
paragraph, Borrower shall prepay Working Capital Loans and reduce
the Working Capital Loan Commitments by the amount of the Estimated
Net Cash Proceeds of such sale or the portion thereof expected to be
reinvested; provided, that upon reinvestment in accordance with the
terms of the immediately preceding paragraph, the reduction in the
Working Capital Loan Commitment shall be decreased by the amount of
such reinvestment. In the event Borrower fails to reinvest all of
such Cash Proceeds in accordance with the terms of the immediately
preceding paragraph on or prior to the end of the applicable 180-day
period, the reduction in Working Capital Loan Commitments in the
aggregate amount of such Cash Proceeds not reinvested shall
automatically be permanent and final.
(b) Prepayments from Issuance or Sale of Equity or Debt
Securities. Upon the receipt by Holding or any of its Subsidiaries
of Cash Proceeds of any issuance or sale of equity or debt
securities (other than the Subordinated Notes issued on the
Restatement Effective Date or debt securities issued in connection
with purchase money Indebtedness permitted under subsection
6.1(iii)(z) or sales of Holding Common Stock in the ordinary course
of business to members of management of Borrower) of Holding or any
of its Subsidiaries, Borrower shall make prepayments of the Loans,
in the manner specified in subsection 2.5A(iii), in an aggregate
amount equal to Borrower's reasonable estimate of the aggregate
amount of such Cash Proceeds, net of customary costs of sale and
issuance actually incurred by Holding or the applicable Subsidiary,
consisting of legal, accounting and investment banking fees,
underwriters discount and commissions, registration expenses and
similar expenses and, on the 60th day after the receipt of such Cash
Proceeds shall make an additional prepayment in an amount equal to
the excess, if any, of such Cash Proceeds over the amount of such
estimated Cash Proceeds; provided, that concurrently with the making
of any prepayment pursuant to this subsection, Borrower shall
deliver an Officers' Certificate demonstrating the derivation of the
net Cash Proceeds from the gross Cash Proceeds of any such issuance
or sale; provided, further, that nothing in this subsection shall be
construed to permit any such issuance or sale of debt or equity
securities other than as expressly permitted by this Agreement
unless otherwise approved by Administrative Agent and Requisite
Lenders in writing.
(c) Prepayments from Consolidated Excess Cash Flow. No later
than sixty-five (65) days after the end of each Fiscal Year,
Borrower shall prepay the Loans in an amount equal to 75% of the
Consolidated Excess Cash Flow for such Fiscal Year in the manner
specified in subsection 2.5A(iii).
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(d) Prepayments due to Pension Plan Reversion. Upon the return
to Holding or any of its Subsidiaries of any surplus assets of any
Pension Plan, Borrower shall prepay the Loans in an amount equal to
the value of such returned surplus assets net of transaction costs
(including taxes payable thereon) incurred in obtaining such return
in the manner specified in subsection 2.5A(iii); provided, however,
that Borrower shall have no obligation to seek the return of any
such surplus assets.
(e) Prepayments due to Limitation on Working Capital Loan
Commitments. Borrower shall make prepayments of Working Capital
Loans necessary to give effect to the limitations set forth in
subsection 2.2A.
(iii) Application of Prepayments.
(a) Application by Type of Loans. All prepayments shall
include payment of accrued interest on the principal amount so
prepaid and shall be applied to the payment of interest before
application to principal. With respect to different Loans being
prepaid separately, any prepayment shall be applied first to Base
Rate Loans to the full extent thereof before application to
Eurodollar Rate Loans. Voluntary prepayments pursuant to subsection
2.5A(i) shall be applied (i) first, to the next scheduled principal
payment of the tranche A Term Loans and Tranche B Term Loans, pro
rata based on the applicable Scheduled Tranche A Term Loan Repayment
Amount and Scheduled Tranche B Term Loan Repayment Amount, and (ii)
to the extent of any amount in excess of the amount applied pursuant
to clause (i), to the Tranche A Term Loans and Tranche B Term Loans
(pro rata based on the respective aggregate principal amounts of the
Tranche A Term Loans and Tranche B Term Loans) in order to reduce
the then remaining Scheduled Tranche A Term Loan Repayment Amounts
and Scheduled Tranche B Term Loan Repayment Amounts, as applicable,
in inverse order of maturity. Mandatory prepayments required
pursuant to subsections 2.5A(ii)(a), (b), (c), and (d) shall be
applied first against the Term Loans in accordance with subsection
2.5A(iii)(b) and second to permanently prepay and reduce the Working
Capital Commitments; provided, however, that, with respect to
prepayments pursuant to subsection 2.5A(ii)(a), if the Borrowing
Base is reduced by the applicable Asset Sale, Borrower may, at its
option, permanently reduce the Working Capital Loan Commitment in
any amount up to the amount of the reduction in the Borrowing Base
(and make any prepayments required pursuant to subsection
2.5A(ii)(e) in connection therewith) and shall not be required
to prepay the Term Loans to the amount of such Working Capital Loan
Commitment reduction.
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(b) Application of Prepayments of Term Loans to Tranche A Term
Loans and Tranche B Term Loans. Any mandatory prepayments of the
Term Loans pursuant to subsection 2.5A(ii) shall be applied to
prepay the Tranche A Term Loans and the Tranche B Term Loans on a
pro rata basis in accordance with the respective outstanding
principal amounts thereof; provided that, in the case of any such
mandatory prepayment of the Tranche B Term Loans with respect to
which Borrower has given Administrative Agent written notification,
at least one Business Day prior to Administrative Agent's receipt of
such mandatory prepayment, that Borrower has elected to give Lenders
with Tranche B Term Loans the option to waive their rights to
receive such prepayment (a "Waivable Mandatory Prepayment"),
Administrative Agent shall, upon receipt of such Waivable Mandatory
Prepayment, notify each Lender of such receipt and of the amount of
such Waivable Mandatory Prepayment to be applied to such Lender's
Tranche B Term Loan and of the designation of such Waivable
Mandatory Prepayment as such by Borrower; provided, further that
Borrower shall use its reasonable efforts to notify Lenders of such
Waivable Mandatory Prepayment three Business Days prior to the
payment to Administrative Agent of such Waivable Mandatory
Prepayment (it being understood that Borrower shall have no
liability for failing to so notify Lenders). In the event any Lender
desires to waive such Lender's right to receive such Waivable
Mandatory Prepayment in whole or in part, (A) such Lender shall so
advise Administrative Agent in writing no later than the close of
business on the Business Day immediately following the date such
notice is delivered and such Lender shall specify in writing the
amount of such Waivable Mandatory Prepayment waived by such Lender
and (B) upon receipt of such written advice from such Lender,
Administrative Agent shall (I) apply 75% of the amount so waived by
such Lender to prepay the Tranche A Term Loans and to reduce the
unpaid Scheduled Tranche A Term Loan Repayment Amounts on a pro rata
basis and (II) return the remainder of the amount so waived by such
Lender to Borrower. If any Lender does not reply to Administrative
Agent by the close of business on the Business Day immediately
following delivery of such notice, such Lender will be deemed not to
have waived any part of such repayment and if any Lender does not
specify the amount to be waived, it will be deemed to have accepted
100% of its Waivable Mandatory Prepayment. Any mandatory prepayments
applied to the Tranche A Term Loans or the Tranche B Term Loans in
accordance with the provisions of this subsection 2.4A(iii)(b) shall
be applied to reduce the then remaining Scheduled Tranche A Term
Loan Repayment Amounts or Scheduled Tranche B Term Loan Repayment
Amounts, as the case may be, in inverse order.
B. Manner and Time of Payment. All payments of principal, interest
and fees hereunder and under the Notes by Borrower shall be made without
defense, set-off
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or counterclaim and in same day funds and delivered to Administrative Agent not
later than 12:00 Noon (New York time) on the date due at its office located at
One Bankers Trust Plaza, New York, New York for the account of Lenders; funds
received by Administrative Agent after that time shall be deemed to have been
paid by Borrower on the next succeeding Business Day. Borrower hereby authorizes
Administrative Agent to charge its account with Administrative Agent in order to
cause timely payment to be made to Administrative Agent of all principal,
interest and fees due hereunder (subject to sufficient funds being available in
its account for that purpose).
C. Apportionment of Payments. Aggregate principal and interest
payments shall be apportioned among all outstanding Loans to which such payments
relate, and such payments shall be apportioned ratably to Lenders,
proportionately to Lenders' respective Pro Rata Shares. Administrative Agent
shall promptly distribute to each Lender at its primary address set forth below
its name on the appropriate signature page hereof or such other address as any
Lender may request its share of all such payments received by Administrative
Agent and the commitment fees of such Lender when received by Administrative
Agent pursuant to subsection 2.4A. Any payments received by Administrative Agent
by 12:00 Noon (New York time) on the applicable payment date and not distributed
to Lenders on such payment date shall bear interest, payable by Administrative
Agent, at the federal funds effecive rate, until such payment is distributed to
Lenders as provided in this subsection. Notwithstanding the foregoing provisions
of this subsection 2.5C if, pursuant to the provisions of subsection 2.7D, any
Notice of Borrowing or Notice of Conversion/Continuation is withdrawn as to any
Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its
Pro Rata Share of Eurodollar Rate Loans, Administrative Agent shall give effect
thereto in apportioning payments received thereafter.
D. Payments on Non-Business Days. Subject to the provisions of
subsection 2.1D, whenever any payment to be made hereunder or under the Notes
shall be stated to be due on a day that is not a Business Day, the payment shall
be made on the next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest hereunder or under the
Notes or of the commitment and other fees hereunder, as the case may be;
provided, however, that if the day on which payment relating to a Eurodollar
Rate Loan is due is not a Business Day but is a day of the month after which no
further Business Day occurs in that month, then the due date thereof shall be
the next preceding Business Day.
E. Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting participations
therein), that Lender will make a notation thereon of all Loans and principal
payments previously made thereon and of the date to which interest thereon has
been paid and will notify Borrower and Administrative Agent of the name and
address of the transferee of that Note; provided that the failure to make (or
any error in the making of) a notation of any Loan made under such Notes or to
notify Borrower and Administrative Agent of the name and address of such
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transferee shall not limit or otherwise affect the obligation of any Loan Party
hereunder or under such Notes with respect to any Loan and payments of principal
or interest on any such Note.
F. Voluntary Reductions of Working Capital Loan Commitments.
Borrower shall have the right, at any time and from time to time, to terminate
in whole or permanently reduce in part, without premium or penalty, the Working
Capital Loan Commitments in an amount up to the amount by which the Working
Capital Loan Commitments exceed the Total Utilization of Working Capital Loan
Commitments. Borrower shall give not less than three (3) Business Days' prior
written notice to Administrative Agent designating the date (which shall be a
Business Day) of such termination or reduction and the amount of any partial
reduction. Promptly after receipt of a notice of such termination or partial
reduction, Administrative Agent shall notify each Lender of the proposed
termination or reduction. Such termination or partial reduction of the Working
Capital Loan Commitments, as the case may be, shall be effective on the date
specified in Borrower's notice and shall reduce the relevant Working Capital
Loan Commitment of each Lender proportionately to its Pro Rata Share. Any such
partial reduction of the Working Capital Loan Commitments shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $1,000,000 in
excess of that amount unless the remaining amount of such Commitments is less
than $1,000,000 in which case such reduction shall be in the amount of the then
remaining Commitments.
G. Mandatory Reductions of Working Capital Loan Commitments.
The Working Capital Loan Commitments shall be automatically
and permanently reduced on the date of any prepayment of the Working
Capital Loans pursuant to subsections 2.5(A)(ii)(a), (b), (c) or (d) by an
amount equal to the amount of such prepayment. In the event that Borrower
has received proceeds or earned income which is not required to be used to
prepay Working Capital Loans pursuant to subsections 2.5A(ii)(a), (b), (c)
or (d) because none or an insufficient amount of Working Capital Loans are
then outstanding, then the Working Capital Loan Commitments shall be
reduced by an amount equal to the amount of Working Capital Loans which
would have been required to be prepaid if the Working Capital Loans
outstanding at such time were equal to the Working Capital Loan
Commitments; provided, that if, pursuant to the terms of this subsection,
Borrower is required to reduce the Working Capital Loan Commitments to a
level below the aggregate amount which is or may become available for
drawing under all Letters of Credit then outstanding, Borrower shall
instead deposit an amount equal to the amount by which the amount
available for drawing would exceed the Working Capital Loan Commitments,
if it were so reduced, as collateral for obligations that may become due
with respect to the outstanding Letters of Credit.
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2.6 Use of Proceeds
A. Term Loans. The proceeds of the Term Loans shall be applied by
Borrower, together with other funds, to consummate the Purchase, to fund the
Distribution and to pay Transaction Costs.
B. Working Capital Loans. The proceeds of the Working Capital Loans
shall be applied by Borrower for the general corporate purposes of Borrower,
which may include the reimbursement of Issuing Lender of any amounts drawn under
any Letter of Credit as provided in subsection 2.9C and payment of certain
Transaction Costs.
C. Letters of Credit. The Letters of Credit shall be issued for the
purposes set forth in the definitions of Commercial Letter of Credit and Standby
Letter of Credit and such other general corporate purposes as may, in any
instance, be approved by Administrative Agent and Requisite Lenders.
D. Margin Regulations. No portion of the proceeds of any borrowing
under this Agreement shall be used by Borrower to purchase or carry any Margin
Stock in any manner that might cause the borrowing or the application of such
proceeds to violate Regulation G, Regulation U, Regulation T, or Regulation X of
the Board of Governors of the Federal Reserve System or any other regulation of
the Board or to violate the Exchange Act, in each case as in effect on the date
or dates of such borrowing and such use of proceeds.
2.7 Special Provisions Governing Eurodollar Rate Loans
Notwithstanding any other provision of this Agreement, the following
provisions shall govern with respect to Eurodollar Rate Loans as to the matters
covered:
A. Determination of Interest Rate. As soon as practicable after
10:00 A.M. (New York time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to Borrower and
each Lender.
B. Substituted Rate of Borrowing. If on any Interest Rate
Determination Date any Lender (including Administrative Agent) shall have
determined (which determination shall be final and conclusive and binding upon
all parties but, with respect to the following clauses (i) and (ii)(b), shall be
made only after consultation with Borrower and Administrative Agent) that:
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(i) by reason of any changes arising after the date of this
Agreement affecting the Eurodollar market or affecting the position of
that Lender in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate by reference to the Eurodollar
Rate with respect to the Eurodollar Rate Loans as to which an interest
rate determination is then being made; or
(ii) by reason of (a) any change after the date hereof in any
applicable law or governmental rule, regulation or order (or any
interpretation thereof and including the introduction of any new law or
governmental rule, regulation or order) or (b) other circumstances
affecting that Lender or the Eurodollar market or the position of that
Lender in such market (such as for example, but not limited to, official
reserve requirements required by Regulation D to the extent not given
effect in the Eurodollar Rate), the Eurodollar Rate shall not represent
the effective pricing to that Lender for Dollar deposits of comparable
amounts for the relevant period;
then, and in any such event, that Lender shall be an Affected Lender and it
shall promptly (and in any event as soon as possible after being notified of a
borrowing, conversion or continuation) give notice (by telephone confirmed in
writing) to Borrower and Administrative Agent (which notice Administrative Agent
shall promptly transmit to each other Lender) of such determination. Thereafter,
Borrower shall pay to the Affected Lender, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as the Affected Lender in its sole
discretion shall determine) as shall be required to cause the Affected Lender to
receive interest with respect to its Eurodollar Rate Loans for the Interest
Period following that Interest Rate Determination Date at a rate per annum equal
to the Applicable Eurodollar Rate Margin in excess of the effective pricing to
the Affected Lender for Dollar deposits to make or maintain its Eurodollar Rate
Loans. A certificate as to additional amounts owed the Affected Lender, showing
in reasonable detail the basis for the calculation thereof, submitted in good
faith to Borrower and Administrative Agent by the Affected Lender shall, absent
manifest error, be final and conclusive and binding upon all of the parties
hereto.
C. Required Termination and Prepayment. If on any date any Lender
shall have reasonably determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of its
Eurodollar Rate Loans has become unlawful or impossible by compliance by that
Lender in good faith with any law, governmental rule, regulation or order
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful), then, and in any such event, that Lender shall be
an Affected Lender and it shall promptly give notice (by telephone confirmed in
writing) to Borrower and Administrative Agent (which notice Administrative Agent
shall promptly transmit to each Lender) of that determination.
Subject to the prior withdrawal of a Notice of Borrowing or a Notice of
Conversion/Continuation or prepayment of the Eurodollar Rate Loans of the
Affected Lender as contemplated by the following subsection 2.7D, the obligation
of the Affected Lender to make or maintain its Eurodollar Rate Loans
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during any such period shall be terminated at the earlier of the termination of
the Interest Period then in effect or when required by law and Borrower shall no
later than the termination of the Interest Period in effect at the time any such
determination pursuant to this subsection 2.7C is made or, earlier, when
required by law, repay or prepay the Eurodollar Rate Loans of the Affected
Lender, together with all interest accrued thereon.
D. Options of Borrower. In lieu of paying an Affected Lender such
additional moneys as are required by subsection 2.7B or the prepayment of an
Affected Lender required by subsection 2.7C, Borrower may exercise any one of
the following options:
(i) If the determination by an Affected Lender relates only to
Eurodollar Rate Loans then being requested by Borrower pursuant to a
Notice of Borrowing or a Notice of Conversion/Continuation, Borrower may
by giving notice (by telephone confirmed in writing) to Administrative
Agent (who shall promptly give similar notice to each Lender) no later
than the date immediately prior to the date on which such Eurodollar Rate
Loans are to be made, withdraw that Notice of Borrowing or Notice of
Conversion/Continuation and the Eurodollar Rate Loans then being requested
shall be made by Lenders as Base Rate Loans; or
(ii) Upon written notice to Administrative Agent and each Lender,
Borrower may terminate the obligations of Lenders to make or maintain
Loans as, and to convert Loans into, Eurodollar Rate Loans and in such
event, Borrower shall, prior to the time any payment pursuant to
subsection 2.7C is required to be made or, if the provisions of subsection
2.7B are applicable, at the end of the then current Interest Period,
convert all of the Eurodollar Rate Loans into Base Rate Loans in the
manner contemplated by subsection 2.3D but without satisfying the advance
notice requirements therein; or
(iii) Borrower may give notice (by telephone confirmed in writing)
to the Affected Lender and Administrative Agent (who shall promptly give
similar notice to each Lender) and require the Affected Lender to make the
Eurodollar Rate Loan then being requested as a Base Rate Loan or to
continue to maintain its outstanding Base Rate Loan then the subject of a
Notice of Conversion/Continuation as a Base Rate Loan or to convert its
Eurodollar Rate Loans then outstanding that are so affected into Base Rate
Loans at the end of the then current Interest Period (or at such earlier
time as prepayment is otherwise required to be made pursuant to subsection
2.7C) in the manner contemplated by subsection 2.3D but without satisfying
the advance notice requirements therein, that notice to pertain only to
the Loans of the Affected Lender and to have no effect on the obligations
of the other Lenders to make or maintain Eurodollar Rate Loans or to
convert Base Rate Loans into Eurodollar Rate Loans.
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E. Compensation. Borrower shall compensate each Lender, upon written
request by that Lender (which request shall set forth in reasonable detail the
basis for requesting such amounts and which shall, absent manifest error, be
conclusive and binding upon all parties hereto), for all reasonable losses,
expenses and liabilities (including, without limitation, any loss (including
interest paid) sustained by that Lender in connection with the re-employment of
such funds), that Lender may sustain: (i) if for any reason (other than a
default by that Lender) a borrowing of any Eurodollar Rate Loan does not occur
on a date specified therefor in a Notice of Borrowing, a Notice of
Conversion/Continuation or a telephonic request for borrowing or
conversion/continuation or a successive Interest Period does not commence after
notice therefor is given pursuant to subsection 2.3D, (ii) if any prepayment of
any of its Eurodollar Rate Loans occurs on a date that is not the last day of an
Interest Period applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
prepayment given by Borrower, or (iv) as a consequence of any other default by
Borrower to repay its Eurodollar Rate Loans when required by the terms of this
Agreement.
F. Quotation of Eurodollar Rate. Anything herein to the contrary
notwithstanding, if on any Interest Rate Determination Date Administrative Agent
is as a matter of general practice not quoting rates to first class banks in the
Eurodollar market for the offering of Dollars for deposit with maturities
comparable to the Interest Period and in amounts comparable to the Eurodollar
Rate Loans requested, Administrative Agent shall give Borrower and each Lender
prompt notice thereof and the Loans requested shall be made as Base Rate Loans.
G. Booking of Eurodollar Rate Loans. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of, any of its branch
offices or the office of an Affiliate of that Lender.
H. Increased Costs. Except as provided in subsection 2.7B with
respect to certain determinations on Interest Rate Determination Dates, if,
after the date hereof by reason of, (x) the introduction of or any change
(including, without limitation, any change by way of imposition or increase of
reserve requirements) in or in the interpretation of any treaty, law, rule, or
regulation, or (y) the compliance with any guideline or request from any central
bank or other governmental authority or quasigovernmental authority exercising
control over banks or financial institutions generally (whether or not having
the force of law):
(i) any Lender (or its applicable lending office) shall be subject
to any tax, duty, levy, cost or other charge (except for taxes on the
overall net income or alternative minimum taxable income of such Lender or
its applicable lending office imposed by the jurisdiction in which such
Lender's principal executive office or applicable lending office is
organized, located or is doing business) with respect to its Eurodollar
Rate Loans or its obligation to make Eurodollar Rate Loans, or the
recording, registration, notarization or other formalization of the
Eurodollar Rate
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Loans or the basis of taxation of payments to any Lender of the
principal of or interest or commitment fees or any amount payable on its
Eurodollar Rate Loans or its obligation to make Eurodollar Rate Loans
shall change; or
(ii) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender's applicable lending office shall be
imposed or deemed applicable or any other condition affecting its
Eurodollar Rate Loans or its obligation to make Eurodollar Rate Loans
shall be imposed on any Lender or its applicable lending office or the
interbank Eurodollar market,
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Rate Loans, or
there shall be a reduction in the amount received or receivable by that Lender
or its applicable lending office, then Borrower shall from time to time, upon
written notice from and demand by that Lender (with a copy of such notice and
demand to Administrative Agent), pay to Administrative Agent for the account of
that Lender, within five (5) Business Days after receipt of such notice, demand
and appropriate proof of such cost, additional amounts sufficient to indemnify
that Lender against such increased cost or reduced amount. A certificate as to
the amount of such increased cost or reduced amount, submitted to Borrower and
Administrative Agent by that Lender, shall, except for manifest error, be final,
conclusive and binding for all purposes. Any payments to be made by Borrower
under subsections 2.7B or 2.7H are to be without duplication.
I. Assumptions Concerning Funding of Eurodollar Rate Loans.
Calculation of all amounts payable to a Lender under this subsection 2.7 shall
be made as though that Lender had actually funded its relevant Eurodollar Rate
Loan through the purchase of a Eurodollar deposit bearing interest at the
Eurodollar Rate in an amount equal to the amount of that Eurodollar Rate Loan
and having a maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office of that Lender to a
domestic office of that Lender in the United States of America; provided,
however, that each Lender may fund each of its Eurodollar Rate Loans in any
manner it sees fit and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection 2.7.
J. Eurodollar Rate Loans After Default. Unless Administrative Agent
and Requisite Lenders shall otherwise agree, after the occurrence of and during
the continuance of a Potential Event of Default or Event of Default, Borrower
may not elect to have a Loan be made or maintained as, or converted to, a
Eurodollar Rate Loan after the expiration of any Interest Period then in effect
for that Loan.
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K. Affected Lenders' Obligation to Mitigate. Each Lender agrees
that, as promptly as practicable after it becomes aware of the occurrence of an
event or the existence of a condition that would cause it to be an Affected
Lender under subsection 2.7B or 2.7C or that would entitle such Lender to
receive payments under subsection 2.7H, it will, to the extent not inconsistent
with such Lender's internal policies, use reasonable efforts to make, fund or
maintain the affected Eurodollar Rate Loans of such Lender through another
lending office of such Lender if as a result thereof the additional moneys which
would otherwise be required to be paid to such Lender pursuant to subsection
2.7B or 2.7H would be materially reduced or the illegality or other adverse
circumstances which would otherwise require prepayment of such Loans pursuant to
subsection 2.7C would cease to exist, and if, as determined by such Lender in
its sole discretion, the making, funding or maintaining of such Loans through
such other lending office would not otherwise materially adversely affect such
Loans or such Lender. Borrower hereby agrees to pay all reasonable expenses
incurred by any Lender in utilizing another lending office of such Lender
pursuant to this subsection 2.7K.
2.8 Capital Adequacy Adjustment
In the event that any Lender shall have determined that the adoption
or implementation after the date hereof of any law, treaty, governmental (or
quasigovernmental) rule, regulation, guideline or order regarding capital
adequacy, including, without limitation, the regulations set forth at 12 C.F.R.
Part 208 (Appendix A) and 12 C.F.R. Part 225 (Appendix A), or any change therein
or in the interpretation or application thereof, or compliance by any Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body having
jurisdiction, does or shall have the effect of increasing the amount of capital
required to be maintained by such Lender and thereby reducing the rate of return
on such Lender's capital as a consequence of its obligations hereunder, then
Borrower shall from time to time, within five (5) days of written notice and
demand from such Lender (with a copy to Administrative Agent) including a
certificate setting forth in reasonable detail the manner of calculation of the
reduction in the rate of return on such Lender's capital and claiming
compensation pursuant to this subsection 2.8, pay to Administrative Agent, for
the account of such Lender, additional amounts sufficient to compensate such
Lender for such reduction. A certificate as to the amount of such compensation,
submitted to Borrower and Administrative Agent by such Lender, shall, absent
manifest error, be final, conclusive and binding for all purposes. In
determining such amount, a Lender may use any reasonable averaging and
attribution method. Notwithstanding the foregoing, nothing in this subsection
2.8 is intended to provide and this subsection 2.8 shall not provide to any Loan
Party the right to inspect the records, files or books of any Lender.
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2.9 Letters of Credit
A. Letters of Credit. In addition to Borrower requesting that
Lenders make Working Capital Loans pursuant to subsection 2.2, Borrower may
request, in accordance with the provisions of this subsection, on and after the
Restatement Effective Date to and excluding the Expiry Date, that Administrative
Agent or one or more Lenders issue Letters of Credit for the account of
Borrower; provided that, if no Lender is willing to provide any Letter of
Credit, Administrative Agent shall, if each of the conditions to issuance of
such Letter of Credit in this Agreement is met, issue such Letter of Credit;
provided further, that
(i) Borrower shall not request that Administrative Agent or any
Lender issue (and neither Administrative Agent nor any Lender shall issue)
any Letter of Credit if, after giving effect to such issuance, the Total
Utilization of Working Capital Loan Commitments would exceed the aggregate
of all Working Capital Loan Commitments;
(ii) Borrower shall not request that Administrative Agent or any
Lender issue any Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage with respect to Standby Letters of
Credit would exceed $10,000,000 or the Letter of Credit Usage with respect
to Commercial Letters of Credit would exceed $10,000,000;
(iii) Borrower shall not request that Administrative Agent or any
Lender issue (and neither Administrative Agent nor any Lender shall issue)
any Letter of Credit if, after giving effect to such issuance, the Total
Utilization of Working Capital Loan Commitments would exceed the Borrowing
Base;
(iv) in no event shall Administrative Agent or any Lender issue any
Commercial Letter of Credit having an expiration date which is (a) not
acceptable to such Issuing Lender in its reasonable discretion, (b) more
than one hundred eighty (180) days after its date of issuance or (c) later
than 30 days prior to the Expiry Date;
(v) in no event shall Administrative Agent or any Lender issue any
Standby Letter of Credit having an expiration date later than the earlier
of (y) the Expiry Date, or (z) the date which is one year from the date of
issuance of such Standby Letter of Credit; provided that this clause (z)
shall not prevent any Issuing Lender from agreeing (subject to clause (y)
of this subsection 2.9A(v)) that a Standby Letter of Credit will
automatically be extended annually for a period not to exceed one year
unless such Issuing Lender elects not to extend for such additional
period; and
(vi) in no event shall Administrative Agent or any Lender issue any
Letter of Credit denominated in any currency other than Dollars.
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The issuance or extension of any Letter of Credit in accordance with
the provisions of this subsection shall require the satisfaction of each
condition set forth in subsection 3.4; provided, however, the obligation of each
Issuing Lender to issue or extend any Letter of Credit is subject to the
condition that (a) such Issuing Lender believed in good faith that all
conditions under subsections 2.9A and 3.4 to the issuance or extension of such
Letter of Credit were satisfied at the time such Letter of Credit was issued or
extended or (b) the satisfaction of any such condition not satisfied had been
waived by Requisite Lenders prior to or at the time such Letter of Credit was
issued or extended; provided further that Issuing Lender shall be entitled to
rely, and shall be fully protected in relying, upon any communication,
instrument or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, including, without limitation,
an Officers' Certificate from Borrower as to the satisfaction of the conditions
under subsection 3.4, in determining the satisfaction of any conditions to the
issuance or extension of any Letter of Credit or the Total Utilization of
Working Capital Loan Commitments or Letter of Credit Usage then in effect.
Immediately upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Lender a participation in such Letter of Credit and drawings thereunder
in an amount equal to such Lender's Pro Rata Share of the maximum amount which
is or at any time may become available to be drawn thereunder.
Each Letter of Credit supporting the payment of Indebtedness may
provide that the Issuing Lender may (but shall not be required to) pay the
beneficiary thereof upon the occurrence of an Event of Default and the
acceleration of the maturity of the Loans or, if payment is not then due to the
beneficiary, provide for the deposit of funds in an account to secure payment to
the beneficiary and that any funds so deposited shall be paid to the beneficiary
of the Letter of Credit if conditions to such payment are satisfied or returned
to the Issuing Lender for distribution to Lenders (or, if all Obligations shall
have been indefeasibly paid in full, to Borrower) if no payment to the
beneficiary has been made and the final date available for drawings under the
Letter of Credit has passed. Each payment or deposit of funds by the Issuing
Lender as provided in this paragraph shall be treated for all purposes of this
Agreement as a drawing duly honored by the Issuing Lender under the related
Letter of Credit.
B. Request for Issuance. Whenever Borrower desires to cause
Administrative Agent or any Lender to issue a Letter of Credit, it shall deliver
to Administrative Agent and that Lender a Notice of Issuance of Letter of Credit
substantially in the form of Exhibit II annexed hereto no later than 1:00 P.M.
(New York time) at least ten (10) Business Days in advance of the proposed date
of issuance or such shorter time as may be acceptable to the Issuing Lender. The
Notice of Issuance of Letter of Credit shall specify (i) the proposed Issuing
Lender, (ii) the proposed date of issuance (which shall be a Business Day),
(iii) the face amount of the Letter of Credit, (iv) the expiration date of the
Letter of
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Credit, (v) the name and address of the beneficiary, (vi) such other documents
or materials as such Issuing Lender may reasonably request, and (vii) a precise
description of the documents and the verbatim text of any certificate to be
presented by the beneficiary which, if presented by the beneficiary prior to the
expiration date of the Letter of Credit, would require the Issuing Lender to
make payment under the Letter of Credit; provided that the Issuing Lender, in
its sole judgment, may require changes in any such documents and certificates;
provided further that the Issuing Lender shall not be required to issue any
Letter of Credit that on its terms requires payment thereunder prior to the
third Business Day following receipt by the Issuing Lender of such documents and
certificates. In determining whether to pay any Letter of Credit, the Issuing
Lender shall be responsible only to use reasonable care to determine that the
documents and certificates required to be delivered under that Letter of Credit
have been delivered and that they substantially comply on their face with the
requirements of that Letter of Credit. In the case of Standby Letters of Credit,
promptly upon the issuance of a Letter of Credit, the Issuing Lender shall
notify Administrative Agent and each Lender of the issuance and the amount of
each such Lender's respective participation therein determined in accordance
with subsection 2.9D. In the case of Commercial Letters of Credit, each Issuing
Lender (other than Administrative Agent) will send by facsimile transmission to
Administrative Agent, promptly on the first Business Day of each week, the
aggregate face amount of outstanding Commercial Letters of Credit issued by such
Issuing Lender for each day of the immediately preceding week.
C. Payment of Amounts Drawn Under Letters of Credit. In the event of
any request for drawing under any Letter of Credit by the beneficiary thereof,
the Issuing Lender shall immediately notify Borrower and Administrative Agent
and Borrower shall reimburse the Issuing Lender on the day on which such drawing
is honored in an amount in same day funds equal to the amount of such drawing;
provided that, anything contained in this Agreement to the contrary
notwithstanding, (i) unless prior to 10:00 A.M. (New York time) on the date of
such drawing (a) Borrower shall have notified the Issuing Lender and
Administrative Agent that Borrower intends to reimburse the Issuing Lender for
the amount of such drawing with funds other than the proceeds of Working Capital
Loans or (b) Borrower shall have delivered a Notice of Borrowing requesting
Working Capital Loans which are Base Rate Loans in an amount equal to the amount
of such drawing, Borrower shall be deemed to have given a Notice of Borrowing to
Administrative Agent requesting Lenders to make Working Capital Loans which are
Base Rate Loans on the date on which such drawing is honored in an amount equal
to the amount of such drawing, and (ii) if so requested by Administrative Agent,
Lenders shall, on the date of such drawing, make Working Capital Loans which are
Base Rate Loans in the amount of such drawing, the proceeds of which shall be
applied directly by Administrative Agent to reimburse the Issuing Lender for the
amount of such drawing; and provided further that, if for any reason proceeds of
Working Capital Loans are not received by the Issuing Lender on such date in an
amount equal to the amount of such drawing, Borrower shall reimburse the Issuing
Lender, on the Business Day immediately following the date of such drawing, in
an amount in same day funds equal to the excess of the amount of such drawing
over the amount of such Working Capital Loans, if
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any, which are so received, plus accrued interest on such amount at the rate set
forth in subsection 2.9E(iii).
D. Payment by Lenders. If Borrower shall fail to reimburse the
Issuing Lender, for any reason, as provided in subsection 2.9C (including,
without limitation, the making of Working Capital Loans by Lenders pursuant to
the terms of subsection 2.9C) in an amount equal to the amount of any drawing
honored by the Issuing Lender under a Letter of Credit issued by it, the Issuing
Lender shall promptly notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein based on such
Lender's Pro Rata Share. Each Lender shall make available to the Issuing Lender
an amount equal to its respective participation, in same day funds, at the
office of the Issuing Lender specified in such notice, not later than 1:00 P.M.
(New York time) on the Business Day after the date notified by the Issuing
Lender. If any Lender fails to make available to the Issuing Lender the amount
of such Lender's participation in such Letter of Credit as provided in this
subsection 2.9D, the Issuing Lender shall be entitled to recover such amount on
demand from such Lender together with interest at the customary rate set by the
Issuing Lender for the correction of errors among banks for one (1) Business Day
and thereafter at the Prime Rate. Nothing in this subsection shall be deemed to
prejudice the right of any Lender to recover from the Issuing Lender any amounts
made available by such Lender to the Issuing Lender pursuant to this subsection
if it is determined in a final judgment by a court of competent jurisdiction
that the payment with respect to a Letter of Credit by the Issuing Lender in
respect of which payment was made by such Lender constituted gross negligence or
willful misconduct on the part of the Issuing Lender. The Issuing Lender shall
distribute to each other Lender which has paid all amounts payable by it under
this subsection with respect to any Letter of Credit issued by the Issuing
Lender such other Lender's Pro Rata Share of all payments received by the
Issuing Lender from Borrower or pursuant to the last paragraph of subsection
2.9A in reimbursement of drawings honored by the Issuing Lender under such
Letter of Credit when such payments are received.
E. Compensation. Borrower agrees to pay the following amounts with
respect to each Letter of Credit issued on its behalf:
(i) with respect to each Letter of Credit, a commission equal to the
maximum amount available from time to time to be drawn under such Letter
of Credit multiplied by a per annum rate equal to the remainder of the
Applicable Eurodollar Rate Margin minus the applicable rate payable with
respect to commitment fees pursuant to subsection 2.4A, payable in arrears
on and to (but not including) the last Business Day of each Fiscal
Quarter, commencing with the first Fiscal Quarter of 1997;
(ii) with respect to each Letter of Credit, an administrative fee
equal to .25% per annum of the maximum amount available from time to time
to be drawn
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under such Letter of Credit, payable in arrears on and to (but not
including) the last Business Day of each Fiscal Quarter, commencing with
the first Fiscal Quarter of 1997;
(iii) with respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by the Issuing Lender in
respect of each such drawing from the date of the drawing through the date
such amount is reimbursed by Borrower (including any such reimbursement
out of the proceeds of Working Capital Loans pursuant to subsection 2.9C)
at a rate which is equal to the rate then applicable to Base Rate Loans;
provided that if such amount is not paid on demand, the Obligations shall
bear interest thereafter in accordance with the provisions of subsection
2.3E;
(iv) with respect to the amendment or transfer of each Letter of
Credit and each drawing made thereunder, documentary and processing
charges in accordance with the Issuing Lender's standard schedule for such
charges in effect at the time of such amendment, transfer or drawing, as
the case may be, or as otherwise agreed to by the Issuing Lender.
The Borrower shall pay promptly to Administrative Agent all amounts
described in clauses (i) or (iii) of this subsection 2.9E with respect to a
Letter of Credit, and Administrative Agent shall distribute to each Lender its
Pro Rata Share (based on the respective Working Capital Loan Commitments).
Borrower also shall pay promptly to the applicable Issuing Lender for its own
account all amounts described pursuant to clauses (ii) and (iv) of this
subsection 2.9E with respect to a Letter of Credit.
F. Obligations Absolute. The obligation of Borrower to reimburse the
Issuing Lender for drawings made under the Letters of Credit issued by it and to
repay any Working Capital Loans made by Lenders pursuant to subsection 2.9C and
the obligations by Lenders under subsection 2.9D shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right
which Borrower may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom
any such transferee may be acting), Administrative Agent, any Lender or
any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including
any underlying transaction between Borrower and the beneficiary for which
the Letter of Credit was procured);
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(iii) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the Issuing Lender under any Letter of Credit
against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit; provided
that such payment does not constitute gross negligence or willful
misconduct of such Issuing Lender;
(v) any adverse change in the condition (financial or otherwise) of
Holding or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by
Holding or any of its Subsidiaries, Administrative Agent, or any Lender
(other than the Issuing Lender);
(vii) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing.
G. Additional Payments. If by reason of (i) any change in any
applicable law, regulation, rule, decree or regulatory requirement or any change
in the interpretation or application by any judicial or regulatory authority of
any law, regulation, rule, decree or regulatory requirement applicable to
financial institutions generally or (ii) compliance by the Issuing Lender or any
Lender with any direction, request or requirement (whether or not having the
force of law) of any governmental or monetary authority including, without
limitation, Regulation D:
(a) the Issuing Lender or any Lender shall be subject to any tax,
levy, charge or withholding of any nature or to any variation thereof or
to any penalty with respect to the maintenance or fulfillment of its
obligations under this subsection 2.9, whether directly or by such being
imposed on or suffered by the Issuing Lender or any Lender;
(b) any reserve, special deposit, premium, FDIC assessment, capital
adequacy or similar requirement is or shall be applicable, imposed or
modified in respect of any Letters of Credit issued by the Issuing Lender
or participations therein purchased by any Lender; or
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(c) there shall be imposed on the Issuing Lender or any Lender any
other condition regarding this subsection 2.9, any Letter of Credit or any
participation therein;
and the result of the foregoing is to directly or indirectly increase the cost
to the Issuing Lender or any Lender of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount receivable in respect thereof by the Issuing Lender or any
Lender, then and in any such case the Issuing Lender or such Lender may, at any
time within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify Borrower and Administrative Agent and provide
appropriate proof of such cost, and Borrower shall pay within five (5) Business
Days of the date of such notice such amounts as the Issuing Lender or such
Lender may specify to be necessary to compensate the Issuing Lender or such
Lender for such additional cost or reduced receipt, together with interest on
such amount from the date demanded until payment in full thereof at a rate equal
at all times to the Prime Rate plus the Applicable Base Rate Margin minus .50%
per annum. The determination by the Issuing Lender or any Lender, as the case
may be, of any amount due pursuant to this subsection 2.9G as set forth in a
certificate setting forth the calculation thereof in reasonable detail, shall,
in the absence of error, be final and conclusive and binding on all of the
parties hereto.
H. Indemnification; Nature of Issuing Lender's Duties. In addition
to amounts payable as elsewhere provided in this subsection, Borrower hereby
agrees to protect, indemnify, pay and save harmless the Issuing Lender from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees and allocated costs
of internal counsel) which the Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (i) the issuance of any Letter of Credit,
including, without limitation, the payment of draws thereunder, other than as a
result of gross negligence or willful misconduct of the Issuing Lender as
determined by a court of competent jurisdiction or (ii) the failure of the
Issuing Lender to honor a drawing under any Letter of Credit as a result of any
act or omission, whether rightful or wrongful, of any present or future de jure
or de facto government or governmental authority (all such acts or omissions
herein called "Government Acts"). Each Lender, proportionately to its Pro Rata
Share of the Working Capital Loan Commitments, severally agrees to indemnify
Issuing Lender to the extent Issuing Lender shall not have been reimbursed by
Holding or its Subsidiaries, for and against any of the foregoing claims,
demands, liabilities, damages, losses, costs, charges and expenses to which
Issuing Lender is entitled to reimbursement from Holding or its Subsidiaries.
As between Borrower and the Issuing Lender, Borrower assumes all
risks of the acts and omissions of, or misuse of the Letters of Credit issued by
the Issuing Lender by, the respective beneficiaries of such Letters of Credit.
In furtherance and not in limitation of the foregoing, the Issuing Lender shall
not be responsible (absent gross negligence or willful misconduct (as determined
by a court of competent jurisdiction)): (i) for the form, validity,
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sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of such Letters of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary of
any such Letter of Credit to comply fully with conditions required in order to
draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) for errors in
interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; (viii) for any consequences arising
from causes beyond the control of the Issuing Lender, including, without
limitation, any Government Acts and (ix) any special, consequential, indirect or
incidental damages, including, but not limited to, lost profits arising out of
or in connection with the issuance of any Letter of Credit or any action taken
or not taken by the Issuing Lender in connection with any Letter of Credit, or
any document or property referred to in or related to any Letter of Credit. None
of the above shall affect, impair, or prevent the vesting of any of the Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Issuing
Lender under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith and absent gross
negligence or willful misconduct of the Issuing Lender (as determined by a court
of competent jurisdiction), shall not put the Issuing Lender under any resulting
liability to Borrower.
Notwithstanding anything to the contrary contained in this
subsection, Borrower shall have no obligation to indemnify the Issuing Lender in
respect of any liability incurred by the Issuing Lender arising solely out of
the gross negligence or willful misconduct of the Issuing Lender as determined
by a court of competent jurisdiction, or out of the wrongful dishonor by the
Issuing Lender of a proper demand for payment made under the Letters of Credit.
For purposes of this subsection 2.9H, the term "Issuing Lender"
means the Issuing Lender and any Lender purchasing a participation in any Letter
of Credit pursuant to subsection 2.9D.
I. Computation of Interest and Fees. Interest and fees payable
pursuant to this subsection 2.9 shall be computed on the basis of a 360-day year
and the actual number of days elapsed in the period during which it accrues.
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J. Existing Letters of Credit. Holding, Borrower, Administrative
Agent and each Lender agree that all Existing Letters of Credit shall, for all
purposes of this Agreement and the other Loan Documents, be deemed to have been
issued by Bankers under and pursuant to the terms of this Agreement.
2.10 Taxes
A. Taxes. Any and all payments or reimbursements made under this
Agreement or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto excluding (i) taxes
imposed on the overall income (whether gross or net) or capital of a Lender or
Administrative Agent by the jurisdiction in which the Lender or Administrative
Agent is organized, resident or doing business and (ii) taxes, levies, imposts,
deductions, charges or withholdings which are imposed by laws, treaties or
regulations in effect as of the Restatement Effective Date; provided, however,
that any changes in laws, treaties or regulations or the interpretation thereof
applicable to financial institutions generally after the Restatement Effective
Date shall not be excluded pursuant to this clause (ii) (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
If Borrower shall be required by law to deduct any Taxes from or
with respect to any sum payable hereunder to any Lender or Administrative Agent,
then the sum payable shall be increased as may be necessary so that, after
making all required deductions, such Lender or Administrative Agent receives an
amount equal to the sum it would have received had no such deductions been made.
B. Foreign Lenders. Each Lender organized under the laws of a
jurisdiction outside the United States (referred to in this subsection 2.10B as
a "Foreign Lender") as to which payments to be made under this Agreement or
under the Notes are exempt from United States withholding tax under an
applicable statute or tax treaty shall provide to Borrower and Administrative
Agent (i) a properly completed and executed Internal Revenue Service Form 4224
or Form 1001 or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such Foreign
Lender's entitlement to such exemption with respect to payments to be made to
such Foreign Lender under this Agreement and under the Notes (referred to in
this subsection 2.10B as a "Certificate of Exemption") or (ii) a letter from any
such Foreign Lender stating that it is not entitled to any such exemption
(referred to in this subsection 2.10B as "Letter of Non-Exemption"). Prior to
becoming a Lender under this Agreement and within 15 days after a reasonable
written request of Borrower or Administrative Agent from time to time
thereafter, each Foreign Lender that becomes a Lender under this Agreement shall
provide a Certificate of Exemption or a Letter of Non-Exemption to Borrower and
Administrative Agent.
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If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Bank under this Agreement and does not
provide a Certificate of Exemption to Borrower and Administrative Agent within
the time periods set forth in the preceding paragraph, Borrower shall withhold
taxes from payments to such Foreign Lender at the applicable statutory rates and
Borrower shall not be required to pay any additional amounts as a result of such
withholding as provided in subsection 2.10A; provided, however, that all such
withholding and associated limitations in payment under subsection 2.10A shall
cease upon delivery by such Foreign Lender of a Certificate of Exemption to
Borrower and Administrative Agent.
SECTION 3. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to convert and make Loans and the other
extensions of credit hereunder are subject to the satisfaction of all of the
following conditions:
3.1 Conditions to Loans on the Restatement Effective Date
The obligations of Lenders to convert and make the Loans on the
Restatement Effective Date are, in addition to the conditions precedent
specified in subsection 3.3, subject to prior or concurrent satisfaction of the
following conditions:
A. Holding Documents. On or before the Restatement Effective Date,
Holding shall deliver to Administrative Agent and Lenders (or to Administrative
Agent for Lenders with sufficient originally executed copies for each Lender)
each, unless otherwise noted, dated the Restatement Effective Date:
1. Copies of its Certificate of Incorporation, certified by the
Secretary of State of the State of Delaware as of a recent date prior to
the Restatement Effective Date and by its corporate secretary or an
assistant secretary as of the Restatement Effective Date;
2. Copies of its Bylaws, certified as of the Restatement Effective
Date by its corporate secretary or an assistant secretary;
3. Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents and Related Agreements to which it is a party, and
approving and authorizing any documents, instruments or certificates to be
executed by it in connection with this Agreement and the other Loan
Documents and Related Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby, all in
form and substance satisfactory to Administrative Agent and its counsel,
each
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certified as of the Restatement Effective Date by its corporate secretary
or an assistant secretary as being in full force and effect without
modification or amendment;
4. Signature and incumbency certificates of its officers executing
this Agreement, the other Loan Documents and Related Agreements to which
it is a party and any documents, instruments or certificates to be
executed by it in connection therewith;
5. Executed copies of this Agreement and the other Loan Documents
and Related Agreements to which it is a party;
6. Good standing certificates, including certification of tax
status, certified by the Secretary of State of Delaware and each of its
principal places of business, each dated a recent date prior to the
Restatement Effective Date; and
7. Such other documents as any Agent or Lender may reasonably
request.
B. Borrower Documents. On or before the Restatement Effective Date,
Borrower shall deliver to Administrative Agent and Lenders (or to Administrative
Agent for Lenders with sufficient originally executed copies for each Lender)
each, unless otherwise noted, dated the Restatement Effective Date:
1. Copies of its Articles of Incorporation, certified by the
Secretary of State of the State of Georgia as of a recent date prior to
the Restatement Effective Date and by its corporate secretary or an
assistant secretary as of the Restatement Effective Date;
2. Copies of its Bylaws, certified as of the Restatement Effective
Date by its corporate secretary or an assistant secretary;
3. Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents and Related Agreements to which it is a party, the
execution, delivery and payment of the Notes and approving and authorizing
any documents, instruments or certificates required to be executed by it
in connection with this Agreement and the other Loan Documents and Related
Agreements to which it is a party and the consummation of the transactions
contemplated hereby and thereby, all in form and substance satisfactory to
Agents and their counsel, all certified as of the Restatement Effective
Date by its corporate secretary or an assistant secretary as being in full
force and effect without modification or amendment;
4. Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents to which it is a party, the
Term Notes, the
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Working Capital Notes and the Swing Line Note, the Related Agreements and
any documents, instruments or certificates to be delivered in connection
therewith;
5. Executed copies of this Agreement, the First Amendment to
Borrower Security Agreement dated as of November 15, 1996 and the other
Loan Documents and Related Agreements to which it is a party;
6. Good standing certificates, including certification of tax
status, certified by the Secretary of State of Georgia, each dated a
recent date prior to the Restatement Effective Date; and
7. Such other documents as Administrative Agent or any Lender may
reasonably request.
C. Canadian Blue Bird Documents. On or before the Restatement
Effective Date, Borrower shall deliver to Administrative Agent and Lenders (or
to Administrative Agent for Lenders with sufficiently originally executed copies
for each Lender) a certificate from the corporate secretary or an assistant
secretary of Canadian Blue Bird certifying that the Certificate of Incorporation
and bylaws of Canadian Blue Bird have not been amended, amended and restated,
supplemented or otherwise modified since the Closing Date under and as defined
in the Existing Credit Agreement.
D. Perfection of Security Interests. Holding and Borrower shall have
taken or caused to be taken such actions in such a manner so that Collateral
Agent has a valid and perfected first priority security interest in the entire
Collateral (subject to Liens consented to by Collateral Agent and Requisite
Lenders with respect to such Collateral, junior Permitted Encumbrances and other
Liens permitted by subsection 6.2) granted by the Collateral Documents. Such
actions shall include, without limitation: (i) the delivery pursuant to the
applicable Collateral Documents by Holding and Borrower of such certificates
(which certificates shall be registered in the name of Collateral Agent or
properly endorsed in blank for transfer or accompanied by irrevocable undated
stock powers duly endorsed in blank, all in form and substance satisfactory to
Collateral Agent) and promissory notes representing all of the capital stock and
other instruments required to be pledged pursuant to the Collateral Documents,
(ii) the delivery to Collateral Agent of Uniform Commercial Code financing
statements, executed by Holding and Borrower as to the Collateral granted by
Holding and Borrower for all jurisdictions as may be necessary or desirable to
perfect Collateral Agent's security interest in such collateral, (iii) the
filing with the United States Patent and Trademark Office with respect to the
trademarks and patents of the Loan Parties; and (iv) evidence reasonably
satisfactory to Collateral Agent that all other filings, recordings and other
actions Collateral Agent deems necessary or advisable to establish, preserve and
perfect the first priority Liens (subject to Liens permitted consented to by
Agent and Requisite Lenders with respect to such Collateral) granted to
Collateral Agent in real, personal and mixed property shall have been made.
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E. Fee Collateral. On or before the Restatement Effective Date,
Borrower shall have delivered to Administrative Agent, for the benefit of Agents
and Lenders the following items, each in form and substance satisfactory to
Agents: (a) executed Mortgages (or, if applicable amendments thereto) and
financing statements encumbering the interest of Holding and its Subsidiaries in
the Fee Collateral and (b) ALTA lender's extended coverage policies of title
insurance (or, if applicable bring-down endorsements) on such Fee Collateral
encumbered by the Mortgages in liability and form and issued by a title company
satisfactory to Agents and in an amount satisfactory to Agents, showing the
Mortgage as a first lien upon the respective fee properties described therein,
subject only to Permitted Encumbrances of the type described in clauses (i) and
(v) of the definition of Permitted Encumbrances and such other exceptions as may
be approved by Agents in writing, together with any endorsements reasonably
required by any Agent, and affirmative assurance that the improvements are
wholly located within the boundaries of the insured land (the "Fee Title
Policies").
F. Consummation of Purchase. On or before the Restatement Effective
Date, the Purchase shall have been consummated pursuant to the Purchase
Documents and Borrower shall have delivered to Administrative Agent complete,
correct and conformed copies of each Purchase Document, all in form and
substance satisfactory to Agents and Requisite Lenders. In addition, all
opinions by counsel to Holding or any of its Subsidiaries (and, if requested by
Administrative Agent, any certificates and letters) delivered in connection with
the Purchase and the Purchase Documents shall be addressed to Agents and Lenders
or accompanied by a written authorization from the Person delivering such
document stating that Agents and Lenders may rely on such document as though it
were addressed to them. Existing Subordinated Notes representing at least 51% of
the outstanding principal amount of the Existing Subordinated Notes shall have
been purchased pursuant to the Purchase and the aggregate premium paid in
connection therewith shall not exceed an aggregate amount satisfactory to the
Agents. If less than all of the Existing Subordinated Notes have been tendered
pursuant to the Purchase, the Existing Subordinated Indenture shall have been
amended pursuant to a supplemental indenture satisfactory in form and substance
to Agents.
G. Issuance of Subordinated Notes. On or before the Restatement
Effective Date, Borrower shall have issued and sold the Subordinated Notes in an
aggregate principal amount of $100,000,000 and Borrower shall have delivered to
Administrative Agent complete, correct and conformed copies of all documents
actually delivered in connection with the issuance of the Subordinated Notes and
the execution of the Subordinated Indenture, all in form and substance
satisfactory to Agents and Requisite Lenders. In addition, all opinions by
counsel to Holding, or any of its Subsidiaries (and, if requested by
Administrative Agent, any certificates and letters) delivered in connection with
the Subordinated Notes and the Subordinated Note Indenture shall be addressed to
Agents and Lenders or accompanied by a written authorization from the Person
delivering such document
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stating that Administrative Agent and Lenders may rely on such document as
though it were addressed to them.
H. Financial Statements; Pro Forma Balance Sheet. On or before the
Restatement Effective Date, Lenders shall have received from Holding and
Borrower (i) audited financial statements of Holding and its Subsidiaries for
Fiscal Year 1995, consisting of a balance sheet and the related consolidated
statements of income, stockholders' equity and cash flows for such Fiscal Year,
(ii) unaudited financial statements of Holding and its Subsidiaries as at July
27, 1996, consisting of a balance sheet and the related consolidated statements
of income, stockholders' equity and cash flows for the nine-month period ending
on such date, all in reasonable detail and certified by the chief financial
officer of Holding that they fairly present the financial condition of Holding
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments, and (iii) pro forma
consolidated balance sheets of Holding and its Subsidiaries as at September 28,
1996, prepared in accordance with GAAP and reflecting the consummation of and
the transactions contemplated by the Loan Documents and the Related Agreements,
which pro forma financial statements shall be in form and substance satisfactory
to Agents.
I. Projected Financial Statements. On or before the Restatement
Effective Date, Holding and Borrower shall have delivered to Agents projected
financial statements for Holding and its Subsidiaries for the seven-year period
after the Restatement Effective Date and such projected financial statements
shall be satisfactory in form and substance to Agents.
J. Financial Condition and Valuation Certificates. Borrower shall
have delivered to Administrative Agent and Lenders a Financial Condition
Certificate dated the Restatement Effective Date, substantially in the form
annexed hereto as Exhibit IX, with appropriate attachments demonstrating that,
after giving effect to the consummation of the transactions contemplated by the
Loan Documents and the Related Agreements the fair salable value of the assets
of Borrower will not be less than the probable liability of its debts, that
Borrower will be able to pay its debts as they mature and that Borrower will not
have unreasonably small capital to conduct its business, and Administrative
Agent and Lenders shall have received a solvency opinion of Valuation Research
Corporation addressed to Agents and Lenders and such other opinions of value and
other appropriate factual information and expert advice supporting the
conclusions reached in such Financial Condition Certificate as any Agent may
reasonably request, all in form and substance reasonably satisfactory to Agents.
K. Distribution. Borrower shall have declared a dividend, payable on
the Restatement Effective Date, in the aggregate amount not to exceed
$202,000,000. Holding shall have declared a dividend and agreed to make related
payments to holders of options to purchase Holding Common Stock in an aggregate
amount not to exceed $202,000,000.
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L. FIRREA Appraisals. To the extent applicable, on or before the
Restatement Effective Date, Administrative Agent and Lenders shall have
received, at Borrower's expense, appraisals with respect to the Fee Collateral,
in form and substance and performed by appraisers satisfactory to Agents, which
satisfy all of the applicable regulations adopted by the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance Corporation, the
Office of the Thrift Supervision, and the Office of the Comptroller of the
Currency pursuant to Title XI - Real Estate Appraisal Reform, Amendments of the
Financial Institution Reform, Recovery and Enforcement Act of 1989.
M. Necessary Consents. On or before the Restatement Effective Date,
each Loan Party shall have obtained all consents to the transactions
contemplated under this Agreement and the other Loan Documents of any Person
required under any Contractual Obligation (including, without limitation, any
consents required from LaSalle National Bank) of any Loan Party or any
Subsidiary of a Loan Party, all of the foregoing in form and substance
reasonably satisfactory to Agents.
N. Intercreditor Agreements. Administrative Agent shall have entered
into the GM Intercreditor Agreement and such Intercreditor Agreement shall be in
full force and effect and satisfactory in form and substance to Agents.
O. Hazardous Materials. On or before the Restatement Effective Date,
Administrative Agent shall have received such evidence as Agents and their
counsel deem appropriate in the circumstances, to establish that (w) there are
no Hazardous Materials stored or otherwise present on, in or about any of the
properties of Holding or its Subsidiaries, other than: (i) inventory; (ii)
janitorial or housekeeping supplies; and (iii) those which would not have,
either individually or in the aggregate, a Material Adverse Effect; (x) there
are no underground tanks located on, in or about any of such properties of
Holding or its Subsidiaries except as set forth on Schedule 4.17; (y) there is
no other environmental risk, problem or hazard affecting any of such properties
of Holding or its Subsidiaries, which risk, problem or hazard (1) would have,
individually or in the aggregate, a Material Adverse Effect or (2) would, in the
reasonable determination of Agents, materially adversely affect the syndication
or participation of the Commitments customary for transactions of this type
(clauses (1) or (2) being a "Material Event"); and (z) all activities conducted
by Holding and its Subsidiaries on any of such properties have been conducted in
compliance with all governmental laws or regulations pertaining to Hazardous
Materials except for any non-compliance which would not, individually or in the
aggregate, result in a Material Event.
P. Representations of Holding and Borrower. Holding and Borrower
shall have delivered to Administrative Agent an Officers' Certificate in form
and substance satisfactory to Agents to the effect that (i) the representations
and warranties in Section 4 hereof pertaining to such Person are true, correct
and complete in all material respects on and as of the Restatement Effective
Date to the same extent as though made on and as of that date,
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(ii) since November 4, 1995 through the Restatement Effective Date there has
been no Material Adverse Effect.
Q. Performance of Agreements. Each of the Loan Parties shall have
performed all agreements which this Agreement or the Related Agreements provide
shall be performed on or before the Restatement Effective Date except as
otherwise disclosed to and agreed to in writing by Agents.
R. Payment of Fees. On or before the Restatement Effective Date,
Holding shall have paid or cause to have been paid to Administrative Agent for
distribution (as appropriate) to Lenders and Administrative Agent, the fees
payable on the Restatement Effective Date referred to in subsection 2.4.
S. Evidence of Insurance. On or before the Restatement Effective
Date, Borrower shall have delivered to Administrative Agent certificates of
insurance naming Collateral Agent on behalf of Administrative Agent and Lenders
as loss payee under the casualty insurance policies required pursuant to
subsection 5.4 hereof. All such certificates of insurance shall contain such
endorsements as are reasonably required by Agents.
T. Opinions from Counsel to Loan Parties. Agents, Lenders and their
respective counsel shall have received originally executed copies of one or more
favorable written opinions of special counsel for Holding and Borrower, in form
and substance reasonably satisfactory to Agents and their counsel, dated as of
the Restatement Effective Date, and setting forth substantially the matters in
the opinion designated in Exhibit XVI annexed hereto and as to such other
matters as any Agent may reasonably request.
U. Opinions from Counsel to Agents. Lenders shall have received an
originally executed copy of one or more favorable written opinions of (i)
O'Melveny & Myers LLP, counsel to the Agents, dated as of the Restatement
Effective Date, addressed to the Agents and Lenders and (ii) local counsel to
Administrative Agent, dated as of the Restatement Effective Date, with respect
to the Fee Collateral and as to such other matters as Administrative Agent may
reasonably request.
V. Borrowing Base Certificate. On or before the Restatement
Effective Date, Administrative Agent shall have received a Borrowing Base
Certificate dated as of November 2, 1996.
W. Securities Regulations. The Subordinated Notes shall have been
registered as qualified under the applicable federal or state securities laws or
shall be exempt therefrom.
X. Transaction Costs. Not less than three (3) days prior to the
Restatement Effective Date, Borrower shall have delivered to Administrative
Agent and
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Lenders a schedule setting forth its reasonable best estimate of the Transaction
Costs (which shall not exceed $16,000,000), and such schedule shall be in form
and substance satisfactory to Agents.
Y. Other Corporate Actions. On or before the Restatement Effective
Date, all corporate and other proceedings taken or to be taken in connection
with the transactions contemplated hereby and all documents incidental thereto
not previously found acceptable by Agents, acting on behalf of Lenders, and
their counsel shall be reasonably satisfactory in form and substance to Agents
and such counsel, and Administrative Agent and such counsel shall have received
all such counterpart originals or certified copies of such documents as any
Agent or Lender may reasonably request.
3.2 Conditions to Initial Working Capital Loans and Swing Line
Loans
The obligation of Lenders to make the initial Working Capital Loans
and of Administrative Agent to make the initial Swing Line Loans hereunder are,
in addition to the conditions precedent specified in subsection 3.3, subject to
prior or concurrent satisfaction of the conditions that the Tranche A Term Loans
and Tranche B Term Loans have been made on the Restatement Effective Date.
3.3 Conditions to All Loans
The obligations of Administrative Agent and Lenders to make any and
all Loans on each Funding Date are subject to the following further conditions
precedent:
A. Notice of Borrowing. Administrative Agent shall have received, in
accordance with the provisions of subsections 2.1C or 2.2C, as the case may be,
before that Funding Date, an originally executed Notice of Borrowing in each
case signed by the Chief Executive Officer, the Chief Financial Officer, the
Treasurer or the Vice President and Controller of Borrower or by any executive
officer of Borrower designated by any of the above-described officers on behalf
of Borrower in writing delivered to Administrative Agent.
B. Conditions to Funding. As of that Funding Date:
(i) The representations and warranties contained herein shall be
true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date,
except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and
warranties shall have been true, correct and complete in all material
respects on and as of such earlier date;
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(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute (a) an Event of Default or (b) a Potential
Event of Default;
(iii) Holding and its Subsidiaries shall have performed in all
material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed by them on or before that Funding
Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making that Loan; and
(v) There shall not be pending or, to the knowledge of Holding or
Borrower, threatened, any action, suit, proceeding, governmental
investigation or arbitration against or affecting Holding or any of its
Subsidiaries or any property of Holding or any of its Subsidiaries, that
could reasonably be expected to result in a Material Adverse Effect that
has not been disclosed by Holding or Borrower in writing pursuant to
subsection 4.6 or 5.1(viii) prior to the making of the last preceding
Loans (or, in the case of the initial Loans hereunder, prior to the
execution of this Agreement) and there shall not have occurred any
development in any action, suit, proceeding, governmental investigation or
arbitration that could reasonably be expected to result in a Material
Adverse Effect that has not been so disclosed prior to the making of the
last preceding Loans. No injunction or other restraining order shall have
been issued and no hearing to cause an injunction or other restraining
order to be issued shall be pending or noticed with respect to any action,
suit or proceeding seeking to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a result of, the Stock
Acquisition, this Agreement or the making of Loans hereunder.
3.4 Conditions to Letters of Credit
The obligation of any Issuing Lender to issue or extend any Letter
of Credit hereunder is subject to prior or concurrent satisfaction of all of the
following conditions:
A. On or before the date of issuance of such Letter of Credit, the
Tranche A Term Loans and Tranche B Term Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit, the
Issuing Lender with respect thereto shall have received, in accordance with the
provisions of subsection 2.9B, a notice requesting the issuance of such Letter
of Credit and all other information specified in subsection 2.9B, and such other
documents as such Issuing Lender may reasonably require in connection with the
issuance of such Letter of Credit.
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C. On the date of issuance or extension of such Letter of Credit,
all conditions precedent described in subsection 3.3B shall be satisfied to the
same extent as though the issuance or extension of such Letter of Credit were
the making of a Loan and the date of issuance or extension of such Letter of
Credit were a Funding Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce Agents and Lenders to enter into this Agreement,
Holding and its Subsidiaries severally represent and warrant to each Agent and
Lender that the following statements are true, correct and complete:
4.1 Organization, Powers, Good Standing, Business and Subsidiaries
A. Organization and Powers. Each of Holding and its Subsidiaries is
a corporation duly organized and validly existing under the laws of the state of
its jurisdiction of incorporation and has all requisite corporate power and
authority to own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into this Agreement, and each
Loan Document and Related Agreement to which it is a party, to issue the Notes
(in the case of Borrower) and to consummate the Refinancing and to carry out the
transactions contemplated hereby and thereby.
B. Good Standing. Each of Holding and its Subsidiaries is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction where the character of its activities requires such
qualification, except where the failure to so qualify has not had and could not
reasonably be expected to have a Material Adverse Effect.
C. Conduct of Business. Borrower is engaged only in the manufacture
and sale of school buses, commercial buses and recreational vehicles and
operations substantially similar or incidental to such business (including
engaging in transactions with respect to the Lease Portfolio).
D. Subsidiaries. All of the direct and indirect Subsidiaries of
Holding, as of the date of this Agreement, are identified in Schedule 4.1D
annexed hereto. The capital stock of each of the Subsidiaries identified in
Schedule 4.1D is duly authorized, validly issued, fully paid and nonassessable.
The capital stock of each such Person identified on Schedule 4.1D is not Margin
Stock. Schedule 4.1D correctly sets forth the ownership interest as of the date
hereof of Holding in each of its direct and indirect Subsidiaries.
E. Ownership. All of the common stock of Borrower is and will be
owned by Holding. As of the Restatement Effective Date, MLCP and its Affiliates
shall own beneficially at least 51% of the common stock of Holding.
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4.2 Authorization of Borrowing, etc.
A. Authorization of Borrowing. The execution, delivery and
performance of this Agreement and the other Loan Documents and Related
Agreements and the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action by each Loan Party. On or before
the Restatement Effective Date, the execution, issuance and payment of the
Subordinated Debt and the transactions contemplated thereby will be duly
authorized by all necessary corporate action by each Loan Party.
B. No Conflict. The execution, delivery and performance by Holding
and its Subsidiaries of the Loan Documents and the Related Agreements and the
issuance, delivery and payment by Borrower of the Notes and the Subordinated
Debt and the consummation of the transactions contemplated hereby and thereby do
not and will not (i) violate any provision of law applicable to Holding or any
of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of
Holding or any of its Subsidiaries, or any order, judgment or decree of any
court or other agency of government binding on Holding or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
Holding or any of its Subsidiaries, except Contractual Obligations for which
approvals or consents will be obtained on or before the Restatement Effective
Date and except breaches, conflicts and defaults which could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of Holding or any of its Subsidiaries (other than Liens
in favor of the Collateral Agent for the benefit of Lenders), or (iv) require
any approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Holding or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Restatement
Effective Date.
C. Governmental Consents. The execution, delivery and performance by
Holding and its Subsidiaries of this Agreement, the other Loan Documents and the
Related Agreements to which each is a party and application of the proceeds of
the Loans and the Subordinated Debt and the consummation of the Refinancing and
the other transactions contemplated hereby and thereby do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any Federal, state or other governmental, including
Canadian, authority or regulatory body, except for filings required by Federal
or state securities laws, filings required in connection with the perfection of
security interests granted pursuant to the Loan Documents, consents, approvals,
notices and actions that have been or will be obtained or taken on or before the
Restatement Effective Date or which the failure to so obtain or take could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Neither the Refinancing nor the transactions contemplated
thereby violate any applicable law or regulation in any material respect.
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D. Binding Obligation. This Agreement, the other Loan Documents, and
the Related Agreements are the legally valid and binding obligations of Holding
and its Subsidiaries party thereto, enforceable against Holding and its
Subsidiaries party thereto in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by equitable
principles.
E. Valid Issuance of Subordinated Debt. On the Restatement Effective
Date, Borrower will have the corporate power and authority to issue the
Subordinated Debt. The Subordinated Debt, when issued and paid for, will be the
legally valid and binding obligation of Borrower, enforceable in accordance with
its terms (including, without limitation, those pertaining to subordination)
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
equitable principles. The subordination provisions of the Subordinated Debt will
be enforceable against the holders thereof, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles, and the
Notes and all other monetary obligations hereunder are or will be within the
definition of "Senior Indebtedness" included in the Subordinated Debt Documents.
The issuance and sale of the Subordinated Debt, upon such issuance and sale,
will be exempt from registration or qualification under applicable Federal and
state securities laws.
4.3 Financial Condition
Holding has heretofore delivered to Lenders the following materials:
(i) audited consolidated balance sheet of Holding and its Subsidiaries as at
November 4, 1995 and the related audited consolidated statements of income,
shareholders' equity and cash flow of Holding and its Subsidiaries for the
fiscal year of Holding ending on such date (including any comment letter
submitted by the accountants in connection therewith) and (ii) unaudited
consolidated balance sheets of Holding and its Subsidiaries as at the last day
of the Fiscal Quarter ending July 27, 1996 and the related consolidated
statements of income, shareholder's equity and cash flow of Holding and its
Subsidiaries for the year-to-date period ended on such date. Such statements,
except as otherwise stated in such statements, fairly present the consolidated
financial position of Holding and its Subsidiaries as at such dates and the
consolidated results of operations and the cash flow of Holding and its
Subsidiaries for the periods then ended, subject, in the case of any unaudited
interim financial statements, to changes resulting from normal year-end
adjustments. Neither Holding nor any of its Subsidiaries has any material (a)
Contingent Obligation, (b) contingent liability or liability for taxes, (c)
long-term lease or (d) unusual forward or long-term commitment that is not
reflected in the most recent financial statements (including the notes thereto)
delivered pursuant to subsection 4.3 or 5.1 of this Agreement other than
Contingent Obligations, contingent liabilities or liabilities for taxes,
long-term leases or forward or long-term commitments incurred in the ordinary
course of business.
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4.4 No Material Adverse Change; No Stock Payments
Since November 4, 1995, no event or change has occurred that has
caused, either in any case or in the aggregate, a Material Adverse Effect other
than the events or changes required by or disclosed in this Agreement or the
Related Agreements. Neither Holding nor any of its Subsidiaries has directly or
indirectly declared, ordered, paid or made or set aside any sum or property for
any Restricted Junior Payment or agreed to do so except as permitted by
subsection 6.5.
4.5 Title to Properties; Liens
Each of the Loan Parties and their respective Subsidiaries has good,
sufficient and legal title, subject only to Permitted Encumbrances and Liens
consented to by Administrative Agent and Requisite Lenders, to all their
respective properties and assets reflected in the most recent consolidated
balance sheet referred to in subsection 4.3 or in the most recent financial
statements delivered pursuant to subsection 5.1 of this Agreement, except for
(i) assets acquired or disposed of in the ordinary course of business since the
date of such consolidated balance sheet and (ii) the sale of the Lease Portfolio
pursuant to the Lease Portfolio Documents. Except for Permitted Encumbrances or
Liens consented to by Administrative Agent and Requisite Lenders, all such
properties and assets are free and clear of Liens.
4.6 Litigation; Adverse Facts
Except as set forth on Schedule 4.6 annexed hereto, there is no
action, suit, proceeding, governmental investigation or arbitration (whether or
not purportedly on behalf of Holding or any of its Subsidiaries) at law or in
equity or before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, pending or, to the knowledge of Holding or any of its Subsidiaries,
threatened against or affecting Holding or any of its Subsidiaries or any
property of Holding or any of its Subsidiaries that could reasonably be expected
to result in a Material Adverse Effect. As of the Restatement Effective Date,
none of Holding or any of its Subsidiaries has received any notice of
termination of any material contract, lease or other agreement or suffered any
material damage, destruction or loss (whether or not covered by insurance) or
had any employee strike, work-stoppage, slow-down or lock-out or any
substantial, nonfrivolous threat directed to it of any imminent strike,
work-stoppage, slow-down or lock-out, any of which remain pending, that could
reasonably be expected to result in a Material Adverse Effect.
4.7 Payment of Taxes
Except to the extent permitted by subsection 5.3, all material tax
returns and reports of Holding and each of its Subsidiaries required to be filed
by any of them have been
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timely filed, and all material taxes, assessments, fees and other governmental
charges upon such Persons and upon their respective properties, assets, income
and franchises which are due and payable have been paid when due and payable,
except to the extent permitted by subsection 5.3. Neither Holding nor any of its
Subsidiaries knows of any proposed tax assessment against any such Person that
could reasonably be expected to result in a Material Adverse Effect, which is
not being actively contested by such Person to the extent affected thereby, in
good faith and by appropriate proceedings; provided that such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
4.8 Materially Adverse Agreements; Performance of Agreements
A. Neither Holding nor any of its Subsidiaries is a party to or is
subject to any material agreement or instrument materially and adversely
affecting the financial condition of Holding and its Subsidiaries taken as a
whole, except as otherwise disclosed in writing to Administrative Agent and
Lenders.
B. Neither Holding nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation of any such Person, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except where the consequences, direct or
indirect, of such default or defaults or the consequences of actions curing such
default or defaults, if any, could not reasonably be expected to result in a
Material Adverse Effect.
4.9 Governmental Regulation
Neither Holding nor any of its Subsidiaries is subject to regulation
under the Public Utility Holdings Company Act of 1935, the Federal Power Act,
the Interstate Commerce Act or the Investment Company Act of 1940 or to any
Federal or state statute or regulation limiting its ability to incur
Indebtedness for money borrowed or to create Liens on any of its properties or
assets to secure such Indebtedness.
4.10 Securities Activities
Neither any Loan Party nor any of their respective Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
4.11 Employee Benefit Plans
A. Except as set forth in Schedule 4.11 annexed hereto, Holding and
each of its Subsidiaries is in material compliance with all applicable
provisions and requirements
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of Title I, II and IV of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have performed all
their obligations under each Employee Benefit Plan.
B. No ERISA Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the Internal
Revenue Code or except as described on Schedule 4.11 annexed hereto, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of
insurance or otherwise) for any retired or former employee of Holding or any of
its Subsidiaries.
D. As of the most recent valuation date for any Pension Plan
(excluding Pension Plans in which no employees of Holding or any of its
Subsidiaries have ever participated as an employee of Holding or one of its
Subsidiaries), the excess of the aggregated accumulated benefit obligations, as
defined in Statement of Financial Accounting Standards No. 87 (the "ABO"), over
the aggregate total fair market value for all such Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which the fair
market value of the assets exceeds the ABO), does not exceed $2,500,000.
4.12 Representations and Warranties Incorporated From Subordinated
Debt Documents
Each of the representations and warranties given by Borrower in the
Subordinated Debt Documents is true and correct in all material respects as of
the Restatement Effective Date, except for those specifically relating to
another time or times which were or will be true and correct in all material
respects at such time or times.
4.13 Disclosure
No representation or warranty of Holding or any of its Subsidiaries
contained in this Agreement or any other document, certificate or written
statement furnished to Lenders by or on behalf of Borrower for use in connection
with the transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact (known to either
Holding or any of its Subsidiaries in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made as of the
time the same were made. The projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by Holding and its Subsidiaries to be reasonable at the time made, it
being recognized by Lenders that such projections as to future events are not to
be viewed as facts and that actual results during the period or periods covered
by any such projections may differ from the projected results. There is no fact
known to Holding or any of its Subsidiaries (other than matters of a general
economic nature) that could reasonably be expected to result in a Material
Adverse Effect that has not been
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disclosed herein or in such other documents (including the Merger Agreement),
certificates and statements furnished to Administrative Agent or Lenders for use
in connection with the transactions contemplated hereby.
4.14 Licenses, Permits and Authorizations
Holding and each of its Subsidiaries has all approvals, licenses or
other permits of all governmental or regulatory agencies, whether Federal, state
or local, the absence of which could reasonably be expected to result in a
Material Adverse Effect.
4.15 Intangible Property
Except as set forth on Schedule 4.15 annexed hereto, Holding and
each of its Subsidiaries is the sole and exclusive owner or licensee of all
trade names, unregistered trademarks and service marks, brand names, patents,
registered and unregistered copyrights, registered trademarks and service marks,
and all applications for any of the foregoing, and all permits, grants and
licenses or other rights with respect thereto used in or necessary for the
conduct of their respective businesses as currently conducted, the absence of
which could reasonably be expected to result in a Material Adverse Effect.
Schedule 4.15 annexed hereto sets forth a true and complete list of all service
marks and registered trademarks and patents (or trademarks or patents for which
registration is pending) of Holding and its Subsidiaries. Neither Holding or any
of its Subsidiaries has been charged with any material infringement of any
intangible property of the character described above or been notified or advised
of any material claim of any other Person relating to any of the intangible
property, other than as set forth in Schedule 4.15 annexed hereto.
4.16 Certain Fees
Except for fees set forth in the schedule delivered pursuant to
subsection 3.1X and except as otherwise disclosed in writing to Agents and
Lenders prior to the date hereof, no fee or commission will be payable by
Holding or any of its Subsidiaries with respect to the offer, issue and sale of
the Subordinated Debt or the Refinancing. Holding and each of its Subsidiaries,
jointly and severally, hereby indemnify Agents and Lenders against, and agree
that they will hold Agents and Lenders harmless from, any claim, demand or
liability for broker's or finder's fees alleged to have been incurred in
connection with any such offer, issue and sale, the Refinancing or any of the
other transactions contemplated hereby or thereby and any expenses, including
reasonable legal fees, arising in connection with any such claim, demand or
liability. No other similar fees or commissions will be payable by Holding or
any of its Subsidiaries for any other services rendered to Holding or such
Subsidiary ancillary to the transactions contemplated hereby or thereby,
including the Refinancing.
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4.17 Environmental Matters
A. Disclosure. Except as set forth in Schedule 4.17:
(i) the operations of Holding and each of its Subsidiaries
(including, without limitation, all operations and conditions at or in the
Facilities) comply in all material respects with all Environmental Laws;
(ii) Holding and each of its Subsidiaries have obtained all
environmental, health and safety permits necessary to their respective
operations, and all such permits are in good standing, and Holding and
each of its Subsidiaries are in compliance with all material terms and
conditions of such permits;
(iii) neither Holding nor any of its Subsidiaries has received (A)
any written notice or claim to the effect that it is or may be liable in
any material respect to any Person as a result of the Release or
threatened Release of any Hazardous Materials or (B) any letter or request
for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9604) or
comparable state laws, and to the best of Holding's or Borrower's
knowledge, none of the operations of Holding or any of its Subsidiaries is
the subject of any federal or state investigation evaluating whether any
remedial action is needed to respond to a Release or threatened Release of
any Hazardous Material at any Facility or at any other location;
(iv) none of the operations of Holding or any of its Subsidiaries is
the subject of any pending judicial or administrative proceeding alleging
the violation of or liability under any Environmental Laws;
(v) Holding and each of its Subsidiaries and all of their present
Facilities or operations, as well as their past Facilities or operations,
are not subject to any outstanding written order or agreement with any
governmental authority or private party respecting (A) any Environmental
Laws or (B) any Environmental Claims;
(vi) neither Holding nor any of its Subsidiaries has any Contingent
Obligation in connection with any Release of any Hazardous Materials by
Holding or any of its Subsidiaries;
(vii) neither Holding nor any of its Subsidiaries or any predecessor
of Holding or of any Subsidiary has filed any notice under any
Environmental Law indicating past or present treatment, storage, or
disposal of Hazardous Materials at any Facility (other than hazardous
waste manifests in the ordinary course of business), none of Holding's or
any of its Subsidiary's operations involves the generation,
transportation, treatment or disposal of hazardous waste, as defined under
40 C.F.R.
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Parts 260-270 or any state equivalent and neither Holding nor any
Subsidiaries nor, to the best of Holding's and Borrower's knowledge, any
predecessor in title to any of them nor, any third party at any time
occupying any Facility has at any time used, generated, disposed of,
stored, transported to or from, released or threatened the release of any
Hazardous Materials, in any form, quantity or concentration on, from,
under or affecting such Facility in a manner that could reasonably expect
to result in material liability of or material claim against Holding or
any of its Subsidiaries;
(viii) no underground storage tanks or surface impoundments are on
or at the Facilities; and
(ix) no Lien in favor of any governmental authority for (A) any
liability under Environmental Laws, or (B) damages arising from or costs
incurred by such governmental authority in response to a Release has been
filed or attached to the Facilities.
B. No Material Adverse Effect. No Hazardous Materials exist on,
under or about any Facility in a manner that could reasonably be expected to
give rise to an Environmental Claim having a Material Adverse Effect and neither
Holding nor any of its Subsidiaries has filed any notice or report of a Release
of any Hazardous Materials that could reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect and no matter disclosed on
Schedule 4.17 could reasonably be expected to give rise to an Environmental
Claim having a Material Adverse Effect.
4.18 Survival of Rights Created Under Existing Credit Agreement.
Notwithstanding the modification effected by this Agreement of the
representations, warranties and covenants of Holding and Borrower contained in
the Existing Credit Agreement, each of Holding and Borrower acknowledges and
agrees that any choses in action or other rights created in favor of any Agent
or Lender and their respective successors arising out of the representations and
warranties of Holding and Borrower contained in or delivered (including
representations and warranties delivered in connection with the making of Loans
or other extensions of credit thereunder) in connection with the Existing Credit
Agreement, shall survive the execution and delivery of this Agreement; provided
that it is understood and agreed that Borrower's monetary obligations under the
Existing Credit Agreement in respect of the loans thereunder are evidenced by
this Agreement as provided in Section 2 hereof.
SECTION 5. AFFIRMATIVE COVENANTS
Holding and each of its Subsidiaries severally covenant and agree
that, so long as any of the Commitments hereunder shall be in effect or any
Letter of Credit remain
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outstanding and until payment in full of all of the Loans and all other amounts
owing hereunder unless Requisite Lenders shall otherwise give prior written
consent, such Person shall perform all covenants in this Section 5.
5.1 Financial Statements and Other Reports
Holding will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. Holding will deliver to Administrative Agent and Lenders:
(i) as soon as practicable and in any event within thirty (30) days
after the end of each Fiscal Month (other than (1) the first Fiscal Month
of each Fiscal Year, with respect to which the following information shall
be combined and delivered with the information delivered within thirty
(30) days of the second Fiscal Month of each Fiscal Year and (2) the last
Fiscal Month of each Fiscal Quarter, with respect to which the following
information shall be delivered with the information delivered pursuant to
subsection 5.1(ii) below for such Fiscal Quarter) (a) a detailed
consolidated balance sheet as of the end of such Fiscal Month and a
consolidated and income statement and consolidated statement of cash flow
for Holding and its Subsidiaries (and for Holding and its Subsidiaries
other than BB Capital) for such Fiscal Month and for the period from the
beginning of the current Fiscal Year to the end of such Fiscal Month, (b)
a schedule, in reasonable detail, of all Indebtedness of Holding and its
Subsidiaries including letters of credit, and (c) a written discussion of
the financial and operating performance for such Fiscal Month from a
profit and loss, cash flow and balance sheet standpoint and discussions of
the major factors affecting such performance, in each case (other than
clause (c)) setting forth in comparative form the consolidated figures or
the corresponding information for the corresponding periods of the
previous Fiscal Year and for the corresponding periods for the financial
budget for that Fiscal Year delivered pursuant to subsection 5.1(xi), all
in reasonable detail and certified by the Chief Financial Officer of
Holding that they fairly present the financial condition of Holding and
its Subsidiaries as at the dates indicated and the results of their
operations and cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustment;
(ii) as soon as practicable and in any event within sixty (60) days
after the end of each Fiscal Quarter (other than the last Fiscal Quarter
of each Fiscal Year, with respect to which the following information shall
be delivered with the information delivered pursuant to subsection
5.1(iii) below for such Fiscal Year) (a) a written discussion of the
financial and operating performance for such Fiscal Quarter from a profit
and loss, cash flow and balance sheet standpoint and discussions of the
major factors affecting such performance, (b) a revised schedule of all
actions, suits, proceedings, governmental investigations or arbitrations
pending, or to the knowledge
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of Holding and its Subsidiaries, threatened against Holding or any of its
Subsidiaries or any of their respective property and (c) a consolidated
balance sheet of Holding and its Subsidiaries (and for Holding and its
Subsidiaries other than BB Capital) as at the end of such period and the
related consolidated statement of income, stockholders' equity and cash
flow of Holding and its Subsidiaries (and for Holding and its Subsidiaries
other than BB Capital) for such Fiscal Quarter and for the period from the
beginning of the current Fiscal Year to the end of such Fiscal Quarter,
setting forth in each case in comparative form the consolidated figures
for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the financial budget for such periods delivered
pursuant to subsection 5.1(xi), all in reasonable detail and certified by
the Chief Financial Officer of Holding that they fairly present the
financial condition of Holding and its Subsidiaries as at the dates
indicated and the results of their operations and cash flows for the
periods indicated, subject to changes resulting from audit and normal
year-end adjustment;
(iii) as soon as practicable and in any event within ninety (90)
days after the end of each Fiscal Year, a written discussion of the
financial and operating performance for the Fiscal Year from a profit and
loss, cash flow and balance sheet standpoint and discussions of the major
factors affecting such performance and setting the number and names of
Borrower's distributors added or lost during such Fiscal Year and a
consolidated balance sheet of Holding and its Subsidiaries (and for
Holding and its Subsidiaries other than BB Capital) as at the end of such
Fiscal Year and the related consolidated statement of income,
stockholders' equity and cash flow of Holding and its Subsidiaries (and
for Holding and its Subsidiaries other than BB Capital) for such Fiscal
Year, setting forth in each case, in comparative form the consolidated
figures for the previous year, and the corresponding figures from the
financial budget for such periods delivered pursuant to subsection
5.1(xi), all in reasonable detail and accompanied by a report thereon of
Arthur Andersen, LLP or other independent certified public accountants of
recognized national standing selected by Holding as shall be satisfactory
to Administrative Agent which report shall not be qualified as to any
matter and shall state that such consolidated financial statements present
fairly the financial position of Holding and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise stated therein) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards;
(iv) within fifteen (15) days after the end of each Fiscal Month,
from time to time upon the request of Administrative Agent and at any
other date Borrower may choose, a Borrowing Base Certificate as of the
last date of such period or the date so requested, as the case may be;
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(v) together with each delivery of financial statements of Holding
and its Subsidiaries pursuant to subdivisions (i), (ii) and (iii) above,
(a) an Officers' Certificate of Holding stating that the signers have
reviewed the terms of this Agreement and the other Loan Documents and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Holding and its Subsidiaries
during the accounting period covered by such financial statements and that
such review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as of the date of the Officers' Certificate, of any condition or
event that constitutes an Event of Default or Potential Event of Default,
or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action Holding has taken,
is taking and proposes to take with respect thereto; and (b) a Compliance
Certificate demonstrating in reasonable detail compliance during and at
the end of the applicable Fiscal Quarter with the restrictions contained
in this Agreement in the manner set forth in such Compliance Certificate;
(vi) together with each delivery of financial statements of Holding
and its Subsidiaries pursuant to subdivision (iii) above, a written
statement by the independent public accountants giving the report thereon
(a) stating that their audit examination has included a review of the
terms of this Agreement and the other Loan Documents as they relate to
accounting matters, (b) stating whether, in connection with their audit
examination, which audit was conducted in accordance with generally
accepted auditing standards, any condition or event that constitutes an
Event of Default or Potential Event of Default has come to their
attention, and if such a condition or event has come to their attention,
specifying the nature and period of existence thereof; provided that such
accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default with
respect to accounting matters that would not be disclosed in the course of
their audit examination, and (c) stating that based on their audit
examination nothing has come to their attention that causes them to
believe that the information contained in either or both the certificates
delivered therewith pursuant to subdivision (v) above is not correct or
that the matters set forth in the Compliance Certificate delivered
therewith pursuant to clause (b) of such subdivision (v) above for that
portion of the applicable Fiscal Year are not stated in accordance with
the terms of this Agreement;
(vii) promptly upon any officer of Holding or any of its
Subsidiaries obtaining knowledge (a) that a condition or event has
occurred and is continuing that constitutes an Event of Default or
Potential Event of Default, or becoming aware that any Lender or
Administrative Agent has given any notice or taken any other action with
respect to a claimed Event of Default or Potential Event of Default under
this Agreement, (b) that any Person has given any notice to Holding,
Borrower or any of their respective Subsidiaries or taken any other action
with respect to a claimed default or event or condition of the type
referred to in subsection 8.2, (c) of any condition or
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event that would be required to be disclosed in a current report filed by
Borrower with the Securities and Exchange Commission on Form 8-K pursuant
to Items 1, 2, 4 or 5 of such Form as in effect on the date hereof if
Borrower were required to file such reports under the Exchange Act, or (d)
of a Material Adverse Effect or of an event or condition that could
reasonably be expected to result in a Material Adverse Effect (other than
matters affecting the economy in general), an Officers' Certificate
specifying the nature and period of existence of such condition or event,
or specifying the notice given or action taken by such holder or Person
and the nature of such claimed default, Event of Default, Potential Event
of Default, event or condition, and what action Holding or Borrower has
taken, is taking and proposes to take with respect thereto;
(viii) promptly upon any officer of Holding or any of its
Subsidiaries obtaining knowledge of (a) the institution of, or
non-frivolous, written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting Holding or
any of its Subsidiaries or any property of Holding or any of its
Subsidiaries not previously disclosed by Holding to Administrative Agent
and Lenders or (b) any material development in any such action, suit,
proceeding, governmental investigation or arbitration, that, in either
case
(y) could reasonably be expected to result in a Material
Adverse Effect; or
(z) seeks to enjoin or otherwise prevent the consummation of,
or to recover any damages or obtain relief as a result of, the
Refinancing;
Holding shall promptly give notice thereof to Agents and Lenders and
provide such other information as may be reasonably available to it to
enable Agents and Lenders and their counsel to evaluate such matters;
(ix) promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action Holding or any of its ERISA Affiliates has
taken, is taking or proposes to take with respect thereto, and, when
known, any action taken or threatened in writing by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto;
(x) with reasonable promptness copies of (a) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by
Holding or any of its ERISA Affiliates with the Internal Revenue Service
with respect to each Pension Plan (in which any employees of Holding or
any of its Subsidiaries have ever participated as employees of Holding or
one of its Subsidiaries) for which a Schedule B is required to be filed;
(b) all notices received by Holding or any of its ERISA Affiliates from a
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Multiemployer Plan sponsor concerning an ERISA Event; and (c) copies of
such other documents or governmental reports or filings relating to any
Employee Benefit Plan as Administrative Agent or any Lender shall
reasonably request;
(xi) as soon as available, but in any event not less than
eighty-five (85) days after the commencement of the Fiscal Year to which
such projections relate, a budget by Fiscal Month on a consolidated basis
for such Fiscal Year as customarily prepared by Borrower including,
without limitation, a forecasted consolidated balance sheet and statement
of income of Holding and its Subsidiaries (and for Holding and its
Subsidiaries other than BB Capital), statement of sales, including unit
sales, forecasted capital expenditures for each Fiscal Month in such
Fiscal Year and the consolidated statement of stockholders' equity and
cash flow of Holding and its Subsidiaries (and for Holding and its
Subsidiaries other than BB Capital) for such Fiscal Year;
(xii) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available generally by Holding to its security holders or by any
Subsidiary of Holding to its security holders other than Holding or
another Subsidiary, of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by Holding or any
of its Subsidiaries with any securities exchange or with the Securities
and Exchange Commission or any governmental authority succeeding to any of
its functions, and of all press releases and other statements made
available generally by Holding or any Subsidiary to the public concerning
material developments in the business of Holding and its Subsidiaries;
(xiii) promptly upon receipt thereof, copies of all reports
submitted to Holding or any of its Subsidiaries by independent public
accountants in connection with each annual, interim or special audit of
the financial statements of Holding made by such accountants, including,
without limitation, the comment letter submitted by such accountants to
management in connection with their annual audit;
(xiv) immediately prior to the release thereof, a copy of all
material press releases;
(xv) as soon as practicable and in any event within 30 days after
the end of each fiscal quarter of BB Capital and 90 days after the end of
each fiscal year of BB Capital, financial statements of BB Capital
consisting of at least a balance sheet at the close of the applicable
fiscal quarter or fiscal year and a statement of income and cash flow for
the applicable fiscal quarter or fiscal year, together with (in the case
of the financial statements for the fiscal year only) an unqualified
opinion and report of independent public accountants of recognized
standing selected by BB Capital and reasonably satisfactory to Agents;
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(xvi) promptly upon any officer of Holding or any of its
Subsidiaries obtaining knowledge of any material development in any
proceeding with or by any governmental or regulatory entity relating to a
recall of any goods sold by Holding or any of its Subsidiaries or other
regulatory action, Holding shall give notice thereof to Agents and provide
such other information as may be reasonably available to it to enable
Agents and their counsel to evaluate such matters; and
(xvii) with reasonable promptness, such other information and data
with respect to Holding or any of its Subsidiaries as from time to time
may be reasonably requested by Administrative Agent or any Lender.
5.2 Corporate Existence, etc.
Subject to subsection 6.7, Holding and Borrower will at all times
preserve and keep in full force and effect their respective corporate existence
and rights and franchises material to its respective business and those of each
of its respective Subsidiaries.
5.3 Payment of Taxes and Claims; Tax Consolidation
A. Each Loan Party will, and will cause each of its Subsidiaries to,
pay or cause to be paid all taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
franchises, business, income or property before any material penalty accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums that have become due and payable and
that by law have or may become a material Lien upon any of its properties or
assets, prior to the time when any material penalty or fine shall be incurred
with respect thereto; provided that so long as no property or assets (other than
money for such charge or claim and the interest or penalty accruing thereon) of
Holding or Borrower or any of their respective Subsidiaries is in danger of
being lost or forfeited as a result thereof, no such charge or claim need be
paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor.
B. Each Loan Party will not, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any consolidated federal
income tax return with any Person other than Holding or any of its Subsidiaries.
5.4 Maintenance of Properties; Insurance
Each Loan Party will maintain or cause to be maintained in good
repair, working order and condition (ordinary wear and tear excepted) all
material properties used in the business of such Loan Party and its Subsidiaries
and from time to time will make or
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cause to be made all appropriate repairs, renewals and replacements thereof.
Holding and its Subsidiaries will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
properties and business and the properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against by corporations
of established reputation engaged in the same or similar businesses and
similarly situated, of such types (including, without limitation, product
liability, bodily injury and business interruption insurance) and in such
amounts as are customarily carried under similar circumstances by such other
corporations. Each such policy of insurance shall provide for at least thirty
(30) days prior written notice to Administrative Agent of any modification or
cancellation of such policies. Upon the Restatement Effective Date and each
anniversary thereof, Holding and its Subsidiaries shall submit to Administrative
Agent an Officers' Certificate setting forth in detail the type and amount of
insurance maintained pursuant to this subsection which shall not be less than
the type and amount maintained on the Restatement Effective Date.
5.5 Inspection; Lender Meeting
Holding and its Subsidiaries shall permit any authorized
representatives designated by any Agent or Lender to visit and inspect any of
the properties of Holding and its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants, all upon reasonable
notice and at reasonable times during normal business hours and as often as may
be reasonably requested. Without in any way limiting the foregoing, Borrower
will participate in an annual meeting of Agents and Lenders to be held at such
place and time as may be agreed to by Borrower and Agents; provided that there
shall be no such annual meeting during Fiscal Year 1997. Agents and Lenders
shall hold all non-public information obtained pursuant to this subsection 5.5
and identified by Borrower as confidential in accordance with its and their
customary procedures for handling confidential information of this nature.
In addition to, and not in limitation of, the immediately preceding
paragraph, a representative designated by Agents shall, at Borrower's expense,
and after reasonable notice and during normal business hours, be permitted to
audit and monitor Borrower's Inventory, Accounts Receivable and other assets and
liabilities in order to, among other things, verify the calculation of the
Borrowing Base.
5.6 Equal Security for Obligations; No Further Negative Pledges
A. If Holding or any of its Subsidiaries shall create or assume any
Lien upon any of its property or assets, whether now owned or hereafter
acquired, other than Liens excepted by the provisions of subsection 6.2, unless
Agents and Requisite Lenders shall otherwise consent in writing, it shall make
or cause to be made effective provision whereby the Obligations will be secured
by such Lien equally and ratably with any and all other
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Indebtedness thereby secured as long as any such Indebtedness shall be secured;
provided that notwithstanding the foregoing, this covenant shall not be
construed as a consent by any Lender to any creation or assumption of any such
Lien not permitted by the provisions of subsection 6.2.
B. Except with respect to specific property encumbered to secure
payment of particular Indebtedness, neither Holding nor any of its Subsidiaries
shall enter into any agreement (other than the Subordinated Debt Documents and,
with respect to lease receivables, the Lease Portfolio Documents, the LaSalle
Documents and the documents pursuant to which Indebtedness permitted under
subsection 6.1(xii) is incurred) prohibiting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired.
5.7 Compliance with Laws, etc.
Holding and its Subsidiaries shall comply with the requirements of
all applicable laws, rules, regulations and orders of any governmental authority
(including, without limitation, all Environmental Laws), noncompliance with
which could reasonably be expected to result in a Material Adverse Effect.
5.8 Real Property Security
If Holding or any of its Subsidiaries shall after the Restatement
Effective Date acquire a fee or leasehold interest in any real property such
Person shall promptly cause such fee interest, and use its reasonable best
efforts to cause such leasehold interest to be subjected to a Mortgage in favor
of Collateral Agent for the benefit of Administrative Agent and Lenders pursuant
to documentation of the type described in subsection 3.1H for the Fee
Collateral.
5.9 Environmental Disclosure and Inspection
(i) Holding shall, and shall cause each of its Subsidiaries and
their Facilities to comply and shall use its reasonable efforts to cause
(a) their respective employees, agents, contractors and subcontractors,
(b) all tenants under any lease or occupancy agreement affecting any
portion of the Facilities and (c) all other Persons on or occupying such
property, to comply with all Environmental Laws.
(ii) Holding and Borrower shall promptly advise Administrative Agent
and Lenders in writing and in reasonable detail of (a) any Release of any
Hazardous Material required to be reported to any federal, state or local
governmental or regulatory agency under all applicable Environmental Laws,
(b) any and all written communications with respect to Environmental
Claims or any Release of Hazardous Material required to be reported to any
federal, state or local governmental or
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regulatory agency, (c) any remedial action taken by Holding, Borrower or,
to the extent Holding or any of its Subsidiaries has any such knowledge,
any other Person in response to (1) any Hazardous Material on, under or
about any Facility, the existence of which could reasonably be expected to
result in a Material Adverse Effect or (2) any Environmental Claim that
could reasonably be expected to result in a Material Adverse Effect, (d)
Holding's or any of its Subsidiaries' discovery of any occurrence or
condition on any real property adjoining or in the vicinity of any
Facility that could cause such Facility or any part thereof to be
classified as "border-zone property" or to be otherwise subject to any
restrictions on the ownership, occupancy, transferability or use thereof
under any Environmental Laws, and (e) any request for information from any
governmental agency that indicates such agency is investigating whether
Holding or its Subsidiaries may be potentially responsible for a Release
of Hazardous Materials.
(iii) Holding and Borrower shall promptly notify Administrative
Agent and Lenders of any proposed acquisition of stock, assets, or
property by Holding or its Subsidiaries, that could reasonably be expected
to expose Holding or its Subsidiaries to, or result in, Environmental
Claims that could reasonably be expected to result in a Material Adverse
Effect and any proposed action to be taken by Holding or its Subsidiaries
to commence operations that could reasonably be expected to subject
Holding or its Subsidiaries to additional laws, rules or regulations
related to Hazardous Materials or environmental matters covered by
Environmental Laws, including, without limitation, laws, rules and
regulations requiring additional environmental permits or licenses.
(iv) Holding and Borrower shall, at their own expense, provide
copies to Administrative Agent and Lenders of such documents or
information to which Holding or any of its Subsidiaries has access as
Administrative Agent or Requisite Lenders may reasonably request in
relation to any matters disclosed pursuant to this subsection 5.9.
5.10 Hazardous Materials; Remedial Action
A. Holding and Borrower shall, and shall cause its Subsidiaries, (i)
to store, use, dispose and transport any Hazardous Materials in compliance with
all applicable Environmental Laws and (ii) promptly to take any and all
necessary remedial action in response to the Release of any Hazardous Materials
on, under or about any Facility. In the event Holding or any of its Subsidiaries
undertakes any remedial action with respect to any Hazardous Material on, under
or about any Facility, Holding or such Subsidiary shall conduct and complete
such remedial action in compliance with all applicable Environmental Laws, and
in accordance with the policies, orders and directives of all federal, state and
local governmental authorities except when Holding's or such Subsidiary's
liability for such
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presence, storage, use, disposal, transportation or discharge of any Hazardous
Material is being contested in good faith by Holding or such Subsidiary.
B. Holding shall not and shall not permit its Subsidiaries to
install or permit to be installed any asbestos in any property owned or leased
by any of them. With respect to any asbestos currently present in such property,
Holding shall and shall cause its Subsidiaries to promptly and in accordance
with all applicable Environmental Laws and prudent industry practices, maintain
such asbestos in good and safe condition.
5.11 Further Assurances; New Subsidiaries; Intellectual Property
At any time or from time to time upon the request of any Agent,
Holding or Borrower, or both, shall and shall cause each of their respective
Subsidiaries to execute and deliver such further documents (including without
limitation, such financing statements, continuation statements or amendments
thereto and such other documents and certificates as may be necessary or
desirable or as any Agent may reasonably request, in order to perfect and
preserve the security interests granted or purported to be granted under any of
the Collateral Documents) and do such other acts and things as any Agent may
reasonably request in order to effect fully the purposes of this Agreement and
the other Loan Documents and to provide for payment of the Obligations in
accordance with the terms of this Agreement and the other Loan Documents.
Without limiting any of the foregoing, in the event (i) a Person becomes a
Subsidiary of Holding or Borrower, after the Restatement Effective Date
(provided that, as long as the LaSalle Documents or any documents approved by
Requisite Lenders pursuant to which BB Capital has entered into a securitization
transaction with respect to its receivables are in full force and effect, then
BB Capital shall be excluded from the provisions of this Section 5.11) or (ii)
Holding or any of its Subsidiaries registers any trademark, copyright or patent
with any governmental authority, then, Holding and Borrower, upon the request of
any Agent shall or shall cause their Subsidiaries to execute and deliver such
guaranties, Collateral Documents and such other agreements, pledges, assignments
in a mutually satisfactory fashion, documents and certificates (including,
without limitation, any amendments to the Loan Documents) as may be necessary or
desirable or as any Agent may reasonably request and do such other acts and
things as any Agent may reasonably request in order to have such Subsidiary
guaranty and/or secure the Obligations or have such trademark, copyright or
patent secure the Obligations, as the case may be, and effect fully the purposes
of this Agreement and the other Loan Documents and to provide for payment of the
Obligations in accordance with the terms of this Agreement and the other Loan
Documents. Borrower agrees to promptly notify Agents at such time as Borrower's
pending patent applications are approved and of the patent numbers issued
therefor.
5.12 Payment of Obligations
Holding, Borrower and each of their respective Subsidiaries shall
pay their respective Obligations when the same shall become due.
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5.13 Interest Rate Agreements
At all times during the period from the Restatement Effective Date
to the date that is two years after the Restatement Effective Date, Borrower
shall maintain in effect one or more Interest Rate Agreements with respect to
the Loans, in an aggregate notional principal amount of not less than
$75,000,000 which Interest Rate Agreements shall have the effect of establishing
a maximum interest rate of not more than 11% per annum with respect to such
notional principal amount, each such Interest Rate Agreement to be in form and
substance satisfactory to Agents.
5.14 Post-Closing Covenants
Within 90 days after the Restatement Effective Date, Borrower shall
take all steps necessary or that Collateral Agent may reasonably request in
order to grant in favor of Collateral Agent, for the benefit of Agents and
Lenders, a first priority, perfected security interest in 66% of the Capital
Stock of Blue Bird Mexico and shall deliver to Collateral Agent a legal opinion,
from counsel reasonably satisfactory to Collateral Agent and in form and
substance reasonably satisfactory to Collateral Agent regarding such perfected
security interest.
SECTION 6. NEGATIVE COVENANTS
Holding and its Subsidiaries severally covenant and agree that, so
long as any of the Commitments shall be in effect or any Letter of Credit is
outstanding and until payment in full of all of the Loans and all other amounts
owing hereunder, unless Requisite Lenders shall otherwise give prior written
consent, such Person will perform all covenants in this Section 6.
6.1 Indebtedness
Holding and its Subsidiaries will not, and will not permit any of
their respective Subsidiaries to, directly or indirectly, create, incur, assume,
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(i) Holding and Borrower may become and remain liable with respect
to the Obligations;
(ii) Borrower may become and remain liable with respect to the
Indebtedness pursuant to the Existing Subordinated Notes (subject to the
reduction in such notes pursuant to the satisfaction of subsection 3.1F)
and the Subordinated Notes in an aggregate outstanding principal amount
not to exceed $105,000,000 at any time or refinancings of the Subordinated
Notes permitted pursuant to subsection 6.13;
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(iii) Borrower and its Subsidiaries may become and remain liable
with respect to Indebtedness in respect of (y) Capital Leases, in an
aggregate amount not to exceed $3,000,000 outstanding at anytime, provided
that such Capital Leases are permitted under subsection 6.6D and (z)
Indebtedness incurred to purchase, or to finance or refinance the purchase
price of, personal property (excluding Inventory) used in the conduct of
Holding's and any of its Subsidiaries' business, in an aggregate amount
not to exceed $3,000,000 outstanding at anytime; provided that in each
case the amount of the Indebtedness incurred is not greater than the fair
market value plus the reasonable delivered and installed cost and related
expenses of any property so financed at the time of such acquisition;
(iv) Holding and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 6.4;
(v) Holding may remain liable with respect to loans permitted by
subsection 6.3(iii) and Borrower may make and maintain, and Canadian Blue
Bird may become and remain liable with respect to, intercompany loans
permitted by subsection 6.3(iv);
(vi) Borrower may remain liable with respect to the existing
Indebtedness listed on Schedule 6.1 annexed hereto;
(vii) Holding may become and remain liable with respect to unsecured
and unguaranteed Indebtedness evidenced by the Junior Subordinated Notes;
(viii) Borrower may become and remain liable with respect to
repurchase and indemnity obligations to LaSalle National Bank as set forth
in the Lease Portfolio Documents;
(ix) In addition to the Indebtedness permitted by clauses
(i)-(viii), Holding and Borrower may become and remain liable with respect
to unsecured Indebtedness not exceeding at any one time $15,000,000 in
aggregate outstanding principal amount;
(x) BB Capital may become and remain liable with respect to
Indebtedness to LaSalle National Bank incurred pursuant to the LaSalle
Loan Agreement in an aggregate principal amount not to exceed $125,000,000
outstanding at any time; and
(xi) BB Capital may become and remain liable with respect to
Indebtedness related to securitization transactions incurred pursuant to
documents approved by Requisite Lenders (the "Securitization Documents");
provided that the aggregate outstanding amount of any such Indebtedness
does not at any time exceed $25,000,000 with respect to any individual
securitization transaction and the aggregate outstanding
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amount of any such Indebtedness and sold receivables shall not exceed
$125,000,000 at any time.
6.2 Liens
Holding will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or permit to exist any Lien on or
with respect to any property or asset (including any document or instrument in
respect of goods or accounts receivable) of Holding or any of its Subsidiaries,
whether now owned or hereafter acquired, or any income or profits therefrom,
except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens created to secure the Indebtedness permitted pursuant to
subsection 6.1(iii); provided such Liens relate solely to the property
financed with such Indebtedness;
(iv) Liens existing on the Restatement Effective Date which are
listed on Schedule 6.2 annexed hereto and which relate solely to the
property identified on such Schedule which secure the Indebtedness
permitted pursuant to subsection 6.1(vi);
(v) Liens in favor of Borrower created by Canadian Blue Bird
pursuant to the Subsidiary Documents to secure Canadian Blue Bird's
Indebtedness to Blue Bird permitted pursuant to subsection 6.3(iv)(b);
(vi) Liens in favor of General Motors Acceptance Corporation in
inventory consisting of Chevrolet and General Motors Corporation vehicles
and chassis, and all additions or accessions thereto and proceeds thereof,
to secure the purchase price of such inventory;
(vii) Liens granted by Borrower pursuant to the Lease Portfolio
Documents in favor of LaSalle National Bank (the "Purchaser") with respect
to the buses, vehicles and other equipment subject to leases sold to the
Purchaser pursuant to such Lease Portfolio Documents and with respect to
funds held by Borrower as servicer under the Lease Portfolio Documents or
constituting purchase price payments to be made to Borrower and retained
by the Purchaser in any holdback account to secure the performance of
Borrower's obligations under the Lease Portfolio Documents, in each case
pursuant to and in accordance with the Lease Portfolio Documents, and any
Liens in favor of the Purchaser arising as a result of any precautionary
filings made by the Purchaser with respect to the Lease Portfolio sold to
such Purchaser;
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(viii) Liens granted by Borrower on the capital stock of BB Capital
to LaSalle National Bank pursuant to the LaSalle Pledge Agreement to
secure Indebtedness under the LaSalle Loan Agreement permitted pursuant to
subsection 6.1 (xi); and
(ix) Liens granted by BB Capital pursuant to documents approved by
Requisite Lenders to secure Indebtedness permitted pursuant to subsection
6.1(xii).
6.3 Investments
Holding will not, and will not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, except:
(i) Borrower may make and own Investments in Cash Equivalents;
(ii) Borrower may own the existing Investments set forth on Schedule
6.3 annexed hereto;
(iii) Borrower may make and maintain intercompany loans to Holding
to the extent permitted by subsection 6.5;
(iv) Borrower may make and maintain Investments in intercompany
loans to Canadian Blue Bird in a principal amount not to exceed
$5,000,000, to the extent required for working capital purposes necessary
to the operation of Canadian Blue Bird; provided that Borrower shall
obtain and pledge to Collateral Agent for the benefit of Lenders
promissory notes with respect to such loans which promissory notes shall
be secured by a duly perfected first priority security interest in all of
the real and personal property of Canadian Blue Bird and all such security
interests shall be assigned and pledged to Collateral Agent for the
benefit of Administrative Agent and Lenders pursuant to the Subsidiary
Documents;
(v) Holding may make and maintain loans to members of the Management
Group in an aggregate principal amount not to exceed $3,200,000;
(vi) Borrower may make and maintain Investments received in
connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers, in each case arising in the
ordinary course of business;
(vii) Borrower may make and maintain Investments in non-cash
proceeds of Asset Sales received in accordance with the provisions of
subsection 6.7 B(iii);
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(viii) Borrower may make and maintain Investments in lease
receivables, with respect to leases originated on terms consistent with
Borrower's prior practices and made the ordinary course of Borrower's
business, in an aggregate amount not to exceed $40,000,000 at any one
time;
(ix) Borrower may make and maintain other Investments in an
aggregate principal amount not in excess of $250,000 at any time;
(x) Borrower may make Investments in BB Capital provided that the
aggregate amounts of all such Investments, including without limitation
all stock purchases, capital contributions, loans or advances, Contingent
Obligations, amounts owing to Borrower which are subordinated pursuant to
the terms of the LaSalle Subordination Agreement (including, to the extent
applicable and without limitation, all payments for buses, other assets or
services) and all advances or other credit extended by way of payment
terms not granted to other non-affiliated purchasers (including without
limitation discounts, holdbacks, recourse or reserves) does not exceed
$12,500,000 outstanding at any time;
(xi) Borrower may make Investments in wholly owned Subsidiaries
pursuant to subsection 6.7B(i); and
(xii) Borrower may maintain Investments in Blue Bird Mexico existing
on the Restatement Effective Date and may make additional Investments in
Blue Bird Mexico in an aggregate amount not to exceed $5,000,000.
6.4 Contingent Obligations
Holding will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or become or be liable with respect to any
Contingent Obligation except:
(i) Contingent Obligations in respect of the Obligations;
(ii) guaranties resulting from endorsement of negotiable instruments
for collection in the ordinary course of business;
(iii) obligations of Holding under the Holding Guaranty;
(iv) Interest Rate Agreements entered into by Borrower; provided
that the aggregate notional amount with respect to such Interest Rate
Agreements shall not exceed the aggregate amount of the Commitments then
in effect subject to a floating rate of interest;
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(v) guaranties by Holding or Borrower in the ordinary course of
business of Capital Leases of Borrower and its Subsidiaries;
(vi) Contingent Obligations of Borrower described on Schedule 6.4
annexed hereto;
(vii) guaranties by Holding of Interest Rate Agreements entered into
by Borrower that are permitted by subsection 6.4(iv);
(viii) the guaranty by Holding of Indebtedness in respect of the
Existing Subordinated Notes (subject to the reduction in such notes
pursuant to the satisfaction of subsection 3.1F) and the Subordinated
Notes or refinancings thereof permitted pursuant to subsection 6.13; and
(ix) in addition to the Contingent Obligations permitted by clauses
(i)-(viii), Borrower may become and remain liable with respect to other
Contingent Obligations; provided, that the maximum aggregate liability of
Borrower in respect of all such Contingent Obligations shall not at any
one time exceed $2,000,000.
6.5 Restricted Junior Payments
Holding and Borrower will not, and will not permit any of their
respective Subsidiaries to, directly or indirectly, declare, order, pay, make or
set apart any sum for any Restricted Junior Payment except:
(i) Borrower may make interest payments in respect of Existing
Subordinated Notes (subject to the reduction in such notes pursuant to the
satisfaction of subsection 3.1F) in accordance with the terms of the
Existing Subordinated Indenture and Subordinated Notes in accordance with
the terms of the Subordinated Indenture, as such documents have been
approved by Agents and Requisite Lenders, and Borrower may make principal
payments, including premium (if any), in respect of the redemption or
repurchase of Existing Subordinated Notes and Subordinated Notes in an
aggregate amount (measured on a cumulative basis from the Restatement
Effective Date) not to exceed $15,000,000 plus accrued interest thereon;
provided that the aggregate amount of such principal payments, including
premium, if any, shall not exceed $5,000,000 in any Fiscal Year; provided
further, that if the aggregate amount of such principal payments,
including premium, if any, actually made in any Fiscal Year is less than
$5,000,000, the difference between (a) the amount of such principal
payments, including premium, if any, actually made in such Fiscal Year and
(b) $5,000,000 may be carried over and made in any subsequent Fiscal Year;
(ii) Holding may repurchase Holding Common Stock held by members of
the Management Group in accordance with the terms of the Subscription
Agreements
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and Borrower may declare and pay dividends or make loans to Holding for
such purpose; provided that the aggregate amount (measured on a cumulative
basis from the Restatement Effective Date) of payments for such
repurchases (and dividends or loans therefor) plus the amount of principal
and interest paid on the Junior Subordinated Notes shall not exceed the
sum of (a) $6,000,000 plus (b) the net Cash Proceeds of any Holding Common
Stock sold to members of the Management Group after the Restatement
Effective Date; provided, further, that the amount of payments for such
repurchases, principal and interest shall not exceed $2,000,000 in the
aggregate during the period from the Restatement Effective Date to the
first anniversary thereof, inclusive; and
(iii) Borrower may declare and pay dividends or make intercompany
loans to Holding for the purpose of paying operating expenses of Holding
arising in the ordinary course of business including, without limitation,
taxes, provided that such dividends and loans shall not exceed $300,000 in
the aggregate per Fiscal Year; and
(iv) Borrower may make payments on or about the Restatement
Effective Date to holders of Existing Subordinated Notes in connection
with the Refinancing on the terms and in the amounts disclosed in writing
to Agents and the Lenders prior to the Restatement Effective Date; and
(v) Borrower may exchange the Subordinated Notes for registered
subordinated notes with substantially identical terms and in accordance
with the terms of the Registration Rights Agreement.
provided that immediately prior to and immediately after giving effect to any
Restricted Junior Payment permitted by this subsection 6.5, no Event of Default
or Potential Event of Default exists or will exist.
Holding and Borrower will not, nor will they permit any of their
respective Subsidiaries to, deposit any funds for the purpose of making any
Restricted Junior Payment with a trustee, paying agent or registrar or other
payment intermediary more than three Business Days prior to the date such
payment is due or 30 days prior to the date such payment is due in respect of
the refinancing of the Subordinated Debt.
6.6 Financial Covenants
A. Minimum Consolidated EBITDA
Holding and its Subsidiaries shall not permit Consolidated EBITDA as
of the last day of each of the Fiscal Quarters shown below for the four
consecutive Fiscal Quarter period ended on such date to be less than the
correlative amount indicated:
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Minimum
Fiscal Quarter Consolidated EBITDA
-------------- -------------------
Fiscal Year 1997
First Fiscal Quarter $53,000,000
Second Fiscal Quarter 54,000,000
Third Fiscal Quarter 54,000,000
Fourth Fiscal Quarter 56,000,000
Fiscal Year 1998
First Fiscal Quarter 57,000,000
Second Fiscal Quarter 57,000,000
Third Fiscal Quarter 58,000,000
Fourth Fiscal Quarter 60,000,000
Fiscal Year 1999
First Fiscal Quarter 61,000,000
Second Fiscal Quarter 61,000,000
Third Fiscal Quarter 62,000,000
Fourth Fiscal Quarter 65,000,000
Fiscal Year 2000
First Fiscal Quarter 65,000,000
Second Fiscal Quarter 66,000,000
Third Fiscal Quarter 68,000,000
Fourth Fiscal Quarter 70,000,000
Fiscal Year 2001
First Fiscal Quarter 71,000,000
Second Fiscal Quarter 72,000,000
Third Fiscal Quarter 74,000,000
Fourth Fiscal Quarter 77,000,000
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Fiscal Year 2002
First Fiscal Quarter 77,000,000
Second Fiscal Quarter 77,000,000
Third Fiscal Quarter 77,000,000
Fourth Fiscal Quarter 77,000,000
Fiscal Year 2003
First Fiscal Quarter 77,000,000
Second Fiscal Quarter 77,000,000
Third Fiscal Quarter 77,000,000
Fourth Fiscal Quarter 77,000,000
B. Maximum Leverage Ratio
Holding and its Subsidiaries shall not permit the ratio of (i)
Consolidated Funded Debt of Holding and its Subsidiaries on a consolidated
basis, to (ii) Consolidated EBITDA for the four consecutive Fiscal Quarter
period ended on the last day of each of the Fiscal Quarters shown below to
exceed the correlative ratios indicated:
Fiscal Quarter Maximum Leverage Ratio
-------------- ----------------------
Fiscal Year 1997
First Fiscal Quarter 5.10 to 1.00
Second Fiscal Quarter 5.10 to 1.00
Third Fiscal Quarter 5.00 to 1.00
Fourth Fiscal Quarter 4.80 to 1.00
Fiscal Year 1998
First Fiscal Quarter 4.75 to 1.00
Second Fiscal Quarter 4.65 to 1.00
Third Fiscal Quarter 4.50 to 1.00
Fourth Fiscal Quarter 4.30 to 1.00
Fiscal Year 1999
First Fiscal Quarter 4.25 to 1.00
Second Fiscal Quarter 4.10 to 1.00
Third Fiscal Quarter 3.95 to 1.00
Fourth Fiscal Quarter 3.70 to 1.00
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Fiscal Year 2000
First Fiscal Quarter 3.60 to 1.00
Second Fiscal Quarter 3.50 to 1.00
Third Fiscal Quarter 3.35 to 1.00
Fourth Fiscal Quarter 3.15 to 1.00
Fiscal Year 2001
First Fiscal Quarter 3.00 to 1.00
Second Fiscal Quarter 2.85 to 1.00
Third Fiscal Quarter 2.70 to 1.00
Fourth Fiscal Quarter 2.55 to 1.00
Fiscal Year 2002
First Fiscal Quarter 2.55 to 1.00
Second Fiscal Quarter 2.55 to 1.00
Third Fiscal Quarter 2.55 to 1.00
Fourth Fiscal Quarter 2.55 to 1.00
Fiscal Year 2003
First Fiscal Quarter 2.55 to 1.00
Second Fiscal Quarter 2.55 to 1.00
Third Fiscal Quarter 2.55 to 1.00
Fourth Fiscal Quarter 2.55 to 1.00
C. Minimum Interest Coverage Ratio
Holding and its Subsidiaries shall not permit the ratio of (i)
Consolidated EBITDA to (ii) Consolidated Cash Interest Expense as of the last
day of each of the Fiscal Quarters shown below for the four consecutive Fiscal
Quarter period ended on the last day of each of the Fiscal Quarters set forth
below to be less than the correlative ratio indicated:
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Minimum Interest
Fiscal Quarter Coverage Ratio
-------------- --------------
Fiscal Year 1997
First Fiscal Quarter 1.85 to 1.00
Second Fiscal Quarter 1.85 to 1.00
Third Fiscal Quarter 1.85 to 1.00
Fourth Fiscal Quarter 1.85 to 1.00
Fiscal Year 1998
First Fiscal Quarter 1.90 to 1.00
Second Fiscal Quarter 1.90 to 1.00
Third Fiscal Quarter 1.90 to 1.00
Fourth Fiscal Quarter 1.95 to 1.00
Fiscal Year 1999
First Fiscal Quarter 2.00 to 1.00
Second Fiscal Quarter 2.05 to 1.00
Third Fiscal Quarter 2.10 to 1.00
Fourth Fiscal Quarter 2.20 to 1.00
Fiscal Year 2000
First Fiscal Quarter 2.25 to 1.00
Second Fiscal Quarter 2.30 to 1.00
Third Fiscal Quarter 2.40 to 1.00
Fourth Fiscal Quarter 2.50 to 1.00
Fiscal Year 2001
First Fiscal Quarter 2.60 to 1.00
Second Fiscal Quarter 2.65 to 1.00
Third Fiscal Quarter 2.75 to 1.00
Fourth Fiscal Quarter 2.90 to 1.00
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Fiscal Year 2002
First Fiscal Quarter 2.90 to 1.00
Second Fiscal Quarter 2.90 to 1.00
Third Fiscal Quarter 2.90 to 1.00
Fourth Fiscal Quarter 2.90 to 1.00
Fiscal Year 2003
First Fiscal Quarter 2.90 to 1.00
Second Fiscal Quarter 2.90 to 1.00
Third Fiscal Quarter 2.90 to 1.00
Fourth Fiscal Quarter 2.90 to 1.00
D. Maximum Consolidated Capital Expenditures
Holding and its Subsidiaries shall not permit Consolidated Capital
Expenditures to exceed in any Fiscal Year the amount set forth below for such
Fiscal Year (the "Capital Expenditure Amount"):
Capital
Expenditure
Fiscal Year Amount
----------- -----------
1997 $6,500,000
1998 6,750,000
1999 7,000,000
2000 7,250,000
2001 7,700,000
2002 8,000,000
2003 9,000,000
; provided that if any portion of the Capital Expenditure Amount permitted to be
incurred in any Fiscal Year (the "Reference Period") has not been incurred
within such Reference Period (the amount of unutilized Consolidated Capital
Expenditures being referred to as the "Unutilized Amount"), Holding and its
Subsidiaries may, in the Fiscal Year immediately following the Reference Period,
make additional Consolidated Capital Expenditures in an amount not to exceed the
lesser of (i) the Unutilized Amount and (ii) 10% of the Capital Expenditure
Amount in respect of the Reference Period.
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6.7 Restriction on Fundamental Changes
A. Other than as permitted by subsection 6.7B, neither Holding nor
any of its Subsidiaries may, without the consent of Requisite Lenders, acquire
or create any Subsidiaries or convey, sell, lease, sublease or transfer any of
its assets to any Subsidiaries.
B. Neither Holding, nor any of its Subsidiaries will enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), issue any Preferred Stock or convey,
sell, exchange, lease, sub-lease, transfer or otherwise dispose of, in one
transaction or a series of related transactions, all or any substantial part of
its business, property or fixed assets or all or any portion of the stock or
beneficial ownership, whether now owned or hereafter acquired, or acquire by
purchase or otherwise all or substantially all the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any Person
except:
(i) subject to the provisions of subsection 6.12, Borrower may
acquire assets or 100% of the Capital Stock of one or more other Persons;
provided that amounts paid for an acquisition pursuant to this subsection
6.7B(i) shall not count as Consolidated Capital Expenditures for purposes
of determining compliance with subsection 6.6D; provided further that (a)
the aggregate consideration (whether Cash or non-cash and including all
assumption of Indebtedness) for such acquisitions (measured on a
cumulative basis from the Restatement Effective Date) shall not exceed
$15,000,000, (b) in the case of the acquisition of Capital Stock of
another Person, (i) such Person shall become a Subsidiary of Borrower and
execute all documents and take all actions required pursuant to subsection
5.11, (2) Borrower may not make any additional Investments in such
Subsidiary, unless permitted by subsection 6.3 and (c) all liabilities of
such Subsidiary shall be non-recourse to Borrower;
(ii) Borrower may sell, exchange or otherwise dispose of assets in
Asset Sale transactions; provided that (a) any Asset Sale is made for the
fair market value of such assets and for at least eighty-five percent
(85%) cash, (b) the Net Cash Proceeds of Asset Sale of each such Asset
Sale are applied in conformity with subsection 2.5 and (c) the balance of
the sale price not received in cash is pledged to Collateral Agent
pursuant to the Borrower Security Agreement; and, provided, further, that
in any Fiscal Year, Borrower and its Subsidiaries may not sell, exchange
or otherwise dispose of assets in Asset Sale transactions having a fair
market or book value in excess of $500,000 in any one or more related
transactions without the prior written consent of Requisite Lenders;
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(iii) a Subsidiary of Borrower acquired pursuant to subsection
6.7B(i) may be merged or consolidated with or into Borrower, or be
liquidated, wound up or dissolved; provided, that in the case of such a
merger or consolidation, Borrower shall be the continuing or surviving
corporation; and
(iv) Borrower may sell buses and leases to BB Capital (x) on terms
and conditions that are no more favorable to BB Capital than those which
BB Capital could obtain from a non-affiliated third party seller in an
arms-length transaction for similar buses and related equipment or leases
or (y) pursuant to documents and on terms approved by Requisite Lenders.
6.8 Sales and Leasebacks
Holding and its Subsidiaries will not directly or indirectly, become
or remain liable as lessee or as guarantor or other surety with respect to any
lease, of any property (whether real or personal or mixed) whether now owned or
hereafter acquired, (i) that Holding or its Subsidiaries has sold or transferred
or is to sell or transfer to any other Person, or (ii) that Holding or its
Subsidiaries intends to use for substantially the same purpose as any other
property that has been or is to be sold or transferred by Holding or any such
Subsidiary to any Person in connection with such lease.
6.9 Sale or Discount of Receivables
Holding and its Subsidiaries will not, directly or indirectly, sell
with recourse, or discount or otherwise sell for less than the face value
thereof, notes or accounts receivable; provided, that notwithstanding this
subsection 6.9, Borrower may sell, transfer or assign its lease receivables (x)
pursuant to, and in accordance with the terms of, the Lease Portfolio Documents,
(y) in transactions the terms and conditions of which are substantially similar
to, and which are no less favorable to Borrower than, those of the Lease
Portfolio Documents or (z) to BB Capital pursuant to a transaction permitted
under subsection 6.7B; provided further, that BB Capital may sell, transfer or
assign its lease receivables pursuant to securitization documents approved by
Requisite Lenders.
6.10 Transactions with Shareholders and Affiliates
Holding and its Subsidiaries will not, directly or indirectly, enter
into or permit to exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity securities of
Holding or Borrower or with any Affiliate of Holding or Borrower or of any such
holder, as the case may be, on terms that are less favorable to Holding or that
Subsidiary, as the case may be, than those that might be
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obtained at the time from Persons who are not such a holder or Affiliate;
provided that with respect to any transaction or series of related transactions
involving aggregate payments or value equal to or greater than $1,000,000,
Borrower shall have delivered an officer's certificate to Administrative Agent
certifying that such transaction or series of related transactions comply with
the provisions of this subsection 6.10 and, with respect to any transaction or
series of transactions involving aggregate payments or value equal to or greater
than $5,000,000, further certifying that such transaction or series of
transactions have been approved by a majority of the Board of Directors of
Borrower, including a majority of the disinterested directors of the Board of
Directors of Borrower. For the purposes of the foregoing, a director of the
Borrower shall not be considered "interested" with respect to a transaction
solely by virtue of being a director of the other party to such transaction.
Borrower shall be deemed to have complied with the foregoing provisions if it
has obtained a written opinion from an Independent Financial Advisor stating
that the terms of such transaction or series of transactions are fair to Holding
or Subsidiary, as the case may be, from a financial point of view. The foregoing
restrictions shall not apply to (i) payment of Transaction Costs and payments
permitted under subsection 6.5, (ii) any transaction between Borrower and any of
its wholly-owned Subsidiaries (other than BB Capital) or between any of its
wholly-owned Subsidiaries (other than BB Capital), (iii) customary fees paid to
members of the Boards of Directors of Borrower and its Subsidiaries, (iv)
reasonable financial advisory arrangements for services rendered by Merrill
Lynch or any of its Affiliates to Borrower or any of its Subsidiaries, (v)
arms-length transactions in the ordinary course of business with other companies
managed by MLCP or Stonington Partners, Inc., (vi) transactions between Borrower
and BB Capital expressly permitted by this Agreement or (vii) allocation of tax
benefits in accordance with the terms of the Tax Allocation Agreement.
6.11 Disposal of Subsidiary Stock
Except as permitted by subsection 6.7 or as required by the
Collateral Documents, a Loan Party will not,
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
securities of (or warrants, rights or options to acquire shares or other
equity securities of) any of its Subsidiaries, except to qualify directors
if required by applicable law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other securities of (or warrants, rights or options to acquire
shares or other securities of) such Subsidiary, except to Borrower or to
qualify directors if required by applicable law.
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6.12 Conduct of Business; Limitations on Subsidiaries
A. Neither Borrower nor any of its Subsidiaries (other than the
Guatemalan Subsidiaries) will engage in any business other than the manufacture
and sale of school buses, commercial buses, recreational vehicles and chassis
and operations substantially similar or incidental to such business, including
transactions with respect to lease receivables pursuant to the Lease Portfolio
Documents; provided that BB Capital may purchase buses and leases from Borrower
to the extent permitted by subsection 6.7B(v), may originate lease receivables
in accordance with Borrower's past practices and procedures (including, without
limitation, Borrower's credit standards), and may finance such lease receivables
to the extent permitted by Section 6.9. Borrower will continue to originate any
lease receivables in accordance with practices and procedures, including,
without limitation, credit standards, consistent with its past practices and
procedures. Holding shall engage only in the business of holding the shares of
stock of Borrower.
B. The Guatemalan Subsidiaries shall not engage in any business, own
or hold any assets, or incur any Indebtedness, Contingent Obligations or other
obligations or liabilities whatsoever. Neither Holding nor any of its
Subsidiaries shall incur any Indebtedness, Contingent Obligations or other
obligations or liabilities whatsoever on behalf of, or with respect to, the
Guatemalan Subsidiaries. Holding's and its Subsidiaries' aggregate Investments
in the Guatemalan Subsidiaries shall not exceed $15,000.
6.13 Amendments or Waivers of Certain Documents; Changes Relating to
Subordinated Debt
A. Neither Holding nor any of its Subsidiaries will agree to any
amendment, amendment and restatement, supplement or other modification to, or
waive any of its rights under, the Related Agreements without the consent of
Requisite Lenders; provided, that this subsection 6.13A shall not govern any
amendments, amendment and restatements, supplements, modifications, waivers or
other matters relating to any Subordinated Debt or to any Subordinated Debt
Documents that are governed by subsection 6.13B.
B. Neither Holding nor any of its Subsidiaries will agree to any
amendment, modification or supplement to, or waive any of its rights under, the
terms of any Subordinated Debt or of any Subordinated Debt Document, or (except
as permitted pursuant to subsection 6.5) make any payment the effect of which is
to amend or change the terms of any Subordinated Debt or Subordinated Debt
Document without the consent of Requisite Lenders; provided, that,
notwithstanding the foregoing, Holding and its Subsidiaries may agree to amend
any provisions of the Subordinated Debt or Subordinated Debt Documents (i) to
cure any ambiguity, to
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correct or supplement any provision therein which may be defective or
inconsistent with any other provision of such Subordinated Debt or Subordinated
Debt Documents, (ii) to comply with the Trust Indenture Act of 1939, (iii) to
make modifications of a technical or clarifying nature which are no less
favorable to the Lenders than the provisions of the Subordinated Debt and
Subordinated Debt Documents in effect on the Restatement Effective Date or (iv)
to eliminate or make less restrictive any covenant contained in the Subordinated
Debt Documents; provided that no amendment pursuant to this clause (iv) shall
result in any provisions which are less favorable to the Lenders than the
provisions contained in the Subordinated Debt Documents on the Restatement
Effective Date.
C. Neither Holding nor any of its Subsidiaries will defease, or make
any payments the effect of which is to defease (whether pursuant to the
defeasance provisions of the Subordinated Debt or otherwise and including
without limitation any covenant defeasance), the Subordinated Debt in whole or
in part, without in each case obtaining the written consent of Requisite
Lenders.
6.14 Designation of Senior Indebtedness.
Neither Holding nor any of its Subsidiaries will, without obtaining
the prior written consent of Requisite Lenders, enter into any agreements or
instruments creating or evidencing Indebtedness if such agreements or
instruments specifically designate such Indebtedness to be "Designated Senior
Indebtedness" under any of the Subordinated Debt Documents (or any comparable
provision of any refinancing agreement entered into in respect thereof).
SECTION 7. GUARANTY OF HOLDING
7.1 Guaranty by Holding
As consideration for Lenders agreeing to enter into this Agreement
and extend the Commitments hereunder, Holding hereby unconditionally and
irrevocably guaranties the due and punctual payment when due (whether by
required prepayment, declaration, demand or otherwise) (including amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)) of all Obligations of
Borrower (including, without limitation, interest which, but for the filing of a
petition in bankruptcy with respect to Borrower, would accrue on such
Obligations whether or not such interest would be an allowable claim in such
proceeding). For purposes of this Section 7, Holding is referred to as a
"Guarantor" and the obligations of Holding under this subsection 7.1 are
referred to as the "Guaranty."
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7.2 Terms of Guaranty
The Guarantor agrees that the Obligations of the Borrower may be
extended or renewed, and the Loans repaid and reborrowed in whole or in part,
without notice or further assent from it, and that it will remain bound upon
this Guaranty notwithstanding any extension, renewal or other alteration of any
such Obligation or repayment and reborrowing of the Loans.
The Guarantor waives presentation of, demand of, payment from and
protest of any Obligation of Borrower and also waives notice of protest for
nonpayment. The obligations of the Guarantor under this Guaranty shall not be
affected by, and the Guarantor hereby waives its rights (to the extent permitted
by law) in connection with:
(a) the failure of any Agent or any Lender to assert any claim or
demand or to enforce any right or remedy against the Borrower under the
provisions of this Agreement or any other agreement or otherwise,
(b) any extension or renewal of any provision thereof,
(c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Agreement or any instrument executed pursuant
hereto,
(d) the release of any of the security held by any Agent or any
Lender for the Obligations of the Borrower,
(e) the failure of any Agent or any Lender to exercise any right or
remedy against any other guarantor of the Obligations of Borrower,
(f) any Agent or any Lender taking and holding security or
collateral for the payment of this Guaranty, any other guaranties of the
Obligations or other liabilities of Borrower and the Obligations
guarantied hereby, and exchanging, enforcing, waiving and releasing any
such security or collateral,
(g) any Agent or any Lender applying any such security or collateral
and directing the order or manner of sale thereof as Collateral Agent in
its discretion may determine, or
(h) any Agent or any Lender settling, releasing, compromising,
collecting or otherwise liquidating the Obligations and any security or
collateral therefor in any manner determined by such Agent or such Lender.
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The Guarantor further agrees that this Guaranty constitutes a
guaranty of payment when due and not of collection and waives any right to
require that any resort be had by any Agent or any other Person to any of the
security held for payment of the Obligations of Borrower or to any balance of
any deposit account or credit on the books of Collateral Agent, Administrative
Agent or any other Person in favor of Borrower or any other Person.
The obligations of the Guarantor under this Guaranty shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of the Obligations, discharge of Borrower from
the Obligations in a bankruptcy or similar proceeding or otherwise. Without
limiting the generality of the foregoing, the obligations of the Guarantor under
this Guaranty shall not be discharged or impaired or otherwise affected by the
failure of Collateral Agent, Administrative Agent or any Lender to assert any
claim or demand or to enforce any remedy under this Agreement or any other
agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of the
Obligations of Borrower, or by any other act or thing or omission or delay to do
any other act or thing that may or might in any manner or to any extent vary the
risk of the Guarantor or would otherwise operate as a discharge of the Guarantor
as a matter of law or equity.
The Guarantor acknowledges that all or a portion of the Obligations
may in the future be secured by deeds of trust, deeds to secure debt or
mortgages covering certain interests in real property and authorizes Collateral
Agent, at its sole option, without notice or demand and without affecting the
liability of the Guarantor under this Guaranty, to foreclose the deeds of trust
and mortgages and the interests in real property secured thereby by non-judicial
or other sale, and the Guarantor hereby waives any defense to the recovery by
Collateral Agent, Administrative Agent or any Lender against the Guarantor of
any deficiency after such sale, and the Guarantor expressly waives any defense
or benefits that may be derived from statutes and laws relating thereto.
Collateral Agent may, at its election, foreclose on any security
held by Collateral Agent by one or more judicial or nonjudicial sales, whether
or not every aspect of any such sale is commercially reasonable, or exercise any
other right or remedy Collateral Agent may have against Borrower or any security
without affecting or impairing in any way the liability of the Guarantor
hereunder except to the extent the Obligations have been paid. The Guarantor
waives any defense arising out of such election by Collateral Agent, even though
such election operates to impair or extinguish
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any right of reimbursement or subrogation or other right or remedy of the
Guarantor against Borrower or any security.
The Guarantor further agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Obligation of Borrower is
rescinded or must otherwise be restored by Administrative Agent, Collateral
Agent or any Lender upon the bankruptcy or reorganization of Borrower or
otherwise.
The Guarantor further agrees, in furtherance of the foregoing and
not in limitation of any other right that Administrative Agent, Collateral Agent
or any Lender may have at law or in equity against the Guarantor by virtue
hereof, upon the failure of Borrower to pay any of its Obligations when and as
the same shall become due (whether by required prepayment, declaration, demand
or otherwise), the Guarantor will forthwith pay, or cause to be paid, in cash,
to Administrative Agent an amount equal to the sum of the unpaid principal
amount of such Obligations, accrued and unpaid interest on such Obligations and
all other Obligations of Borrower to Administrative Agent, Collateral Agent or
such Lender.
Guarantor hereby irrevocably waives any rights which it may acquire
against Borrower by way of right of subrogation.
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon any failure of
Borrower to pay its Obligations when due (whether by required prepayment,
declaration, demand or otherwise), each Lender, or Administrative Agent with
respect to any Obligation owed under the Letters of Credit, and any Affiliate of
any of them, is hereby authorized by Guarantor at any time or from time to time,
without notice to Guarantor or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, not limited to, Indebtedness evidenced
by certificates of deposit, whether matured or unmatured, but not including
trust accounts) and any other Indebtedness at any time owing by any Lender or
any subsequent holder of any Note, or Administrative Agent with respect to any
Obligation owed under the Letters of Credit, or any Affiliate of any of them, to
or for the credit or the account of Guarantor against and on account of the
obligations and liabilities of Guarantor to any Lender, or Administrative Agent
with respect to any Obligation owed under the Letters of Credit, or any
Affiliate of any of them, under this Agreement, this Guaranty or the Letters of
Credit including but not limited to, all claims of any nature or description
arising out of or connected with this Agreement, this Guaranty or the Letters of
Credit or any of the other Loan Documents irrespective of whether or not (a)
Lenders, or Administrative Agent with respect to any Obligation owed under the
Letters of Credit, or any Affiliate of any of them, shall have made any demand
hereunder or (b) Lenders, or Administrative Agent with respect to any
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Obligation owed under the Letters of Credit, or any Affiliate of any of them,
shall have declared the principal of and interest on the Loans or the Letters of
Credit and other amounts due hereunder or under the other Loan Documents to be
due and payable as permitted by Section 8.
SECTION 8. EVENTS OF DEFAULT
IF any of the following conditions or events ("Events of Default")
shall occur and be continuing:
8.1 Failure to Make Payments When Due
Failure to pay any installment of principal of any Loan when due,
whether at stated maturity, by declaration or acceleration, by notice of
prepayment, by required prepayment or otherwise; or failure to pay any interest
on any Loan or any other amount due under this Agreement (including, without
limitation, any payment with respect to reimbursement of amounts drawn under
Letters of Credit) within five (5) days after the date due; or
8.2 Default in Other Agreements
Failure of Holding or Borrower or any of their respective
Subsidiaries to pay when due (i) any principal or interest on any item or items
of Indebtedness (other than Indebtedness referred to in subsection 8.1) in an
individual or aggregate principal amount of $2,500,000 or more, or (ii) any one
or more Contingent Obligations in an individual or aggregate principal amount of
$2,500,000 or more, in each case beyond the end of any period prior to which the
obligee is prohibited from accelerating payment thereunder; or
Breach or default of Holding or Borrower or any of their respective
Subsidiaries with respect to any other term of (i) any evidence of any item or
items of Indebtedness in an individual or aggregate principal amount of
$2,500,000 or more or any one or more Contingent Obligations in an individual or
aggregate principal amount of $2,500,000 or more, or (ii) any loan agreement,
mortgage, indenture or other agreement relating thereto, with respect to
Indebtedness with an aggregate principal amount of $2,500,000 or more, if, in
the case of either clause (i) or clause (ii) of this paragraph, the effect of
such failure, default or breach is then to cause, or to permit the holder or
holders of that Indebtedness or Contingent Obligation (or a trustee on behalf of
such holder or holders) then to cause, that Indebtedness or Contingent
Obligation to become or be declared due prior to its stated maturity (or the
stated maturity of any underlying obligation, as the case may be); or
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8.3 Breach of Certain Covenants
Failure of Holding or Borrower to perform or comply with any term or
condition contained in subsections 2.5A(ii), 2.6, 5.2, 5.6, 5.8, or Section 6;
or
8.4 Breach of Warranty
Any representation, warranty, certification or other statement made
by any Loan Party in any Loan Document or in any statement or certificate at any
time given by such Loan Party in writing pursuant hereto or in connection
herewith shall be false in any material respect on the date as of which made; or
8.5 Other Defaults Under Agreement or Loan Documents
Holding or Borrower shall default in the performance of or
compliance with any term contained in this Agreement or the other Loan Documents
other than those referred to above in subsections 8.1, 8.3 or 8.4 and such
default shall not have been remedied or waived within thirty (30) days after
receipt by Holding or Borrower, as the case may be, of notice from
Administrative Agent of any such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Holding, Borrower, Canadian Blue Bird, BB
Capital or any of their respective material Subsidiaries in an involuntary case
under the Bankruptcy Code or any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, which decree or order is not stayed; or
any other similar relief shall be granted under any applicable Federal or state
law; or
(ii) an involuntary case is commenced against Holding, Borrower,
Canadian Blue Bird, BB Capital or any of their respective material Subsidiaries
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Holding, Borrower,
Canadian Blue Bird, BB Capital or any of their respective material Subsidiaries,
or over all or a substantial part of its property, shall have been entered; or
the involuntary appointment of an interim receiver, trustee or other custodian
of Holding, Borrower, Canadian Blue Bird, BB Capital or any of their respective
material Subsidiaries for all or a substantial part of its property; or the
issuance of a warrant of attachment, execution or similar process against any
substantial part of the property of Holding, Borrower, Canadian Blue Bird, BB
Capital or any of their respective material Subsidiaries, and the continuance of
any such event in clause (ii) for sixty (60) days unless dismissed, bonded or
discharged; or
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8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) Holding, Borrower, Canadian Blue Bird, BB Capital or any of
their respective material Subsidiaries shall have an order for relief entered
with respect to it or commence a voluntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
property; or Holding, Borrower, Canadian Blue Bird, BB Capital or any of their
respective material Subsidiaries shall make any assignment for the benefit of
creditors; or
(ii) the inability or failure of Holding, Borrower, Canadian Blue
Bird, BB Capital or any of their respective material Subsidiaries, or the
admission by Holding, Borrower, Canadian Blue Bird, BB Capital or any of their
respective material Subsidiaries in writing of its inability, to pay its debts
as such debts become due; or the Board of Directors of Holding, Borrower,
Canadian Blue Bird, BB Capital or any of their respective material Subsidiaries
(or any committee thereof) adopts any resolution to approve or otherwise
authorizes any of the actions referred to in clause (i) or this clause (ii); or
8.8 Judgments and Attachments
(i) Any money judgment, writ or warrant of attachment, or similar
process involving in any individual case an amount in excess of $3,000,000
(exclusive of any amount which is fully and adequately covered by insurance and
with respect to which the insurer has acknowledged in writing its coverage)
shall be entered or filed against Holding or Borrower or any of their respective
Subsidiaries or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of sixty (60) days or in any event
later than five (5) days prior to the date of any proposed sale thereunder; or
(ii) Holding or any of its Subsidiaries shall enter into any
voluntary settlement of litigation or claim in an amount, in any individual
case, in excess of $3,000,000 (exclusive of any amount which is fully and
adequately covered by insurance and with respect to which the insurer has
acknowledged its coverage in writing); or
8.9 Dissolution
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Any order, judgment or decree shall be entered against Holding or
Borrower or any of their respective Subsidiaries decreeing the dissolution or
split up of Holding or Borrower or that of their respective Subsidiaries and
such order shall remain undischarged or unstayed for a period in excess of sixty
(60) days; or
8.10 Employee Benefit Plans
There occurs one or more ERISA Events which individually or in the
aggregate results in or is reasonably expected to result in liability of Holding
or any of its Subsidiaries in excess of $1,000,000 during the term of this
Agreement; or there exists an excess of aggregated accumulated benefit
obligations, as defined in Statement of Financial Accounting Standards No. 87
(the "ABO"), over the aggregate total fair market value for all Pension Plans
(excluding for purposes of such computation each Pension Plan with respect to
which the fair market value of the assets exceeds the ABO and each Pension Plan
in which no employees of Holding or any of its Subsidiaries have ever
participated as an employee of Holding or any of its Subsidiaries) which exceeds
the greater of (a) ten percent (10%) of the aggregated ABO and (b) $5,000,000
for a period of thirty (30) consecutive days; or
8.11 Invalidity of Guaranties
Any guaranty of the Obligations, including the Holding Guaranty, for
any reason, other than the satisfaction in full of all Obligations and
termination of this Agreement, ceases to be in full force and effect or is
declared to be null and void, or any guarantor, including Holding, denies that
it has any further liability, including, without limitation, with respect to
future advances by Lenders, under any guaranty or gives notice to such effect;
or
8.12 Change in Control
(i) Any Person or related group of Persons (including a "group" as
such term is used in Section 13(d)(3) of the Exchange Act but excluding MLCP and
its Affiliates) owns or controls more than 30% of the common stock or 30% of the
voting power of Holding entitled to vote for the election of members of the
board of directors of Holding or (ii) any Person or related group of Persons
(including a "group" as such term is used in Section 13(d)(3) of the Exchange
Act) owns or controls a greater percentage of the common stock or of the voting
power of Holding entitled to vote for the election of members of the board of
directors of Holding than MLCP and its Affiliates or (iii) Holding shall cease
to own and control at least 100% of the common stock and 100% of the voting
power of Borrower entitled to vote for the election of members of the board of
directors of Borrower or (iv) a change shall occur in the Board of Directors of
Holding so that a majority of the Board of Directors of Holding ceases to
consist of the individuals who constituted the Board of Directors of Holding
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on the Restatement Effective Date (or individuals whose election or nomination
for election was approved by a vote of at least 66-2/3% of the directors then in
office who either were directors on the Restatement Effective Date or whose
election or nomination for election was previously so approved); or
8.13 Impairment of Collateral
(i) A judgment creditor of Holding or Borrower or any of their
respective Subsidiaries shall obtain possession of any substantial portion of
the collateral under the Collateral Documents by any means, including, without
limitation, levy, distraint, replevin or self-help, (ii) any substantial portion
of the Collateral shall be taken by eminent domain or condemnation, (iii) any of
the Collateral Documents shall cease for any reason to be in full force and
effect, or any party thereto shall purport to disavow its obligations thereunder
or shall declare that it does not have any further obligations thereunder or
shall contest the validity or enforceability thereof or Lenders shall cease to
have a valid and perfected first priority security interest in any Collateral
therein, or (iv) Lenders' security interests or Liens on the Collateral under
the Collateral Documents shall become otherwise impaired or unenforceable; or
8.14 Default Under Subordinated Debt Documents
Failure of Borrower or any obligee of the Subordinated Debt to
comply with the subordination provisions contained in the Subordinated Debt
Documents;
THEN (i) upon the occurrence of any Event of Default described in the foregoing
subsections 8.6 or 8.7(i), each of (a) the unpaid principal amount of and
accrued interest on the Loans, (b) an amount equal to the maximum amount that
may at any time be drawn under all Letters of Credit then outstanding (whether
or not any beneficiary under any Letter of Credit shall have presented or be
entitled to present, the drafts and other documents required to draw under the
Letter of Credit), and (c) all other Obligations, shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by Holding
and its Subsidiaries and the obligation of Administrative Agent to make any
Swing Line Loan, the obligation of each Lender to make any Loan, and the
obligation of each Issuing Lender to issue any Letter of Credit shall thereupon
terminate and (ii) upon the occurrence and during the continuance of any other
Event of Default, Requisite Lenders may, by written notice to Borrower, declare
all or any portion of the amounts described in clause (a) through (c) above to
be, and the same shall forthwith become, immediately due and payable, together
with accrued interest thereon, and the obligation of Administrative Agent to
make any Swing Line Loan, the obligation of each Lender to make any Loan and the
obligation of each Issuing Lender to issue any Letter of Credit shall thereupon
terminate; provided, that the foregoing shall not affect in any way the
obligations of Lenders to make Working
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Capital Loans to reimburse drawings under Letters of Credit as provided in
subsection 2.9C or the right of Administrative Agent to cause Lenders to make
Working Capital Loans in order to repay Swing Line Loans as provided in
subsection 2.2B. So long as any Letter of Credit shall remain outstanding, any
amounts described in clause (b) above with respect to Letters of Credit, when
received by the Issuing Lender, shall be held by the Issuing Lender, pursuant to
such documentation as the Issuing Lender shall request, as cash collateral for
the obligation of Borrower to reimburse the Issuing Lender in the event of any
drawing under such Letters of Credit, and so much of such funds shall at all
times remain on deposit as cash collateral as aforesaid as shall equal the
maximum amount available at any time for drawing under all Letters of Credit
(the "Maximum Available Amount"); provided that in the event of cancellation or
expiration of any Letter of Credit or any reduction in the Maximum Available
Amount, the Issuing Lender shall apply the difference between the cash
collateral held by the Issuing Lender immediately prior to such cancellation,
expiration or reduction and the Maximum Available Amount immediately after such
cancellation, expiration or reduction first to the payment of any outstanding
Obligations, and second to the payment to whomsoever shall be lawfully entitled
to receive such funds.
Notwithstanding anything contained in the foregoing paragraph, if at
any time within 30 days after acceleration of the maturity of any Loan, Holding
or Borrower shall pay all arrears of interest and all payments on account of the
principal which shall have become due otherwise than by acceleration (with
interest on principal and, to the extent permitted by law, on overdue interest,
at the rates specified in this Agreement or the Notes) and all Events of Default
and Potential Events of Default (other than non-payment of principal of and
accrued interest on the Loans and the Notes and payments of amounts referred to
clauses (a), (b) and (c) above, in each case which is due and payable solely by
virtue of acceleration) shall be remedied or waived pursuant to subsection 10.7,
then Requisite Lenders, by written notice to Administrative Agent and Borrower,
may at their option rescind and annul the acceleration and its consequences and
return to Borrower any amounts held pursuant to the cash collateral arrangement
referred to above as cash collateral in respect of the amounts described in
clause (b) above; but such action shall not affect any subsequent Event of
Default or Potential Event of Default or impair any right consequent thereon.
Administrative Agent agrees to use its reasonable best efforts to
promptly notify LaSalle National Bank, as purchaser under the Lease Portfolio
Documents, of any Event of Default pursuant to this Section 8; provided,
however, that any failure by Administrative Agent to notify LaSalle National
Bank shall be of no consequence or effect whatsoever and Administrative Agent
shall have no liability whatsoever to LaSalle National Bank or to any other
Person whatsoever for any failure to notify LaSalle National Bank.
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SECTION 9. ADMINISTRATIVE AGENT; SYNDICATION AGENT
9.1 Appointment
Bankers is hereby appointed Administrative Agent hereunder by each
Lender. Merrill Lynch is hereby appointed Syndication Agent hereunder by each
Lender. Each Lender hereby authorizes each Agent to act hereunder and under the
other instruments and agreements referred to herein (including, without
limitation, the Collateral Documents) as its agents hereunder and thereunder.
Each Agent agrees to act as such upon the express conditions contained in this
Section 9 and in the Collateral Documents. The provisions of this Section 9 are
solely for the benefit of Agents and Lenders, and neither Holding nor any of its
Subsidiaries shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing their functions and duties under this
Agreement, Agents shall act solely as agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation towards or relationship of
agency or trust with or for Holding or any of its Subsidiaries.
9.2 Powers; General Immunity
A. Duties Specified. Each Lender irrevocably authorizes each Agent
to take such action on such Lender's behalf and to exercise such powers
hereunder and under the other instruments and agreements referred to herein
(including, without limitation, the Collateral Documents) as are specifically
delegated to such Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. Each Agent shall have only those
duties and responsibilities that are expressly specified with respect to such
Agent in this Agreement and the Collateral Documents and it may perform such
duties by or through its agents or employees. The duties of Agents shall be
mechanical and administrative in nature; no Agent shall have by reason of this
Agreement a fiduciary relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon any Agent any obligations in respect of this Agreement or the other
instruments and agreements referred to herein except as expressly set forth
herein or therein. No Lender designated as a co-agent shall have any fiduciary
relationship with any Agent, any other Lender or any Loan Party nor any
additional obligations under this Agreement by reason of such designation.
B. No Responsibility for Certain Matters. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement, any
other Loan Document or the Notes or Letters of Credit, or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement
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or in any financial or other statements, instruments, reports, certificates or
any other documents in connection herewith or therewith furnished or made by any
Agent to Lenders or by or on behalf of Holding or any of its Subsidiaries to
Administrative Agent or any Lender or be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained herein or therein or as to the use of the
proceeds of the Loans or of the existence or possible existence of any Event of
Default or Potential Event of Default. Anything contained in this Agreement to
the contrary notwithstanding, Administrative Agent shall not have any liability
arising from confirmations of the amount of outstanding Loans.
C. Exculpatory Provisions. No Agent nor any of their respective
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted hereunder or in connection herewith (including, without
limitation, any act or omission under the Collateral Documents) unless caused by
its or their gross negligence or willful misconduct. If any Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement, such Agent shall
be entitled to refrain from such act or taking such action unless and until such
Agent shall have received instructions from Requisite Lenders or, to the extent
such action requires the consent of all Lenders pursuant to the express terms of
this Agreement, all Lenders. Without prejudice to the generality of the
foregoing, (i) each Agent shall be entitled to rely, and shall be fully
protected in relying, upon any communication, instrument or document believed by
it to be genuine and correct and to have been signed or sent by the proper
person or persons, and shall be entitled to rely and shall be protected in
relying on opinions and judgments of attorneys (who may be attorneys for Holding
or any of its Subsidiaries), accountants, experts and other professional
advisors selected by it; and (ii) no Lender shall have any right of action
whatsoever against any Agent as a result of such Agent acting or (where so
instructed) refraining from acting under this Agreement or the other instruments
and agreements referred to herein in accordance with the instructions of
Requisite Lenders. Each Agent shall be entitled to refrain from exercising any
power, discretion or authority vested in them under this Agreement or the other
instruments and agreements referred to herein unless and until they have
obtained the instructions of Requisite Lenders.
D. Agents Entitled to Act as Lenders. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose any
duties or obligations upon, any Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans, each Agent shall each
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties and functions delegated to
it hereunder and the term "Lender" or any similar term shall, unless the context
clearly otherwise indicates, include each Agent in its individual capacity. Each
Agent and their Affiliates may accept deposits
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from, lend money to and generally engage in any kind of banking, trust,
financial advisory or other business with Holding or any Affiliate of Holding as
if it were not performing the duties specified herein, and may accept fees and
other consideration from Holding or any of its Subsidiaries for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders, except as required by subsection 2.4.
9.3 Representations and Warranties; No Responsibility For Appraisal
of Creditworthiness
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Holding and
its Subsidiaries in connection with the making of the Loans hereunder and has
made and shall continue to make its own appraisal of the creditworthiness of
Holding and its Subsidiaries. No Agent shall have any duty or responsibility
either initially or on a continuing basis to make any such investigation or any
such appraisal on behalf of Lenders or to provide any Lender with any credit or
other information with respect thereto whether coming into their possession
before the making of the Loans or any time or times thereafter and no Agent
shall have any responsibility with respect to the accuracy of or the
completeness of the information provided to Lenders.
9.4 Right to Indemnity
Each Lender, proportionately to its Pro Rata Share, severally agrees
to indemnify each Agent to the extent such Agent shall not have been reimbursed
by Holding or its Subsidiaries, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including, without limitation, counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against such Agent in performing its duties hereunder, in any way
relating to or arising out of this Agreement; provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Agent's gross negligence or willful misconduct. If any indemnity
furnished to any Agent for any purpose shall, in the opinion of such Agent be
insufficient or become impaired, such Agent may call for additional indemnity
and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished.
9.5 Registered Persons Treated as Owner
Administrative Agent may deem and treat the Persons listed as
Lenders in the Register as the owner of the corresponding Loan listed therein
for all purposes hereof unless and until a written notice of the assignment or
transfer thereof shall have
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been filed with Administrative Agent and recorded in the Register. Any request,
authority or consent of any person or entity who, at the time of making such
request or giving such authority or consent, is listed in the Register as a
Lender shall be conclusive and binding on any subsequent holder, transferee or
assignee of the corresponding Loan.
9.6 Collateral Documents and Intercreditor Agreements; Appointment
of Collateral Agent
Each Lender, Administrative Agent and Syndication Agent hereby
appoints Bankers as Collateral Agent and authorizes Collateral Agent, as such
agent, to act as such under the Collateral Documents and the Intercreditor
Agreements. Each Lender, Administrative Agent and Syndication Agent hereby
further authorizes Collateral Agent to enter into the Collateral Documents and
the Intercreditor Agreements on behalf of and for the benefit of Lenders,
Administrative Agent and Syndication Agent and agrees to be bound by the terms
of the Collateral Documents and the Intercreditor Agreements; provided that
Collateral Agent shall not enter into or consent to any amendment, modification,
termination or waiver of any provision contained in any Collateral Document or
any Intercreditor Agreement without the prior written consent of Administrative
Agent and Requisite Lenders. Each Lender, Administrative Agent and Syndication
Agent agrees that no Lender, Administrative Agent or Syndication Agent shall
have any right individually to realize upon the security granted by the
Collateral Documents, it being understood and agreed that such rights and
remedies may be exercised by Collateral Agent for the benefit of Lenders,
Administrative Agent, Syndication Agent and the other parties benefitted by the
Intercreditor Agreement in accordance with the terms of such agreements. Each
Lender, Administrative Agent and Syndication Agent hereby authorizes Collateral
Agent to release Collateral as permitted or required under this Agreement, the
Collateral Documents or the Intercreditor Agreements, and agrees that a
certificate executed by Collateral Agent evidencing such release of Collateral
shall be conclusive evidence of such release as to any third party.
9.7 Successor Administrative Agents
Administrative Agent may resign at any time by giving written notice
thereof to Lenders and Borrower, and Administrative Agent may be removed at any
time with or without cause by an instrument or concurrent instruments in writing
delivered to Borrower and Administrative Agent and signed by Requisite Lenders.
Upon any such notice of resignation or any such removal, Requisite Lenders shall
have the right, upon five (5) days notice to Borrower, to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by Requisite Lenders, and shall have accepted such appointment, within
thirty (30) days after the retiring Administrative Agent's giving of notice of
resignation or Requisite Lenders'
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removal of the retiring Administrative Agent then, upon five days' notice to
Borrower, the retiring Administrative Agent may, on behalf of Lenders, appoint a
successor Administrative Agent, which shall be a Lender, or a commercial bank
organized under the laws of the United States of America or of any State
thereof, or any Affiliate of such bank, having a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as an
Administrative Agent hereunder by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed
Administrative Agent and the retiring or removed Administrative Agent shall be
discharged from its duties and obligations as Administrative Agent, under this
Agreement. After any retiring or removed Administrative Agent's resignation or
removal hereunder as Administrative Agent, as the case may be, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement.
SECTION 10. MISCELLANEOUS
10.1 Representation of Lenders
Each Lender hereby represents that it is a commercial lender,
financial institution or entity that would qualify as an Eligible Assignee which
makes loans in the ordinary course of its business and that it will make any
Loan for its own account in the ordinary course of such business and that,
subject to subsection 10.2, the disposition of evidence of Indebtedness held by
that Lender shall at all times be within its exclusive control.
10.2 Assignments and Participations in Loans and Letters of Credit
(a) General. Subject to subsection 10.2(b), each Lender shall have
the right at any time to (i) sell, assign or transfer to any Eligible Assignee,
or (ii) sell participations to any Person in, all or any part of its Commitments
or any Loan or Loans made by it or its Letters of Credit or participations
therein or any other interest herein or in any other Obligations owed to if;
provided that no such sale, assignment or transfer described in clause (i) above
shall be effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.2(b)(ii); provided further
that no such sale, assignment, transfer or participation of any Letter of Credit
or any participation therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Working Capital
Loan Commitment and the Working Capital Loans of the Lender effecting such sale,
assignment, transfer or participation. Except as otherwise provided in this
subsection
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10.2, no Lender shall, as between Company and such Lender, be relieved of any of
its obligations hereunder as a result of any sale, assignment or transfer of, or
any granting of participations in, all or any part of its Commitments or the
Loans, the Letters of Credit or participations therein, or the other Obligations
owed to such Lender.
(b) Assignment.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
of Credit or participation in any Letter of Credit or in any Swing Line Loan, or
other Obligation may (a) be assigned in any amount to another Lender, or to an
Affiliate of the assigning Lender or another Lender, with the giving of notice
to Borrower and Administrative Agent or (b) be assigned in an aggregate amount
of not less than $5,000,000 (or such lesser amount as shall constitute the
aggregate amount of the Commitments, Loans, Letters of Credit and participations
in any amount Letter of Credit or in any Swing Line Loan, and other Obligations
of the assigning Lender) to any other Eligible Assignee, with the consent of
Borrower and Administrative Agent (which consent of Company and Agent shall not
be unreasonably withheld or delayed). To the extent of any such assignment in
accordance with either clause (a) or (b) above, the assigning Lender shall be
relieved of its obligations with respect to its Commitments, Loans, Letters of
Credit or participations therein, or other Obligations of the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the Register, an
Assignment Agreement, together with a processing and recordation fee of, $3,500
and such forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver to Administrative Agent pursuant
to subsection 2.10. Upon such execution, delivery, acceptance and recordation,
from and after the effective date specified in such Assignment Agreement, (y)
the assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and (z)
the assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights (other than any rights which survive the termination of
this Agreement under subsection 10.10) and be released from its obligations
under this Agreement (and, in the case of an Assignment Agreement covering all
or the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto); provided that,
anything contained in any of the Loan Documents to the contrary notwithstanding,
if such Lender is the Issuing Lender with respect to any outstanding Letters of
Credit such Lender shall continue to have all rights and obligations of an
Issuing Lender with respect to such Letters of Credit until the cancellation or
expiration of such Letters of Credit and the reimbursement of any amounts drawn
thereunder). The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any
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remaining Commitment of such assigning Lender and, if any such assignment occurs
after the issuance of the Notes hereunder, the assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as practicable,
surrender its applicable Notes to Administrative Agent for cancellation, and
thereupon new Notes shall be issued to the assignee and to the assigning Lender,
substantially in the form of Exhibit IV, Exhibit V, Exhibit VI or Exhibit VII
annexed hereto, as the case may be, with appropriate insertions, to reflect the
new Commitments and/or outstanding Term Loans, as the case may be, of the
assignee and/or the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register.
Upon its receipt of an Assignment Agreement executed by an assigning Lender and
an assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.2(i) and any forms,
certificates or other evidence with respect to United States federal income tax
withholding matters that such assignee may be required to deliver to Agent
pursuant to subsection 2.10, Administrative Agent shall, if Administrative Agent
and Borrower have consented to the assignment evidenced thereby (in each case to
the extent such consent is required pursuant to subsection 10.2(b)(i), (a)
accept such Assignment Agreement by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required consent of Administrative
Agent to such assignment), (b) record the information contained therein in the
Register, and (c) give prompt notice thereof to Borrower. Administrative Agent
shall maintain a copy of each Assignment Agreement delivered to and accepted by
it as provided in this subsection 10.2(b)(ii).
(c) Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final maturity date of any
portion of the principal amount of or the postponement of the date of payment of
interest on any Loan allocated to such participation (it being understood that
changes in interim amortization amounts or dates are not extensions of scheduled
final maturity dates), or the extension of the stated expiration date beyond the
Maturity Date of any Letter of Credit allocated to such participation, or (ii) a
reduction of the principal amount of or the rate of interest payable on any Loan
allocated to such participation (other than any waiver of any increase in the
interest rate applicable to the Loans pursuant to subsection 2.3E), and all
amounts payable by Borrower (including without limitation amounts payable to
such Lender pursuant to subsections 2.7, 2.8 and 2.9) shall be determined as if
such Lender had not sold such participation. Borrower and each Lender hereby
acknowledge and agree that, solely for purposes of subsections 10.3 and 10.4,
(a) any participation will give rise to a direct obligation of Borrower to the
Participant and (b) the participant shall be considered to be a "Lender".
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(d) Assignments to Federal Reserve Banks. In addition to the
assignments and participations permitted under the foregoing provisions of this
subsection 10.2, any Lender may assign and pledge all or any portion of its
Loans, the other Obligations owed to such Lender, and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulations A of the Board of
Governors of the Federal Reserve System and any operating circular issued by
such Federal Reserve Bank; provided that (i) no Lender shall, as between
Borrower and such Lender, be relieved of any of its obligations hereunder as a
result of any such assignment and pledge and (ii) in no event shall such Federal
Reserve Bank be considered to be a "Lender" or be entitled to require the
assigning Lender to take or omit to take any action hereunder.
10.3 Expenses
Whether or not the transactions contemplated hereby shall be
consummated, Holding and its Subsidiaries jointly and severally agree to
promptly pay (i) all the actual and reasonable costs and expenses of Agents for
the preparation of the Loan Documents and all the costs of furnishing all
opinions by counsel for Holding and its Subsidiaries (including, without
limitation, any opinions reasonably requested by any Agent as to any legal
matters arising hereunder), and of Holding's and its Subsidiaries' performance
of and compliance with all agreements and conditions contained herein on its
part to be performed or complied with, (ii) the reasonable fees, expenses and
disbursements of counsel to Agents (including allocated costs of internal
counsel) in connection with the negotiation, syndication, preparation, execution
and administration of this Agreement, the Loan Documents, the Loans and Letters
of Credit hereunder, and any amendments and waivers hereto, (iii) all the actual
costs and expenses of creating and perfecting Liens in favor of Lenders
contemplated by this Agreement and the other Loan Documents, including filing
and recording fees and expenses, mortgage or similar taxes, title insurance,
title report and work charges, reasonable fees and expenses of counsel for
providing such opinions as any Agent may reasonably request and reasonable fees
and expenses of legal counsel to Agents, (iv) all other actual and reasonable
out-of-pocket expenses incurred by Agents in connection with the negotiation,
preparation, execution and administration of this Agreement, the Loan Documents,
the Subordinated Debt Documents and the other Related Agreements, the making and
conversion of the Loans hereunder and the issuance of the Letters of Credit and
other extensions of credit hereunder and the syndication of such Loans and
Letters of Credit, and (v) after the occurrence of an Event of Default, all
costs and expenses (including reasonable fees of legal counsel to Agents,
including allocated costs of internal counsel and costs of settlement) incurred
by Agents and Lenders in enforcing any Obligations of or in collecting any
payments due from Holding or any of its Subsidiaries hereunder or the Letters of
Credit or of any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceeding.
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10.4 Indemnity
In addition to the payment of expenses pursuant to subsection 10.3,
whether or not the transactions contemplated hereby shall be consummated,
Holding and its Subsidiaries jointly and severally agree to indemnify, pay and
hold Agents and Lenders, and the officers, directors, employees, agents, and
affiliates of Agents and Lenders and such holders (collectively called the
"Indemnitees") harmless from and against, any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees) in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto, that may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of, the
Refinancing, this Agreement or the other Loan Documents, the statements
contained in the commitment letter, Lenders' agreement to make and convert the
Loans and other extensions of credit and Lenders' agreements to purchase
participations therein as provided herein, or the use or intended use of the
proceeds of any of the Loans or other extensions of credit hereunder or in any
way relating to or resulting from the actions of Holding, Borrower, any of their
respective Subsidiaries, MLCP (the "Indemnified Liabilities"); provided that
neither Holding nor any of its Subsidiaries shall have any obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct, all as determined by a final judgment of
a court of competent jurisdiction; provided further that all indemnification
obligations of Holding and Borrower pursuant to the Existing Credit Agreement
shall survive the amendment and restatement of the Existing Credit Agreement
pursuant to this Agreement. To the extent that the undertaking to indemnify, pay
and hold harmless set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, Holding and its
Subsidiaries shall each contribute the maximum portion that it is permitted to
pay and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnitees or any of them.
10.5 Set Off
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of any
Event of Default, each Lender, upon the consent of Administrative Agent and
Requisite Lenders, is hereby authorized by Holding and any of its Subsidiaries
at any time or from time to time, without notice to Holding or any of its
Subsidiaries, or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured but not including trust
accounts) and any other Indebtedness at any time held or owing by
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that Lender to or for the credit or the account of Holding or any of its
Subsidiaries, against and on account of the obligations and liabilities of
Holding or any of its Subsidiaries to that Lender under this Agreement or with
respect to the Letters of Credit, including, but not limited to, all claims of
any nature or description arising out of or connected with this Agreement or
with respect to the Letters of Credit or any other Loan Document, irrespective
of whether or not (i) that Lender shall have made any demand hereunder or (ii)
the principal of or the interest on the Loans, Notes or any Obligations with
respect to the Letters of Credit, and other amounts due hereunder shall have
become due and payable pursuant to Section 8 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.
10.6 Ratable Sharing
Lenders each agree among themselves that if any of them shall,
through the exercise of any right of counterclaim, set-off, banker's lien or
otherwise or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal and interest then due with respect to the Loans
and the amounts due to that Lender in respect of facility fees or commitment
fees hereunder (collectively, the "Aggregate Amounts Due" to such Lender), which
is greater than the proportion received by any other Lender in respect to the
Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify each other Lender and
Administrative Agent of such receipt and (ii) purchase participations (which it
shall be deemed to have done simultaneously upon the receipt of such payment) in
the Aggregate Amounts Due shall be shared by the Lenders in proportion to the
Aggregate Amounts Due them; provided that if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered from
such Lender, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to that Lender to the extent of such
recovery, but without interest. Holding and each of its Subsidiaries expressly
consents to the foregoing arrangement and agrees that any holder of a
participation so purchased may exercise any and all rights of banker's lien,
set-off or counterclaim with respect to any and all monies owing by Holding or
any of its Subsidiaries to that holder.
10.7 Amendments and Waivers
A. No amendment, modification, termination or waiver of any
provision of this Agreement or of the Notes, or consent to any departure by
Holding or Borrower therefrom, shall in any event be effective without the
written concurrence of Requisite Lenders; provided that no such amendment,
modification, termination, waiver or consent shall, without the consent of each
Lender (with Obligations directly affected in the case of the following
clause(i)): (i) extend the scheduled final maturity of any Loan or Note, or
extend the stated expiration date of any Letter of Credit
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beyond the Maturity Date or reduce the rate of interest (other than any waiver
of any increase in the interest rate applicable to any of the Loans pursuant to
subsection 2.3E) or fees thereon, or extend the time of payment of interest or
fees thereon, or reduce the principal amount thereof, (ii) release all or
substantially all of the Collateral or from the Holding Guaranty except as
expressly provided in the Loan Documents, (iii) amend, modify, terminate or
waive any provision of this subsection 10.7, (iv) reduce the percentage
specified in the definition of Requisite Lenders (it being understood that, with
the consent of the Requisite Lenders, additional extensions of credit pursuant
to this Agreement may be included in the determination of the Requisite Lenders
on substantially the same basis as the extensions of Term Loans and Working
Capital Loan Commitments are included on the Restatement Effective Date) or (v)
consent to the assignment or transfer by Borrower or Holding of any of its
rights and obligations under this Agreement; provided further that no such
amendment, modification, termination or waiver shall (1) increase the
Commitments of any Lender over the amount thereof then in effect without the
consent of such Lender (it being understood that amendments, modifications or
waivers of conditions precedent, covenants, Potential Events of Default or
Events of Default or of a mandatory reduction in the Commitments shall not
constitute an increase of the Commitment of any Lender, and that an increase in
the available portion of any Commitment of any Lender shall not constitute an
increase in the Commitment of such Lender); (2) without the consent of
Administrative Agent, amend, modify, terminate or waive any provision of
subsection 2.2B or any other provision of this Agreement relating to the Swing
Line Commitment or the Swing Line Loans; (3) without the consent of the
Requisite Class Lenders of each Class which is being allocated a lesser
prepayment, repayment or commitment reduction as a result of the actions
described below (or without the consent of the Requisite Class Lenders), amend
the definition of Requisite Class Lenders or alter the required application of
any prepayments or repayments (or commitment reduction), as between the Classes
pursuant to subsection 2.4 (although the Requisite Lenders may waive, in whole
or in part, any such prepayment, repayment or commitment reduction so long as
the application, as between the Classes, of any such prepayment, repayment or
commitment reduction which is still required to be made is not altered); (4)
without the consent of Requisite Class Lenders of the respective Class, waive or
reduce any scheduled repayment pursuant to subsection 2.1D; (5) no amendment,
modification, termination or waiver relating to the obligations of Revolving
Lenders relating to the purchase of participations in Letters of Credit shall be
effective without the written concurrence of each Issuing Lender having a Letter
of Credit then outstanding or which has not been reimbursed for a drawing under
a Letter of Credit issued by Administrative Agent and of Administrative Agent;
(6) without the consent of Administrative Agent or Collateral Agent, amend,
modify, terminate or waive any provision of this Agreement as the same applies
to the rights or obligations of Administrative Agent or Collateral Agent, as
applicable; or (7) without the consent of Syndication Agent, amend, modify,
terminate or waive any provision of this Agreement as the same applies to the
rights or obligations of Syndication Agent.
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B. If, in connection with any proposed amendment, modification,
termination or waiver to any of the provisions of this Agreement or the Notes as
contemplated by clauses (i) through (v) of the first proviso of subsection
10.7A, the consent of the Requisite Lenders is obtained but the consent of one
or more of such other Lenders whose consent is required is not obtained, then
Borrower shall have the right, so long as all non-consenting Lenders whose
individual consent is required are treated as described in either clause (i) or
(ii) below, to either (i) replace each such non-consenting Lender or Lenders
with one or more proposed Lenders satisfactory to Administrative Agent (a
"Replacement Lender") so long as at the time of such replacement, each such
Replacement Lender consents to the proposed amendment, modification, termination
or waiver, or (ii) terminate such non-consenting Lender's Commitments and repay
in full in cash its outstanding Loans, accrued and unpaid interest and other
amounts due and payable to such Lender; provided that unless the Commitments
that are terminated and the Loans that are repaid pursuant to the preceding
clause (ii) are immediately replaced in full at such time through the addition
of new Lenders or the increase of the Commitments and/or outstanding Loans of
existing Lenders (who in each case must specifically consent thereto), then in
the case of any action pursuant to the preceding clause (ii), the Requisite
Lenders (determined before giving effect to the proposed actions) shall
specifically consent thereto; provided further that Borrower shall not have the
right to terminate such Lender's Working Capital Loan Commitment and repay in
full in Cash its outstanding Loans pursuant to clause (ii) of this subsection
10.7B if, immediately after the termination of such Lender's Working Capital
Loan Commitment, the Working Capital Loan Exposure of all Lenders would exceed
the Working Capital Loan Commitments of all Lenders; provided still further,
that Borrower shall not have the right to replace a Lender solely as a result of
the exercise of such Lender's rights (and the withholding of any required
consent by such Lender) pursuant to the second proviso to subsection 10.7A.
C. Administrative Agent may, but shall have no obligation to, with
the concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on Holding or Borrower in any case shall entitle Holding or
Borrower to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.7 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Holding or
Borrower, on Holding or Borrower, as the case may be.
10.8 Independence of Covenants
All covenants hereunder shall be given independent effect so that if
a particular action or condition is not permitted by any of such covenants, the
fact that it
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would be permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of an Event of Default or
Potential Event of Default if such action is taken or condition exists.
10.9 Notices
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telecopied or sent by United States mail or courier
service and shall be deemed to have been given when delivered in person, receipt
of telecopy or four Business Days after depositing it in the United States mail,
registered or certified, with postage prepaid and properly addressed; provided
that notices to Administrative Agent shall not be effective until received. For
the purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this subsection 10.9) shall be as set
forth under each party's name on the signature pages hereof.
10.10 Survival of Warranties and Certain Agreements
A. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement, and the conversion of
Loans on the Restatement Effective Date and the making of the Loans hereunder.
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Borrower set forth in subsections 2.7E, 2.7H,
2.8, 2.9E, 2.9G, 2.9H, 10.3, 10.4 and 10.5 and the agreements of Lenders set
forth in subsections 9.2C, 9.4, 10.5 and 10.6 shall survive the payment of the
Loans and the reimbursement obligations under the Letters of Credit and the
termination of this Agreement.
10.11 Failure or Indulgence Not Waiver; Remedies Cumulative
No failure or delay on the part of any Lender or any holder of any
Note in the exercise of any power, right or privilege hereunder or under the
Notes shall impair such power, right or privilege or be construed to be a waiver
of any default or acquiescence therein, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further exercise thereof
or of any other right, power or privilege. All rights and remedies existing
under this Agreement or the Notes are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
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10.12 Severability
In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders' Rights
The obligation of each Lender hereunder is several, and no Lender
shall be responsible for the obligation or commitment of any other Lender
hereunder. Nothing contained in this Agreement and no action taken by Lenders
pursuant hereto shall be deemed to constitute Lenders to be a partnership, an
association, a joint venture or any other kind of entity. The amounts payable at
any time hereunder to each Lender shall be a separate and independent debt, and
each Lender shall be entitled to protect and enforce its rights arising out of
this Agreement and it shall not be necessary for any other Lender to be joined
as an additional party in any proceeding for such purpose.
10.14 Headings; Table of Contents
Section and subsection headings in this Agreement and the table of
contents are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
10.15 Applicable Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.16 Successors and Assigns; Subsequent Holders of Notes
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders. The terms and provisions of
this Agreement shall inure to the benefit of any assignee of the Loans, and in
the event of such transfer or assignment, the rights and privileges herein
conferred upon Lenders shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions hereof. Neither
Holding's or any of its Subsidiaries' rights nor
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any interest therein hereunder may be assigned without the written consent of
all Lenders. Lenders' rights of assignment are subject to subsection 10.2.
10.17 Consent to Jurisdiction and Service of Process
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST HOLDING OR ANY OF ITS
SUBSIDIARIES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OBLIGATION
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
SITTING IN NEW YORK, NEW YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
HOLDING AND EACH OF ITS SUBSIDIARIES ACCEPTS FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT OR SUCH OBLIGATION. Holding and
each of its Subsidiaries designates and appoints C T Corporation System and
such other Persons as may hereafter be selected by Holding and each of its
Subsidiaries irrevocably agreeing in writing to so serve, as its agent to
receive on its behalf service of all process in any such proceedings in any
such court, such service being hereby acknowledged by Holding and each of its
Subsidiaries to be effective and binding service in every respect. A copy of
any such process so served shall be mailed by registered mail to Holding and
each of its Subsidiaries at its address provided in the applicable signature
page hereto, except that unless otherwise provided by applicable law, any
failure to mail such copy shall not affect the validity of service of
process. If any agent appointed by Holding and each of its Subsidiaries
refuses to accept service, Holding and each of its Subsidiaries hereby agree
that service upon it by mail shall constitute sufficient notice. Nothing
herein shall affect the right to serve process in any other manner permitted
by law or shall limit the right of any Agent or Lender to bring proceedings
against Holding and each of its Subsidiaries in the courts of any other
jurisdiction.
10.18 Waiver of Jury Trial
HOLDING, BORROWER, EACH AGENT AND EACH LENDER HEREBY MUTUALLY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN
DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. The scope of this waiver is intended to be all-encompassing of
any and all disputes that may be filed in any court
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and that relate to the subject matter of this transaction, including without
limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Borrower, Administrative Agent and
each Lender each acknowledge that this waiver is a material inducement to
enter into a business relationship, that each has already relied on the
waiver in entering into this Agreement, and that each will continue to rely
on the waiver in their related future dealings. Holding, Borrower,
Administrative Agent and each Lender further warrant and represent that each
has reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE
LOAN DOCUMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS
OR THE LETTERS OF CREDIT. In the event of litigation, this Agreement may be
filed as a written consent to a trial by the court.
10.19 Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents, or supplements
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt of
written or telephonic notification of such execution and authorization of
delivery thereof by Borrower and Administrative Agent.
[Remainder of page intentionally left blank]
142
<PAGE>
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
BLUE BIRD BODY COMPANY
By: /s/ Paul E. Glaske
----------------------------
Title: President and Chairman
Notice Address:
Blue Bird Body Company
P.O. Box 7839
3920 Arkwright Road
Macon, GA 31210
Attention: Paul Glaske
BLUE BIRD CORPORATION
By: /s/ Paul E. Glaske
----------------------------
Title: President and Chairman
Notice Address:
Blue Bird Corporation
P.O. Box 7839
3920 Arkwright Road
Macon, GA 31210
Attention: Paul Glaske
With a copy to:
Stonington Partners
767 Fifth Avenue
New York, New York 10153
Attention: Alexis Michas
S-1
<PAGE>
BANKERS TRUST COMPANY,
individually and as Administrative Agent
By: /s/ Mary Jo Jolly
----------------------------
Title: Assistant Vice President
Notice Address:
Bankers Trust Company
130 Liberty, 14th Fl.
New York, New York 10006
Attention: Mary Jo Jolly
With a copy to:
Bankers Trust Company
300 South Grand Avenue,
41st Floor
Los Angeles, California 90071
Attention: Cristie Sheffield
S-2
<PAGE>
MERRILL LYNCH & CO., as
Syndication Agent
By: /s/ Edward Crook
________________________________
Title: Managing Director
Notice Address:
World Financial Center
North-7th Floor
New York, New York 10281
Attention: Edward Crook
MERRILL LYNCH CAPITAL
CORPORATION
By: /s/ Edward Crook
_________________________________
Title: Vice President
Notice Address:
Merrill Lynch Capital Corporation
World Financial Center
North-7th Floor
New York, New York 10281
Attention: Edward Crook
S-3
<PAGE>
ABN AMRO BANK NV, Atlanta Agency
By: /s/ Steven Hipsman/Larry Kelley
--------------------------------------
Title: Vice President/Group Vice President
Notice Address:
ABN AMRO
One Ravinia Drive, Suite 1200
Atlanta, GA 30346
Attention: Patrick Thom
ALLSTATE INSURANCE COMPANY
By: /s/ Patricia W. Wilson
----------------------------
Title: Authorized Signatory
Assistant Vice President
By: /s/ Ronald A. Mendel
----------------------------
Title: Authorized Signatory
Notice Address:
Allstate Insurance Company
3075 Sanders Road, Suite G3A
Northbrook, IL 60062
Attention: Tom Napholz
AMSOUTH BANK OF ALABAMA
By: /s/ Alan D. Lot
----------------------------
Title: Vice President
Notice Address:
AmSouth Bank of Alabama
1900 5th Avenue North, 7th Fl.
Birmingham, AL 35203
Attention: Alan D. Lot
S-4
<PAGE>
BANK OF AMERICA ILLINOIS
By: /s/ John P. Hesselmann
----------------------------
Title: Senior Vice President
Notice Address:
Bank of America Illinois
231 S. LaSalle Street, 6th Fl.
Chicago, IL 60697
Attention: Mark D. Cordes
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By: /s/ Victor Bulzacchelli
----------------------------
Title: Vice President
Notice Address:
Bank of Tokyo - Mitsubishi Trust Company
1251 Avenue of Americas, 12th Fl.
New York, NY 10020
Attention: Joel Makowsky
CIBC INC.
By: /s/ Roger Colden
----------------------------
Title: Director
Notice Address:
CIBC Inc.
2 Paces West
2727 Paces Ferry Rd.
Suite 1200
Atlanta, GA 30339
Attention: Ken Auchter
S-5
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ Brian O'Leary/Sean Mounier
--------------------------------------
Title: Vice President/First Vice President
Notice Address:
Compagnie Financiere de CIC et de
L'Union Europeenne
520 Madison Avenue, 37th Fl.
New York, NY 10022
Attention: Brian O'Leary
CORESTATES BANK, N.A.
By: /s/ S. Scott Gates
----------------------------
Title: Assistant Vice President
Notice Address:
CoreStates Bank, N.A.
1339 Chestnut Street
Widener Building, 11th Fl.
P.O. Box 7618
Philadelphia, PA 19107
Attention: Scott Gates
S-6
<PAGE>
CREDITANSTALT - BANKVEREIN
By: /s/ Robert M. Biringer
----------------------------
Title: Executive Vice President
By: /s/ Carl G. Drake
----------------------------
Title: Senior Associate
Notice Address:
Creditanstalt-Bankverein
Two Ravinia Drive, Suite 1680
Atlanta, GA 30346
Attention: Carl G. Drake
THE FUJI BANK, ATLANTA AGENCY
By: /s/ Toshihiro Mitsui
------------------------------
Title: Vice-President and Manager
Notice Address:
The Fuji Bank, Limited
Marquis One Tower
245 Peachtree Center Ave, NE
Suite 2100
Atlanta, GA 30303
Attention: David Hart
S-7
<PAGE>
BANQUE INDOSUEZ NEW YORK
By: /s/ Francoise Berthelot
----------------------------
Title: Vice President
By: /s/ John Sabre
----------------------------
Title: First Vice President
Notice Address:
Banque Indosuez
Grand Cayman Island Branch
1211 Avenue of the Americas
New York, NY 10036-8701
Attention: Francois Berthelot
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By: /s/ John J. Sullivan
----------------------------
Title: Joint General Manager
Notice Address:
The Long-Term Credit Bank of Japan,
Limited
165 Broadway
New York, New York 10006
Attention: Edna Astuto
S-8
<PAGE>
NATIONAL BANK OF CANADA
By: /s/ William L. Benning
----------------------------
Title: Vice President
Notice Address:
National Bank of Canada
200 Galleria Parkway, Suite 800
Atlanta, GA 30339
Attention: William Benning
NATIONSBANK, N.A. (SOUTH)
By: /s/ Kathryn W. Robinson
----------------------------
Title: Senior Vice President
Notice Address:
NationsBank
600 Peachtree Street, N.E., 21st Fl.
Atlanta, GA 30308
Attention: Kathryn Robinson
S-9
<PAGE>
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P., its
General Partner
By: Oak Hill Securities MGP, Inc., its
General Partner
By: /s/ Scott Krase
----------------------------
Scott Krase
Vice President
Notice Address:
Oak Hill Securities Fund, L.P.
c/o Oak Hill Partners
Park Avenue Towers
65 East 55th Street
New York, NY 10022
Attention: Scott Krase
PPM AMERICA, INC., as attorney in fact,
on behalf of Jackson National Life
Insurance Company
By: /s/ Michael DiRe
----------------------------
Title: Vice President/Head
High Yield Bank Loans
Notice Address:
PPM America, Inc.
225 West Wacker Drive, Ste. 1200
Chicago, IL 60606
Attention: Private Placements
Michael DiRe or Guy Petrelli
S-10
<PAGE>
PROTECTIVE LIFE INSURANCE
COMPANY
By: /s/ Mark K. Okada
-----------------------------------
Title: Executive Vice President
Protective Asset Management, L.L.C.
Notice Address:
Protective Life Insurance Company
1150 Two Galleria Tower
13455 Noel Rd. LB #45
Dallas, TX 75240
Attention: Mark Okada
SUNTRUST BANK, ATLANTA
By: /s/ Susan Hall
----------------------------
Title: Vice President
Notice Address:
SunTrust Bank
25 Park Place (MC075)
Atlanta, GA 30303
Attention: Susan Hall
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By: /s/ Brian Good
----------------------------
Title: Vice President
Notice Address:
Van Kampen American Capital
One Parkview Plaza
Oak Brook Terrace, IL 60181
Attention: Jeffrey Maillet
S-11
<PAGE>
WACHOVIABANK OF GEORGIA,
N.A.
By: /s/ Kevin B. Harrison
_________________________________
Title: Vice President
Notice Address:
Wachovia Bank
191 Peachtree Street, N.E. 30th Floor
Atlanta, GA 30303
Attention: Kevin Harrison
YASUDA TRUST BANKING COMPANY
By: /s/ Makoto Tagawa
_________________________________
Title: Deputy General Manager
Notice Address:
666 Fifth Avenue
Suite 801
New York, New York 10103
Attention: Makota Tagawa
S-12
<PAGE>
EXHIBIT I
FORM OF NOTICE OF BORROWING
Pursuant to that certain First Amended and Restated Credit Agreement
dated as of November 15, 1996 (such agreement, as it may be amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"; capitalized terms used herein without definition shall have the
meanings assigned those terms in the Credit Agreement) by and among Blue Bird
Corporation, a Delaware corporation ("HOLDING"), Blue Bird Body Company, a
Georgia corporation ("BORROWER"), the lenders party thereto ("LENDERS"), Bankers
Trust Company, as administrative agent for Lenders ("ADMINISTRATIVE AGENT"), and
Merrill Lynch & Co., as syndication agent (in such capacity as "SYNDICATION
AGENT") this represents Borrower's request to borrow on ___________, ____
$__________ from [Lenders on a pro rata basis as [Base Rate/Eurodollar Rate]
[Term/Working Capital] Loans] [Administrative Agent as Base Rate Swing Line
Loans]. [The Interest Period for such Eurodollar Rate Loans is requested to be
a [one/two/three/six/nine] month period]. The proceeds of such Loans are to be
deposited in Borrower's account at the office of Administrative Agent located at
One Bankers Trust Plaza, New York, New York.
The undersigned officer, to the best of such officer's knowledge, and
Borrower certify that (i) the representations and warranties of Borrower and
Holding contained in the Credit Agreement and the other Loan Documents are true,
correct and complete in all material respects on and as of the Funding Date to
the same extent as though made on and as of the Funding Date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date; (ii) no Event
of Default or Potential Event of Default has occurred and is continuing or will
result from the proposed borrowing; (iii) Borrower and Holding have performed in
all material respects all agreements and satisfied all conditions under the
Credit Agreement provided to be performed by either or both of them on or before
the Funding Date; (iv) after giving effect to the proposed borrowing, the Total
Utilization of Working Capital Loan Commitments will not exceed the aggregate
Working Capital Loan Commitments in effect on the proposed Funding Date [and the
aggregate principal amount of outstanding Swing Line Loans
I-1
<PAGE>
will not exceed the Swing Line Commitment then in effect]; (v) after giving
effect to the proposed borrowing, the Total Utilization of Working Capital Loan
Commitments will not exceed the then applicable Borrowing Base and (vi) each of
the other conditions to funding set forth in subsection 3.3B of the Credit
Agreement will be satisfied on the proposed Funding Date.
DATED: _______________
BLUE BIRD BODY COMPANY
By ____________________________
Title:
I-2
<PAGE>
EXHIBIT II
FORM OF NOTICE OF ISSUANCE OF
LETTER OF CREDIT
Pursuant to that certain First Amended and Restated Credit Agreement
dated as of November 15, 1996 (such agreement, as it may be amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"; capitalized terms used herein without definition shall have the
meanings assigned those terms in the Credit Agreement), by and among Blue Bird
Corporation, a Delaware corporation ("HOLDING"), Blue Bird Body Company, a
Georgia corporation ("BORROWER"), the lenders party thereto ("LENDERS"), Bankers
Trust Company, as administrative agent for Lenders ("ADMINISTRATIVE AGENT"), and
Merrill Lynch & Co., as syndication agent (in such capacity as "SYNDICATION
AGENT"), this represents Borrower's request to have [1] issue a Letter of Credit
for the account of Borrower on [2] in the face amount of $[3] with an expiration
date of [4] for the benefit of [5]. [6]
The undersigned officer, to the best of such officer's knowledge, and
Borrower certify that (i) the representations and warranties contained in the
Credit Agreement and the other Loan Documents are true, correct and complete in
all material respects on and as of the date hereof to the same extent as though
made on and as of the date hereof, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete in all
material respects on and as of such earlier date; (ii) no Event of Default or
Potential Event of Default has occurred and is continuing under the Credit
Agreement or will result from the proposed issuance of the Letter of Credit for
the account of Borrower; (iii) Borrower and Holding have performed in all
material respects all agreements and satisfied all conditions under the Credit
________________________
[1] Insert name of Issuing Lender.
[2] Insert proposed date of issuance of the Letter of Credit.
[3] Insert face amount of the Letter of Credit in numbers.
[4] Insert expiration date for the Letter of Credit.
[5] Insert name and address of the beneficiary of the Letter of Credit.
[6] Insert precise description of the documents and the verbatim text of the
certificate to be presented by the beneficiary which, if presented prior to
the expiration date of the Letter of Credit, would require the Issuing
Lender to make payment under the Letter of Credit.
II-1
<PAGE>
Agreement provided to be performed by either or both of them on or before the
date hereof; (iv) after giving effect to the proposed issuance, the Total
Utilization of Working Capital Loan Commitments will not exceed either the
aggregate Working Capital Loan Commitments in effect on the proposed Funding
Date; (v) after giving effect to the proposed issuance, the Total Utilization of
Working Capital Loan Commitments will not exceed the then applicable Borrowing
Base; (vi) after giving effect to the proposed issuance, the Letter of Credit
Usage with respect to Standby Letters of Credit will not exceed $10,000,000, the
Letter of Credit Usage with respect to Commercial Letters of Credit will not
exceed $10,000,000; and (vi) each of the other conditions to the issuance of a
Letter of Credit set forth in subsection 3.4 of the Credit Agreement will be
satisfied on the proposed Funding Date.
DATED: _____________________
BLUE BIRD BODY COMPANY
By _________________________
Title:
II-2
<PAGE>
EXHIBIT III
FORM OF NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain First Amended and Restated Credit Agreement
dated as of November 15, 1996 (such agreement as it may be amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"; capitalized terms used herein without definition shall have the
meanings assigned to those terms in the Credit Agreement) by and among Blue Bird
Corporation, a Delaware corporation, Blue Bird Body Company, a Georgia
corporation ("Borrower"), the lenders party thereto, Bankers Trust Company, as
administrative agent for Lenders, and Merrill Lynch & Co., as syndication agent
for Lenders, this represents Borrower's request to [A: convert $___________ in
principal amount of presently outstanding [Base Rate/Eurodollar Rate] [Term/
Working Capital] Loans [with an Interest Period expiration date of _________,
____] to [Base Rate/Eurodollar Rate] Loans on ___________, ____.] [The Interest
Period for such Eurodollar Rate Loans is requested to be a
[one/two/three/six/nine] month period.] [B: continue as Eurodollar Rate Loans
$___________ in principal amount of presently outstanding [Term/Working Capital]
Loans with an Interest Period expiration date of ___________, ____.] [The
Interest Period for such Eurodollar Rate Loans commencing on such Interest
Period expiration date is requested to be a [one/two/three/six/nine] month
period.] Borrower certifies that no Event of Default or Potential Event of
Default has occurred and is continuing or will result from the proposed
[conversion/continuation].
DATED: _______________
BLUE BIRD BODY COMPANY
By __________________________
Title:
III-1
<PAGE>
EXHIBIT IV
FORM OF TRANCHE A TERM NOTE
BLUE BIRD BODY COMPANY
$[1]
November 15, 1996
New York, New York
FOR VALUE RECEIVED, BLUE BIRD BODY COMPANY, a Georgia corporation
("BORROWER"), promises to pay to the order of [2] ("PAYEE"), on or before the
Expiry Date, the lesser of (x) [3] ($[1]) and (y) the unpaid aggregate
principal amount of all advances converted or made by Payee to Borrower as
Tranche A Term Loans under the Credit Agreement referred to below.
Borrower also promises to pay interest on the unpaid principal amount
hereof until paid at the rates, at the times and from the dates which shall be
determined in accordance with the provisions of that certain First Amended and
Restated Credit Agreement dated as of November 15, 1996 (such agreement, as it
may be amended, amended and restated, supplemented or otherwise modified from
time to time, being herein called the "CREDIT AGREEMENT"; capitalized terms used
herein without definition shall have the meanings assigned those terms in the
Credit Agreement), by and among Blue Bird Corporation, a Delaware corporation,
Borrower, the lenders party thereto ("LENDERS"), Bankers Trust Company, as
administrative agent for Lenders ("ADMINISTRATIVE AGENT"), and Merrill Lynch &
Co., as syndication agent ("SYNDICATION AGENT").
- ----------------
[1] Insert in numbers the principal amount of Lender's Pro Rata Share of the
Tranche A Term Loans.
[2] Insert name of Lender in capital letters.
[3] Insert in words the principal amount of Lender's Pro Rata Share of the
Tranche A Term Loans.
IV-1
<PAGE>
This Note is one of Borrower's "TRANCHE A TERM NOTES" in the aggregate
principal amount of $100,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loans evidenced
hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at the
office of Administrative Agent located at One Bankers Trust Plaza, New York, New
York or at such other place as shall be designated in writing for such purpose
in accordance with the terms of the Credit Agreement. Until notified in writing
of the transfer of this Note, Borrower and Administrative Agent shall be
entitled to deem Payee or such person who has been so identified by the
transferor in writing to Borrower and Administrative Agent as the holder of this
Note, as the owner and holder of this Note. Each of Payee and any subsequent
holder of this Note agrees by its acceptance hereof that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make notation of any payment
made on this Note shall not limit or otherwise affect the obligation of Borrower
hereunder with respect to payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note; provided, however, that if the day on
which any payment relating to a Eurodollar Rate Loan is due is not a Business
Day but is a day of the month after which no further Business Day occurs in such
month, then the due date thereof shall be the next preceding Business Day.
Borrower shall make principal payments on this Note on the dates and
in the amounts set forth in the definition of "Scheduled Tranche A Term Loan
Repayment Amount" in the Credit Agreement, and as otherwise required pursuant to
the terms of the Credit Agreement; provided that the last such installment shall
be in an amount sufficient to repay the entire unpaid principal balance of this
Note, together with all unpaid interest thereon.
This Note is subject to mandatory prepayment as provided in subsection
2.5A(ii) of the Credit Agreement and to prepayment at the option of Borrower as
provided in subsection 2.5A(i) of the Credit Agreement.
This Note is secured by certain assets pursuant to the Collateral
Documents.
This Note is subject to restriction on transfer or assignment as
provided in subsections 10.2 and 10.16 of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
IV-2
<PAGE>
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note.
Borrower and endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as a
defense to any demand hereunder.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and the place
first above written.
BLUE BIRD BODY COMPANY
By __________________________
Title:
IV-3
<PAGE>
TRANSACTIONS ON
TRANCHE A TERM NOTE
Amount of Outstanding
Principal Paid Principal Balance Notation
Date This Date This Date Made by
- ---- -------------- ----------------- --------
IV-4
<PAGE>
EXHIBIT V
FORM OF TRANCHE B TERM NOTE
BLUE BIRD BODY COMPANY
$[1]
November 15, 1996
New York, New York
FOR VALUE RECEIVED, BLUE BIRD BODY COMPANY, a Georgia corporation
("BORROWER"), promises to pay to the order of [2] ("PAYEE"), on or before the
Final Maturity Date, the lesser of (x) [3] ($[1]) and (y) the unpaid aggregate
principal amount of all advances made by Payee to Borrower as Tranche B Term
Loans under the Credit Agreement referred to below.
Borrower also promises to pay interest on the unpaid principal amount
hereof until paid at the rates, at the times and from the dates which shall be
determined in accordance with the provisions of that certain First Amended and
Restated Credit Agreement dated as of November 15, 1996 (such agreement, as it
may be amended, amended and restated, supplemented or otherwise modified from
time to time, being herein called the "CREDIT AGREEMENT"; capitalized terms used
herein without definition shall have the meanings assigned those terms in the
Credit Agreement), by and among Blue Bird Corporation, a Delaware corporation,
Borrower, the lenders party thereto ("LENDERS"), Bankers Trust Company, as
administrative agent for Lenders ("ADMINISTRATIVE AGENT"), and Merrill Lynch &
Co., as syndication agent ("SYNDICATION AGENT").
This Note is one of Borrower's "Tranche B Term Notes" in the aggregate
principal amount of $75,000,000 and is issued pursuant to and entitled to the
benefits of the Credit Agreement to which reference is hereby made for a more
complete statement of the terms and conditions under which the Loans evidenced
hereby were made and are to be repaid.
- ----------------
[1] Insert in numbers the principal amount of Lender's Pro Rata Share of the
Tranche B Term Loans.
[2] Insert name of Lender in capital letters.
[3] Insert in words the principal amount of Lender's Pro Rata Share of the
Tranche B Term Loans.
V-1
<PAGE>
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at the
office of Administrative Agent located at One Bankers Trust Plaza, New York, New
York or at such other place as shall be designated in writing for such purpose
in accordance with the terms of the Credit Agreement. Until notified in writing
of the transfer of this Note, Borrower and Administrative Agent shall be
entitled to deem Payee or such person who has been so identified by the
transferor in writing to Borrower and Administrative Agent as the holder of this
Note, as the owner and holder of this Note. Each of Payee and any subsequent
holder of this Note agrees by its acceptance hereof that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make notation of any payment
made on this Note shall not limit or otherwise affect the obligation of Borrower
hereunder with respect to payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note; provided, however, that if the day on
which any payment relating to a Eurodollar Rate Loan is due is not a Business
Day but is a day of the month after which no further Business Day occurs in such
month, then the due date thereof shall be the next preceding Business Day.
Borrower shall make principal payments on this Note on the dates and
in the amounts set forth in the definition of "Scheduled Tranche B Term Loan
Repayment Amount" in the Credit Agreement, and as otherwise required pursuant to
the terms of the Credit Agreement; provided that the last such installment shall
be in an amount sufficient to repay the entire unpaid principal balance of this
Note, together with all unpaid interest thereon.
This Note is subject to mandatory prepayment as provided in subsection
2.5A(ii) of the Credit Agreement and to prepayment at the option of Borrower as
provided in subsection 2.5A(i) of the Credit Agreement.
This Note is secured by certain assets pursuant to the Collateral
Documents.
This Note is subject to restriction on transfer or assignment as
provided in subsections 10.2 and 10.16 of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
V-2
<PAGE>
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note.
Borrower and endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as a
defense to any demand hereunder.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and the place
first above written.
BLUE BIRD BODY COMPANY
By __________________________
Title:
V-3
<PAGE>
TRANSACTIONS ON
TRANCHE B TERM NOTE
Amount of Outstanding
Principal Paid Principal Balance Notation
Date This Date This Date Made by
- ---- -------------- ----------------- --------
V-4
<PAGE>
11/7/96
EXHIBIT VI
FORM OF WORKING CAPITAL NOTE
BLUE BIRD BODY COMPANY
$[1]
November 15, 1996
New York, New York
FOR VALUE RECEIVED, BLUE BIRD BODY COMPANY, a Georgia corporation
("BORROWER"), promises to pay to the order of [2] ("PAYEE"), on or before the
Expiry Date, the lesser of (x) [3] ($[1]) and (y) the unpaid aggregate principal
amount of all advances converted or made by Payee to Borrower as Working Capital
Loans under the Credit Agreement referred to below.
Borrower also promises to pay interest on the unpaid principal amount
hereof until paid at the rates, at the times and from the dates which shall be
determined in accordance with the provisions of that certain First Amended and
Restated Credit Agreement dated as of November 15, 1996 (such agreement, as it
may be amended, amended and restated, supplemented or otherwise modified from
time to time, being herein called the "CREDIT AGREEMENT"; capitalized terms used
herein without definition shall have the meanings assigned those terms in the
Credit Agreement), by and among Blue Bird Corporation, a Delaware corporation,
Borrower, the lenders party thereto ("LENDERS"), Bankers Trust Company, as
administrative agent for Lenders ("ADMINISTRATIVE AGENT"), Merrill Lynch & Co.,
as syndication agent ("SYNDICATION AGENT").
This Note is one of Borrower's "WORKING CAPITAL NOTES" in the
aggregate principal amount of $80,000,000 and is issued pursuant to and entitled
to the benefits of the Credit Agreement to which reference is hereby made for a
more complete statement of the terms and conditions under which the Loans
evidenced hereby were or are made and are to be repaid.
- ----------------
[1] Insert in numbers the principal amount of Lender's Pro Rata Share of the
aggregate Working Capital Loan Commitment.
[2] Insert name of Lender in capital letters.
[3] Insert in words the principal amount of Lender's Pro Rata Share of the
aggregate Working Capital Loan Commitment.
VI-1
<PAGE>
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in same day funds at the
office of Administrative Agent located at One Bankers Trust Plaza, New York, New
York, or at such other place as shall be designated in writing for such purpose
in accordance with the terms of the Credit Agreement. Until notified in writing
of the transfer of this Note, Borrower and Administrative Agent shall be
entitled to deem Payee or such person who has been so identified by the
transferor in writing to Borrower and Administrative Agent as the holder of this
Note, as the owner and holder of this Note. Each of Payee and any subsequent
holder of this Note agrees by its acceptance hereof that before disposing of
this Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided, however, that the failure to make notation of any payment
made on this Note shall not limit or otherwise affect the obligation of Borrower
hereunder with respect to payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note; provided, however, that if the day on
which any payment relating to a Eurodollar Rate Loan is due is not a Business
Day but is a day of the month after which no further Business Day occurs in such
month, then the due date thereof shall be the next preceding Business Day.
This Note is subject to mandatory prepayment as provided in subsection
2.5A(ii) of the Credit Agreement and to prepayment at the option of Borrower as
provided in subsection 2.5A(i) of the Credit Agreement.
This Note is secured by certain assets pursuant to the Collateral
Documents.
This Note is subject to restriction on transfer or assignment as
provided in subsections 10.2 and 10.16 of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Note or the Credit Agreement shall alter or impair the obligation of
Borrower, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
VI-2
<PAGE>
Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note.
Borrower and endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as a
defense to any demand hereunder.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and the place
first above written.
BLUE BIRD BODY COMPANY
By __________________________
Title:
VI-3
<PAGE>
TRANSACTIONS ON
WORKING CAPITAL NOTE
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made by
- ---- --------- --------- -------------- --------- --------
VI-4
<PAGE>
EXHIBIT VII
FORM OF SWING LINE NOTE
BLUE BIRD BODY COMPANY
$10,000,000
November 15, 1996
New York, New York
FOR VALUE RECEIVED, BLUE BIRD BODY COMPANY, a Georgia corporation
("BORROWER"), promises to pay to the order of Bankers Trust Company ("PAYEE"),
on or before the Expiry Date, the lesser of (x) ten million dollars
($10,000,000), and (y) the unpaid aggregate principal amount of all advances
made by Payee to Borrower as Swing Line Loans under the Credit Agreement
referred to below.
Borrower also promises to pay interest on the unpaid principal amount
hereof until paid at the rates, at the times and from the dates which shall be
determined in accordance with the provisions of that certain First Amended and
Restated Credit Agreement dated as of November 15, 1996 (such agreement, as it
may be amended, amended and restated, supplemented or otherwise modified from
time to time, being herein called the "CREDIT AGREEMENT"; capitalized terms used
herein without definition shall have the meanings assigned those terms in the
Credit Agreement), by and among Blue Bird Corporation, a Delaware corporation,
Borrower, the lenders party thereto ("LENDERS"), Bankers Trust Company, as
administrative agent for Lenders ("ADMINISTRATIVE AGENT"), Merrill Lynch & Co.,
as syndication agent ("SYNDICATION AGENT").
This Note is Borrower's "SWING LINE NOTE" in the principal amount of
$10,000,000 and is issued pursuant to and entitled to the benefits of the Credit
Agreement to which reference is hereby made for a more complete statement of the
terms and conditions under which the Loans evidenced hereby were or are made and
are to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day
funds at the office of Administrative Agent located at One Bankers Trust
Plaza, New York, New York, or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit
VII-1
<PAGE>
Agreement. Until notified in writing of the transfer of this Note, Borrower
and Administrative Agent shall be entitled to deem Payee or such person who
has been so identified by the transferor in writing to Borrower and
Administrative Agent as the holder of this Note, as the owner and holder of
this Note. Each of Payee and any subsequent holder of this Note agrees by
its acceptance hereof that before disposing of this Note or any part hereof
it will make a notation hereon of all principal payments previously made
hereunder and of the date to which interest hereon has been paid; provided,
however, that the failure to make a notation of any payment made on this Note
shall not limit or otherwise affect the obligation of Borrower hereunder with
respect to payments of principal or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.5A(ii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.5A(i) of the Credit Agreement.
This Note is secured by certain assets pursuant to the Collateral
Documents.
This Note is subject to restriction on transfer or assignment provided
in subsections 10.2 and 10.16 of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
VII-2
<PAGE>
Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note.
Borrower and endorsers of this Note hereby consent to renewals and extensions of
time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as a
defense to any demand hereunder.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and the place
first above written.
BLUE BIRD BODY COMPANY
By _________________________
Title:
VII-3
<PAGE>
TRANSACTIONS ON
SWING LINE NOTE
Outstanding
Amount of Amount of Principal
Loan Made Principal Paid Balance Notation
Date This Date This Date This Date Made by
- ---- --------- -------------- --------- --------
VII-4
<PAGE>
EXHIBIT VIII
BORROWING BASE CERTIFICATE
NOVEMBER 19, 1996
Reference is made to the First Amended and Restated Credit Agreement
dated as of November 15, 1996 (such agreement, as it may be amended, amended
and restated, supplemented or otherwise modified from time to time, the
"Credit Agreement"; capitalized terms used herein without definition shall
have the meanings set forth in the Credit Agreement) by and among Blue Bird
Corporation, a Delaware corporation ("Holding"), Blue Bird Body Company, a
Georgia corporation, the lenders party thereto ("Lenders"), Bankers Trust
Company, as administrative agent for Lenders ("Administrative Agent") and
Merrill Lynch & Co., as syndication agent ("Syndication Agent").
Pursuant to Section 5.1(iv) of the Credit Agreement, the undersigned
Vice President--Finance and Administration of Borrower hereby certifies that
attached hereto as Annex A is a true and accurate calculation of the
borrowing Base as of November 2, 1996 determined in accordance with the
requirements of the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
duly executed as of November 19, 1996.
BLUE BIRD BODY COMPANY
By -----------------------------
Name: Bobby G. Wallace
Title: Vice President--Finance
and Administration
Treasurer and Secretary
VIII-1
<PAGE>
EXHIBIT IX
FORM OF FINANCIAL CONDITION CERTIFICATE
THIS FINANCIAL CONDITION CERTIFICATE is delivered in connection with
the First Amended and Restated Credit Agreement dated as of November 7, 1996 (as
such agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"; capitalized terms used
herein without definition shall have the meanings assigned those terms in the
Credit Agreement), by and among Blue Bird Corporation, a Delaware corporation
("HOLDING"), Blue Bird Body Company, a Georgia corporation ("BORROWER"), the
lenders party thereto, Bankers Trust Company, as administrative agent
("ADMINISTRATIVE AGENT"), and Merrill Lynch & Co., as syndication agent
("SYNDICATION AGENT"). In my capacity as an officer of Borrower, I hereby
certify as follows:
1. I am, and at all pertinent times mentioned herein have been, the
duly qualified and acting Chief Financial Officer of Borrower and in such
capacity am the senior financial officer of Borrower and have responsibility for
the management of the financial affairs of Borrower and its Subsidiaries and the
preparation of financial statements of Borrower and its Subsidiaries. I have
carefully reviewed the Credit Agreement and the exhibits thereto, and I was
consulted by officers of Borrower and its Subsidiaries in connection with
certain matters concerning the negotiation and consummation of the Credit
Agreement and the Refinancing, including the issuance of the Subordinated Debt.
2. I have carefully reviewed the contents of this Certificate, and I
have conferred with counsel for Borrower for the purpose of discussing the
meaning of its contents.
3. In connection with preparation for consummation of the
transactions contemplated by the Credit Agreement, I have caused the preparation
of and I have reviewed consolidated income projections for Borrower and its
Subsidiaries for Fiscal Years 1997 through 2003, inclusive, and a pro forma
forecast of earnings and cash flow (the "Projected Financial Statements"). The
Projected Financial Statements attached hereto as Exhibit A give effect to the
consummation of the transactions contemplated by the Credit Agreement, including
the Refinancing. The Projected Financial Statements were prepared on the basis
of information available at _____________, 1996. These projections have been
prepared in a manner which is based on reasonable assumptions and with
reasonable care. I know of no facts which have occurred since __________, 1996
that would lead me to believe that the Projected Financial Statements are
inaccurate in any material respect.
4. I have also caused the preparation of and I have reviewed a pro
forma consolidated summary balance sheet of Borrower and its Subsidiaries as
of ____________, 1996, the expected Restatement Effective Date (the "FAIR
IX-1
<PAGE>
VALUE SUMMARY BALANCE SHEET"), giving effect to the making of the Term Loans,
the initial Working Capital Loans and any other extensions of credit under
the Credit Agreement, the issuance of the Subordinated Debt and the intended
application of the proceeds thereof, and the Refinancing. The Fair Value
Summary Balance Sheet is attached as Exhibit B and has been prepared using
the methodologies described below and not in accordance with GAAP.
5. In connection with the preparation of the Projected Financial
Statements, I have made such investigation and inquiries as I deem necessary and
prudent therefor and specifically have relied on historical information,
revenues, expenses and other data supplied by Borrower's supervisory personnel
directly responsible for the various operations involved. The assumptions upon
which the Projected Financial Statements are based are stated therein, which
assumptions I believe are reasonable, although any assumption and any forecast
by necessity involves uncertainty and approximation. Based thereon, I believe
that the projections for Borrower and its Subsidiaries, taken as a whole,
provide reasonable estimations of future performance, subject, as stated above,
to the uncertainty and approximation inherent in any projections.
6. The Fair Value Summary Balance Sheet has been prepared in a
manner which I believe reflects the fair value of the assets of Borrower and its
Subsidiaries, and the probable liability on all of their liabilities, contingent
or otherwise. I understand "FAIR VALUE" of assets to mean the amount which may
be realized within a reasonable time, either through collection or sale of such
assets at the regular market value, conceiving of the latter as the amount which
could be obtained for the property in question within such period by a capable
and diligent businessman from an interested buyer who is willing to purchase
under ordinary selling conditions, neither being under any compulsion to act.
With respect to the valuation of such assets, my conclusions are supported by
the attached letter of Valuation Research Corporation. I have included debts on
the Fair Value Summary Balance Sheet at the present value of known probable
liabilities. With respect to contingent liabilities (such as litigation,
guarantees and pension plan liabilities), such liabilities have been computed at
the amount which, in light of all the facts and circumstances existing at this
time, represents the amount which can reasonably be expected to become an actual
or matured liability. The specific methodology I followed is set forth in the
notes and assumptions to the Fair Value Summary Balance Sheet.
Based upon the foregoing, I have reached the following conclusions:
1. Borrower and its Subsidiaries are not now nor will the incurrence
of the obligations to repay the Loans and other extensions of credit made
pursuant to the Credit Agreement and the Subordinated Debt render them
"INSOLVENT", as defined below. I understand that in this context "INSOLVENT"
means that the present fair value of assets is less than the amount that will be
required to pay the probable liability on existing debts as they become absolute
and matured. I also understand that the term "debts" includes any legal
liability, whether matured or unmatured, liquidated or unliquidated, absolute,
fixed or contingent.
IX-2
<PAGE>
My conclusion is supported by an analysis of the Fair Value Summary
Balance Sheet. A valuation of Borrower and its Subsidiaries on the basis
thereof would reflect the value of Borrower and its Subsidiaries as
$___________, representing the difference between asset values of $_____________
and liabilities of $_____________.
2. By the consummation of the Refinancing and the incurrence of
obligations to repay the Loans and other extensions of credit made pursuant to
the Credit Agreement and the Subordinated Debt, Borrower and its Subsidiaries
will not incur debts beyond their ability to pay as they mature. I have based
my conclusion in part on the Projected Financial Statements which demonstrate
that Borrower and its Subsidiaries will have positive cash flow after paying all
of their scheduled anticipated indebtedness (including scheduled payments under
the Credit Agreement and the Subordinated Debt and other permitted
indebtedness). I have concluded that the realization of the current assets in
the ordinary course of business will be sufficient to pay recurring current
debt, short-term debt and long-term debt service as such debts mature, and that
the cash flow (including earnings plus non-cash charges to earnings and the
disposition of surplus fixed assets held for sale) will be sufficient to provide
cash necessary to repay Loans and other extensions of credit made under the
Credit Agreement, the Subordinated Debt and other long-term indebtedness as such
debt matures.
3. Consummation of the Refinancing and the incurrence of the
obligations to repay the Loans and other extensions of credit made pursuant to
the Credit Agreement and the Subordinated Debt will not leave Borrower or any of
its Subsidiaries with property remaining in its hands constituting "UNREASONABLY
SMALL CAPITAL." In reaching this conclusion, I understand that "UNREASONABLY
SMALL CAPITAL" depends upon the nature of the particular business or businesses
conducted or to be conducted, and I have reached my conclusion based on the
needs and anticipated needs for capital of the businesses conducted or
anticipated to be conducted by Borrower and its Subsidiaries in light of the
Projected Financial Statements and available credit capacity.
4. To the best of my knowledge, neither Borrower nor any of its
Subsidiaries has taken any action with respect to the Credit Agreement, the
Loans and other extensions of credit under the Credit Agreement, the
Subordinated Debt or any documents mentioned herein or therein, or made any
transfer or incurred any obligations thereunder, with actual intent to hinder,
delay or defraud either present or future creditors.
I understand that you are relying on the truth and accuracy of the
foregoing in connection with the extension of credit pursuant to the Credit
Agreement.
I represent the foregoing information to be, to the best of my
knowledge and belief, true and correct and execute this Certificate this ____
day of November 7, 1996.
BLUE BIRD BODY COMPANY
By _______________________________
Title: Chief Financial Officer
IX-3
<PAGE>
EXHIBIT X
BORROWER SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is dated as of April 15,
1992, and entered into by and between BLUE BIRD BODY COMPANY, a Georgia
corporation (the "Borrower"), and BANKERS TRUST COMPANY, as collateral agent for
and representative of (in such capacity, together with any successor in such
capacity, "Collateral Agent") the Lenders (as defined herein).
PRELIMINARY STATEMENTS
B B Acquisition Corp., a Georgia corporation, Blue Bird Corporation, a
Delaware corporation, the lenders party thereto ("Lenders") and Bankers Trust
Company, as agent for Lenders ("Agent"), have entered into a credit agreement
dated as of April 15, 1992 (said credit agreement, as it may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time, is referred to herein as the "Credit Agreement"; capitalized terms used
herein without definition shall have the meanings set forth in the Credit
Agreement). It is a condition precedent to the making of loans and other
extensions of credit by Lenders under the Credit Agreement that Borrower shall
have granted the security interest contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Borrower hereby agrees with Collateral
Agent as follows:
SECTION 1. GRANT OF SECURITY. Borrower hereby assigns and grants to
Collateral Agent, for its benefit and the benefit of Agent and Lenders
(collectively, the "Secured Parties"), and hereby grants to Collateral Agent a
security interest in, all of Borrower's right, title and interest in and to the
following, in each case whether now or hereafter existing or in which Borrower
now has or hereafter acquires an interest and wherever the same may be located
(the "Collateral") to secure the Secured Obligations (as defined in Section 2):
(a) All equipment in all of its forms, and all parts thereof and all
accessions thereto and documents therefor (any and all such equipment,
parts, accessions and documents being the "Equipment");
(b) All inventory in all of its forms, including, but not limited to,
(i) all goods held by Borrower for sale or lease or to be furnished under
contracts of service or so
<PAGE>
leased or furnished, (ii) all raw materials, work in process, finished
goods, and materials used or consumed in the manufacture, packing,
shipping, advertising, selling, leasing, furnishing or production of such
inventory or otherwise used or consumed in Borrower's business, (iii) goods
in which Borrower has an interest in mass or a joint or other interest or
right of any kind, (iv) goods which are returned to or repossessed by
Borrower and all additions and accessions thereto and replacements thereof)
(all such inventory, accessions and products being the "Inventory");
(c) All accounts, contract rights, chattel paper, instruments,
guaranties, letters of credit, documents, drafts, acceptances, tax refunds,
rights to performance, judgments, security agreements, leases, permits,
licenses, franchises, certificates, other contracts and general intangibles
of every nature, including, without limitation, all rights and claims to
the payment or receipt of money or other forms of consideration of any kind
included in this clause (c) (any and all such rights and claims to the
payment or receipt of money or other forms of consideration being the
"Payment Rights", and any and all such leases, security agreements and
other contracts being the "Related Contracts");
(d) All books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software (owned by
Borrower or in which it has an interest) that at any time evidence or
contain information relating to any of the Collateral or are otherwise
necessary or helpful in the collection thereof or realization thereupon;
(e) All plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all additions and accessions thereto and
replacements thereof and products thereof;
(f) All Subsidiary Documents (including the mortgages on Schedule VII
which charge the lands on Schedule VIII) and Lease Portfolio Documents, as
each such agreement, contract and assignment may be amended, amended and
restated, supplemented or otherwise modified from time to time (said
agreements, contracts and assignments, as so amended, amended and restated,
supplemented or otherwise modified, are referred to herein individually as
an "Assigned Agreement" and collectively as the "Assigned Agreements")
including, without limitation, (i) all rights of Borrower to receive moneys
due or to become due under or pursuant to the Assigned Agreements, (ii) all
rights of Borrower to receive proceeds of any insurance, indemnity,
warranty or guaranty with respect to the Assigned Agreements, (iii) all
claims of
2
<PAGE>
Borrower for damages arising out of breach of or any default under the
Assigned Agreements and (iv) the right of Borrower to terminate, amend,
supplement or modify the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder;
(g) All cash, money, currency and all deposit accounts ("Deposit
Accounts"), including, without limitation, all demand, time, savings,
passbook or like accounts maintained with a bank, savings and loan
association, credit union or other like organization, and all such accounts
into which receipts are deposited or which are maintained with Collateral
Agent or any other Secured Party (any and all Deposit Accounts, the
"Pledged Deposits") but in no event shall Deposit Accounts include moneys
in the Hold-Back Account established under the Lease Portfolio Documents or
any moneys constituting payments on or with respect to lease receivables
sold to LaSalle National Bank received by Borrower as servicer of such
lease receivables which moneys are payable to LaSalle National Bank
pursuant to the Lease Portfolio Documents;
(h) To the extent not otherwise included in the definition of
Collateral, (i) all common law and/or statutory copyrights, rights and
interests of every kind and nature in copyrights and works protectable by
copyright, whether now owned or hereafter created or acquired and renewals
and extensions of copyrights (the "Copyrights"), (ii) the right (but not
the obligation) to make publication thereof for copyright purposes, to
register claim upon copyright and the right (but not the obligation) to
renew and extend such copyrights, (iii) all licenses and rights in and any
written agreement now or hereafter in existence granting to Borrower any
right to use any of the foregoing (the "Copyright Licenses"), (iv) the
right (but not the obligation) to sue in the name of Borrower or in the
name of Collateral Agent for past, present and future infringements of any
such properties, (v) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing, including, without
limitation, damages or payments for past, present and future infringements
of any such properties and (vi) all goodwill associated with or symbolized
by any of the foregoing;
(i) To the extent not otherwise included in the definition of
Collateral, (i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, logos, other business identifiers, prints and labels on which any of
the foregoing have appeared or appear, all registrations and recordings
thereof, and all applications in connection therewith including
registrations, recordings and applications in the United States Patent and
Trademark
3
<PAGE>
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof (the
"Trademarks"); (ii) all reissues, extensions or renewals thereof and the
right (but not the obligation) to register claim under trademark and to
renew and extend such trademarks; (iii) all licenses and rights in and any
written agreement granting Borrower any right to use any of the foregoing
(the "Trademark Licenses"); (iv) all income, royalties, damages and
payments now or hereafter due and/or payable under any of the foregoing or
with respect to any of the foregoing, including, without limitation,
damages or payment for past, present and future infringements of any of the
foregoing; (v) the right (but not the obligation) to sue for past, present
and future infringements of the foregoing; (vi) all rights corresponding to
any of the foregoing throughout the world; and (vii) all goodwill
associated with or symbolized by any of the foregoing;
(j) To the extent not otherwise included in the definition of
Collateral, (i) all patents and patent applications and the inventions and
improvements described and claimed therein, and patentable inventions (the
"Patents"); (ii) the reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any of the foregoing; (iii) all
licenses and rights in and all written agreements granting Borrower any
right to use any invention on which a patent is in existence ("Patent
Licenses") (the Copyrights, Copyright Licenses, Trademarks, Trademark
Licenses, Patents and Patent Licenses are collectively referred to herein
as the "Intellectual Property"); (iv) all income, royalties, damages or
payments now and hereafter due and/or payable under any of the foregoing
with respect to any of the foregoing, including, without limitation,
damages or payments for past, present and future infringements of any of
the foregoing; (v) the right (but not the obligation) to sue for past,
present and future infringements of any of the foregoing; (vi) all rights
corresponding to any of the foregoing throughout the world; and (vii) all
goodwill associated with any of the foregoing;
(k) To the extent not otherwise included in the definition of
Collateral, all goods, all building materials, equipment, work in progress
and all trade secrets and other confidential information relating to the
business of Borrower, including, by way of illustration and not limitation,
each and every kind of know-how practiced by Borrower and its employees;
the names and addresses of, and credit and other business information
concerning Borrower's past, present or future customers as they may exist
from time to time; the prices which Borrower obtains for its services or at
which it sells merchandise; estimating and cost procedures; profit margins;
policies and procedures
4
<PAGE>
pertaining to the sales and services furnished by Borrower; information
concerning suppliers of Borrower and manner of operation, business plans,
pledges, projections, and all other information of any kind or character,
whether or not reduced in writing, with respect to the conduct by Borrower
of its business not generally known by the public, now or hereafter
existing; and
(l) All proceeds of any and all of the foregoing Collateral and, to
the extent not otherwise included, all payments under insurance (whether or
not Collateral Agent is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral. For purposes of this
Agreement, the term "proceeds" includes whatever is receivable or received
when Collateral or proceeds are sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and
includes, without limitation, all rights to payment, including returned
premiums, with respect to any insurance relating thereto.
Notwithstanding anything to the contrary hereinabove contained, Collateral shall
not include any and all Equipment, Inventory, Payment Rights and Related
Contracts, together with any other rights, title or interest of Borrower related
thereto, sold, assigned, pledged or transferred, or in which a security interest
is granted, to LaSalle National Bank or its assignee, under and in accordance
with the terms of the Lease Portfolio Documents as in effect on the Closing
Date.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures and the
Collateral is collateral security for the prompt payment or performance in full
when due, whether at stated maturity, by acceleration, declaration or otherwise
(including the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
Section 362(a)) of all obligations of every nature of Borrower now or hereafter
existing under the Credit Agreement (including, without limitation, all
Obligations as defined in the Credit Agreement), and any promissory note or
other document or instrument delivered pursuant thereto and all amendments,
extensions or renewals thereof or hereof, whether for principal, interest
(including, without limitation, interest that, but for the filing of a petition
in bankruptcy with respect to the Borrower, would accrue on such obligations
whether or not a claim is allowed against Borrower in any such bankruptcy
proceeding), fees, expenses or otherwise, whether now existing or hereafter
arising, voluntary or involuntary, whether or not jointly owed with others,
direct or indirect, absolute or contingent, liquidated or unliquidated, and
whether or not from time to time decreased or extinguished and later increased,
created or incurred and all or any portion of such obligations
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that are paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from Collateral Agent as a preference,
fraudulent transfer or otherwise (all such obligations being the "Underlying
Debt"), and all obligations of every nature of Borrower now or hereafter
existing under this Agreement (all such obligations of Borrower, together with
the Underlying Debt, being the "Secured Obligations").
SECTION 3. BORROWER REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) Borrower shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Collateral Agent of
any of the rights hereunder shall not release Borrower from any of its duties or
obligations under the contracts and agreements included in the Collateral and
(c) Collateral Agent shall not have any obligation or liability under any
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Collateral Agent be obligated to perform any of the obligations or
duties of Borrower thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants as follows:
(a) Binding Obligation. This Agreement is the legally valid and
binding obligation of Borrower, enforceable against it in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws or equitable principles
relating to or limiting creditors' rights generally.
(b) Location of Equipment and Inventory. All of the Equipment and
Inventory is located at the places specified in SCHEDULE I hereto.
(c) Delivery of Certain Collateral. Other than chattel paper, notes
and other instruments (excluding checks) being held by Borrower pending
sale pursuant to the Lease Portfolio Documents which items may be held by
Borrower for up to 90 days, all chattel paper and notes and other
instruments (excluding checks) comprising any and all items of Collateral
have been delivered to Collateral Agent duly endorsed and accompanied by
duly executed instruments of transfer or assignment in blank.
(d) Payment Rights Valid. Each Payment Right constitutes the legally
valid and binding obligation of the party obligated to pay the same (the
"Account Debtor"). Each such Payment Right complies with the provisions of
all applicable laws and regulations, whether federal, state or
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local, applicable thereto (including, without limitation, any usury law,
the Federal Truth and Lending Act and Regulation C of the Federal Reserve
System). None of the Payment Rights is evidenced by a promissory note or
other instrument other than a check, that has not been delivered to
Collateral Agent.
(e) Ownership of Collateral. Except for the interests disclosed in
SCHEDULE II hereto and the security interest created by this Agreement,
Borrower owns the Collateral free and clear of any Lien. Except with
respect to the interests disclosed in SCHEDULE II hereto and such as may
have been filed in favor of Collateral Agent relating to this Agreement, no
effective financing statement or other instrument similar in effect
covering all or any part of the Collateral is on file in any filing or
recording office.
(f) Perfection. This Agreement creates a valid, perfected and,
except for the interests disclosed in SCHEDULE II hereto, first priority
security interest in the Collateral, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken.
(g) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required either (i) for the grant by Borrower of the
security interest granted hereby or for the execution, delivery or
performance of this Agreement by Borrower or (ii) for the perfection of or
the exercise by Collateral Agent of its rights and remedies hereunder
(except as may have been taken by or at the direction of Borrower).
(h) Other Information. All information heretofore, herein or
hereafter supplied to Collateral Agent by or on behalf of Borrower with
respect to the Collateral is accurate and complete in all material
respects.
(i) Office Locations; Fictitious Names. The chief place of business,
the chief executive office and the office where Borrower keeps its records
regarding the Payment Rights and all originals of all chattel paper that
evidence Payment Rights is set forth in SCHEDULE III hereto. Borrower does
not do business under any trade-name or fictitious business name except as
set forth in SCHEDULE III hereto.
(j) Intellectual Property. SCHEDULE IV hereto sets forth each of
Borrower's registered Copyrights, applications therefor and Copyright
Licenses. SCHEDULE V hereto sets forth each of Borrower's registered
Trademarks, applications
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therefor and Trademarks Licenses. SCHEDULE VI hereto sets forth each of
Borrowers registered Patents, applications therefor and Patent Licenses.
All of the Intellectual Property is valid, subsisting and enforceable and
Borrower is not aware of any pending or threatened claim by any Person that
any of the Intellectual Property is invalid or unenforceable or that the
use of any of the Intellectual Property violates the rights of any Person
or of any basis for any such claim.
SECTION 5. FURTHER ASSURANCES. (a) Borrower agrees that from time to
time, at the expense of Borrower, Borrower will promptly execute and
deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that Collateral Agent may request,
in order to perfect and protect any security interest granted or purported
to be granted hereby or to enable Collateral Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, Borrower will: (i) at the
request of Collateral Agent (which request, in the case of Payment Rights
held for sale pursuant to the Lease Portfolio Documents, will not be made
prior to the earlier to occur of an Event of Default or 90 days after
Borrower's receipt of such Payment Rights), mark conspicuously each chattel
paper included in the Payment Rights and each Related Contract, (ii) at the
request of Collateral Agent (which request, in the case of Payment Rights
held for sale pursuant to the Lease Portfolio Documents, will not be made
prior to the earlier to occur of an Event of Default or 90 days after
Borrower's receipt of such Payment Rights), mark conspicuously each of its
records pertaining to the Collateral with a legend, in form and substance
satisfactory to Collateral Agent, indicating that such Collateral is
subject to the security interest granted hereby; (iii) if any Payment Right
shall be evidenced by a promissory note or other instrument (excluding
checks) or chattel paper, deliver and pledge to Collateral Agent hereunder
such note or instrument or chattel paper duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and
substance satisfactory to Collateral Agent, which delivery shall be made
within 90 days of Borrower's receipt of such Payment Rights in the case of
any such chattel paper, notes or other instruments held for sale pursuant
to the Lease Portfolio Documents and not so sold within such 90 day period
and, in the case of all other such Payment Rights, which delivery shall be
made promptly upon Borrower's receipt of such Payment Rights; (iv) at the
request of Collateral Agent, deliver and pledge to Collateral Agent all
promissory notes and other instruments (including checks) and all original
counterparts of chattel paper constituting Collateral duly endorsed and
accompanied by duly executed instruments of
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transfer or assignment, all in form and substance satisfactory to
Collateral Agent; (v) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices,
as may be necessary or desirable, or as Collateral Agent may request, in
order to perfect and preserve the security interests granted or purported
to be granted hereby, (vi) at any reasonable time, upon demand by
Collateral Agent, exhibit the Collateral to and allow inspection of the
Collateral by Collateral Agent, or persons designated by Collateral Agent
and (vii) at Collateral Agent's request, appear in and defend any action or
proceeding that may affect Borrower's title to or Collateral Agent's
security interest in the Collateral.
(b) Borrower hereby authorizes Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of Borrower. A
carbon, photographic or other reproduction of this Agreement or a financing
statement signed by Borrower shall be sufficient as a financing statement.
(c) Borrower will furnish to Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Collateral
Agent may reasonably request, all in reasonable detail.
SECTION 6. COVENANTS OF BORROWER. Borrower shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement, or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Collateral Agent of any change in Borrower's name,
identity or corporate structure within 15 days of such change;
(c) give Collateral Agent 30 days' prior written notice of any change
in Borrower's residence or chief place of business;
(d) if Collateral Agent gives value to enable Borrower to acquire
rights in or the use of any Collateral, use such value for such purposes;
and
(e) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except
to the extent the validity thereof is being contested in good
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faith; provided that so long as no property or assets (other than money for
such charge or claim and the interest or penalty accruing thereon) of
Holding or Borrower or any of their respective Subsidiaries is in danger of
being lost or forfeited as a result thereof, no such charge or claim need
be paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such other reserve or
other appropriate provision, if any, as shall be required in conformity
with GAAP shall have been made therefor.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
Borrower shall:
(a) keep the Equipment and Inventory (other than Inventory sold in
the ordinary course of business) at the places therefor specified on
SCHEDULE I hereto or, upon 30 days' prior written notice to Collateral
Agent, at such other places in jurisdictions where all action that may be
necessary or desirable, or that Collateral Agent may request, in order to
perfect and protect any security interest granted or purported to be
granted hereby or to enable Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to such Equipment and Inventory
shall have been taken;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with Borrower's past practices, and shall
forthwith, or in the case of any loss or damage to any of the Equipment as
quickly as practicable after the occurrence thereof, make or cause to be
made all repairs, replacements, and other improvements in connection
therewith that are necessary or desirable to such end. Borrower shall
promptly furnish to Collateral Agent a statement respecting any loss or
damage to any of the Equipment;
(c) keep correct and accurate records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory, Borrower's cost
therefor and (where applicable) the current price list for such Inventory;
and
(d) if any Inventory is in possession or control of any of Borrower's
agents or processors, if the aggregate book value of all such Inventory
exceeds $25,000, and in any event upon the occurrence of an Event of
Default, instruct such agent or processor to hold all such Inventory for
the account of Collateral Agent and subject to the instructions of
Collateral Agent.
SECTION 8. INSURANCE. (a) Borrower shall, at its own expense,
maintain insurance with respect to the Equipment
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and Inventory in such amounts, against such risks, in such form and with
such insurers, as shall be reasonably satisfactory to Collateral Agent from
time to time. Such insurance shall include, without limitation, property
damage insurance and liability insurance. Each policy for property damage
insurance shall provide for all losses (except for losses of less than
$25,000 per occurrence) to be paid directly to Collateral Agent. Each
policy shall in addition (i) name Borrower and Collateral Agent as insured
parties thereunder (without any representation or warranty by or obligation
upon Collateral Agent) as their interests may appear, (ii) unless otherwise
agreed by Collateral Agent, contain an agreement by the insurer that any
loss thereunder payable to Collateral Agent shall be payable to Collateral
Agent notwithstanding any action, inaction or breach of representation or
warranty by Borrower, (iii) have attached thereto the Lender's Loss Payable
Endorsement or its equivalent, or a Loss Payable clause acceptable to
Collateral Agent, (iv) provide that there shall be no recourse against
Collateral Agent for payment of premiums or other amounts with respect
thereto and (v) provide that at least 30 days' prior written notice of
cancellation, material amendment, reduction in scope or limits of coverage
or of lapse shall be given to Collateral Agent by the insurer. Borrower
shall, if so requested by Collateral Agent, deliver to Collateral Agent
original or duplicate policies of such insurance and, as often as
Collateral Agent may reasonably request, a report of a reputable insurance
broker with respect to such insurance. Further, Borrower shall, at the
request of Collateral Agent, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements of
Section 5(a) and cause the respective insurers to acknowledge notice of
such assignment.
(b) Reimbursement under any liability insurance maintained by
Borrower pursuant to this Section 8 may be paid directly to the person who
shall have incurred liability covered by such insurance. In case of any
loss involving damage to Equipment or Inventory when subsection (c) of this
Section 8 is not applicable, Borrower shall make or cause to be made the
necessary repairs to or replacements of such Equipment or Inventory, and
any proceeds of insurance maintained by Borrower pursuant to this Section 8
shall be paid to Borrower as reimbursement for the costs of such repairs or
replacements.
(c) Upon (i) the occurrence and during the continuance of any Event
of Default, or (ii) the actual or constructive total loss (in excess of
$25,000 per occurrence) of any Equipment or Inventory, all insurance
payments in respect of such Equipment or Inventory shall be paid to and
applied by Collateral Agent as specified in Section 20.
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SECTION 9. SPECIAL COVENANTS WITH RESPECT TO PAYMENT RIGHTS AND
RELATED CONTRACTS.
(a) Borrower shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Payment Rights and Related Contracts at the location therefor specified in
SCHEDULE III hereto or, upon 30 days' prior written notice to Collateral
Agent, at such other locations in a jurisdiction where all action that may
be necessary or desirable, or that Collateral Agent may request, in order
to perfect and protect any security interest granted or purported to be
granted hereby or to enable Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to such Payment Rights and
Related Contracts shall have been taken. Borrower will hold and preserve
such records and will permit representatives of Collateral Agent at any
time during normal business hours to inspect and make abstracts from such
records and Borrower agrees to render to Collateral Agent, at Borrower's
cost and expense, such clerical and other assistance as may be reasonably
requested with regard thereto. Promptly upon the request of Collateral
Agent, Borrower shall deliver to Collateral Agent complete and correct
copies of each Related Contract.
(b) Borrower shall, for not less than 5 years from the date on which
such Payment Right arose, maintain (i) complete records of each Payment
Right, including records of all payments received, credits granted and
merchandise returned and (ii) all documentation relating thereto.
(c) Borrower shall duly fulfill all obligations on its part to be
fulfilled under or in connection with the Payment Rights and the Related
Contracts and shall do nothing to impair the rights of Collateral Agent
therein.
(d) Except as otherwise provided in this subsection (d) of this
Section 9, Borrower shall continue to collect, at its own expense, all
amounts due or to become due Borrower under the Payment Rights and Related
Contracts. In connection with such collections, Borrower may take (and, at
Collateral Agent's direction, shall take) such action as Borrower or
Collateral Agent may deem necessary or advisable to enforce collection of
the Payment Rights; provided, however, that Collateral Agent shall have the
right at any time, upon the occurrence and during the continuance of an
Event of Default or a Potential Event of Default and upon written notice to
Borrower of its intention to do so, to notify the account debtors or
obligors under any Payment Rights of the assignment of such Payment Rights
to Collateral Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due
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to Borrower thereunder directly to Collateral Agent, to notify each Person
maintaining a lockbox or similar arrangement to which account debtors or
obligors under any Payment Rights have been directed to make payment to
remit all amounts representing collections on checks and other payment
items from time to time sent to or deposited in such lockbox or other
arrangement directly to Collateral Agent and, upon such notification and at
the expense of Borrower, to enforce collection of any such Payment Rights
and to adjust, settle or compromise the amount or payment thereof, in the
same manner and to the same extent as Borrower might have done. After
receipt by Borrower of the notice from Collateral Agent referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by Borrower in respect of the
Payment Rights and the Related Contracts shall be received in trust for the
benefit of Collateral Agent hereunder, shall be segregated from other funds
of Borrower and shall be forthwith paid over or delivered to Collateral
Agent in the same form as so received (with any necessary endorsement) to
be held as cash collateral and applied as provided by Section 20, and
(ii) Borrower shall not adjust, settle or compromise the amount or payment
of any Payment Right, or release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
SECTION 10. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED
AGREEMENTS.
(a) Borrower shall at its expense:
(i) Perform and observe all terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements in full force and effect, enforce the Assigned Agreements in
accordance with their terms, and take all such action to such end as may be
from time to time requested by Collateral Agent.
(ii) Furnish to Collateral Agent promptly upon receipt thereof
copies of all notices, requests and other documents received by Borrower
under or pursuant to the Assigned Agreements, and from time to time
(A) furnish to Collateral Agent such information and reports regarding the
Assigned Agreements as Collateral Agent may reasonably request and (B) upon
request of Collateral Agent make to the appropriate Person designated under
any Assigned Agreement such demands and requests for information and
reports or for action as Borrower is entitled to make under the Assigned
Agreements.
(b) Borrower shall not:
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(i) Cancel or terminate any of the Assigned Agreements or
consent to or accept any cancellation or termination thereof.
(ii) Amend or otherwise modify the Assigned Agreements or give
any consent, waiver or approval thereunder.
(iii) Waive any default under or breach of the Assigned
Agreements.
(iv) Take any other action in connection with the Assigned
Agreements that would impair the value of the interest or rights of
Borrower thereunder or that would impair the interest or rights of
Collateral Agent.
SECTION 11. SPECIAL PROVISIONS WITH RESPECT TO DEPOSIT ACCOUNTS.
Upon the occurrence and during the continuance of an Event of Default,
Collateral Agent may exercise dominion and control over, and refuse to permit
further withdrawals (whether of money, securities, instruments or other
property) from deposit accounts maintained with Collateral Agent constituting
part of the Collateral.
SECTION 12. SPECIAL PROVISIONS WITH RESPECT TO INTELLECTUAL PROPERTY.
(a) If, before the Secured Obligations are indefeasibly paid in full,
Borrower obtains any new Intellectual Property or rights thereto or becomes
entitled to the benefit of any Intellectual Property not listed on the
applicable Schedules to this Agreement, this Agreement shall automatically
apply thereto and Borrower shall give to Collateral Agent prompt written
notice thereof and shall amend this Agreement to include any such new
Intellectual Property.
(b) Borrower shall (i) prosecute diligently, through counsel
reasonably acceptable to Collateral Agent, any copyright, patent, trademark
or license application at any time pending; (ii) make application, through
counsel reasonably acceptable to Collateral Agent, on all new copyrights,
patents and trademarks as reasonably deemed appropriate by Borrower;
(iii) preserve and maintain all rights in the Intellectual Property
material to Borrower's business; and (iv) upon and after the occurrence and
during the continuance of an Event of Default, use its best efforts to
obtain any consents, waivers or agreements from third parties necessary to
enable Collateral Agent to exercise its remedies with respect to the
Intellectual Property. Borrower shall not abandon any right to file a
copyright, patent or trademark application nor shall Borrower abandon any
pending copyright, patent or trademark application, or
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Intellectual Property which is, either individually or in the aggregate,
material to Borrower's business without the prior written consent of
Collateral Agent. Borrower represents and warrants to Collateral Agent
that the execution, delivery and performance of this Agreement by Borrower
will not violate or cause a default under any of the Intellectual Property
or any agreement in connection therewith.
(c) Upon the occurrence of an Event of Default, Collateral Agent
shall have the right, but shall have no obligation, to bring suit in the
name of Borrower or Collateral Agent to enforce any Intellectual Property,
in which event Borrower shall, at the request of Collateral Agent, do any
and all lawful acts and execute any and all documents reasonably required
by Collateral Agent in aid of such enforcement and Borrower shall promptly,
upon demand, reimburse Collateral Agent for its reasonable expenses and
indemnify Collateral Agent. To the extent that Collateral Agent shall
elect not to bring suit to enforce any Intellectual Property, Borrower
agrees to use all reasonable measures, whether by action, suit, proceedings
or otherwise, to prevent the infringement of any of the Intellectual
Property.
SECTION 13. LICENSE OF INTELLECTUAL PROPERTY. Borrower hereby
assigns, transfers and conveys to Collateral Agent, effective upon the
occurrence of any Event of Default, the nonexclusive right and license to use
all Intellectual Property or technical processes owned or used by Borrower that
relate to the Collateral and any other collateral granted by Borrower as
security for the Secured Obligations, together with any goodwill associated
therewith, all to the extent necessary to enable Collateral Agent to use,
possess and realize on the Collateral and any successor or assign to enjoy the
benefits of the Collateral. This right and license shall inure to the benefit
of Collateral Agent and its successors, assigns and transferees, whether by
voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed
in lieu of foreclosure or otherwise. Such right and license is granted free of
charge, without requirement that any monetary payment whatsoever be made to
Borrower.
SECTION 14. REASSIGNMENT. If (a) an Event of Default shall have
occurred and, by reason of waiver, modification, amendment or otherwise, no
longer be continuing, (b) no other Event of Default shall be continuing, (c) an
assignment to Collateral Agent shall have been previously made pursuant to
Section 13 hereof, and (d) the Secured Obligations shall not have become
immediately due and payable, upon the written request of Borrower and the
written consent of Collateral Agent, Collateral Agent shall promptly execute and
deliver to Borrower such assignments as may be necessary to reassign to Borrower
any rights, title and interests as may have been assigned pursuant to
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Section 13 hereof, subject to any disposition thereof that may have been made by
Collateral Agent pursuant hereto; provided that, after giving effect to such
reassignment, Collateral Agent's security interest and conditional assignment
granted pursuant hereto as well as all other rights and remedies of Collateral
Agent granted hereunder, shall continue to be in full force and effect; and
provided, further, that the rights, title and interests so reassigned shall be
free and clear of all Liens other than Liens (if any) encumbering such rights,
title and interest at the time of their assignment to Collateral Agent and
Permitted Encumbrances.
SECTION 15. TRANSFERS AND OTHER LIENS. Borrower shall not:
(a) Sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement; provided that notwithstanding the foregoing, Borrower shall be
permitted to sell, assign or otherwise dispose of Equipment, Inventory,
Related Contracts and Payment Rights and any other right, title or interest
of Borrower related thereto, from time to time in connection with sales of
lease receivables made by Borrower to LaSalle National Bank pursuant to and
in accordance with the Lease Portfolio Documents as in effect on the
Closing Date and upon any such sale, assignment or other disposition
pursuant to and in accordance with the Lease Portfolio Documents, such
Equipment, Inventory, Related Contracts and Payments Rights and any other
right, title or interest of Borrower related thereto, shall be
automatically released to Borrower free and clear of the Lien and security
interest of this Agreement and shall no longer be Collateral hereunder.
The Collateral Agent agrees, at the reasonable request of, and upon payment
of any cost or expense of Collateral Agent related thereto by, LaSalle
National Bank, to execute and deliver UCC financing statements on Form
UCC-3 evidencing such release.
(b) In the event any Collateral not released pursuant to the proviso
in the foregoing clause (a) is sold, transferred or otherwise disposed of
in any Asset Sale or other transaction not prohibited by the Credit
Agreement, Collateral Agent shall release such Collateral to Borrower free
and clear of the Lien and security interest under this Agreement in
accordance with the following: (i) so long as any Secured Obligations
remain outstanding and if such disposition is an Asset Sale, concurrently
upon Collateral Agent's determination that arrangements satisfactory to it
have been made for delivery to it of the Estimated Net Cash Proceeds of
such Asset Sale to the extent required under the Credit Agreement and (ii)
in all other instances, concurrently upon Collateral Agent's determination
and
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delivery of an Officers' Certificate by Borrower certifying that no Cash
Proceeds of such disposition are required to be delivered by Pledgor in
respect of the Secured Obligations.
(c) Except for the interests disclosed in SCHEDULE II hereto, the
security interest created by this Agreement and as permitted by Section 6.2
of the Credit Agreement, create or suffer to exist any Lien upon or with
respect to any of the Collateral to secure the indebtedness or other
obligations of any Person.
SECTION 16. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Borrower
hereby irrevocably appoints Collateral Agent Borrower's attorney-in-fact, with
full authority in the place and stead of Borrower and in the name of Borrower,
Collateral Agent or otherwise, from time to time in Collateral Agent's
discretion to take any action and to execute any instrument that Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be maintained by
Borrower or paid to Collateral Agent pursuant to Section 8,
(b) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clauses (a)
and (b) above,
(d) to file any claims or take any action or institute any
proceedings that Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Collateral Agent with respect to any of the Collateral,
(e) to pay or discharge taxes or Liens, levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Collateral
Agent in its sole discretion, and such payments made by Collateral Agent to
become obligations of Borrower to Collateral Agent, due and payable
immediately without demand,
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts and
other documents relating to the Collateral,
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(g) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though Collateral Agent were the absolute owner thereof for
all purposes, and to do, at Collateral Agent's option and Borrower's
expense, at any time, or from time to time, all acts and things that
Collateral Agent deems necessary to protect, preserve or realize upon the
Collateral and Collateral Agent's security interest therein, in order to
effect the intent of this Agreement, all as fully and effectively as
Borrower might do.
SECTION 17. COLLATERAL AGENT MAY PERFORM. If Borrower fails to
perform any agreement contained herein, promptly after receipt of a request to
do so from Collateral Agent Collateral Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Collateral Agent
incurred in connection therewith shall be payable by Borrower under Section 21.
SECTION 18. COLLATERAL AGENT'S AND SECURED PARTIES' DUTIES AND
LIABILITIES.
(a) The powers conferred on Collateral Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually
received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
Collateral Agent shall be deemed to exercise reasonable care in the custody
and preservation of such Collateral if such Collateral is accorded
treatment substantially equal to that which Collateral Agent accords its
own property.
(b) Neither Collateral Agent nor any other Secured Party shall
be liable to Borrower (i) for any loss or damage sustained by it, or
(ii) for any loss, damage, depreciation or other diminution in the value of
any of the Collateral, that may occur as a result of, in connection with or
that is in any way related to (x) any exercise by Collateral Agent or any
other Secured Party of any right or remedy under this Agreement or (y) any
other act of or failure to act by Collateral Agent or any other Secured
Party, except to the extent that the same shall be determined by a judgment
of a court of competent jurisdiction to be the result of acts or omissions
on the part of Collateral Agent or such other Secured Party constituting
gross negligence or willful misconduct.
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(c) NO CLAIM MAY BE MADE BY BORROWER AGAINST COLLATERAL AGENT,
ANY OTHER SECURED PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT, OR
CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER
THE CLAIM THEREFOR IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN
CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS
CONTEMPLATED AND RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND BORROWER HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO
EXIST IN ITS FAVOR.
SECTION 19. REMEDIES. If any Event of Default shall have occurred
and be continuing, Collateral Agent may exercise in respect of the Collateral,
(a) all the rights and remedies of a secured party on default under the Uniform
Commercial Code of the State of New York (the "Code") (whether or not the Code
applies to the affected Collateral), (b) all of the rights and remedies provided
for in this Agreement, the Credit Agreement and any other agreement between
Borrower and Collateral Agent and (c) such other rights and the remedies as may
be provided by law or otherwise (such rights and remedies of Collateral Agent to
be cumulative and non-exclusive). Collateral Agent also may (i) require
Borrower to, and Borrower hereby agrees that it will at its expense and upon
request of Collateral Agent forthwith, assemble all or part of the Collateral as
directed by Collateral Agent and make it available to Collateral Agent at a
place to be designated by Collateral Agent that is reasonably convenient to both
parties, (ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Collateral Agent deems appropriate, (iv) take possession of
Borrower's premises or place custodians in exclusive control thereof, remain on
such premises and use the same and any of Borrower's equipment for the purpose
of completing any work in process, taking any actions described in the preceding
clause (iii) and collecting any Secured Obligation and (v) without notice except
as specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as Collateral Agent may deem commercially
reasonable. Borrower agrees that, at least 10 days' notice to Borrower of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. Collateral Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed
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therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
Collateral Agent may retain any of Borrower's directors, officers and
employees, in each case upon such terms as Collateral Agent and any such person
may agree, notwithstanding the provisions of any employment, confidentiality or
non-disclosure agreement between any such person and Borrower and Borrower
hereby waives its rights under any such agreement and consents to each such
retention.
SECTION 20. APPLICATION OF PROCEEDS. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Collateral Agent in
respect of any sale of, collection from or other realization upon all or any
part of the Collateral may, in the discretion of Collateral Agent, be held by
Collateral Agent as Collateral for, and/or then, or at any other time thereafter
applied, in full or in part by Collateral Agent against the Secured Obligations
in the following order of priority:
(a) To the payment of all costs and expenses of such sale, collection
or other realization and all other expenses, liabilities and advances made
or incurred by Collateral Agent in connection therewith and all amounts for
which Collateral Agent is entitled to indemnification hereunder and all
advances made by Collateral Agent hereunder for the account of Borrower and
for the payment of all costs and expenses paid or incurred by Collateral
Agent in connection with the exercise of any right or remedy hereunder, all
in accordance with Section 21;
(b) To the payment of the Secured Obligations in such order as
Collateral Agent shall elect; and
(c) After payment in full of the amounts specified in the preceding
subparagraphs, to the payment to or upon the order of Borrower, or
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
SECTION 21. INDEMNITY AND EXPENSES.
(a) Borrower agrees to indemnify Collateral Agent from and against any
and all claims, losses and liabilities growing out of or resulting from
this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from Collateral
Agent's gross negligence or willful misconduct.
(b) Borrower will upon demand pay to Collateral Agent the amount of
any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any
20
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experts and agents, that Collateral Agent may incur in connection with
(i) the administration of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization
upon, any of the Collateral, (iii) the exercise or enforcement of any of
the rights of Collateral Agent hereunder or (iv) the failure by Borrower to
perform or observe any of the provisions hereof.
SECTION 22. SECURITY INTEREST ABSOLUTE.
(a) All rights of Collateral Agent and security interests hereunder,
and all obligations of Borrower hereunder, shall be absolute and
unconditional, irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement or any Collateral Document, or any agreement or instrument
relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other amendment or waiver of or consent to any departure from the
Credit Agreement or any Collateral Document;
(iii) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guaranty, for all or any of the Secured
Obligations; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of Borrower or a third party
grantor of a security interest.
Without limiting the generality of the foregoing, Borrower hereby
consents to, and hereby agrees that the rights of Collateral Agent and the
security interests hereunder, and the obligations of Borrower hereunder, shall
not be affected by, any and all releases of any Collateral from the Liens and
security interests created by any Collateral Documents, whether for purposes of
Asset Sales or other dispositions of assets pursuant to the Credit Agreement or
for some other purpose, except to the extent expressly provided in such
releases.
SECTION 23. WAIVER OF HEARING. Borrower expressly waives any
constitutional or other right to a judicial hearing prior to the time Collateral
Agent takes possession or disposes of the Collateral as provided in Section 19
hereof.
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SECTION 24. WAIVER OF JURY TRIAL. BORROWER AND COLLATERAL AGENT
HEREBY MUTUALLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The
scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter
of this transaction, including without limitation, contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Borrower and Collateral Agent each acknowledge that this waiver is a
material inducement for Borrower and Collateral Agent to enter into a
business relationship, that Borrower and Collateral Agent have already relied
on the waiver in entering into this Agreement and that each will continue to
rely on the waiver in their related future dealings. Borrower and Collateral
Agent further warrant and represent that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
SECTION 25. CONTINUING SECURITY INTEREST. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the indefeasible payment in full of the Secured
Obligations and termination of Secured Parties' obligations to lend under the
Credit Agreement, (b) be binding upon Borrower, its successors and assigns and
(c) inure, together with the rights and remedies of Collateral Agent hereunder,
to the benefit of Collateral Agent and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), Secured Parties may
assign or otherwise transfer the Credit Agreement and any notes issued in
connection therewith to any other person or entity, and such other benefits in
respect thereof granted to Secured Parties herein or otherwise. Upon the
indefeasible payment in full of the Secured Obligations and termination of
Secured Parties' obligations to lend under the Credit Agreement, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Borrower. Upon any such termination, Collateral Agent will, at
Borrower's expense, execute and deliver to Borrower such documents as Borrower
shall reasonably request to evidence such termination.
SECTION 26. AMENDMENTS; ETC. No amendment or waiver of any provision
of this Agreement nor consent to any departure by Borrower herefrom, shall in
any event be effective unless the same shall be in writing and signed by
Collateral Agent, and no amendment or waiver of the last sentence of Section 1
or Section 15(a) of this Agreement nor any consent to any departure by Borrower
therefrom which is adverse to LaSalle National Bank, as
22
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purchaser under the Lease Portfolio Documents, shall be effective unless the
same shall be in writing and signed by Collateral Agent and LaSalle National
Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. The parties hereto
intend that LaSalle National Bank be a third party beneficiary with respect
to such last sentence of Section 1 and Section 15(a) to the extent related to
the Lease Portfolio or the Lease Portfolio Documents.
SECTION 27. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including facsimile
communication) and mailed or telecopied or delivered to Borrower or Collateral
Agent, as the case may be, addressed to it at the address of such party
specified on the signature page hereof, or as to either party at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed, be effective when deposited in the
mails, addressed as aforesaid.
SECTION 28. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
All judicial proceedings brought against Borrower with respect to this
Agreement may be brought in any state or federal court of competent jurisdiction
in the State of New York and by execution and delivery of this Agreement
Borrower accepts for itself and in connection with the Collateral, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
irrevocably agrees to be bound by any judgement rendered thereby in connection
with this Agreement. Borrower designates and appoints C T Corporation System
and such other Person as may be hereafter selected by Borrower irrevocably
agreeing in writing to so serve, as its agent to receive on its behalf service
of all process in any proceedings in any such court, such service being hereby
acknowledged by Borrower to be effective and binding service in every respect.
A copy of any such process so served shall be mailed by registered mail to
Borrower, at its address specified pursuant to Section 27 hereof, except that
unless otherwise provided by applicable law, any failure to mail such copy shall
not affect the validity of service of process. If any agent appointed by
Borrower refuses to accept service, Borrower hereby agrees that service upon it
by mail shall constitute sufficient notice. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Collateral Agent to bring proceedings against Borrower in the courts of
any other jurisdiction.
SECTION 29. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE
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INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY
PROVISION OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreement, terms used in Article 9 of the Uniform Commercial Code in the
State of New York are used herein as therein defined.
SECTION 30. COLLATERAL AGENT. Collateral Agent has been appointed as
Collateral Agent hereunder pursuant to the Credit Agreement, and shall be
entitled to the benefits of the Credit Agreement. Collateral Agent shall be
obligated, and shall have the right, hereunder to make demands, to give notices,
to exercise or refrain from taking action (including, without limitation, the
release or substitution of Collateral) solely in accordance with this Agreement
and the Credit Agreement. Collateral Agent may resign and a successor
Collateral Agent may be appointed in the manner provided for resignation or
removal of Agent and appointment of a successor in the Credit Agreement. Upon
the acceptance of any appointment as a Collateral Agent by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring Collateral Agent shall
thereupon be discharged from its duties and obligations under this Agreement and
shall deliver any Collateral in its possession to the successor Collateral
Agent. After any retiring Collateral Agent's resignation, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Collateral Agent.
SECTION 31. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement or be given any substantive effect.
SECTION 32. SEVERABILITY. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation and in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 33. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, Borrower has caused this Agreement to be duly
executed and delivered by its officers thereunto duly authorized as of the date
first above written.
BLUE BIRD BODY COMPANY
By _____________________
Title:
Notice Address:
Blue Bird Body Company
North Camellia Boulevard
P.O. Box 937
Fort Valley, GA 31030
Attn: Bob G. Wallace
with a copy to:
Wachtell, Lipton, Rosen & Katz
299 Park Avenue
New York, NY 10171-0149
Attn: Andrew R. Brownstein,
Esq.
BANKERS TRUST COMPANY,
as Collateral Agent
By _____________________
Title:
Notice Address:
Bankers Trust Company
280 Park Avenue
9th Floor West
New York, NY 10017
Attn: Mary Zadroga
with a copy to:
Bankers Trust Company
300 South Grand Avenue
41st Floor
Los Angeles, CA 90071
Attn: Patrice M. Daniels
S-1
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this ____ day of ________, 1992, before me personally came
_________________________________ to me known, who being by me duly sworn, did
depose and say that he/she resides at ___________________________________, that
he/she is a ____________________________ of _______________
_____________________________, one of the corporations described in and which
executed the within instrument, and that he/she signed his/her name thereto by
authority of the Board of Directors of said corporation.
______________________________
Notary Public
S-2
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this ____ day of ________, 1992, before me personally came
_________________________________ to me known, who being by me duly sworn, did
depose and say that he/she resides at ___________________________________, that
he/she is a ____________________________ of _______________
_____________________________, one of the corporations described in and which
executed the within instrument, and that he/she signed his/her name thereto by
authority of the Board of Directors of said corporation.
______________________________
Notary Public
S-3
<PAGE>
4/9/92
EXHIBIT XI
FORM OF BORROWER PLEDGE AGREEMENT
THIS BORROWER PLEDGE AGREEMENT (this "Agreement") is dated as of
April 15, 1992 between BLUE BIRD BODY COMPANY, a Georgia corporation
("Pledgor"), and BANKERS TRUST COMPANY ("Bankers"), as collateral agent for and
representative of (in such capacity, together with any successor in such
capacity "Collateral Agent") the Secured Parties (as defined herein).
PRELIMINARY STATEMENT
A. Pledgor is the legal and beneficial owner of (i) the shares (the
"Pledged Shares") of stock described in Part A of SCHEDULE I hereto and issued
by the corporations named therein and (ii) the indebtedness described in Part B
of said SCHEDULE I (the "Pledged Debt") and issued by the obligors named
therein.
B. Blue Bird Corporation, a Delaware corporation ("Holding"), B B
Acquisition Corp., a Georgia corporation ("Acquisition", which corporation has
merged with and into Pledgor), the lenders party thereto ("Lenders") and Bankers
Trust Company, as agent for Lenders ("Agent") have entered into that certain
Credit Agreement dated as of April 15, 1992 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
pursuant to which Lenders make certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend credit facilities to
Acquisition and Pledgor.
C. Acquisition has entered into the Subordinated Indenture pursuant
to which Acquisition has issued the Subordinated Notes and Holding has issued
its guaranty thereof.
D. It is a condition under the Credit Agreement and the Subordinated
Indenture that Pledgor shall have made the pledge and undertaken the obligations
contemplated by this Agreement.
E. Bankers, as agent under the Credit Agreement, and Manufacturers
Hanover Trust Company, as trustee under the Subordinated Indenture (the
"Subordinated Indenture Trustee") have entered into the Intercreditor Agreement
providing for, among other things, the appointment of Collateral Agent to
administer and enforce this Agreement and the Pledged Collateral (as hereinafter
defined) as provided therein.
<PAGE>
F. It is contemplated that Pledgor may from time to time enter into
Interest Rate Agreements (the "Interest Rate Agreements") with one or more
financial institutions, other than Lenders ("Other Banks") (such Other Banks
that have acknowledged and delivered to Collateral Agent a counterpart of the
Intercreditor Agreement agreeing to be bound by the terms thereof are
collectively referred to herein as the "Interest Rate Exchangers" and, such
Interest Rate Exchangers, together with Collateral Agent, Agent, Lenders, the
Subordinated Indenture Trustee and the holders of the Subordinated Notes, are
each individually referred to herein as a "Secured Party" and are collectively
referred to herein as the "Secured Parties").
IN CONSIDERATION of the foregoing premises, Pledgor hereby agrees with
Collateral Agent, for its benefit and the benefit of the other Secured Parties,
as follows:
SECTION 1. CERTAIN DEFINED TERMS. Terms used and not otherwise
defined herein have the respective meanings assigned to them in the Credit
Agreement. The following terms used herein shall have the following meanings:
"CREDIT AGREEMENT OBLIGATIONS" means all obligations of every nature
of Pledgor, Holding and any other Loan Party now or hereafter existing under or
arising out of or in connection with the Credit Agreement and any promissory
notes or other documents or instruments delivered pursuant thereto (including,
without limitation, the Holding Guaranty and any Interest Rate Agreements by and
between Borrower and any Lender and all other Obligations under the Credit
Agreement) and all amendments, extensions or renewals thereof, whether for
principal, interest (including, without limitation, interest that, but for the
filing of a petition in bankruptcy with respect to Pledgor, would accrue on such
obligations whether or not a claim is allowed against Pledgor in any such
bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit,
fees, expenses or otherwise.
"INTEREST RATE OBLIGATIONS" means all obligations of every nature of
Pledgor to the Interest Rate Exchangers now or hereafter existing in respect of
the Interest Rate Agreements (including, without limitation, interest that, but
for the filing of a petition in bankruptcy with respect to Pledgor, would accrue
on all such obligations whether or not a claim is allowed against Pledgor in any
such bankruptcy proceeding).
"SUBORDINATED INDENTURE OBLIGATIONS" means all obligations of every
nature of Pledgor and Holding now or hereafter existing under or arising out of
or in connection with the Subordinated Indenture and the Subordinated Notes
(including, without limitation, the guaranty by Holding or any other obligor
thereof), and all amendments, extensions or renewals thereof (to the extent such
amendments, extensions or renewals are not
X1-2
<PAGE>
prohibited by the Credit Agreement), whether for principal, interest (including,
without limitation, interest that, but for the filing of a petition in
bankruptcy with respect to Pledgor, would accrue on such obligations whether or
not a claim is allowed against Pledgor in any such bankruptcy proceeding), fees,
expenses or otherwise.
SECTION 2. PLEDGE OF SECURITY.
(a) Pledgor hereby pledges to Collateral Agent, and grants to
Collateral Agent on behalf of Agent and Lenders, a Lien on and security interest
in, the following (the "Pledged Collateral") to secure the Credit Agreement
Obligations:
(i) the Pledged Shares and the certificates representing the
Pledged Shares and any interest of Pledgor in the entries on the books of
any financial intermediary pertaining to the Pledged Shares, and all
dividends, cash, warrants, rights, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Shares;
(ii) the Pledged Debt and the instruments evidencing the Pledged
Debt, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Debt;
(iii) all additional shares of, and all securities
convertible into and warrants, options and other rights to purchase, stock
of any issuer of the Pledged Shares from time to time acquired by Pledgor
in any manner (which shares shall be deemed to be part of the Pledged
Shares), the certificates or other instruments representing such additional
shares, securities, warrants, options or other rights and any interest of
Pledgor in the entries on the books of any financial intermediary
pertaining to such additional shares, and all dividends, cash, warrants,
rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional shares, securities, warrants, options or
other rights; provided, that Pledgor shall not be required to pledge more
than 66% of the shares of stock of any Subsidiary organized in a
jurisdiction outside of the United States of America (a "Foreign Entity")
otherwise required to be pledged hereunder to the extent that such pledge
would constitute an investment of earnings in United States property under
Section 956 (or a successor provision) of the Internal Revenue Code which
investment would trigger an increase in the gross income of a United States
shareholder of such
XI-3
<PAGE>
Pledgor pursuant to Section 951 (or a successor provision) of the Internal
Revenue Code;
(iv) all additional indebtedness from time to time owed to
Pledgor by any obligor of the Pledged Debt and the instruments evidencing
such indebtedness, and all interest, cash, instruments and other property
or proceeds from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of such indebtedness;
(v) all shares of, and all securities convertible into and
warrants, options and other rights to purchase, stock of any Person that,
after the date of this Agreement, becomes, as a result of any occurrence, a
direct Subsidiary of Pledgor (which shares shall be deemed to be part of
the Pledged Shares) and the certificates or other instruments representing
such shares, securities, warrants, options or other rights and any interest
of Pledgor in the entries on the books of any financial intermediary
pertaining to such shares, and all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of such shares, securities, warrants, options or other rights; provided
that Pledgor shall not be required to pledge more than 66% of the shares of
stock of any Foreign Entity otherwise required to be pledged hereunder to
the extent that such pledge would constitute an investment of earnings in
United States property under Section 956 (or a successor provision) of the
Internal Revenue Code that would trigger an increase in the gross income of
a United States shareholder of the Pledgor pursuant to Section 951 (or a
successor provision) of the Internal Revenue Code; and
(vi) to the extent not covered by clauses (i) through (v) above,
all Proceeds of any or all of the foregoing. The term "Proceeds" shall
have the meaning assigned that term under the Uniform Commercial Code (the
"Code") as in effect in any relevant jurisdiction or under relevant law
and, in any event, shall include, but not be limited to, any and all
(y) proceeds of any indemnity or guaranty payable to Pledgor or Collateral
Agent from time to time with respect to any of the Pledged Collateral and
(z) any other amounts from time to time paid or payable under or in
connection with any of the Pledged Collateral.
(b) Pledgor hereby pledges to Collateral Agent, and grants to
Collateral Agent on behalf of Interest Rate Exchangers, a Lien on and security
interest in the Pledged Collateral to secure the Interest Rate Obligations.
XI-4
<PAGE>
(c) Pledgor hereby pledges to Collateral Agent, and grants to
Collateral Agent on behalf of the Subordinated Indenture Trustee and the holders
of the Subordinated Notes, a Lien on and security interest in the Pledged
Collateral to secure the Subordinated Indenture Obligations.
(d) Pledgor hereby pledges to Collateral Agent, and grants to
Collateral Agent on behalf of Collateral Agent, a Lien on and security interest
in the Pledged Collateral to secure the obligations owed to Collateral Agent
under this Agreement.
(e) Each of the grants of a Lien and security interest in paragraphs
(a)-(d) of this Section 2 is, and is intended to be, a separate, independent and
distinct grant to the same extent as if each such grant were set forth in a
separate document and such grants have been included in one document solely for
the administrative convenience of the Secured Parties.
SECTION 3. SECURITY FOR OBLIGATIONS.
(a) The Lien and security interest granted in Section 2(a) of this
Agreement, secures, and the Pledged Collateral is collateral security for, the
prompt payment and performance in full when due, whether at stated maturity, by
acceleration, declaration or otherwise (including the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a), or any successor
provision thereto), of the Credit Agreement Obligations, whether or not jointly
owed with others, direct or indirect, absolute or contingent, liquidated or
unliquidated,
XI-5
<PAGE>
and whether or not from time to time decreased or extinguished and later
increased, created or incurred and all or any portion of such obligations that
are paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Collateral Agent as a preference, fraudulent
transfer or otherwise (all such obligations being the "Credit Agreement
Indebtedness"), and all obligations or liabilities of every nature of Pledgor to
Agent and Lenders now or hereafter existing under this Agreement (all such
obligations of Pledgor, together with the Credit Agreement Indebtedness, being
the "Credit Agreement Secured Obligations").
(b) The Lien and security interest granted in Section 2(b) of this
Agreement secures, and the Pledged Collateral is collateral security for, the
prompt payment and performance in full when due, whether at stated maturity, by
acceleration, declaration or otherwise (including the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a), or any successor
provision thereto), of the Interest Rate Obligations, whether now existing or
hereafter arising, voluntary or involuntary, whether or not jointly owed with
others, direct or indirect, absolute or contingent, liquidated or unliquidated,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred and all or any portion of such obligations that
are paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Collateral Agent as a preference, fraudulent
transfer or otherwise (all such obligations being the "Interest Rate
Indebtedness"), and all obligations or liabilities of every nature of Pledgor to
Interest Rate Exchangers now or hereafter existing under this Agreement (all
such obligations of Pledgor, together with the Interest Rate Indebtedness, being
the "Interest Rate Secured Obligations").
(c) The Lien and security interest granted in Section 2(c) of this
Agreement secures, and the Pledged Collateral is collateral security for, the
prompt payment and performance in full when due, whether at stated maturity, by
acceleration, declaration or otherwise (including the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a), or any successor
provision thereto), of the Subordinated Indenture Obligations, whether now
existing or hereafter arising, voluntary or involuntary, whether or not jointly
owed with others, direct or indirect, absolute or contingent, liquidated or
unliquidated, and whether or not from time to time decreased or extinguished and
later increased, created or incurred and all or any portion of such obligations
that are paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from Collateral Agent as a preference,
fraudulent transfer or otherwise (all such obligations being the "Subordinated
Indenture Indebtedness"), and all obligations or liabilities of every nature of
Pledgor to the Subordinated Indenture Trustee and the holders of the
Subordinated Notes now or hereafter existing under this Agreement (all such
obligations of Pledgor, together with the Indebtedness, being the "Subordinated
Indenture Secured Obligations").
(d) The Lien and security interest granted in Section 2(d) of this
Agreement secures, and the Pledged Collateral is collateral security for, the
prompt payment and performance in full when due, (including the payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a), or any
successor provision thereto), of all amounts owed to Collateral Agent under this
Agreement, whether now existing or hereafter arising, voluntary or involuntary,
whether or not jointly owed with others, direct or indirect, absolute or
contingent, liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or incurred and all or
any portion of such obligations that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Collateral
Agent as a preference, fraudulent transfer or otherwise (all such obligations,
together with the Credit Agreement Indebtedness, Interest
XI-6
<PAGE>
Rate Indebtedness and the Subordinated Indenture Indebtedness being the
"Indebtedness"), and all obligations or liabilities of every nature of Pledgor
to Collateral Agent on its own behalf now or hereafter existing under this
Agreement (all such obligations of Pledgor, together with the Indebtedness, the
Credit Agreement Secured Obligations, the Interest Rate Secured Obligations, and
the Subordinated Indenture Secured Obligations being the "Secured Obligations").
SECTION 4. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Collateral Agent. Collateral Agent shall have the right, at any time upon or
after the occurrence of an Event of Default (as defined below) and without
notice to Pledgor, to transfer to or to register in the name of Collateral Agent
or any of its nominees any or all of the Pledged Collateral, subject only to the
revocable rights specified in Section 8(a). In addition, Collateral Agent shall
have the right at any time to exchange certificates or instruments representing
or evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
(a) All of the Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable. All of the Pledged Debt has been
duly authorized, authenticated or issued and delivered, and is the legal, valid
and binding obligation of the issuers thereof, and is not in default.
(b) Pledgor is the legal, record and beneficial owner of the Pledged
Collateral free and clear of any Lien except for the security interest created
by this Agreement.
(c) Pledgor has full power and lawful authority to enter into this
Agreement, to sell, assign, transfer and pledge the Pledged Collateral to
Collateral Agent and to grant to Collateral Agent a first priority security
interest therein as herein provided, all of which have been duly authorized by
all necessary corporate action; the execution, delivery and performance hereof
are not in contravention of any charter or by-law provision or of any indenture,
agreement or undertaking to which Pledgor is a party or by which Pledgor or its
property are bound; this Agreement constitutes the legally valid and binding
obligation of Pledgor enforceable against Pledgor in accordance with its terms,
subject, as to enforcement, to bankruptcy,
XI-7
<PAGE>
insolvency, reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights generally and to
equitable principles relating to enforceability; and any officer, agent or
representative acting for or on behalf of Pledgor in connection with this
Agreement or any aspect hereof, or entering into or executing this Agreement on
behalf of Pledgor, has been duly authorized so to do, and is fully empowered to
act for and represent Pledgor in connection with this Agreement and all matters
relating thereto or in connection therewith.
(d) No consent of any other party (including, without limitation,
stockholders or creditors of Pledgor) and no consent, authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either (i) for the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interest granted hereby or for the execution, delivery or performance of this
Agreement by Pledgor or (ii) for the exercise by Collateral Agent of the voting
or other rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required in
connection with a disposition of Pledged Collateral by laws affecting the
offering and sale of securities generally).
(e) The pledge of the Pledged Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in the Pledged
Collateral, securing the payment of the Secured Obligations.
(f) The Pledged Shares constitute all of the issued and outstanding
shares of each issuer thereof, except as otherwise set forth in SCHEDULE II
hereto, and there are no outstanding options, warrants, rights to subscribe,
stock purchase rights or other agreements outstanding with respect to, or
property that is now or hereafter convertible into, or that requires the
issuance or sale of, any Pledged Shares.
(g) The pledge of the Pledged Collateral pursuant to this Agreement
does not violate Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
SECTION 6. CERTAIN COVENANTS. Pledgor hereby covenants that, until
the Secured Obligations have been indefeasibly paid in full, Pledgor will:
(a) not, except as expressly permitted by the Credit Agreement,
(i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral, (ii) create or
permit to exist any Lien upon or with respect to any of the Pledged Collateral,
except for the security interest under this Agreement, (iii) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or
XI-8
<PAGE>
grant any option with respect to, or create or permit to exist any Lien upon or
with respect to, any of the capital stock of a Foreign Entity not pledged
hereunder, or (iv) permit any issuer of Pledged Shares to merge or consolidate
unless all the outstanding capital stock of the surviving or resulting
corporation is, upon such merger or consolidation, pledged hereunder and no
cash, securities or other property is distributed in respect of the outstanding
shares of any other constituent corporation; provided, however, that if an Asset
Sale permitted by the Credit Agreement occurs and the assets subject to such
Asset Sale are Pledged Collateral, Collateral Agent shall release the Pledged
Collateral that is the subject of such Asset Sale to Pledgor free and clear of
the lien and security interest under this Agreement (A) so long as any
Obligations remain outstanding under the Credit Agreement, concurrently with the
receipt of advice from Agent that arrangements satisfactory to it have been made
for delivery to it of the Estimated Net Cash Proceeds of such Asset Sale,
(B) after such time as all Credit Agreement Obligations have been paid in full
and the Commitments under the Credit Agreement have been terminated, if any
other Secured Parties are entitled to receive any portion of the Cash Proceeds
of such Asset Sale, concurrently with the receipt of advice from the agent or
trustee for such Secured Parties that arrangements satisfactory to it have been
made for delivery to it of the amounts required to be paid to such Secured
Parties out of the Cash Proceeds of such Asset Sale, and (C) in the event no
Secured Party is entitled to receive any portion of the Cash Proceeds of such
Asset Sale, concurrently upon receipt of advice from Pledgor that no Secured
Party is entitled to receive such proceeds; provided, however, that
notwithstanding anything herein to the contrary, Collateral Agent shall release
such Pledged Collateral from the lien and security interest of this Agreement as
may be specified by Agent upon the approval of the release of such Pledged
Collateral by Requisite Lenders under the Credit Agreement.
(b) (i) cause each issuer of Pledged Shares not to issue any stock or
other securities in addition to or in substitution for the Pledged Shares, or
any shares of capital stock of a Foreign Entity not pledged hereunder, except to
Pledgor, and (ii) subject to any limitations with respect to a pledge of the
shares of capital stock of a Foreign Entity under Sections 2(c) and 2(e) hereof,
pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all additional shares of stock or other securities of each
issuer of Pledged Shares, and (iii) subject to any limitations with respect to a
pledge of the shares of capital stock of a Foreign Entity under Sections 2(c)
and 2(e) hereof, pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all shares of stock of any Person which, after the
date of this Agreement, becomes, as a result of any occurrence, a direct
Subsidiary of Pledgor;
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(c) (i) pledge hereunder, immediately upon their issuance, any and
all instruments or other evidences of additional indebtedness from time to time
owed (directly or indirectly) to Pledgor by any obligor of the Pledged Debt, and
(ii) pledge hereunder, immediately upon their issuance, any and all instruments
or other evidences of indebtedness from time to time owed (directly or
indirectly) to Pledgor by any Person that after the date of this Agreement
becomes, as a result of any occurrence, a direct or indirect Subsidiary of
Pledgor;
(d) promptly deliver to Collateral Agent all written notices received
by it with respect to the Pledged Collateral; and
(e) pay or discharge, prior to delinquency, all taxes, charges, fees,
expenses, Liens and assessments of every nature levied or imposed upon the
Pledged Collateral.
SECTION 7. FURTHER ASSURANCES; PLEDGE AMENDMENTS. Pledgor agrees
that at any time and from time to time, at the expense of Pledgor, Pledgor will
promptly execute and deliver all further instruments and documents, and take all
further actions, that may be necessary, or that Collateral Agent may request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral.
Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 6(b) or (c), promptly (and in any event within five (5) Business
Days) deliver to Collateral Agent a Pledge Amendment, duly executed by Pledgor,
in substantially the form of SCHEDULE III hereto (a "Pledge Amendment"), in
respect of the additional Pledged Shares or Pledged Debt to be pledged pursuant
to this Agreement. Pledgor hereby authorizes Collateral Agent to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Shares or Pledged
Debt listed on any Pledge Amendment delivered to Collateral Agent shall for all
purposes hereunder be considered Pledged Collateral.
SECTION 8. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the Credit Agreement; provided, however, that Pledgor shall not exercise
or refrain from exercising any such right if
XI-10
<PAGE>
Collateral Agent shall have notified Pledgor that, in Collateral Agent's
judgment, such action would have a material adverse effect on the value of the
Pledged Collateral or any part thereof; and provided, further, that Pledgor
shall give Collateral Agent at least five Business Days' prior written notice of
the manner in which it intends to exercise, or the reasons for refraining from
exercising, any such right. It is understood, however, that neither (A) the
voting by Pledgor of any Pledged Shares for or Pledgor's consent to the election
of directors at a regularly scheduled annual or other meeting of stockholders or
with respect to incidental matters at any such meeting nor (B) Pledgor's consent
to or approval of any action otherwise permitted under this Agreement or the
Credit Agreement shall be deemed inconsistent with the terms of this Agreement
or the Credit Agreement within the meaning of this Section 8(a)(i), and no
notice of any such voting or consent need be given to Collateral Agent.
(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and
interest paid in respect of the Pledged Collateral; provided, however, that
any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged
Collateral,
shall be, and shall forthwith be delivered to Collateral Agent to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in trust
for the benefit of Collateral Agent, be segregated from the other property
or funds of Pledgor and be forthwith delivered to Collateral Agent as
Pledged Collateral in the same form as so received (with all necessary
endorsements).
(iii) Collateral Agent shall promptly execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies, dividend
payment orders and other instruments as Pledgor may from time to time
reasonably request for the purpose of enabling Pledgor to exercise the
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<PAGE>
voting and other consensual rights which it is entitled to exercise
pursuant to paragraph (i) above and to receive the dividends, principal or
interest payments which it is authorized to receive and retain pursuant to
paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) Upon written notice from Collateral Agent to Pledgor, all rights
of Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 8(a)(i) shall
cease, and all such rights shall thereupon become vested in Collateral
Agent who shall thereupon have the sole right to exercise such voting and
other consensual rights during the continuance of such Event of Default.
(ii) All rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 8(a)(ii) shall cease, and all such rights shall
thereupon become vested in Collateral Agent who shall thereupon have the
sole right to receive and hold as Pledged Collateral such dividends and
interest payments during the continuance of such Event of Default.
(iii) All dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this
Section 8(b) shall be received in trust for the benefit of Collateral
Agent, shall be segregated from other funds of Pledgor and shall forthwith
be paid over to Collateral Agent as Pledged Collateral in the same form as
so received (with any necessary endorsements).
(c) In order to permit Collateral Agent to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to Section
8(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 8(a)(ii) or Section 8(b)(ii), Pledgor shall
promptly execute and deliver (or cause to be executed and delivered) to
Collateral Agent all such proxies, dividend payment orders and other instruments
as Collateral Agent may from time to time reasonably request.
SECTION 9. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor
hereby irrevocably appoints Collateral Agent as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time in Collateral Agent's discretion to take any action
and to execute any instrument, including but not limited to financing and
continuation statements, which Collateral Agent may
XI-12
<PAGE>
deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to Pledgor representing any dividend, principal or interest payment
or other distribution in respect of the Pledged Collateral or any part thereof
and to give full discharge for the same, to ask, demand, collect, sue for,
recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Pledged Collateral, and to file
any claims or take any action or institute any proceedings which Collateral
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or to enforce the rights of Collateral Agent with respect to any of
the Pledged Collateral.
SECTION 10. COLLATERAL AGENT MAY PERFORM. If Pledgor fails to
perform any agreement contained herein promptly after receipt of a request to do
so from Collateral Agent, Collateral Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Collateral Agent
incurred in connection therewith shall be payable by Pledgor under
Section 16(b).
SECTION 11. STANDARD OF CARE; SECURED PARTIES' DUTIES AND
LIABILITIES.
(a) The powers conferred on Collateral Agent hereunder are solely to
protect its interest in the Pledged Collateral and shall not impose on it any
duty to exercise such powers. Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equivalent to that which Collateral Agent in its individual
capacity accords its own property consisting of negotiable securities, it being
understood that Collateral Agent shall have no responsibility for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged Collateral, whether
or not Collateral Agent has or is deemed to have knowledge of such matters,
(ii) taking any necessary steps (other than steps taken in accordance with the
standard of care set forth above to maintain possession of the Pledged
Collateral) to preserve rights against any parties with respect to any Pledged
Collateral, (iii) taking any necessary steps to collect or realize upon the
Secured Obligations or any guarantee therefor, or any part thereof, or any of
the Pledged Collateral or (iv) initiating any action to protect the Pledged
Collateral against the possibility of a decline in market value.
(b) Neither Collateral Agent nor any other Secured Party shall be
liable to Pledgor (i) for any loss or damage sustained by it, or (ii) for any
loss, damage, depreciation or other diminution in the value of any of the
Pledged Collateral that may occur as a result of, in connection with or that is
in
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any way related to (x) any exercise by Collateral Agent or any other Secured
Party of any right or remedy under this Agreement or (y) any other act of or
failure to act by Collateral Agent or any other Secured Party, except to the
extent that the same shall be determined by a judgment of a court of competent
jurisdiction to be the result of acts or omissions on the part of Collateral
Agent or such other Secured Party constituting gross negligence or willful
misconduct.
(c) NO CLAIM MAY BE MADE BY PLEDGOR AGAINST COLLATERAL AGENT, ANY
OTHER SECURED PARTY OR THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL
DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR
IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING
OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP
ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH; AND PLEDGOR HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE
UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR
NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
SECTION 12. EVENTS OF DEFAULT. The occurrence of any of the
following shall be an "Event of Default" under this Agreement: (a) the
occurrence of any "Event of Default" as defined in the Credit Agreement, or
(b) after such time as the Credit Agreement Obligations have been paid in full
and the Commitments under the Credit Agreement have been terminated, so long as
any Interest Rate Obligations to Interest Rate Exchangers remain outstanding and
provided that the Pledged Collateral then secures such Interest Rate
Obligations, the occurrence of any event of default under such Interest Rate
Agreements, or (c) after such time as the Credit Agreement Obligations have been
paid in full and the Commitments under the Credit Agreement have been
terminated, and after such time as the Interest Rate Obligations to Interest
Rate Exchangers have been paid in full and such Interest Rate Agreements
terminated, so long as any Subordinated Indenture Obligations remain outstanding
and provided that the Pledged Collateral then secures such Subordinated
Indenture Obligations, the occurrence of any "Event of Default" under and as
defined in the Subordinated Indenture.
SECTION 13. REMEDIES UPON DEFAULT; DECISIONS RELATING TO EXERCISE OF
REMEDIES.
(a) If any Event of Default shall have occurred and be continuing:
(i) Collateral Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
on default under the Code as in effect in the State of New York (or any
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other state with jurisdiction over the Pledged Collateral) at that time,
and Collateral Agent may also in its sole discretion, without notice
(except as specified below), sell the Pledged Collateral or any part
thereof in one or more parcels at public or private sale, at any exchange,
broker's board or at any of Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, at such time or times and at such
price or prices and upon such other terms as Collateral Agent may deem
commercially reasonable, irrespective of the impact of any such sales on
the market price of the Pledged Collateral. Collateral Agent may be the
purchaser of any or all of the Pledged Collateral at any such sale and
shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Pledged
Collateral sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price of any
Pledged Collateral payable by Collateral Agent at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of Pledgor, and Pledgor hereby waives
(to the extent permitted by law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any
rule of law or statute now existing or hereafter enacted. Pledgor agrees
that, to the extent notice of sale shall be required by law, at least ten
days' notice to Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. Collateral Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been given.
Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. Pledgor hereby waives any claims against Collateral Agent
arising by reason of the fact that the price at which any Pledged
Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Collateral
Agent accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Pledged Collateral are insufficient to pay all the
Secured Obligations, Pledgor shall be liable for the deficiency and the
fees of any attorneys employed by Collateral Agent to collect such
deficiency.
(ii) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as from time to time amended (the
"Securities Act"), and applicable state securities laws, Collateral Agent
may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration
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or qualification of such Pledged Collateral under the Securities Act and/or
such state securities laws, to limit purchasers to those who will agree,
among other things, to acquire the Pledged Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. Pledgor acknowledges that any such private sales may be at prices
and on terms less favorable to Collateral Agent than those obtainable
through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement
under the Securities Act) and, notwithstanding such circumstances and the
registration rights granted to Collateral Agent by Pledgor pursuant to
Section 14, Pledgor agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner and that Collateral
Agent shall have no obligation to engage in public sales and no obligation
to delay the sale of any Pledged Collateral for the period of time
necessary to permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act or under applicable
state securities laws, even if such issuer would, or should, agree to so
register it.
(iii) If Collateral Agent determines to exercise its right to
sell any or all of the Pledged Collateral, upon written request, Pledgor
shall and shall cause each issuer of any Pledged Shares to be sold
hereunder from time to time to furnish to Collateral Agent all such
information as Collateral Agent may request in order to determine the
number of shares and other instruments included in the Pledged Collateral
which may be sold by Collateral Agent in exempt transactions under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.
(b) Notwithstanding anything in this Agreement to the contrary,
Collateral Agent shall exercise, or shall refrain from exercising, any remedy
provided for in subsection 13(a) hereof as Collateral Agent may be directed by
instructions given in accordance with the terms and provisions of the
Intercreditor Agreement and each Secured Party shall be bound by such
instructions and the sole right of each Secured Party under this Agreement shall
be to be secured by the Pledged Collateral and to receive the payments provided
for in Section 15 hereof.
SECTION 14. REGISTRATION RIGHTS. If Collateral Agent shall determine
to exercise its right to sell all or any of the Pledged Collateral pursuant to
Section 13, Pledgor agrees that, upon request of Collateral Agent (which request
may be made by Collateral Agent in its sole discretion), Pledgor will, at its
own expense:
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(a) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
Collateral Agent, advisable to register such Pledged Collateral under the
provisions of the Securities Act and to cause the registration statement
relating thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion of
Collateral Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under all
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested by
Collateral Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement which will satisfy the provisions
of Section 11(a) of the Securities Act;
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law; and
(e) bear all costs and expenses, including reasonable attorneys'
fees, of carrying out its obligations under this Section 14.
Pledgor further agrees that a breach of any of the covenants contained
in this Section 14 will cause irreparable injury to Collateral Agent, that
Collateral Agent has no adequate remedy at law in respect of such breach and, as
a consequence, agrees that each and every covenant contained in this Section 14
shall be specifically enforceable against Pledgor, and Pledgor hereby waives and
agrees not to assert any defenses against an action for specific performance of
such covenants except for a defense that no default has occurred giving rise to
the Secured Obligations becoming due and payable prior to their stated
maturities. Nothing in this Section 14 shall in any way alter the rights of
Collateral Agent under Section 13.
SECTION 15. APPLICATION OF PROCEEDS. All Cash Proceeds received by
Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral may, in the
discretion of Collateral Agent, be held by Collateral Agent as Pledged
Collateral for, and/or then or at any time thereafter applied in whole or in
part by
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Collateral Agent against the Secured Obligations in the following order of
priority:
FIRST: To the payment of the costs and expenses of such sale,
collection or other realization, and all expenses, liabilities and advances made
or incurred by Collateral Agent in connection therewith, including reasonable
compensation to Collateral Agent and its agents and counsel, in accordance with
Section 16(b);
SECOND: To the payment in full of all Secured Obligations in the
order set forth in the Intercreditor Agreement; and
THIRD: To the payment to or upon the order of Pledgor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
SECTION 16. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Collateral Agent from and against any
and all claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement, the Intercreditor Agreement and the transactions
contemplated hereby and thereby (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting from Collateral
Agent's gross negligence or willful misconduct.
(b) Pledgor will upon demand pay to Collateral Agent the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Collateral Agent or any other Secured Party hereunder or (iv) the
failure by Pledgor to perform or observe any of the provisions hereof.
(c) In the event of any public sale described in Section 14, Pledgor
agrees to indemnify and hold harmless Collateral Agent and each of Collateral
Agent's directors, officers, employees and agents from and against any loss,
fee, cost, expense, damage, liability or claim, joint or several, to which
Collateral Agent or such other persons may become subject or for which any of
them may be liable, under the Securities Act or otherwise, insofar as such
losses, fees, costs, expenses, damages, liabilities or claims (or any litigation
commenced or threatened in respect thereof), arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus or other such
document published or filed in
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connection with such public sale, or any amendment or supplement thereto, 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 necessary to make the
statements therein not misleading, and will reimburse Collateral Agent and such
other persons for any legal or other expenses reasonably incurred by Collateral
Agent and such other persons in connection with any litigation, of any nature
whatsoever, commenced or threatened in respect thereof (including without
limitation any and all fees, costs and expenses whatsoever reasonably incurred
by Collateral Agent and such other persons and counsel for Collateral Agent and
such other persons in investigating, preparing for, defending against or
providing evidence, producing documents or taking any other action in respect
of, any such commenced or threatened litigation or any claims asserted). This
indemnity shall be in addition to any liability which Pledgor may otherwise have
and shall extend upon the same terms and conditions to each person, if any, that
controls Collateral Agent or such persons within the meaning of the Securities
Act.
SECTION 17. WAIVERS OF PLEDGOR.
(a) Pledgor waives any right to require Collateral Agent to:
(i) proceed against any guarantor of any of the Secured Obligations or any other
person or entity; (ii) proceed against or exhaust any other security held from
any other person or entity; (iii) give notice to Pledgor of the terms, time and
place of any public or private sale of the Pledged Collateral or any other
security, or otherwise comply with Section 9504 of the Code; (iv) pursue any
other remedy in Collateral Agent's power; or (v) make or give any presentments,
demands for performance, notices of nonperformance, protests, notices of protest
or notices of dishonor in connection with any obligations or evidences of
indebtedness which constitute in whole or in part the Secured Obligations or in
connection with the creation of new or additional Secured Obligations;
(b) Pledgor waives any defense arising by reason of: (i) any
disability or other defense of Pledgor, or any other entity, including, without
limitation, any defense based on or arising out of the unenforceability of any
of the Secured Obligations, legal or equitable discharge of the Secured
Obligations or this Agreement or any statute of limitations affecting Pledgor's
liability hereunder or the enforcement thereof or hereof; (ii) the cessation
from any cause whatsoever, other than payment in full, of the Secured
Obligations or the release or substitution of any sureties or guarantors of the
Secured Obligations; (iii) any act or omission by Collateral Agent which
directly or indirectly results in or aids the discharge of Pledgor or any of the
Secured Obligations by operation of law or otherwise; (iv) the release of any
other collateral securing the Secured Obligations or the failure by Collateral
Agent to perfect or maintain the perfection of any such other collateral;
(v) any
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modification of the Secured Obligations, in any form whatsoever, including, but
not limited to the renewal, extension, acceleration or other change in the time
for payment of the Secured Obligations, and any change in the terms of the
Secured Obligations, including, but not limited to, any increase or decrease of
the rate of interest on the Secured Obligations; and (vi) any law limiting the
liability of or exonerating guarantors or sureties; and
(c) until all the Secured Obligations shall have been paid in full,
Pledgor waives any right to enforce any remedy which Collateral Agent now has or
may hereafter have against any person or entity guaranteeing or securing the
Secured Obligations, and waives any benefit of, or any right to participate in
any security whatsoever now or hereafter held by Collateral Agent for the
Secured Obligations.
SECTION 18. CONTINUING SECURITY INTEREST; TRANSFER OF INDEBTEDNESS.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until indefeasible
payment in full of all Secured Obligations and the cancellation or termination
of any commitments related thereto, (b) be binding upon Pledgor, its successors
and assigns, and (c) inure, together with the rights and remedies of Collateral
Agent hereunder, to the benefit of Collateral Agent and each other Secured Party
and their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c) and subject to the provisions of the
Credit Agreement, Collateral Agent and each other Secured Party may assign or
otherwise transfer any Indebtedness held by it to any other person or entity,
and such other person or entity shall thereupon become vested with all the
benefits in respect thereof granted to Collateral Agent herein or otherwise,
subject however to the provisions of the Intercreditor Agreement. Upon the
indefeasible payment in full of all Secured Obligations and the cancellation or
termination of the commitments related thereto, this Agreement shall terminate
and Pledgor shall be entitled to the return, upon its request and at its
expense, against receipt and without recourse to Collateral Agent, of such of
the Pledged Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof.
SECTION 19. NO WAIVER BY COLLATERAL AGENT; AUTHORITY OF PLEDGOR. No
failure on the part of Collateral Agent to exercise, and no course of dealing
with respect to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by Collateral Agent of any right, power or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies herein provided are cumulative to the fullest extent
permitted by law and are not exclusive of any remedies provided by law. It is
not necessary for Collateral Agent to inquire into the powers of Pledgor or the
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officers, directors or agents acting or purporting to act on behalf of any of
them.
SECTION 20. AMENDMENT, ETC. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by Pledgor herefrom, shall in
any event be effective unless the same shall be in writing and signed by
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that solely with respect to any amendment or waiver of Sections 2(c),
3(c) or 15 of this Agreement or this Section 20 or the definitions herein of
"Secured Parties," "Subordinated Indenture Obligations," "Subordinated Indenture
Indebtedness," "Subordinated Indenture Secured Obligations" or "Secured
Obligations," any such amendment or waiver shall also require the written
consent of the Subordinated Indenture Trustee; provided, further, that solely
with respect to any amendment or waiver of Sections 2(b) or 3(b) of this
Agreement or this Section 20 or the definitions herein of "Secured Parties,"
"Interest Rate Obligations," "Interest Rate Indebtedness," "Interest Rate
Secured Obligations" or "Secured Obligations," any such amendment or waiver
shall also require the written consent of any Interest Rate Exchanger then
secured hereunder.
SECTION 21. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including telegraphic
or telecopy communication) and, if to either party, mailed, telegraphed,
telecopied or delivered to it, addressed to it at the address of such party
specified in the Credit Agreement, or as to either party at such other address
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section 21. All such notices
and other communications shall, when mailed or telegraphed, respectively, be
effective when deposited in the mails or delivered to the telegraph company,
respectively, addressed as aforesaid, and when delivered or telecopied, be
effective when received at the address specified above.
SECTION 22. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT
THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Agreement, terms defined in Article 9 of the
Code are used herein as therein defined.
SECTION 23. SEVERABILITY. Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdictions,
be ineffective to the
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extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All
judicial proceedings brought against Pledgor with respect to this Agreement may
be brought in any state or federal court of competent jurisdiction in the State
of New York and by execution and delivery of this Agreement, Pledgor accepts for
itself and in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement.
Pledgor designates and appoints C T Corporation and such other Persons as may
hereafter be selected by Pledgor irrevocably agreeing in writing to so serve, as
its agent to receive on its behalf service of all process in any such
proceedings in any such court, such service being hereby acknowledged by Pledgor
to be effective and binding service in every respect. A copy of any such
process so served shall be mailed by registered mail to Pledgor at its address
referred to in Section 22, except that unless otherwise provided by applicable
law, any failure to mail such copy shall not affect the validity of service of
process. If any agent appointed by Pledgor refuses to accept service, Pledgor
hereby agrees that service upon it by mail shall constitute sufficient notice.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Collateral Agent to bring
proceedings against Pledgor in the courts of any other jurisdiction.
SECTION 25. COLLATERAL AGENT. Collateral Agent has been appointed as
Collateral Agent hereunder pursuant to the Intercreditor Agreement, and shall be
entitled to the benefits of the Intercreditor Agreement. Collateral Agent shall
be obligated, and shall have the right, hereunder to make demands, to give
notices, to exercise or refrain from taking action (including, without
limitation, the release or substitution of Pledged Collateral) solely in
accordance with this Agreement and the Intercreditor Agreement. Collateral
Agent may resign and a successor Collateral Agent may be appointed in the manner
provided for resignation or removal of Agent and appointment of a successor in
the Intercreditor Agreement. Upon the acceptance of any appointment as a
Collateral Agent by a successor Collateral Agent, that successor Collateral
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent under this Agreement, and
the retiring Collateral Agent shall thereupon be discharged from its duties and
obligations under this Agreement and shall deliver any Collateral in its
possession to the successor Collateral Agent. After any retiring Collateral
Agent's resignation, the provisions of this Agreement shall inure to its benefit
as to any
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actions taken or omitted to be taken by it under this Agreement while it was
Collateral Agent.
SECTION 26. WAIVER OF JURY TRIAL. PLEDGOR AND COLLATERAL AGENT
HEREBY MUTUALLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OR ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTION
CONTEMPLATED HEREBY AND THE RELATIONSHIP BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation, contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Pledgor and Collateral
Agent each acknowledge that this waiver is a material inducement to enter into a
business relationship, that each has already relied on the waiver in entering
into this Agreement and that each will continue to rely on the waiver in their
related future dealings. Pledgor and Collateral Agent further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO EXTENSIONS OF
CREDIT PURSUANT TO THE LOAN DOCUMENTS. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
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IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
BLUE BIRD BODY COMPANY
By __________________________
Title:
BANKERS TRUST COMPANY,
as Collateral Agent
By __________________________
Title:
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4/22/92
EXHIBIT XII
FORM OF HOLDING SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is dated as of April 15,
1992, and entered into by and between BLUE BIRD CORPORATION, a Delaware
corporation, ("Holding"), and BANKERS TRUST COMPANY, as collateral agent for and
representative of (in such capacity, together with any successor in such
capacity, "Collateral Agent") the Lenders (as defined herein).
PRELIMINARY STATEMENTS
B B Acquisition Corp., a Georgia corporation, Holding, the lenders
party thereto ("Lenders") and Bankers Trust Company, as agent for Lenders
("Agent"), have entered into a credit agreement dated as of April 15, 1992 (said
credit agreement, as it may hereafter be amended, amended and restated,
supplemented or otherwise modified from time to time, is referred to herein as
the "Credit Agreement"; capitalized terms used herein without definition shall
have the meanings set forth in the Credit Agreement). It is a condition
precedent to the making of loans and other extensions of credit by Lenders under
the Credit Agreement that Holding shall have granted the security interest
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Holding hereby agrees with Collateral
Agent as follows:
SECTION 1. GRANT OF SECURITY. Holding hereby assigns and grants to
Collateral Agent, for its benefit and the benefit of Agent and Lenders
(collectively, the "Secured Parties"), and hereby grants to Collateral Agent a
security interest in, all of Holding's right, title and interest in and to the
following, in each case whether now or hereafter existing or in which Holding
now has or hereafter acquires an interest and wherever the same may be located
(the
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"Collateral") to secure the Secured Obligations (as defined in Section 2):
(a) All equipment in all of its forms, and all parts thereof and all
accessions thereto and documents therefor (any and all such equipment,
parts, accessions and documents being the "Equipment");
(b) All inventory in all of its forms, including, but not limited to,
(i) all goods held by Holding for sale or lease or to be furnished under
contracts of service or so leased or furnished, (ii) all raw materials,
work in process, finished goods, and materials used or consumed in the
manufacture, packing, shipping, advertising, selling, leasing, furnishing
or production of such inventory or otherwise used or consumed in Holding's
business, (iii) goods in which Holding has an interest in mass or a joint
or other interest or right of any kind, (iv) goods which are returned to or
repossessed by Holding and all additions and accessions thereto and
replacements thereof) (all such inventory, accessions and products being
the "Inventory");
(c) All accounts, contract rights, chattel paper, instruments,
guaranties, letters of credit, documents, drafts, acceptances, tax refunds,
rights to performance, judgments, security agreements, leases, permits,
licenses, franchises, certificates, other contracts and general intangibles
of every nature, including, without limitation, all rights and claims to
the payment or receipt of money or other forms of consideration of any kind
included in this clause (c) (any and all such rights and claims to the
payment or receipt of money or other forms of consideration being the
"Payment Rights", and any and all such leases, security agreements and
other contracts being the "Related Contracts");
(d) All books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software (owned by
Holding or in which it has an interest) that at any time evidence or
contain information relating to any of the Collateral or are otherwise
necessary or helpful in the collection thereof or realization thereupon;
(e) All plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all additions and accessions thereto and
replacements thereof and products thereof;
(f) All cash, money, currency and all deposit accounts ("Deposit
Accounts"), including, without limitation, all demand, time, savings,
passbook or like accounts maintained with a bank, savings and loan
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association, credit union or other like organization, and all such accounts
into which receipts are deposited or which are maintained with Collateral
Agent or any other Secured Party (any and all Deposit Accounts, the
"Pledged Deposits");
(g) To the extent not otherwise included in the definition of
Collateral, (i) all common law and/or statutory copyrights, rights and
interests of every kind and nature in copyrights and works protectable by
copyright, whether now owned or hereafter created or acquired and renewals
and extensions of copyrights (the "Copyrights"), (ii) the right (but not
the obligation) to make publication thereof for copyright purposes, to
register claim upon copyright and the right (but not the obligation) to
renew and extend such copyrights, (iii) all licenses and rights in and any
written agreement now or hereafter in existence granting to Holding any
right to use any of the foregoing (the "Copyright Licenses"), (iv) the
right (but not the obligation) to sue in the name of Holding or in the name
of Collateral Agent for past, present and future infringements of any such
properties, (v) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing, including, without
limitation, damages or payments for past, present and future infringements
of any such properties and (vi) all goodwill associated with or symbolized
by any of the foregoing;
(h) To the extent not otherwise included in the definition of
Collateral, (i) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, logos, other business identifiers, prints and labels on which any of
the foregoing have appeared or appear, all registrations and recordings
thereof, and all applications in connection therewith including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision thereof
(the "Trademarks"); (ii) all reissues, extensions or renewals thereof and
the right (but not the obligation) to register claim under trademark and to
renew and extend such trademarks; (iii) all licenses and rights in and any
written agreement granting Holding any right to use any of the foregoing
(the "Trademark Licenses"); (iv) all income, royalties, damages and
payments now or hereafter due and/or payable under any of the foregoing or
with respect to any of the foregoing, including, without limitation,
damages or payment for past, present and future infringements of any of the
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foregoing; (v) the right (but not the obligation) to sue for past, present
and future infringements of the foregoing; (vi) all rights corresponding to
any of the foregoing throughout the world; and (vii) all goodwill
associated with or symbolized by any of the foregoing;
(i) To the extent not otherwise included in the definition of
Collateral, (i) all patents and patent applications and the inventions and
improvements described and claimed therein, and patentable inventions (the
"Patents"); (ii) the reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any of the foregoing; (iii) all
licenses and rights in and all written agreements granting Holding any
right to use any invention on which a patent is in existence ("Patent
Licenses") (the Copyrights, Copyright Licenses, Trademarks, Trademark
Licenses, Patents and Patent Licenses are collectively referred to herein
as the "Intellectual Property"); (iv) all income, royalties, damages or
payments now and hereafter due and/or payable under any of the foregoing
with respect to any of the foregoing, including, without limitation,
damages or payments for past, present and future infringements of any of
the foregoing; (v) the right (but not the obligation) to sue for past,
present and future infringements of any of the foregoing; (vi) all rights
corresponding to any of the foregoing throughout the world; and (vii) all
goodwill associated with any of the foregoing;
(j) To the extent not otherwise included in the definition of
Collateral, all goods, all building materials, equipment, work in progress
and all trade secrets and other confidential information relating to the
business of Holding, including, by way of illustration and not limitation,
each and every kind of know-how practiced by Holding and its employees; the
names and addresses of, and credit and other business information
concerning Holding's past, present or future customers as they may exist
from time to time; the prices which Holding obtains for its services or at
which it sells merchandise; estimating and cost procedures; profit margins;
policies and procedures pertaining to the sales and services furnished by
Holding; information concerning suppliers of Holding and manner of
operation, business plans, pledges, projections, and all other information
of any kind or character, whether or not reduced in writing, with respect
to the conduct by Holding of its business not generally known by the
public, now or hereafter existing; and
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(k) All proceeds of any and all of the foregoing Collateral and, to
the extent not otherwise included, all payments under insurance (whether or
not Collateral Agent is the loss payee thereof), or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing Collateral. For purposes of this
Agreement, the term "proceeds" includes whatever is receivable or received
when Collateral or proceeds are sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and
includes, without limitation, all rights to payment, including returned
premiums, with respect to any insurance relating thereto.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures and the
Collateral is collateral security for the prompt payment or performance in full
when due, whether at stated maturity, by acceleration, declaration or otherwise
(including the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
Section 362(a)) of all obligations of every nature of Holding now or hereafter
existing under the Credit Agreement, including, without limitation, all
Obligations under the Credit Agreement and any promissory note or other document
or instrument delivered pursuant thereto and all amendments, extensions or
renewals thereof or hereof, whether for principal, interest (including, without
limitation, interest that, but for the filing of a petition in bankruptcy with
respect to the Holding or Borrower, would accrue on such obligations, whether or
not a claim is allowed against Holding or Borrower in any such bankruptcy
proceeding), fees, expenses or otherwise, whether now existing or hereafter
arising, voluntary or involuntary, whether or not jointly owed with others,
direct or indirect, absolute or contingent, liquidated or unliquidated, and
whether or not from time to time decreased or extinguished and later increased,
created or incurred and all or any portion of such obligations that are paid, to
the extent all or any part of such payment is avoided or recovered directly or
indirectly from Collateral Agent as a preference, fraudulent transfer or
otherwise (all such obligations being the "Underlying Debt"), and all
obligations of every nature of Holding now or hereafter existing under this
Agreement (all such obligations of Holding, together with the Underlying Debt,
being the "Secured Obligations").
SECTION 3. HOLDING REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) Holding shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same
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extent as if this Agreement had not been executed, (b) the exercise by
Collateral Agent of any of the rights hereunder shall not release Holding from
any of its duties or obligations under the contracts and agreements included in
the Collateral and (c) Collateral Agent shall not have any obligation or
liability under any contracts and agreements included in the Collateral by
reason of this Agreement, nor shall Collateral Agent be obligated to perform any
of the obligations or duties of Holding thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Holding represents and
warrants as follows:
(a) Binding Obligation. This Agreement is the legally valid and
binding obligation of Holding, enforceable against it in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws or equitable principles
relating to or limiting creditors' rights generally.
(b) Location of Equipment and Inventory. All of the Equipment and
Inventory is located at the places specified in SCHEDULE I hereto.
(c) Delivery of Certain Collateral. All chattel paper and notes and
other instruments (excluding checks) comprising any and all items of
Collateral have been delivered to Collateral Agent duly endorsed and
accompanied by duly executed instruments of transfer or assignment in
blank.
(d) Payment Rights Valid. Each Payment Right constitutes the legally
valid and binding obligation of the party obligated to pay the same (the
"Account Debtor"). Each such Payment Right complies with the provisions of
all applicable laws and regulations, whether federal, state or local,
applicable thereto (including, without limitation, any usury law, the
Federal Truth and Lending Act and Regulation C of the Federal Reserve
System). None of the Payment Rights is evidenced by a promissory note or
other instrument other than a check, that has not been delivered to
Collateral Agent.
(e) Ownership of Collateral. Except for the interests disclosed in
SCHEDULE II hereto and the security interest created by this Agreement,
Holding owns the Collateral free and clear of any Lien. Except with
respect to the interests disclosed in SCHEDULE II hereto and such as may
have been filed in favor of
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<PAGE>
Collateral Agent relating to this Agreement, no effective financing
statement or other instrument similar in effect covering all or any part of
the Collateral is on file in any filing or recording office.
(f) Perfection. This Agreement creates a valid, perfected and,
except for the interests disclosed in SCHEDULE II hereto, first priority
security interest in the Collateral, securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken.
(g) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required either (i) for the grant by Holding of the
security interest granted hereby or for the execution, delivery or
performance of this Agreement by Holding or (ii) for the perfection of or
the exercise by Collateral Agent of its rights and remedies hereunder
(except as may have been taken by or at the direction of Holding).
(h) Other Information. All information heretofore, herein or
hereafter supplied to Collateral Agent by or on behalf of Holding with
respect to the Collateral is accurate and complete in all material
respects.
(i) Office Locations; Fictitious Names. The chief place of business,
the chief executive office and the office where Holding keeps its records
regarding the Payment Rights and all originals of all chattel paper that
evidence Payment Rights is set forth in SCHEDULE III hereto. Holding does
not do business under any trade-name or fictitious business name except as
set forth in SCHEDULE III hereto.
(j) Intellectual Property. SCHEDULE IV hereto sets forth each of
Holding's registered Copyrights, applications therefor and Copyright
Licenses. SCHEDULE V hereto sets forth each of Holding's registered
Trademarks, applications therefor and Trademarks Licenses. SCHEDULE VI
hereto sets forth each of Holdings registered Patents, applications
therefor and Patent Licenses. All of the Intellectual Property is valid,
subsisting and enforceable and Holding is not aware of any pending or
threatened claim by any Person that any of the Intellectual Property is
invalid or unenforceable or that the use of any of the Intellectual
Property violates the rights of any Person or of any basis for any such
claim.
XII-7
<PAGE>
SECTION 5. FURTHER ASSURANCES. (a) Holding agrees that from time to
time, at the expense of Holding, Holding will promptly execute and deliver
all further instruments and documents, and take all further action, that
may be necessary or desirable, or that Collateral Agent may request, in
order to perfect and protect any security interest granted or purported to
be granted hereby or to enable Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, Holding will: (i) mark
conspicuously each chattel paper included in the Payment Rights and each
Related Contract, (ii) at the request of Collateral Agent, mark
conspicuously each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to Collateral Agent, indicating
that such Collateral is subject to the security interest granted hereby;
(iii) if any Payment Right shall be evidenced by a promissory note or other
instrument (excluding checks) or chattel paper, deliver and pledge to
Collateral Agent hereunder such note or instrument or chattel paper duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Collateral Agent;
(iv) at the request of Collateral Agent, deliver and pledge to Collateral
Agent all promissory notes and other instruments (including checks) and all
original counterparts of chattel paper constituting Collateral duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to Collateral Agent;
(v) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Collateral Agent may request, in order to
perfect and preserve the security interests granted or purported to be
granted hereby, (vi) at any reasonable time, upon demand by Collateral
Agent, exhibit the Collateral to and allow inspection of the Collateral by
Collateral Agent, or persons designated by Collateral Agent and (vii) at
Collateral Agent's request, appear in and defend any action or proceeding
that may affect Holding's title to or Collateral Agent's security interest
in the Collateral.
(b) Holding hereby authorizes Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of Holding. A
carbon, photographic or other reproduction of this Agreement or a financing
statement signed by Holding shall be sufficient as a financing statement.
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<PAGE>
(c) Holding will furnish to Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Collateral
Agent may reasonably request, all in reasonable detail.
SECTION 6. COVENANTS OF HOLDING. Holding shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement, or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Collateral Agent of any change in Holding's name, identity
or corporate structure within 15 days of such change;
(c) give Collateral Agent 30 days' prior written notice of any change
in Holding's residence or chief place of business;
(d) if Collateral Agent gives value to enable Holding to acquire
rights in or the use of any Collateral, use such value for such purposes;
and
(e) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except
to the extent the validity thereof is being contested in good faith;
provided that so long as no property or assets (other than money for such
charge or claim and the interest or penalty accruing thereon) of Holding or
Borrower or any of their respective Subsidiaries is in danger of being lost
or forfeited as a result thereof, no such charge or claim need be paid if
it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if such other reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND INVENTORY.
Holding shall:
(a) keep the Equipment and Inventory (other than Inventory sold in
the ordinary course of business) at the places therefor specified on
SCHEDULE I hereto or, upon 30 days' prior written notice to Collateral
Agent, at such other places in jurisdictions where all action that may be
necessary or desirable, or that Collateral
XII-9
<PAGE>
Agent may request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to such
Equipment and Inventory shall have been taken;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with Holding's past practices, and shall
forthwith, or in the case of any loss or damage to any of the Equipment as
quickly as practicable after the occurrence thereof, make or cause to be
made all repairs, replacements, and other improvements in connection
therewith that are necessary or desirable to such end. Holding shall
promptly furnish to Collateral Agent a statement respecting any loss or
damage to any of the Equipment;
(c) keep correct and accurate records of the Inventory, itemizing and
describing the kind, type and quantity of Inventory, Holding's cost
therefor and (where applicable) the current price list for such Inventory;
and
(d) if any Inventory is in possession or control of any of Holding's
agents or processors, if the aggregate book value of all such Inventory
exceeds $25,000, and in any event upon the occurrence of an Event of
Default, instruct such agent or processor to hold all such Inventory for
the account of Collateral Agent and subject to the instructions of
Collateral Agent.
SECTION 8. INSURANCE. (a) Holding shall, at its own expense,
maintain insurance with respect to the Equipment and Inventory in such
amounts, against such risks, in such form and with such insurers, as shall
be reasonably satisfactory to Collateral Agent from time to time. Such
insurance shall include, without limitation, property damage insurance and
liability insurance. Each policy for property damage insurance shall
provide for all losses (except for losses of less than $25,000 per
occurrence) to be paid directly to Collateral Agent. Each policy shall in
addition (i) name Holding and Collateral Agent as insured parties
thereunder (without any representation or warranty by or obligation upon
Collateral Agent) as their interests may appear, (ii) unless otherwise
agreed by Collateral Agent, contain an agreement by the insurer that any
loss thereunder payable to Collateral Agent shall be payable to Collateral
Agent notwithstanding any action, inaction or breach of
XII-10
<PAGE>
representation or warranty by Holding, (iii) have attached thereto the
Lender's Loss Payable Endorsement or its equivalent, or a Loss Payable
clause acceptable to Collateral Agent, (iv) provide that there shall be no
recourse against Collateral Agent for payment of premiums or other amounts
with respect thereto and (v) provide that at least 30 days' prior written
notice of cancellation, material amendment, reduction in scope or limits of
coverage or of lapse shall be given to Collateral Agent by the insurer.
Holding shall, if so requested by Collateral Agent, deliver to Collateral
Agent original or duplicate policies of such insurance and, as often as
Collateral Agent may reasonably request, a report of a reputable insurance
broker with respect to such insurance. Further, Holding shall, at the
request of Collateral Agent, duly execute and deliver instruments of
assignment of such insurance policies to comply with the requirements of
Section 5(a) and cause the respective insurers to acknowledge notice of
such assignment.
(b) Reimbursement under any liability insurance maintained by Holding
pursuant to this Section 8 may be paid directly to the person who shall
have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment or Inventory when subsection (c) of this
Section 8 is not applicable, Holding shall make or cause to be made the
necessary repairs to or replacements of such Equipment or Inventory, and
any proceeds of insurance maintained by Holding pursuant to this Section 8
shall be paid to Holding as reimbursement for the costs of such repairs or
replacements.
(c) Upon (i) the occurrence and during the continuance of any Event
of Default, or (ii) the actual or constructive total loss (in excess of
$25,000 per occurrence) of any Equipment or Inventory, all insurance
payments in respect of such Equipment or Inventory shall be paid to and
applied by Collateral Agent as specified in Section 19.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO PAYMENT RIGHTS AND
RELATED CONTRACTS.
(a) Holding shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Payment Rights and Related Contracts at the location therefor specified in
SCHEDULE III hereto or, upon 30 days' prior written notice to Collateral
Agent, at such other locations in a jurisdiction where all action that may
be necessary or desirable, or that Collateral Agent may
XII-11
<PAGE>
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to such Payment
Rights and Related Contracts shall have been taken. Holding will hold and
preserve such records and will permit representatives of Collateral Agent
at any time during normal business hours to inspect and make abstracts from
such records and Holding agrees to render to Collateral Agent, at Holding's
cost and expense, such clerical and other assistance as may be reasonably
requested with regard thereto. Promptly upon the request of Collateral
Agent, Holding shall deliver to Collateral Agent complete and correct
copies of each Related Contract.
(b) Holding shall, for not less than 5 years from the date on which
such Payment Right arose, maintain (i) complete records of each Payment
Right, including records of all payments received, credits granted and
merchandise returned and (ii) all documentation relating thereto.
(c) Holding shall duly fulfill all obligations on its part to be
fulfilled under or in connection with the Payment Rights and the Related
Contracts and shall do nothing to impair the rights of Collateral Agent
therein.
(d) Except as otherwise provided in this subsection (d) of this
Section 9, Holding shall continue to collect, at its own expense, all
amounts due or to become due Holding under the Payment Rights and Related
Contracts. In connection with such collections, Holding may take (and, at
Collateral Agent's direction, shall take) such action as Holding or
Collateral Agent may deem necessary or advisable to enforce collection of
the Payment Rights; provided, however, that Collateral Agent shall have the
right at any time, upon the occurrence and during the continuance of an
Event of Default or a Potential Event of Default and upon written notice to
Holding of its intention to do so, to notify the account debtors or
obligors under any Payment Rights of the assignment of such Payment Rights
to Collateral Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to Holding thereunder directly
to Collateral Agent, to notify each Person maintaining a lockbox or similar
arrangement to which account debtors or obligors under any Payment Rights
have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such
XII-12
<PAGE>
lockbox or other arrangement directly to Collateral Agent and, upon such
notification and at the expense of Holding, to enforce collection of any
such Payment Rights and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as Holding might
have done. After receipt by Holding of the notice from Collateral Agent
referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including checks and other instruments) received by Holding in
respect of the Payment Rights and the Related Contracts shall be received
in trust for the benefit of Collateral Agent hereunder, shall be segregated
from other funds of Holding and shall be forthwith paid over or delivered
to Collateral Agent in the same form as so received (with any necessary
endorsement) to be held as cash collateral and applied as provided by
Section 19, and (ii) Holding shall not adjust, settle or compromise the
amount or payment of any Payment Right, or release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon.
SECTION 10. SPECIAL PROVISIONS WITH RESPECT TO DEPOSIT ACCOUNTS.
Upon the occurrence and during the continuance of an Event of Default,
Collateral Agent may exercise dominion and control over, and refuse to permit
further withdrawals (whether of money, securities, instruments or other
property) from deposit accounts maintained with Collateral Agent constituting
part of the Collateral.
SECTION 11. SPECIAL PROVISIONS WITH RESPECT TO INTELLECTUAL PROPERTY.
(a) If, before the Secured Obligations are indefeasibly paid in full,
Holding obtains any new Intellectual Property or rights thereto or becomes
entitled to the benefit of any Intellectual Property not listed on the
applicable Schedules to this Agreement, this Agreement shall automatically
apply thereto and Holding shall give to Collateral Agent prompt written
notice thereof and shall amend this Agreement to include any such new
Intellectual Property.
(b) Holding shall (i) prosecute diligently, through counsel
reasonably acceptable to Collateral Agent, any copyright, patent, trademark
or license application at any time pending; (ii) make application, through
counsel reasonably acceptable to Collateral Agent, on all new copyrights,
patents and trademarks as reasonably deemed appropriate by Holding;
(iii) preserve and maintain all rights in the Intellectual Property
material to Holding's business;
XII-13
<PAGE>
and (iv) upon and after the occurrence and during the continuance of an
Event of Default, use its best efforts to obtain any consents, waivers or
agreements from third parties necessary to enable Collateral Agent to
exercise its remedies with respect to the Intellectual Property. Holding
shall not abandon any right to file a copyright, patent or trademark
application nor shall Holding abandon any pending copyright, patent or
trademark application, or Intellectual Property which is, either
individually or in the aggregate, material to Holding's business without
the prior written consent of Collateral Agent. Holding represents and
warrants to Collateral Agent that the execution, delivery and performance
of this Agreement by Holding will not violate or cause a default under any
of the Intellectual Property or any agreement in connection therewith.
(c) Upon the occurrence of an Event of Default, Collateral Agent
shall have the right, but shall have no obligation, to bring suit in the
name of Holding or Collateral Agent to enforce any Intellectual Property,
in which event Holding shall, at the request of Collateral Agent, do any
and all lawful acts and execute any and all documents reasonably required
by Collateral Agent in aid of such enforcement and Holding shall promptly,
upon demand, reimburse Collateral Agent for its reasonable expenses and
indemnify Collateral Agent. To the extent that Collateral Agent shall
elect not to bring suit to enforce any Intellectual Property, Holding
agrees to use all reasonable measures, whether by action, suit, proceedings
or otherwise, to prevent the infringement of any of the Intellectual
Property.
SECTION 12. LICENSE OF INTELLECTUAL PROPERTY. Holding hereby
assigns, transfers and conveys to Collateral Agent, effective upon the
occurrence of any Event of Default, the nonexclusive right and license to use
all Intellectual Property or technical processes owned or used by Holding that
relate to the Collateral and any other collateral granted by Holding as security
for the Secured Obligations, together with any goodwill associated therewith,
all to the extent necessary to enable Collateral Agent to use, possess and
realize on the Collateral and any successor or assign to enjoy the benefits of
the Collateral. This right and license shall inure to the benefit of Collateral
Agent and its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license is granted free of charge,
without requirement that any monetary payment whatsoever be made to Holding.
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<PAGE>
SECTION 13. REASSIGNMENT. If (a) an Event of Default shall have
occurred and, by reason of waiver, modification, amendment or otherwise, no
longer be continuing, (b) no other Event of Default shall be continuing, (c) an
assignment to Collateral Agent shall have been previously made pursuant to
Section 12 hereof, and (d) the Secured Obligations shall not have become
immediately due and payable, upon the written request of Holding and the written
consent of Collateral Agent, Collateral Agent shall promptly execute and deliver
to Holding such assignments as may be necessary to reassign to Holding any
rights, title and interests as may have been assigned pursuant to Section 13
hereof, subject to any disposition thereof that may have been made by Collateral
Agent pursuant hereto; provided that, after giving effect to such reassignment,
Collateral Agent's security interest and conditional assignment granted pursuant
hereto as well as all other rights and remedies of Collateral Agent granted
hereunder, shall continue to be in full force and effect; and provided, further,
that the rights, title and interests so reassigned shall be free and clear of
all Liens other than Liens (if any) encumbering such rights, title and interest
at the time of their assignment to Collateral Agent and Permitted Encumbrances.
SECTION 14. TRANSFERS AND OTHER LIENS. Holding shall not:
(a) Sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit
Agreement.
(b) In the event any Collateral is sold, transferred or otherwise
disposed of in any Asset Sale or other transaction not prohibited by the
Credit Agreement, Collateral Agent shall release such Collateral to Holding
free and clear of the Lien and security interest under this Agreement in
accordance with the following: (i) so long as any Secured Obligations
remain outstanding and if such disposition is an Asset Sale, concurrently
upon Collateral Agent's determination that arrangements satisfactory to it
have been made for delivery to it of the Estimated Net Cash Proceeds of
such Asset Sale to the extent required under the Credit Agreement and (ii)
in all other instances, concurrently upon Collateral Agent's determination
and delivery of an Officers' Certificate by Holding certifying that no Cash
Proceeds of such disposition are required to be delivered by Pledgor in
respect of the Secured Obligations.
(c) Except for the interests disclosed in SCHEDULE II hereto, the
security interest created by
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<PAGE>
this Agreement and as permitted by Section 6.2 of the Credit Agreement,
create or suffer to exist any Lien upon or with respect to any of the
Collateral to secure the indebtedness or other obligations of any Person.
SECTION 15. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Holding
hereby irrevocably appoints Collateral Agent Holding's attorney-in-fact, with
full authority in the place and stead of Holding and in the name of Holding,
Collateral Agent or otherwise, from time to time in Collateral Agent's
discretion to take any action and to execute any instrument that Collateral
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be maintained by
Holding or paid to Collateral Agent pursuant to Section 8,
(b) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clauses (a)
and (b) above,
(d) to file any claims or take any action or institute any
proceedings that Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Collateral Agent with respect to any of the Collateral,
(e) to pay or discharge taxes or Liens, levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Collateral
Agent in its sole discretion, and such payments made by Collateral Agent to
become obligations of Holding to Collateral Agent, due and payable
immediately without demand,
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts and
other documents relating to the Collateral,
(g) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as
XII-16
<PAGE>
though Collateral Agent were the absolute owner thereof for all purposes,
and to do, at Collateral Agent's option and Holding's expense, at any time,
or from time to time, all acts and things that Collateral Agent deems
necessary to protect, preserve or realize upon the Collateral and
Collateral Agent's security interest therein, in order to effect the intent
of this Agreement, all as fully and effectively as Holding might do.
SECTION 16. COLLATERAL AGENT MAY PERFORM. If Holding fails to
perform any agreement contained herein, promptly after receipt of a request to
do so from Collateral Agent, Collateral Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Collateral Agent
incurred in connection therewith shall be payable by Holding under Section 20.
SECTION 17. COLLATERAL AGENT'S AND SECURED PARTIES' DUTIES AND
LIABILITIES.
(a) The powers conferred on Collateral Agent hereunder are
solely to protect its interest in the Collateral and shall not impose any
duty upon it to exercise any such powers. Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually
received by it hereunder, Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
Collateral Agent shall be deemed to exercise reasonable care in the custody
and preservation of such Collateral if such Collateral is accorded
treatment substantially equal to that which Collateral Agent accords its
own property.
(b) Neither Collateral Agent nor any other Secured Party shall
be liable to Holding (i) for any loss or damage sustained by it, or
(ii) for any loss, damage, depreciation or other diminution in the value of
any of the Collateral, that may occur as a result of, in connection with or
that is in any way related to (x) any exercise by Collateral Agent or any
other Secured Party of any right or remedy under this Agreement or (y) any
other act of or failure to act by Collateral Agent or any other Secured
Party, except to the extent that the same shall be determined by a judgment
of a court of competent jurisdiction to be the result of acts or omissions
on the part of Collateral Agent or such other Secured Party constituting
gross negligence or willful misconduct.
XII-17
<PAGE>
(c) NO CLAIM MAY BE MADE BY Holding AGAINST COLLATERAL AGENT,
ANY OTHER SECURED PARTY OR ANY OF THEIR RESPECTIVE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT, OR
CONSEQUENTIAL DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER
THE CLAIM THEREFOR IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN
CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS
CONTEMPLATED AND RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND Holding HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO
EXIST IN ITS FAVOR.
SECTION 18. REMEDIES. If any Event of Default shall have occurred
and be continuing, Collateral Agent may exercise in respect of the Collateral,
(a) all the rights and remedies of a secured party on default under the Uniform
Commercial Code of the State of New York (the "Code") (whether or not the Code
applies to the affected Collateral), (b) all of the rights and remedies provided
for in this Agreement, the Credit Agreement and any other agreement between
Holding and Collateral Agent and (c) such other rights and the remedies as may
be provided by law or otherwise (such rights and remedies of Collateral Agent to
be cumulative and non-exclusive). Collateral Agent also may (i) require Holding
to, and Holding hereby agrees that it will at its expense and upon request of
Collateral Agent forthwith, assemble all or part of the Collateral as directed
by Collateral Agent and make it available to Collateral Agent at a place to be
designated by Collateral Agent that is reasonably convenient to both parties,
(ii) enter onto the property where any Collateral is located and take possession
thereof with or without judicial process, (iii) prior to the disposition of the
Collateral, store, process, repair or recondition the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent Collateral
Agent deems appropriate, (iv) take possession of Holding's premises or place
custodians in exclusive control thereof, remain on such premises and use the
same and any of Holding's equipment for the purpose of completing any work in
process, taking any actions described in the preceding clause (iii) and
collecting any Secured Obligation and (v) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as Collateral Agent may deem commercially reasonable. Holding agrees
that, at least 10 days' notice to Holding of the time and place of any public
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<PAGE>
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Collateral Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. Collateral
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
Collateral Agent may retain any of Holding's directors, officers and
employees, in each case upon such terms as Collateral Agent and any such person
may agree, notwithstanding the provisions of any employment, confidentiality or
non-disclosure agreement between any such person and Holding and Holding hereby
waives its rights under any such agreement and consents to each such retention.
SECTION 19. APPLICATION OF PROCEEDS. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Collateral Agent in
respect of any sale of, collection from or other realization upon all or any
part of the Collateral may, in the discretion of Collateral Agent, be held by
Collateral Agent as Collateral for, and/or then, or at any other time thereafter
applied, in full or in part by Collateral Agent against the Secured Obligations
in the following order of priority:
(a) To the payment of all costs and expenses of such sale, collection
or other realization and all other expenses, liabilities and advances made
or incurred by Collateral Agent in connection therewith and all amounts for
which Collateral Agent is entitled to indemnification hereunder and all
advances made by Collateral Agent hereunder for the account of Holding and
for the payment of all costs and expenses paid or incurred by Collateral
Agent in connection with the exercise of any right or remedy hereunder, all
in accordance with Section 20;
(b) To the payment of the Secured Obligations in such order as
Collateral Agent shall elect; and
(c) After payment in full of the amounts specified in the preceding
subparagraphs, to the payment to or upon the order of Holding, or whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.
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<PAGE>
SECTION 20. INDEMNITY AND EXPENSES.
(a) Holding agrees to indemnify Collateral Agent from and against any
and all claims, losses and liabilities growing out of or resulting from
this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from Collateral
Agent's gross negligence or willful misconduct.
(b) Holding will upon demand pay to Collateral Agent the amount of
any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, that Collateral
Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Collateral Agent
hereunder or (iv) the failure by Holding to perform or observe any of the
provisions hereof.
SECTION 21. SECURITY INTEREST ABSOLUTE.
(a) All rights of Collateral Agent and security interests hereunder,
and all obligations of Holding hereunder, shall be absolute and
unconditional, irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement or any Collateral Document, or any agreement or instrument
relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other amendment or waiver of or consent to any departure from the
Credit Agreement or any Collateral Document;
(iii) any exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guaranty, for all or any of the Secured
Obligations; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of Holding or a third party
grantor of a security interest.
XII-20
<PAGE>
Without limiting the generality of the foregoing, Holding hereby
consents to, and hereby agrees that the rights of Collateral Agent and the
security interests hereunder, and the obligations of Holding hereunder, shall
not be affected by, any and all releases of any Collateral from the Liens and
security interests created by any Collateral Documents, whether for purposes of
Asset Sales or other dispositions of assets pursuant to the Credit Agreement or
for some other purpose, except to the extent expressly provided in such
releases.
SECTION 22. WAIVER OF HEARING. Holding expressly waives any
constitutional or other right to a judicial hearing prior to the time Collateral
Agent takes possession or disposes of the Collateral as provided in Section 19
hereof.
SECTION 23. WAIVER OF JURY TRIAL. HOLDING AND COLLATERAL AGENT
HEREBY MUTUALLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope
of this waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this
transaction, including without limitation, contract claims, tort claims, breach
of duty claims, and all other common law and statutory claims. Holding and
Collateral Agent each acknowledge that this waiver is a material inducement for
Holding and Collateral Agent to enter into a business relationship, that Holding
and Collateral Agent have already relied on the waiver in entering into this
Agreement and that each will continue to rely on the waiver in their related
future dealings. Holding and Collateral Agent further warrant and represent
that each has reviewed this waiver with its legal counsel, and that each
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 24. CONTINUING SECURITY INTEREST. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the indefeasible payment in full of the Secured
Obligations and termination of Secured Parties' obligations to lend under the
Credit Agreement, (b) be binding upon Holding, its successors and assigns and
(c) inure, together with the rights and remedies of Collateral Agent hereunder,
to the benefit of Collateral Agent and its successors, transferees and assigns.
Without limiting the generality of
XII-21
<PAGE>
the foregoing clause (c), Secured Parties may assign or otherwise transfer the
Credit Agreement and any notes issued in connection therewith to any other
person or entity, and such other benefits in respect thereof granted to Secured
Parties herein or otherwise. Upon the indefeasible payment in full of the
Secured Obligations and termination of Secured Parties' obligations to lend
under the Credit Agreement, the security interest granted hereby shall terminate
and all rights to the Collateral shall revert to Holding. Upon any such
termination, Collateral Agent will, at Holding's expense, execute and deliver to
Holding such documents as Holding shall reasonably request to evidence such
termination.
SECTION 25. AMENDMENTS; ETC. No amendment or waiver of any provision
of this Agreement nor consent to any departure by Holding herefrom, shall in any
event be effective unless the same shall be in writing and signed by Collateral
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 26. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including facsimile
communication) and mailed or telecopied or delivered to Holding or Collateral
Agent, as the case may be, addressed to it at the address of such party
specified on the signature page hereof, or as to either party at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section. All such notices
and other communications shall, when mailed, be effective when deposited in the
mails, addressed as aforesaid.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
All judicial proceedings brought against Holding with respect to this
Agreement may be brought in any state or federal court of competent jurisdiction
in the State of New York and by execution and delivery of this Agreement Holding
accepts for itself and in connection with the Collateral, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
irrevocably agrees to be bound by any judgement rendered thereby in connection
with this Agreement. Holding designates and appoints C T Corporation System and
such other Person as may be hereafter selected by Holding irrevocably agreeing
in writing to so serve, as its agent to receive on its behalf service of all
process in any proceedings in any such court, such service being hereby
acknowledged by Holding to be effective and binding service in every respect. A
copy of any such
XII-22
<PAGE>
process so served shall be mailed by registered mail to Holding, at its address
specified pursuant to Section 26 hereof, except that unless otherwise provided
by applicable law, any failure to mail such copy shall not affect the validity
of service of process. If any agent appointed by Holding refuses to accept
service, Holding hereby agrees that service upon it by mail shall constitute
sufficient notice. Nothing herein shall affect the right to serve process in
any other manner permitted by law or shall limit the right of Collateral Agent
to bring proceedings against Holding in the courts of any other jurisdiction.
SECTION 28. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCEPT AS REQUIRED BY MANDATORY PROVISION OF LAW AND EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined herein
or in the Credit Agreement, terms used in Article 9 of the Uniform Commercial
Code in the State of New York are used herein as therein defined.
SECTION 29. COLLATERAL AGENT. Collateral Agent has been appointed as
Collateral Agent hereunder pursuant to the Credit Agreement, and shall be
entitled to the benefits of the Credit Agreement. Collateral Agent shall be
obligated, and shall have the right, hereunder to make demands, to give notices,
to exercise or refrain from taking action (including, without limitation, the
release or substitution of Collateral) solely in accordance with this Agreement
and the Credit Agreement. Collateral Agent may resign and a successor
Collateral Agent may be appointed in the manner provided for resignation or
removal of Agent and appointment of a successor in the Credit Agreement. Upon
the acceptance of any appointment as a Collateral Agent by a successor
Collateral Agent, that successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring Collateral Agent shall
thereupon be discharged from its duties and obligations under this Agreement and
shall deliver any Collateral in its possession to the successor Collateral
Agent. After any retiring Collateral Agent's resignation, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Collateral Agent.
SECTION 30. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement or be given any substantive effect.
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<PAGE>
SECTION 31. SEVERABILITY. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation and in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 32. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement.
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<PAGE>
IN WITNESS WHEREOF, Holding has caused this Agreement to be duly
executed and delivered by its officers thereunto duly authorized as of the date
first above written.
BLUE BIRD CORPORATION
By _____________________
Title:
Notice Address:
Blue Bird Corporation
c/o Merrill Lynch Capital Partners, Inc.
767 Fifth Avenue
New York, NY 10153
Attn: Alexis P. Michas
with a copy to:
Wachtell, Lipton, Rosen & Katz
299 Park Avenue
New York, NY 10171-0149
Attn: Andrew R. Brownstein,
Esq.
BANKERS TRUST COMPANY,
as Collateral Agent
By _____________________
Title:
Notice Address:
Bankers Trust Company
280 Park Avenue, 9 West
New York, New York 10017
Attention: Mary Zadroga
With a copy to:
Bankers Trust Company
300 South Grand Avenue
41st Floor
Los Angeles, California 90071
Attention: Patrice Daniels
XII-25
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this ____ day of ________, 1992, before me personally came
_________________________________ to me known, who being by me duly sworn, did
depose and say that he/she resides at ___________________________________, that
he/she is a ____________________________ of _______________
_____________________________, one of the corporations described in and which
executed the within instrument, and that he/she signed his/her name thereto by
authority of the Board of Directors of said corporation.
______________________________
Notary Public
XII-26
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this ____ day of ________, 1992, before me personally came
_________________________________ to me known, who being by me duly sworn, did
depose and say that he/she resides at ___________________________________, that
he/she is a ____________________________ of _______________
_____________________________, one of the corporations described in and which
executed the within instrument, and that he/she signed his/her name thereto by
authority of the Board of Directors of said corporation.
______________________________
Notary Public
XII-27
<PAGE>
4/9/92
EXHIBIT XIII
FORM OF HOLDING PLEDGE AGREEMENT
THIS HOLDING PLEDGE AGREEMENT (this "Agreement") is dated as of April
15, 1992 between BLUE BIRD CORPORATION, a Delaware corporation ("Pledgor"), and
BANKERS TRUST COMPANY, as collateral agent for and representative of (in such
capacity, together with any successor in such capacity "Collateral Agent") the
Lenders (as defined herein).
PRELIMINARY STATEMENT
A. Pledgor is the legal and beneficial owner of (i) the shares (the
"Pledged Shares") of stock described in Part A of SCHEDULE I hereto and issued
by the corporations named therein and (ii) the indebtedness described in Part B
of said SCHEDULE I (the "Pledged Debt") and issued by the obligors named
therein.
B. Concurrently herewith, Holding, B B Acquisition Corp., a Georgia
corporation ("Borrower"), the lenders party thereto ("Lenders") and Bankers
Trust Company, as agent for Lenders ("Agent") have entered into that certain
Credit Agreement dated as of April 15, 1992 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement")
with Pledgor, pursuant to which Lenders make certain commitments, subject to the
terms and conditions set forth in the Credit Agreement, to extend credit
facilities to Borrower.
C. Pledgor owns all of the outstanding capital stock of Borrower.
D. Pledgor has guaranteed the Obligations of Borrower pursuant to
the Holding Guaranty.
E. It is a condition precedent to the initial extension of credit by
Lenders under the Credit Agreement that Pledgor shall have made the pledge and
undertaken the obligations contemplated by this Agreement.
IN CONSIDERATION of the above and in order to induce Lenders to enter
into and to extend credit under the Credit Agreement, Pledgor hereby agrees with
Collateral Agent, for its benefit and the benefit of Agent and Lenders
(collectively, the "Secured Parties"), as follows:
XIII-1
<PAGE>
SECTION 1. CERTAIN DEFINED TERMS. Terms used and not otherwise
defined herein have the respective meanings assigned to them in the Credit
Agreement.
SECTION 2. PLEDGE OF SECURITY. Pledgor hereby pledges to Collateral
Agent, and grants to Collateral Agent on behalf of Secured Parties, a Lien on
and security interest in, the following (the "Pledged Collateral") to secure the
Secured Obligations (as defined in Section 3):
(a) the Pledged Shares and the certificates representing the Pledged
Shares and any interest of Pledgor in the entries on the books of any financial
intermediary pertaining to the Pledged Shares, and all dividends, cash,
warrants, rights, instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Shares;
(b) the Pledged Debt and the instruments evidencing the Pledged Debt,
and all interest, cash, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Debt;
(c) all additional shares of, and all securities convertible into and
warrants, options and other rights to purchase, stock of any issuer of the
Pledged Shares from time to time acquired by Pledgor in any manner (which shares
shall be deemed to be part of the Pledged Shares), the certificates or other
instruments representing such additional shares, securities, warrants, options
or other rights and any interest of Pledgor in the entries on the books of any
financial intermediary pertaining to such additional shares, and all dividends,
cash, warrants, rights, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of such additional shares, securities, warrants, options or other
rights;
(d) all additional indebtedness from time to time owed to Pledgor by
any obligor of the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into and warrants,
options and other rights to purchase, stock of any Person that, after the date
of this Agreement, becomes, as a result of any occurrence, a direct Subsidiary
of Pledgor (which shares shall be deemed to be part of the Pledged Shares) and
the certificates or other instruments representing
XIII-2
<PAGE>
such shares, securities, warrants, options or other rights and any interest of
Pledgor in the entries on the books of any financial intermediary pertaining to
such shares, and all dividends, cash, warrants, rights, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares,
securities, warrants, options or other rights; and
(f) to the extent not covered by clauses (a) through (e) above, all
Proceeds of any or all of the foregoing. The term "Proceeds" shall have the
meaning assigned that term under the Uniform Commercial Code (the "Code") as in
effect in any relevant jurisdiction or under relevant law and, in any event,
shall include, but not be limited to, any and all (i) proceeds of any indemnity
or guaranty payable to Pledgor or Collateral Agent from time to time with
respect to any of the Pledged Collateral and (ii) any other amounts from time to
time paid or payable under or in connection with any of the Pledged Collateral.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment and
performance in full when due, whether at stated maturity, by acceleration,
declaration or otherwise (including the payment of amounts that would become due
but for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 U.S.C. Section 362(a), or any successor provision thereto),
of all obligations or liabilities of every nature of Pledgor and Borrower now or
hereafter existing under or arising out of or in connection with the Credit
Agreement (including, without limitation, all Obligations under the Credit
Agreement) and any promissory notes or other documents or instruments delivered
pursuant thereto (including, without limitation, the Holding Guaranty and any
Interest Rate Agreements by and between Borrower and any Lender) and all
amendments, extensions or renewals thereof, whether for principal, interest
(including, without limitation, interest that, but for the filing of a petition
in bankruptcy with respect to Pledgor or Borrower, would accrue on such
obligations, whether or not a claim is allowed against Pledgor or Borrower in
any such bankruptcy proceeding), reimbursement of amounts drawn under Letters of
Credit, fees, expenses or otherwise, whether now existing or hereafter arising,
voluntary or involuntary, whether or not jointly owed with others, direct or
indirect, absolute or contingent, liquidated or unliquidated, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred and all or any portion of such obligations that are paid, to the extent
all or any part of such payment is avoided or recovered directly or indirectly
from Collateral Agent as a preference, fraudulent transfer or otherwise (all
such obligations being the "Indebtedness"), and all obligations or
XIII-3
<PAGE>
liabilities of every nature of Pledgor now or hereafter existing under this
Agreement (all such obligations of Pledgor, together with the Indebtedness,
being the "Secured Obligations").
SECTION 4. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by or on behalf of Collateral Agent pursuant hereto and shall be in
suitable form for transfer by delivery, or, as applicable, shall be accompanied
by Pledgor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Collateral Agent. Collateral Agent shall have the right, at any time upon or
after the occurrence of an Event of Default or Potential Event of Default and
without notice to Pledgor, to transfer to or to register in the name of
Collateral Agent or any of its nominees any or all of the Pledged Collateral,
subject only to the revocable rights specified in Section 8(a). In addition,
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
(a) All of the Pledged Shares have been duly authorized and validly
issued and are fully paid and non-assessable. All of the Pledged Debt has been
duly authorized, authenticated or issued and delivered, and is the legal, valid
and binding obligation of the issuers thereof, and is not in default.
(b) Pledgor is the legal, record and beneficial owner of the Pledged
Collateral free and clear of any Lien except for the security interest created
by this Agreement.
(c) Pledgor has full power and lawful authority to enter into this
Agreement, to sell, assign, transfer and pledge the Pledged Collateral to
Collateral Agent and to grant to Collateral Agent a first priority security
interest therein as herein provided, all of which have been duly authorized by
all necessary corporate action; the execution, delivery and performance hereof
are not in contravention of any charter or by-law provision or of any indenture,
agreement or undertaking to which Pledgor is a party or by which Pledgor or its
property are bound; this Agreement constitutes the legally valid and binding
obligation of Pledgor enforceable against Pledgor in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and to equitable principles
XIII-4
<PAGE>
relating to enforceability; and any officer, agent or representative acting for
or on behalf of Pledgor in connection with this Agreement or any aspect hereof,
or entering into or executing this Agreement on behalf of Pledgor, has been duly
authorized so to do, and is fully empowered to act for and represent Pledgor in
connection with this Agreement and all matters relating thereto or in connection
therewith.
(d) No consent of any other party (including, without limitation,
stockholders or creditors of Pledgor) and no consent, authorization, approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required either (i) for the pledge by Pledgor of the Pledged
Collateral pursuant to this Agreement and the grant by Pledgor of the security
interest granted hereby or for the execution, delivery or performance of this
Agreement by Pledgor or (ii) for the exercise by Collateral Agent of the voting
or other rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement (except as may be required in
connection with a disposition of Pledged Collateral by laws affecting the
offering and sale of securities generally).
(e) The pledge of the Pledged Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in the Pledged
Collateral securing the payment of the Secured Obligations.
(f) The Pledged Shares constitute all of the issued and outstanding
shares of each issuer thereof, and there are no outstanding options, warrants,
rights to subscribe, stock purchase rights or other agreements outstanding with
respect to, or property that is now or hereafter convertible into, or that
requires the issuance or sale of, any Pledged Shares. The Pledged Debt
constitutes all of the issued and outstanding intercompany indebtedness
evidenced by a promissory note of the respective issuers thereof owing to
Pledgor.
(g) The pledge of the Pledged Collateral pursuant to this Agreement
does not violate Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
SECTION 6. CERTAIN COVENANTS. Pledgor hereby covenants that, until
the Secured Obligations have been indefeasibly paid in full, Pledgor will:
(a) not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral, (ii) create or permit to exist any Lien upon or with respect to any
of the Pledged Collateral, except for the security interest under this
Agreement, or (iii) permit any issuer of Pledged Shares to merge or consolidate
unless all the outstanding capital
XIII-5
<PAGE>
stock of the surviving or resulting corporation is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation;
(b) (i) cause each issuer of Pledged Shares not to issue any stock or
other securities in addition to or in substitution for the Pledged Shares issued
by such issuer, except to Pledgor, and (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock or other securities of each issuer of Pledged Shares, and (iii) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all shares of stock of any Person which, after the date of this
Agreement, becomes, as a result of any occurrence, a direct Subsidiary of
Pledgor;
(c) (i) pledge hereunder, immediately upon their issuance, any and
all instruments or other evidences of additional indebtedness from time to time
owed (directly or indirectly) to Pledgor by any obligor of the Pledged Debt, and
(ii) pledge hereunder, immediately upon their issuance, any and all instruments
or other evidences of indebtedness from time to time owed (directly or
indirectly) to Pledgor by any Person that after the date of this Agreement
becomes, as a result of any occurrence, a direct or indirect Subsidiary of
Pledgor;
(d) promptly deliver to Collateral Agent all written notices received
by it with respect to the Pledged Collateral; and
(e) pay or discharge, prior to delinquency, all taxes, charges, fees,
expenses, Liens and assessments of every nature levied or imposed upon the
Pledged Collateral.
SECTION 7. FURTHER ASSURANCES; PLEDGE AMENDMENTS. Pledgor agrees
that at any time and from time to time, at the expense of Pledgor, Pledgor will
promptly execute and deliver all further instruments and documents, and take all
further actions, that may be necessary, or that Collateral Agent may request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral.
Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 6(b) or (c), promptly (and in any event within five (5) Business
Days) deliver to Collateral Agent a Pledge Amendment, duly executed by Pledgor,
in substantially the form of SCHEDULE II hereto (a "Pledge Amendment"), in
respect of the additional Pledged
XIII-6
<PAGE>
Shares or Pledged Debt to be pledged pursuant to this Agreement. Pledgor hereby
authorizes Collateral Agent to attach each Pledge Amendment to this Agreement
and agrees that all Pledged Shares or Pledged Debt listed on any Pledge
Amendment delivered to Collateral Agent shall for all purposes hereunder be
considered Pledged Collateral.
SECTION 8. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default (as defined below) shall have
occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the Credit Agreement; provided, however, that Pledgor shall not exercise
or refrain from exercising any such right if Collateral Agent shall have
notified Pledgor that, in Collateral Agent's judgment, such action would
have a material adverse effect on the value of the Pledged Collateral or
any part thereof; and provided, further, that Pledgor shall give Collateral
Agent at least five Business Days' prior written notice of the manner in
which it intends to exercise, or the reasons for refraining from
exercising, any such right. It is understood, however, that neither
(A) the voting by Pledgor of any Pledged Shares for or Pledgor's consent to
the election of directors at a regularly scheduled annual or other meeting
of stockholders or with respect to incidental matters at any such meeting
nor (B) Pledgor's consent to or approval of any action otherwise permitted
under this Agreement and the Credit Agreement shall be deemed inconsistent
with the terms of this Agreement or the Credit Agreement within the meaning
of this Section 8(a)(i), and no notice of any such voting or consent need
be given to Collateral Agent.
(ii) Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Agreement, any and all dividends and
interest paid in respect of the Pledged Collateral; provided, however, that
any and all
(A) dividends and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or
total liquidation or
XIII-7
<PAGE>
dissolution or in connection with a reduction of capital, capital
surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal or in redemption of or in exchange for any Pledged
Collateral,
shall be, and shall forthwith be delivered to Collateral Agent to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in trust
for the benefit of Collateral Agent, be segregated from the other property
or funds of Pledgor and be forthwith delivered to Collateral Agent as
Pledged Collateral in the same form as so received (with all necessary
endorsements).
(iii) Collateral Agent shall promptly execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies, dividend
payment orders and other instruments as Pledgor may from time to time
reasonably request for the purpose of enabling Pledgor to exercise the
voting and other consensual rights which it is entitled to exercise
pursuant to paragraph (i) above and to receive the dividends, principal or
interest payments which it is authorized to receive and retain pursuant to
paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) Upon written notice from Collateral Agent to Pledgor, all rights
of Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 8(a)(i) shall
cease, and all such rights shall thereupon become vested in Collateral
Agent who shall thereupon have the sole right to exercise such voting and
other consensual rights during the continuance of such Event of Default.
(ii) All rights of Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to Section 8(a)(ii) shall cease, and all such rights shall
thereupon become vested in Collateral Agent who shall thereupon have the
sole right to receive and hold as Pledged Collateral such dividends and
interest payments during the continuance of such Event of Default.
(iii) All dividends, principal and interest payments which are
received by Pledgor contrary to the provisions of paragraph (ii) of this
Section 8(b) shall be received in trust for the benefit of Collateral
Agent, shall be segregated from other funds of Pledgor and shall forthwith
be paid over to Collateral Agent as Pledged
XIII-8
<PAGE>
Collateral in the same form as so received (with any necessary
endorsements).
(c) In order to permit Collateral Agent to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to Section
8(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 8(a)(ii) or Section 8(b)(ii), Pledgor shall
promptly execute and deliver (or cause to be executed and delivered) to
Collateral Agent all such proxies, dividend payment orders and other instruments
as Collateral Agent may from time to time reasonably request.
SECTION 9. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Pledgor
hereby irrevocably appoints Collateral Agent as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time in Collateral Agent's discretion to take any action
and to execute any instrument, including but not limited to financing and
continuation statements, which Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same, to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Pledged Collateral, and to file any claims or take
any action or institute any proceedings which Collateral Agent may deem
necessary or desirable for the collection of any of the Pledged Collateral or to
enforce the rights of Collateral Agent with respect to any of the Pledged
Collateral.
SECTION 10. COLLATERAL AGENT MAY PERFORM. If Pledgor fails to
perform any agreement contained herein promptly after receipt of a request to do
so from Collateral Agent, Collateral Agent may itself perform, or cause
performance of, such agreement, and the reasonable expenses of Collateral Agent
incurred in connection therewith shall be payable by Pledgor under
Section 16(b).
SECTION 11. STANDARD OF CARE; SECURED PARTIES' DUTIES AND
LIABILITIES.
(a) The powers conferred on Collateral Agent hereunder are solely to
protect its interest in the Pledged Collateral and shall not impose on it any
duty to exercise such powers. Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equivalent to
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that which Collateral Agent in its individual capacity accords its own property
consisting of negotiable securities, it being understood that Collateral Agent
shall have no responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relating
to any Pledged Collateral, whether or not Collateral Agent has or is deemed to
have knowledge of such matters, (ii) taking any necessary steps (other than
steps taken in accordance with the standard of care set forth above to maintain
possession of the Pledged Collateral) to preserve rights against any parties
with respect to any Pledged Collateral, (iii) taking any necessary steps to
collect or realize upon the Secured Obligations or any guarantee therefor, or
any part thereof, or any of the Pledged Collateral or (iv) initiating any action
to protect the Pledged Collateral against the possibility of a decline in market
value.
(b) Neither Collateral Agent nor any other Secured Party shall be
liable to Pledgor (i) for any loss or damage sustained by it, or (ii) for any
loss, damage, depreciation or other diminution in the value of any of the
Pledged Collateral, that may occur as a result of, in connection with or that is
in any way related to (x) any exercise by Collateral Agent or any other Secured
Party of any right or remedy under this Agreement or (y) any other act of or
failure to act by Collateral Agent or any other Secured Party, except to the
extent that the same shall be determined by a judgment of a court of competent
jurisdiction to be the result of acts or omissions on the part of Collateral
Agent or such other Secured Party constituting gross negligence or willful
misconduct.
(c) NO CLAIM MAY BE MADE BY PLEDGOR AGAINST COLLATERAL AGENT, ANY
OTHER SECURED PARTY OR THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES, ATTORNEYS OR AGENTS FOR ANY SPECIAL, INDIRECT, OR CONSEQUENTIAL
DAMAGES IN RESPECT OF ANY BREACH OR WRONGFUL CONDUCT (WHETHER THE CLAIM THEREFOR
IS BASED ON CONTRACT, TORT OR DUTY IMPOSED BY LAW) IN CONNECTION WITH, ARISING
OUT OF OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED AND RELATIONSHIP
ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH; AND PLEDGOR HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE
UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR
NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
SECTION 12. EVENTS OF DEFAULT. The occurrence of any of the
following shall be an "Event of Default" under this Agreement: (a) failure of
Pledgor to pay any obligation secured by this Agreement when due; (b) failure of
Pledgor to perform any of the Secured Obligations when such Secured
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Obligation is required to be performed; or (c) the occurrence of any "Event of
Default" as defined in the Credit Agreement.
SECTION 13. REMEDIES UPON DEFAULT. If any Event of Default shall
have occurred and be continuing:
(a) Collateral Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Code as in effect in the State of New York (or any other state
with jurisdiction over the Pledged Collateral) at that time, and Collateral
Agent may also in its sole discretion, without notice (except as specified
below), sell the Pledged Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker's board or at any of
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Collateral Agent may deem commercially reasonable, irrespective of the
impact of any such sales on the market price of the Pledged Collateral.
Collateral Agent may be the purchaser of any or all of the Pledged Collateral at
any such sale and shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Pledged Collateral sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price of any Pledged
Collateral payable by Collateral Agent at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of Pledgor, and Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted. Pledgor agrees that, to the extent notice of sale shall be required by
law, at least ten days' notice to Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification. Collateral Agent shall not be obligated to make any
sale of Pledged Collateral regardless of notice of sale having been given.
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Pledgor hereby waives any claims against Collateral Agent arising by reason of
the fact that the price at which any Pledged Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale, even if Collateral Agent accepts the first offer received and does
not offer such Pledged Collateral to more than one offeree. If the proceeds of
any sale or other disposition of the Pledged Collateral are insufficient to pay
all the Secured Obligations, Pledgor shall
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<PAGE>
be liable for the deficiency and the fees of any attorneys employed by
Collateral Agent to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as from time to time amended (the
"Securities Act"), and applicable state securities laws, Collateral Agent may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable to Collateral Agent than those obtainable
through a public sale without such restrictions (including, without limitation,
a public offering made pursuant to a registration statement under the Securities
Act) and, notwithstanding such circumstances and the registration rights granted
to Collateral Agent by Pledgor pursuant to Section 14, Pledgor agrees that any
such private sale shall be deemed to have been made in a commercially reasonable
manner and that Collateral Agent shall have no obligation to engage in public
sales and no obligation to delay the sale of any Pledged Collateral for the
period of time necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or under
applicable state securities laws, even if such issuer would, or should, agree to
so register it.
(c) If Collateral Agent determines to exercise its right to sell any
or all of the Pledged Collateral, upon written request, Pledgor shall and shall
cause each issuer of any Pledged Shares to be sold hereunder from time to time
to furnish to Collateral Agent all such information as Collateral Agent may
request in order to determine the number of shares and other instruments
included in the Pledged Collateral which may be sold by Collateral Agent in
exempt transactions under the Securities Act and the rules and regulations of
the Securities and Exchange Commission thereunder, as the same are from time to
time in effect.
SECTION 14. REGISTRATION RIGHTS. If Collateral Agent shall determine
to exercise its right to sell all or any of the Pledged Collateral pursuant to
Section 13, Pledgor agrees that, upon request of Collateral Agent (which request
may be made by Collateral Agent in its sole discretion), Pledgor will, at its
own expense:
(a) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all
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<PAGE>
such instruments and documents, and do or cause to be done all such other acts
and things, as may be necessary or, in the opinion of Collateral Agent,
advisable to register such Pledged Collateral under the provisions of the
Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of Collateral Agent,
are necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Pledged Collateral under all
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested by
Collateral Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement which will satisfy the provisions
of Section 11(a) of the Securities Act;
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law; and
(e) bear all costs and expenses, including reasonable attorneys'
fees, of carrying out its obligations under this Section 14.
Pledgor further agrees that a breach of any of the covenants contained
in this Section 14 will cause irreparable injury to Collateral Agent, that
Collateral Agent has no adequate remedy at law in respect of such breach and, as
a consequence, agrees that each and every covenant contained in this Section 14
shall be specifically enforceable against Pledgor, and Pledgor hereby waives and
agrees not to assert any defenses against an action for specific performance of
such covenants except for a defense that no default has occurred giving rise to
the Secured Obligations becoming due and payable prior to their stated
maturities. Nothing in this Section 14 shall in any way alter the rights of
Collateral Agent under Section 13.
SECTION 15. APPLICATION OF PROCEEDS. All Proceeds received by
Collateral Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral may, in the
discretion of Collateral Agent, be held by Collateral Agent as Pledged
Collateral for,
XIII-13
<PAGE>
and/or then or at any time thereafter applied in whole or in part by Collateral
Agent against the Secured Obligations in the following order of priority:
FIRST: To the payment of the costs and expenses of such sale,
collection or other realization, and all expenses, liabilities and advances made
or incurred by Collateral Agent in connection therewith, including reasonable
compensation to Collateral Agent and its agents and counsel, in accordance with
Section 16(b);
SECOND: To the payment in full of all Secured Obligations in such
order as Collateral Agent shall elect; and
THIRD: To the payment to or upon the order of Pledgor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from such
proceeds.
SECTION 16. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Collateral Agent from and against any
and all claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting from Collateral Agent's gross negligence or
willful misconduct.
(b) Pledgor will upon demand pay to Collateral Agent the amount of
any and all costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of Collateral Agent or any other Secured Party hereunder or (iv) the
failure by Pledgor to perform or observe any of the provisions hereof.
(c) In the event of any public sale described in Section 14, Pledgor
agrees to indemnify and hold harmless Collateral Agent and each of Collateral
Agent's directors, officers, employees and agents from and against any loss,
fee, cost, expense, damage, liability or claim, joint or several, to which
Collateral Agent or such other persons may become subject or for which any of
them may be liable, under the Securities Act or otherwise, insofar as such
losses, fees, costs, expenses, damages, liabilities or claims (or any litigation
commenced or threatened in respect thereof), arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
preliminary
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<PAGE>
prospectus, registration statement, prospectus or other such document published
or filed in connection with such public sale, or any amendment or supplement
thereto, 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 necessary to make
the statements therein not misleading, and will reimburse Collateral Agent and
such other persons for any legal or other expenses reasonably incurred by
Collateral Agent and such other persons in connection with any litigation, of
any nature whatsoever, commenced or threatened in respect thereof (including
without limitation any and all fees, costs and expenses whatsoever reasonably
incurred by Collateral Agent and such other persons and counsel for Collateral
Agent and such other persons in investigating, preparing for, defending against
or providing evidence, producing documents or taking any other action in respect
of, any such commenced or threatened litigation or any claims asserted). This
indemnity shall be in addition to any liability which Pledgor may otherwise have
and shall extend upon the same terms and conditions to each person, if any, that
controls Collateral Agent or such persons within the meaning of the Securities
Act.
SECTION 17. WAIVERS OF PLEDGOR.
(a) Pledgor waives any right to require Collateral Agent to:
(i) proceed against Borrower, any other guarantor of any of the Secured
Obligations or any other person or entity; (ii) proceed against or exhaust any
other security held from any other person or entity; (iii) give notice to
Pledgor of the terms, time and place of any public or private sale of the
Pledged Collateral or any other security, or otherwise comply with Section 9504
of the Code; (iv) pursue any other remedy in Collateral Agent's power; or
(v) make or give any presentments, demands for performance, notices of
nonperformance, protests, notices of protest or notices of dishonor in
connection with any obligations or evidences of indebtedness which constitute in
whole or in part the Secured Obligations or in connection with the creation of
new or additional Secured Obligations;
(b) Pledgor waives any defense arising by reason of: (i) any
disability or other defense of Pledgor, Borrower, or any other entity,
including, without limitation, any defense based on or arising out of the
unenforceability of any of the Secured Obligations, legal or equitable discharge
of the Secured Obligations or this Agreement or any statute of limitations
affecting Pledgor's liability hereunder or Borrower's liability thereunder, or
the enforcement thereof or hereof; (ii) the cessation from any cause whatsoever,
other than payment in full, of the Secured Obligations or the release or
substitution of any sureties or guarantors of the Secured Obligations; (iii) any
act or omission by Collateral
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<PAGE>
Agent which directly or indirectly results in or aids the discharge of Pledgor
or Borrower or any of the Secured Obligations by operation of law or otherwise;
(iv) the release of any other collateral securing the Secured Obligations or the
failure by Collateral Agent to perfect or maintain the perfection of any such
other collateral; (v) any modification of the Secured Obligations, in any form
whatsoever, including, but not limited to the renewal, extension, acceleration
or other change in the time for payment of the Secured Obligations, and any
change in the terms of the Secured Obligations, including, but not limited to,
any increase or decrease of the rate of interest on the Secured Obligations; and
(vi) any law limiting the liability of or exonerating guarantors or sureties;
and
(c) until all the Secured Obligations shall have been paid in full,
Pledgor waives any right to enforce any remedy which Collateral Agent now has or
may hereafter have against Borrower or any person or entity guaranteeing or
securing the Secured Obligations, and waives any benefit of, or any right to
participate in any security whatsoever now or hereafter held by Collateral Agent
for the Secured Obligations.
SECTION 18. CONTINUING SECURITY INTEREST; TRANSFER OF NOTES. This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (a) remain in full force and effect until indefeasible payment in full
of all Secured Obligations, the cancellation or termination of the Commitments
and the cancellation or expiration of all outstanding Letters of Credit, (b) be
binding upon Pledgor, its successors and assigns, and (c) inure, together with
the rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent and its successors, transferees and assigns. Without limiting
the generality of the foregoing clause (c) and subject to the provisions of
subsections 10.2 and 10.16 of the Credit Agreement, Collateral Agent may assign
or otherwise transfer any Note held by it to any other person or entity, and
such other person or entity shall thereupon become vested with all the benefits
in respect thereof granted to Collateral Agent herein or otherwise. Upon the
indefeasible payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, Pledgor shall be entitled to the return, upon its
request and at its expense, against receipt and without recourse to Collateral
Agent, of such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.
SECTION 19. NO WAIVER BY COLLATERAL AGENT; AUTHORITY OF PLEDGOR OR
BORROWER. No failure on the part of Collateral Agent to exercise, and no course
of dealing with
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<PAGE>
respect to, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise by
Collateral Agent of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein provided are cumulative to the fullest extent permitted by
law and are not exclusive of any remedies provided by law. It is not necessary
for Collateral Agent to inquire into the powers of Pledgor or the officers,
directors or agents acting or purporting to act on behalf of any of them.
SECTION 20. TRANSFERS. In the event any Pledged Collateral is sold,
transferred or otherwise disposed of in any Asset Sale or other transaction not
prohibited by the Credit Agreement, Collateral Agent shall release such Pledged
Collateral to Pledgor free and clear of the Lien and security interest under
this Agreement in accordance with the following: (a) so long as any Secured
Obligations remain outstanding and if such disposition is an Asset Sale,
concurrently upon Collateral Agent's determination that arrangements
satisfactory to it have been made for delivery to it of the Estimated Net Cash
Proceeds of such Asset Sale and (b) in all other instances, concurrently upon
Collateral Agent's determination and delivery of an Officer's Certificate by
Pledgor certifying that no Cash Proceeds of such disposition are required to be
delivered by Pledgor in respect of the Secured Obligations.
SECTION 21. AMENDMENT, ETC. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by Pledgor herefrom, shall in
any event be effective unless the same shall be in writing and signed by
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 22. ADDRESSES FOR NOTICES. All notices and other
communications provided for hereunder shall be in writing (including telegraphic
or telecopy communication) and, if to either party, mailed, telegraphed,
telecopied or delivered to it, addressed to it at the address of such party
specified in the Credit Agreement, or as to either party at such other address
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section 22. All such notices
and other communications shall, when mailed or telegraphed, respectively, be
effective when deposited in the mails or delivered to the telegraph company,
respectively, addressed as aforesaid, and when delivered or telecopied, be
effective when received at the address specified above.
XIII-17
<PAGE>
SECTION 23. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT
THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Agreement, terms defined in Article 9 of the
Code are used herein as therein defined.
SECTION 24. SEVERABILITY. Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdictions,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 25. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All
judicial proceedings brought against Pledgor with respect to this Agreement may
be brought in any state or federal court of competent jurisdiction in the State
of New York and by execution and delivery of this Agreement, Pledgor accepts for
itself and in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement.
Pledgor designates and appoints C T Corporation System and such other Persons as
may hereafter be selected by Pledgor irrevocably agreeing in writing to so
serve, as its agent to receive on its behalf service of all process in any such
proceedings in any such court, such service being hereby acknowledged by Pledgor
to be effective and binding service in every respect. A copy of any such
process so served shall be mailed by registered mail to Pledgor at its address
referred to in Section 22, except that unless otherwise provided by applicable
law, any failure to mail such copy shall not affect the validity of service of
process. If any agent appointed by Pledgor refuses to accept service, Pledgor
hereby agrees that service upon it by mail shall constitute sufficient notice.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Collateral Agent to bring
proceedings against Pledgor in the courts of any other jurisdiction.
SECTION 26. COLLATERAL AGENT. Collateral Agent has been appointed as
Collateral Agent hereunder pursuant to the Credit Agreement, and shall be
entitled to the benefits of the Credit Agreement. Collateral Agent shall be
obligated, and shall have the right, hereunder to make demands, to give notices,
to exercise or refrain from taking action (including,
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<PAGE>
without limitation, the release or substitution of Pledged Collateral) solely in
accordance with this Agreement and the Credit Agreement. Collateral Agent may
resign and a successor Collateral Agent may be appointed in the manner provided
for resignation or removal of Agent and appointment of a successor in the Credit
Agreement. Upon the acceptance of any appointment as a Collateral Agent by a
successor Collateral Agent, that successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent under this Agreement, and the retiring
Collateral Agent shall thereupon be discharged from its duties and obligations
under this Agreement and shall deliver any Collateral in its possession to the
successor Collateral Agent. After any retiring Collateral Agent's resignation,
the provisions of this Agreement shall inure to its benefit as to any actions
taken or omitted to be taken by it under this Agreement while it was Collateral
Agent.
SECTION 27. WAIVER OF JURY TRIAL. PLEDGOR AND COLLATERAL AGENT
HEREBY MUTUALLY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OR ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTION
CONTEMPLATED HEREBY AND THE RELATIONSHIP BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation, contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Pledgor and Collateral
Agent each acknowledge that this waiver is a material inducement to enter into a
business relationship, that each has already relied on the waiver in entering
into this Agreement and that each will continue to rely on the waiver in their
related future dealings. Pledgor and Collateral Agent further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO EXTENSIONS OF
CREDIT PURSUANT TO THE LOAN DOCUMENTS. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
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<PAGE>
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
BLUE BIRD CORPORATION
By __________________________
Title:
BANKERS TRUST COMPANY,
as Collateral Agent
By __________________________
Title:
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<PAGE>
EXHIBIT XIV
ENVIRONMENTAL INDEMNITY
THIS ENVIRONMENTAL INDEMNITY (this "INDEMNITY") is entered into as of
April 15, 1992 by BLUE BIRD CORPORATION, a Delaware corporation ("Holding"), and
BLUE BIRD BODY COMPANY, a Georgia corporation ("Company") (each of which shall
be referred to hereinafter individually as an "Indemnitor" and collectively as
the "Indemnitors"), to and for the benefit of BANKERS TRUST COMPANY, as Agent
(as defined below) on behalf of itself and Lenders (as defined below) and its
and their successors, assigns and participants, and its and their respective
parent, subsidiary and affiliated corporations, and the respective directors,
officers, agents, attorneys, and employees of each of the foregoing (each of
which shall be referred to hereinafter individually as an "Indemnitee" and
collectively as the "Indemnitees").
W I T N E S S E T H:
A. Pursuant to that certain Credit Agreement dated as of April 15,
1992 by and among Holding, B B Acquisition Corp., a Georgia corporation, the
lenders party thereto ("Lenders") and Bankers Trust Company, as agent for
Lenders ("Agent") (as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement), Lenders have made loans and extended certain
credit facilities in the maximum principal amount of $170,000,000 (the "Loan")
to Borrower, which Loan is to be secured by, among other things, one or more
Mortgages of even date herewith executed by Borrower, as mortgagor, to
Collateral Agent, on behalf of Agent and Lenders, as mortgagee, which Mortgages
encumber the real property described on EXHIBIT A attached hereto (the
"Premises"), and the improvements constructed or to be constructed thereon
(which improvements, together with the Premises, shall hereinafter be referred
to as the "Projects").
B. Lenders and Agent have therefore made it a condition of Lenders'
and Agent's making the Loan that this Indemnity be executed and delivered by the
Indemnitors in order to protect the Indemnitees from any such liabilities,
costs, and expenses and all other Environmental Losses (as hereinafter defined).
<PAGE>
C. Company is the wholly-owned Subsidiary of Holding and Holding
will benefit from the making of the Loan by Lenders and Agent.
NOW, THEREFORE, in consideration of the foregoing and of Lenders and
Agent making the Loan, and other valuable consideration, the receipt of which is
hereby acknowledged, the Indemnitors agree as follows:
1. As used in this Indemnity, the following terms shall have the
following meanings:
"AGREED RATE" means a rate per annum equal to the sum of three and
one-half percent (3.50%) <*>plus</*> the Prime Rate.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as heretofore
or hereafter amended from time to time.
"FORECLOSURE TRANSFER" means the transfer of title to all or any part
of the Premises or the Projects at a foreclosure sale under a Mortgage,
either pursuant to judicial decree or the power of sale contained in a
Mortgage, or by deed in lieu of such foreclosure.
"HAZARDOUS MATERIAL ACTIVITY" means any actual proposed or threatened
storage, holding, existence, release, emission, discharge, generation,
processing, abatement, removal, disposition, handling or transportation of
any Hazardous Material from, under, into or on the Premises or the Projects
or surrounding property.
"LOSSES" means any and all losses, liabilities, damages, demands,
claims, actions, judgments, causes of action, assessments, penalties, costs
and expenses (including, without limitation, the reasonable fees and
disbursements of outside legal counsel and accountants and the reasonable
charges of in-house legal counsel and accountants), and all foreseeable and
unforeseeable consequential damages.
"ENVIRONMENTAL LOSSES" means Losses suffered or incurred by any
Indemnitee, arising out of or as a result of: (i) the occurrence of any
Hazardous Material Activity; (ii) any violation of any applicable
Environmental Laws relating to the Premises or the Projects or to the
ownership, use, occupancy or operation thereof; (iii) any investigation,
inquiry, order, hearing, action, or other proceeding by or before any
governmental agency in connection with any
XIV-2
<PAGE>
Hazardous Material Activity; or (iv) any claim, demand or cause of action,
or any action or other proceeding, whether meritorious or not, brought or
asserted against any Indemnitee which directly or indirectly relates to,
arises from or is based on any of the matters described in clauses (i),
(ii), or (iii), or any allegation of any such matters.
2. Each Indemnitor hereby agrees, jointly and severally, to
indemnify, defend, and hold harmless Indemnitees, and each of them, from and
against any and all Environmental Losses.
3. This Indemnity is given solely to protect Collateral Agent, Agent
and Lenders and the other Indemnitees against Environmental Losses, and not as
additional security for, or as a means of repayment of, the Loan. The
obligations of each of the Indemnitors under this Indemnity are independent of,
and shall not be measured or affected by (i) any amounts at any time owing under
the Loan or the Credit Agreement, or secured by a Mortgage, (ii) the sufficiency
or insufficiency of any collateral (including, without limitation, the Projects)
given to Collateral Agent, Agent and Lenders to secure repayment of the Loan,
(iii) the consideration given by Agent and Lenders or any other party in order
to acquire the Premises or the Projects, or any portion thereof, (iv) the
modification, expiration or termination of the Credit Agreement or any other
document or instrument relating thereto, or (v) the discharge or repayment in
full of the Loan (including, without limitation, by amounts paid or credit bid
at a foreclosure sale or by discharge in connection with a deed in lieu of
foreclosure).
4. The Indemnitors' obligations hereunder shall survive the sale
or other transfer of the Premises or the Projects by Borrower. The rights of
each Indemnitee under this Indemnity shall be in addition to any other rights
and remedies of such Indemnitee against any Indemnitor under any other
document or instrument now or hereafter executed by such Indemnitor, or at
law or in equity (including, without limitation, any right of reimbursement
or contribution pursuant to CERCLA), and shall not in any way be deemed a
waiver of any of such rights. Each Indemnitor agrees that it shall have no
right of contribution (including, without limitation, any right of
contribution under CERCLA) or subrogation against any other Indemnitor
hereunder. Each Indemnitor further agrees that, to the extent that the
waiver of its rights of subrogation and contribution as set forth herein is
found by a court of competent jurisdiction to be void or voidable for any
reason, any rights of subrogation or contribution such
XIV-3
<PAGE>
Indemnitor may have shall be junior and subordinate to the rights of each
Indemnitee against each Indemnitor hereunder.
5. All obligations of the Indemnitors hereunder shall be payable on
demand, and any amount due and payable hereunder to any Indemnitee by any
Indemnitor which is not paid within thirty (30) days after written demand
therefor from an Indemnitee with an explanation of the amounts demanded shall
bear interest from the date of such demand at the Agreed Rate.
6. The Indemnitors shall pay to each Indemnitee all costs and
expenses (including, without limitation, the reasonable fees and disbursements
of any Indemnitee's outside legal counsel and the reasonable charges of any
Indemnitee's in-house legal counsel) incurred by such Indemnitee in connection
with this Indemnity or the enforcement hereof.
7. This Indemnity shall be binding upon each Indemnitor, its heirs,
representatives, administrators, executors, successors and assigns and shall
inure to the benefit of and shall be enforceable by each Indemnitee, its
successors, endorsees and assigns (including, without limitation, any entity to
which Agent or any Lender assigns or sells all or any portion of its interest in
the Loan). As used herein, the singular shall include the plural and the
masculine shall include the feminine and neuter and vice versa, if the context
so requires. If this Indemnity is executed by more than one person or entity,
the liability of the undersigned hereunder shall be joint and several.
8. This Indemnity shall be governed and construed in accordance with
the internal laws of the State of New York, without regard to its conflicts of
laws principles.
9. Every provision of this Indemnity is intended to be severable.
If any provision of this Indemnity or the application of any provision hereof to
any party or circumstance is declared to be illegal, invalid or unenforceable
for any reason whatsoever by a court of competent jurisdiction, such invalidity
shall not affect the balance of the terms and provisions hereof or the
application of the provision in question to any other party or circumstance, all
of which shall continue in full force and effect.
10. No failure or delay on the part of any Indemnitee to exercise any
power, right or privilege under this Indemnity shall impair any such power,
right or privilege, or be construed to be a waiver of any default or an
acquiescence therein, nor shall any single or partial
XIV-4
<PAGE>
exercise of such power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. No provision of this
Indemnity may be changed, waived, discharged or terminated except by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
11. This Indemnity may be executed in any number of counterparts,
each of which shall be deemed an original and all of which shall constitute one
and the same indemnity with the same effect as if all parties had signed the
same signature page. Any signature page of this Indemnity may be detached from
any counterpart of this Indemnity and reattached to any other counterpart of
this Indemnity identical in form hereto but having attached to it one or more
additional signature pages.
XIV-5
<PAGE>
IN WITNESS WHEREOF, this Indemnity is executed as of the day and year
first written above.
BLUE BIRD CORPORATION
By _______________________________
Title: President
BLUE BIRD BODY COMPANY
By _______________________________
Title: President
XIV-6
<PAGE>
DRAFT
11/7/96
EXHIBIT XV
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
DATE _________ __, ____
Reference is made to the Agreement described in Item 2 of Annex I
annexed hereto (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT"). Terms defined in the
Credit Agreement are used herein with [ASSIGNOR] (the "ASSIGNOR") and
[ASSIGNEE] (the "ASSIGNEE") agreeing as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
assignee hereby purchases and assumes from the Assignor, that interest in and
to all of the Assignor's rights and obligations under the Credit Agreement as
of the date hereof which represents the percentage interest specified in
Item 4 of Annex I of all outstanding rights and obligations under the Credit
Agreement relating to the facilities listed in Item 4 of Annex I, including,
without limitation, such interest in the Assignor's Commitments (if
applicable), the Loans owing to the Assignor and participations in
outstanding Letters of Credit relating to such facilities. After giving
effect to such sale and assignment, the Assignee's Commitments, the amount of
the Loans owing to the Assignee and participations in outstanding Letters of
Credit will be as set forth in Item 4 of Annex I.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim created by the Assignor; (ii)
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement regarding the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto; and
(iii) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of Borrower or the performance or
observance by Borrower of any of its obligations under the Credit Agreement
or any other instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
therein, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption; (ii) agrees that it will, independently and
without reliance upon Administrative Agent, the Assignor or any
XV-1
<PAGE>
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking
or not taking action under the Credit Agreement; (iii) confirms that it is an
eligible assignee pursuant to subsection 10.2 of the Credit Agreement; (iv)
appoints and authorizes each Agent to take such action as agent on its behalf
and to exercise such powers under the Credit Agreement and other Loan
Documents as are delegated to such Agent, respectively, by the terms thereof,
together with such powers as are reasonably incidental thereto; [and] (iv)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender [; and (v) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the
Credit Agreement, such other documents as are necessary to indicate that all
such payments are subject to such rates at a rate reduced by an applicable
tax treaty or a letter certifying that Assignee is not entitled to any such
exemption or reduced rate].*
4. Following the execution of this Assignment and Assumption by
the Assignor and the Assignee, it will be delivered to Administrative Agent
for acceptance and recording by Administrative Agent. The effective date of
this Assignment and Assumption shall be the date upon which (i) this
Assignment and Assumption has been executed by the Assignor and the Assignee
and (ii) the applicable conditions contained in subsection 10.2 of the Credit
Agreement have been satisfied (including, without limitation, and only to the
extent required by such subsection 10.2, Borrower's consent to such
assignment has been obtained) unless another date is specified on Item 6 of
Annex I hereto (the "SETTLEMENT DATE").
5. Upon such acceptance and recording by Administrative Agent, as
of the Settlement Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Assumption, relinquish
its rights and be released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by Administrative Agent,
from and after the Settlement Date, Administrative Agent shall make all
payments under the Credit Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest
and commitment fees (if applicable) with respect thereto) to the Assignee.
Upon the Settlement Date, the Assignee shall pay to the Assignor the
principal amount of any outstanding Loans and obligations in respect of
Letters of Credit under the Credit Agreement which are being assigned
hereunder, net of any closing costs. The Assignor and the Assignee shall make
all appropriate
- ----------------------
*If the Assignee is organized under the laws of a jurisdiction outside
the United States.
XV-2
<PAGE>
adjustments in payments under the Credit Agreement for periods prior to the
Settlement Date directly between themselves on the Settlement Date.
7. This Assignment and Assumption shall be governed by, and
construed in accordance with, the internal laws of the State of New York,
without regard to conflicts of laws principles.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
and Assumption to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Annex I hereto.
Accepted this ______ day
of _____________, ______
BANKERS TRUST COMPANY,
as Administrative Agent
By __________________________
Title: ___________________
[NAME OF ASSIGNOR]
as Assignor
By __________________________
Title: ___________________
[NAME OF ASSIGNEE]
as Assignee
By __________________________
Title: ___________________
XV-3
<PAGE>
ANNEX I
1. Borrower: Blue Bird Body Company
2. Name and Date of Credit Agreement: First Amended and Restated Credit
Agreement dated as of November 15, 1992 by and among Blue Bird
Corporation, Blue Bird Body Company, the lenders party thereto, Bankers
Trust Company, as administrative agent, and Merrill Lynch & Co., as
syndication agent
3. Date of Assignment Agreement: _______________, 19 ____
4. Amounts
(As of Date in Item #3 above):
Facility 1 Facility 2 Facility 3 Facility 4 Facility 5
---------- ---------- ---------- ---------- ----------
(Tranche A (Tranche B (Working (Swing (Letter of
Term Loans) Loans) Capital Line Credit
Loan Commit- partici-
Commit- ment) pations)
XV-I-I
<PAGE>
11/07/96
EXHIBIT XVII
FORM OF COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected [Title] and [Title] of Blue Bird
Corporation, a Delaware corporation ("HOLDING"), and Blue Bird Body Company, a
Georgia corporation ("BORROWER");
(2) We have reviewed the terms of the First Amended and Restated
Credit Agreement dated as of November 15, 1996 by and among Holding, Blue Bird
Body Company, a Georgia corporation, the lenders party thereto ("LENDERS"),
Bankers Trust Company, as administrative agent for Lenders, and Merrill Lynch &
Co., as syndication agent (as such agreement may be amended, amended and
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"; capitalized terms used herein without definition shall have the
meanings assigned to those terms in the Credit Agreement), and we have reviewed
the terms of the Credit Agreement, the Notes and the other Loan Documents and we
have made, or have caused to be made under our supervision, a review in
reasonable detail of the transactions and conditions of Holding and its
Subsidiaries during the accounting period covered by the attached financial
statements;
(3) The examinations described in paragraph (2) did not disclose, and
we have no knowledge of, the existence of any condition or event that
constitutes an Event of Default or Potential Event of Default during or at the
end of the accounting period covered by the attached financial statements or as
of the date of this Certificate, except as set forth below; and
(4) As of the date of this Certificate, Holding and its Subsidiaries
are not in default under any negative covenant set forth in Section 6 of the
Credit Agreement, except as set forth below.
Describe below (or in a separate attachment to this Certificate) the
exceptions, if any, to paragraphs (3) and (4) by listing, in detail, the nature
of the condition or event, the period during which it has existed and the action
which Holding or Borrower has taken, is taking, or proposes to take with respect
to each such condition or event:
XVII-1
<PAGE>
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
The foregoing certifications, together with the computations set forth
in Attachment No. 1 hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this ______ day of
_______, 19__ pursuant to subsection 5.1(v) of the Credit Agreement.
BLUE BIRD CORPORATION
By ____________________________
Title:
By ____________________________
Title:
BLUE BIRD BODY COMPANY
By ____________________________
Title:
By ____________________________
Title:
XVII-2
<PAGE>
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
(The Certificate attached hereto is as of _________ and pertains to the period
from __________________________ to _______________________.)
Capitalized terms used herein shall have the meanings set forth in the
First Amended and Restated Credit Agreement dated as of November 15, 1996 by and
among Blue Bird Corporation, a Delaware corporation, Blue Bird Body Company, a
Georgia corporation, the lenders party thereto ("LENDERS"), Bankers Trust
Company, as administrative agent for Lenders, and Merrill Lynch & Co., as
syndication agent. Subsection references herein relate to the subsections of
the Credit Agreement.
A. MINIMUM CONSOLIDATED EBITDA
1. Consolidated EBITDA for the current
Fiscal Quarter $__________
2. Consolidated EBITDA for the prior Fiscal
Quarter $__________
3. Consolidated EBITDA for the next prior
Fiscal Quarter $__________
4. Consolidated EBITDA for the next to the
next prior Fiscal Quarter $__________
5. Consolidated EBITDA for the current and
3 prior Fiscal Quarters (the sum of
lines A1 through A4) $__________
6. Minimum Consolidated EBITDA required by
subsection 6.6A $__________
B. MAXIMUM LEVERAGE RATIO
1. Aggregate Indebtedness of Holding and
its Subsidiaries with maturity in excess
of one year (or which is renewable to a
date more than one year from date of
determination) $__________
2. Aggregate principal amount of Working
Capital Loans $__________
XVII- ATTACHMENT 1-1
<PAGE>
3. Aggregate principal amount of Indebtedness of
BB Capital with maturity in excess of one
year (or which is renewable to a date more
than one year from date of determination) $__________
4. Funded Debt (Line B1 minus Line B2 minus
Line B3) $__________
5. Consolidated EBITDA for the current and
3 prior Fiscal Quarters (Line A5) $__________
6. Leverage Ratio (Line B4 divided by Line
B5) ____ to 1.00
7. Maximum Leverage Ratio permitted
pursuant to subsection 6.6B ____ to 1:00
C. MINIMUM INTEREST COVERAGE RATIO
1. Consolidated EBITDA for the current and
3 prior Fiscal Quarters (Line A5) $__________
2. Consolidated Cash Interest Expense for the
current and 3 prior Fiscal Quarters
(Line C6) $__________
3. Interest Coverage Ratio (Line D1 divided by
Line D2) ____:1.00
4. Minimum Interest Coverage Ratio required by
subsection 6.6D ____:1.00
D. MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES
1. Consolidated Capital Expenditures amount
set forth in subsection 6.6F for the current
Fiscal Year $__________
2. Consolidated Capital Expenditures amount set
forth in subsection 6.6F for prior Fiscal
Year $__________
3. Consolidated Capital Expenditures for prior
Fiscal Year $__________
XVII - ATTACHMENT 1-2
<PAGE>
4. Unutilized Consolidated Capital
Expenditures for prior Fiscal Year (Line
F2 minus F3) $__________
5. Carryover Amount (the lesser of [10%
multiplied by Line D2] and Line D4) $__________
6. Consolidated Capital Expenditures for current
Fiscal Year $__________
7. Maximum Consolidated Capital Expenditures
permitted for current Fiscal Year by
subsection 6.6F (Line F1 plus Line F5) $__________
E. MAXIMUM OTHER INDEBTEDNESS
1. Indebtedness outstanding pursuant to
subsection 6.1(ix) $__________
2. Maximum Indebtedness permitted by subsection
6.1(ix) $__________
F. MAXIMUM INTERCOMPANY LOANS
1. Intercompany loans outstanding pursuant to
subsection 6.3(iv) $__________
2. Maximum intercompany loans permitted by
subsection 6.3(iv) $__________
G. MAXIMUM RESTRICTED JUNIOR PAYMENTS
1. Restricted Junior Payments made pursuant
to subsection 6.5(ii) during current Fiscal
Year $__________
2. Maximum Restricted Junior Payments permitted
by subsection 6.5(ii) for current Fiscal
Year $__________
3. Restricted Junior Payments made pursuant to
subsection 6.5(iii) during current Fiscal
Year $__________
4. Maximum Restricted Junior Payments permitted
by subsection 6.5(iii) for current Fiscal
Year $__________
XVII - ATTACHMENT 1-3
<PAGE>
EXHIBIT XVIII
Form of Mortgage
Recording requested by
___________________________
and when recorded mail to:
O'MELVENY & MYERS
400 South Hope Street
Los Angeles, California 90071-2899
Attn: Mitchell B. Menzer, Esq.
THIS INSTRUMENT IS TO BE FILED AND INDEXED IN THE REAL ESTATE RECORDS AND ALSO
TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS.
THE NAMES OF THE GRANTOR AND THE GRANTEE, THE MAILING ADDRESS OF THE GRANTEE
FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE OBTAINED, AND THE
MAILING ADDRESS OF THE GRANTOR ARE DESCRIBED IN SECTION 4.06 HEREOF AND A
STATEMENT INDICATING THE TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL ARE AS
DESCRIBED ON PAGES 3, 4 AND 5 HEREOF, IN COMPLIANCE WITH THE REQUIREMENTS OF
ARTICLE 9, SECTION 402 OF THE UNIFORM COMMERCIAL CODE, TITLE 11 OF THE OFFICIAL
CODE OF GEORGIA ANNOTATED (MICHIE, 1982).
THE INDEBTEDNESS SECURED HEREBY IS SECURED BY REAL ESTATE IN VIRGINIA, GEORGIA,
IOWA AND ONTARIO, CANADA. ACCORDINGLY, RECORDING TAX IMPOSED HEREON IS
CALCULATED IN ACCORDANCE WITH THE PROVISIONS OF O.C.G.A. Section 48-6-69(b).
DEED TO SECURE DEBT, SECURITY AGREEMENT
ASSIGNMENT OF RENTS, FINANCING STATEMENT, AND FIXTURE FILING
(STATE OF GEORGIA)
THIS DEED TO SECURE DEBT, SECURITY AGREEMENT, ASSIGNMENT OF RENTS,
FINANCING STATEMENT, AND FIXTURE FILING (this "Security Deed") is made as of
______________, 1992, by and among BLUE BIRD BODY COMPANY, a Georgia corporation
("GRANTOR") whose address is North Camellia Boulevard, P.O. Box 937, Fort
Valley, GA 31030, and BANKERS TRUST COMPANY, a New York banking corporation
("GRANTEE"), whose address is 300 South Grand Avenue, 41st Floor, Los Angeles,
California 90071, in its capacity as Collateral Agent for the Lenders (the
"LENDERS") listed on the signature pages of the Credit Agreement of even date
herewith (as the same may hereafter be amended, supplemented or restated from
time to time, the "CREDIT AGREEMENT"), among the Lenders, Grantee, as Agent for
the Lenders, BB Acquisition Corp., a Georgia corporation ("ACQUISITION") and
Blue Bird Corporation, a Delaware corporation ("HOLDING").
1
<PAGE>
R E C I T A L S
A. Holding, Acquisition, the Lenders and Grantee, as Agent for the
Lenders, have or will enter into the Credit Agreement pursuant to, upon the
terms and subject to the conditions of which, the Lenders have agreed to extend
certain credit facilities to Acquisition in an aggregate principal amount of One
Hundred Seventy Million Dollars ($170,000,000), which together with the proceeds
of the Subordinated Debt (as defined in the Credit Agreement) and certain other
funds, will be used to make payments to the existing holders of Blue Bird Body
Company stock, to pay certain transaction expenses and to provide certain
working capital facilities to Borrower (as that term is defined in Section 1.1
of the Credit Agreement).
B. Acquisition will merge with and into Grantor with Grantor as the
surviving corporation.
C. Additionally, pursuant to and subject to the terms of Section 7
of the Credit Agreement, Holding has guaranteed the obligations of Grantor under
the Credit Agreement.
D. After the merger of Acquisition into Grantor, Grantor is the
Borrower as defined in the Credit Agreement.
FOR GOOD AND VALUABLE CONSIDERATION, including the Indebtedness (as
hereinafter defined) herein recited the receipt of which is hereby acknowledged,
Grantor hereby irrevocably grants, sells, bargains, transfers, conveys and
assigns to Grantee, as Collateral Agent, under and subject to the terms and
conditions hereinafter set forth, that certain real property more particularly
described in EXHIBIT A attached hereto and by this reference incorporated herein
(the "PREMISES");
TOGETHER WITH all of Grantor's right, title and interest, whether as
owner, lessee or otherwise, in and to any and all buildings and improvements now
or hereafter erected on the Premises, including the fixtures, attachments,
appliances, equipment, machinery, and other articles attached to said buildings
and improvements (the "IMPROVEMENTS"), all of which shall be deemed and
construed to be a part of the realty;
TOGETHER WITH all rents, issues, profits, royalties, income and other
benefits derived from the Premises or the Improvements (collectively, the
"RENTS"), subject to the right, power and authority hereinafter given to Grantor
to collect and apply such Rents;
TOGETHER WITH all personal property now or hereafter owned by Grantor,
whether as owner, lessee or otherwise, and
2
<PAGE>
located on or used in connection with the Premises, including without limitation
the personal property described in EXHIBIT B attached hereto and by this
reference incorporated herein, and all property of similar type or kind
hereafter acquired by Grantor and all insurance proceeds from any policy of
insurance covering any of the foregoing property now or hereafter acquired by
Grantor;
TOGETHER WITH all interests, estates or other claims, both in law and
in equity, which Grantor now has or may hereafter acquire in the Premises or the
Improvements;
TOGETHER WITH all easements, rights-of-way and rights now owned or
hereafter acquired by Grantor used in connection with the Premises or the
Improvements or as a means of access thereto, including, without limiting the
generality of the foregoing, all rights pursuant to any trackage agreement and
all rights to the nonexclusive use of common drive entries, and all tenements,
hereditaments and appurtenances thereof and thereto, and all water and water
rights and shares of water stock evidencing the same;
TOGETHER WITH all other leasehold estate, right, title and interest of
Grantor in and to all leases or subleases covering the Premises, the
Improvements or any portion thereof now or hereafter existing or entered into,
and all right, title and interest of Grantor thereunder including, without
limitation, all cash or security deposits, advance rentals, and deposits or
payments of similar nature;
TOGETHER WITH all right, title and interest now owned or hereafter
acquired by Grantor in and to any greater estate in the Premises or the
Improvements, including without limitation any options to purchase real
property;
TOGETHER WITH all right, title and interest of Grantor, now owned or
hereafter acquired, in and to any land lying within the right-of-way of any
street, open or proposed, adjoining the Premises, and any and all sidewalks,
alleys and strips and gores of land adjacent to or used in connection with the
Premises;
TOGETHER WITH all the estate, interest, right, title, other claim or
demand, both in law and in equity, including claims or demands with respect to
the proceeds of insurance in effect with respect thereto, which Grantor now has
or may hereafter acquire in the Premises or the Improvements, and any and all
awards made for the taking by eminent domain, or by any proceeding of purchase
in lieu thereof, of the whole or any part of the Collateral (as hereinafter
defined), including, without limitation, any awards resulting from a change of
grade of streets and awards for severance damages;
3
<PAGE>
TOGETHER WITH any and all rights of Grantor under any contracts or
agreements related to the foregoing.
The entire estate, property and interest hereby conveyed to Grantee
may hereafter be collectively referred to as the "COLLATERAL."
FOR THE PURPOSE OF SECURING:
(a) the payment by Grantor of the "Term Notes" described in the
Credit Agreement, the aggregate original principal balance evidenced by the
Term Notes being equal to Eighty Million Dollars ($80,000,000) and the Term
Notes being due and payable in full not later than October 1, 1998;
(b) the payment by Grantor of the "Working Capital Notes" and the
"Swing Line Note" described in the Credit Agreement, the Working Capital
Notes and the Swing Line Note evidencing a revolving line of credit having
a maximum principal amount at any time outstanding of Ninety Million
Dollars ($90,000,000) and requiring that each advance and readvance
thereunder must be repaid within not more than twelve (12) months;
(c) the payment by Grantor of the reimbursement obligations of
Grantor in regard to letters of credit issued pursuant to the Credit
Agreement;
(d) the payment and performance by Grantor of all obligations of
Grantor under the Credit Agreement, this Instrument and under all other
documents or instruments delivered pursuant to the Credit Agreement, as the
Credit Agreement, this Instrument and such other documents or instruments
may from time to time be amended, extended, renewed or modified;
(e) the payment and performance by Grantor of any and all other
indebtednesses and obligations now owing or which may hereafter be owing by
Grantor to Grantee, including, without limitation, all Obligations (as
defined in the Credit Agreement) whether now existing or hereafter coming
into existence, however and whenever incurred or evidenced, whether express
or implied, direct or indirect, absolute or contingent, or due or to become
due, and all renewals, modifications, consolidations and extensions
thereof;
(f) payment of all sums advanced by Grantee or any Lender to protect
the Collateral or the priority or enforceability of this Security Deed,
with interest thereon at a rate equal to two percent (2%) per annum in
excess of the interest rate established in SECTION 2.3.A.
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of the Credit Agreement (which rate of interest is hereinafter referred to
as the "AGREED RATE");
(g) performance of every obligation, covenant and agreement of
Grantor (including, without limitation, by virtue of the Merger of
Acquisition into Grantor) contained in any agreement now or hereafter
executed by Grantor, the Lenders and Grantee, as Collateral Agent for the
Lenders, which recites that the obligations thereunder are secured by this
Security Deed.
All of the foregoing secured obligations are hereinafter referred to
collectively as the "Indebtedness".
TO HAVE AND TO HOLD THE COLLATERAL AND ALL PARTS, RIGHTS, MEMBERS AND
APPURTENANCES THEREOF, TO THE USE, BENEFIT AND BEHOOF OF GRANTEE, ITS SUCCESSORS
AND ASSIGNS, FOREVER, FOR THE FULL ESTATE HEREBY CONVEYED.
THIS SECURITY DEED IS INTENDED TO OPERATE AND IS TO BE CONSTRUED AS A
DEED PASSING THE TITLE TO THE PREMISES TO GRANTEE AND IS MADE UNDER THOSE
PROVISIONS OF THE EXISTING LAWS OF THE STATE OF GEORGIA RELATING TO DEEDS TO
SECURE DEBT, AND NOT AS A MORTGAGE, AND IS GIVEN TO SECURE THE INDEBTEDNESS.
SHOULD THE INDEBTEDNESS BE PAID WHEN THE SAME SHALL BECOME DUE AND PAYABLE, THEN
THIS SECURITY DEED SHALL BE CANCELLED AND SURRENDERED, SUBJECT TO THE FOLLOWING.
THE INDEBTEDNESS EVIDENCED BY THE WORKING CAPITAL NOTES AND THE SWING LINE NOTES
IS A REVOLVING INDEBTEDNESS. THE CREDIT AGREEMENT PROVIDES THAT THE AGGREGATE
PRINCIPAL SUM EVIDENCED BY THE WORKING CAPITAL NOTES AND THE SWING LINE NOTES,
SUCH AGGREGATE PRINCIPAL SUM BEING NINETY MILLION AND NO/100 DOLLARS
($90,000,000.00), MAY BE ADVANCED, REPAID AND READVANCED FROM TIME TO TIME IN
ACCORDANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT. ACCORDINGLY,
THE AGGREGATE PRINCIPAL ADVANCES DURING THE TERM OF THE CREDIT AGREEMENT MAY
EXCEED ONE HUNDRED SEVENTY MILLION AND NO/100 DOLLARS ($170,000,000.00);
PROVIDED, HOWEVER, AT NO TIME SHALL THE OUTSTANDING PRINCIPAL BALANCE EXCEED ONE
HUNDRED SEVENTY MILLION AND NO/100 DOLLARS ($170,000,000.00) EXCEPT FOR ADVANCES
MADE TO PROTECT THE PRIORITY OR ENFORCEABILITY OF THIS SECURITY DEED OR TO
PROTECT THE COLLATERAL. GRANTOR AGREES THAT IF THE OUTSTANDING BALANCE OF THE
INDEBTEDNESS IS EVER REPAID TO ZERO, THIS SECURITY DEED SHALL NOT BE RELEASED OR
EXTINGUISHED, AND THE PRIORITY AND ENFORCEABILITY HEREOF SHALL IN NO WAY BE
AFFECTED, WHETHER BY OPERATION OF LAW, AN IMPLIED INTENT OF THE PARTIES OR
OTHERWISE. THIS SECURITY DEED SHALL REMAIN IN FULL FORCE AND EFFECT AS TO ANY
FURTHER ADVANCES UNDER OR PURSUANT TO THE CREDIT AGREEMENT MADE AFTER ANY SUCH
ZERO BALANCE UNTIL THE INDEBTEDNESS IS PAID AND PERFORMED IN FULL, ALL
AGREEMENTS TO MAKE FURTHER ADVANCES HAVE BEEN TERMINATED AND THIS SECURITY DEED
HAS BEEN CANCELLED
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OF RECORD. GRANTOR WAIVES THE OPERATION OF ANY APPLICABLE STATUTE, CASE LAW OR
REGULATION HAVING A CONTRARY EFFECT.
IN FURTHERANCE OF THE FOREGOING GRANTS (INCLUDING GRANTS OF SECURITY
INTERESTS), BARGAINS, SALES, ASSIGNMENTS, TRANSFERS, PLEDGES AND CONVEYANCES,
AND TO PROTECT THE PREMISES AND THE SECURITY GRANTED BY THIS SECURITY DEED,
GRANTOR HEREBY WARRANTS, REPRESENTS, COVENANTS AND AGREES AS FOLLOWS:
ARTICLE I
COVENANTS AND AGREEMENTS OF GRANTOR
1.01. PAYMENT OF SECURED OBLIGATIONS. Grantor shall pay when due the
principal of and the interest on the Indebtedness; all charges, fees and other
sums as provided in the Loan Documents (as that term is defined in Section 1.1
of the Credit Agreement); the principal of and interest on any future advances
secured by this Security Deed; and the principal of and interest on any other
indebtedness secured by this Security Deed.
1.02. MAINTENANCE, REPAIR, ALTERATIONS. Grantor shall keep the
Collateral in good condition and repair; Grantor shall not remove, demolish or
substantially alter any of the Improvements except upon Grantee's prior written
consent; provided, however, that no such consent shall be required where such
removal, demolition or substantial alteration either does not materially
diminish the value of the affected Improvements or is followed by prompt
construction or delivery of replacement Improvements of equal or greater value
to the Improvements removed, demolished or substantially altered. Grantor shall
complete promptly and in a good and workmanlike manner any Improvements which
may be now or hereafter constructed on the Premises and promptly restore in like
manner any portion of the Improvements which may be damaged or destroyed thereon
from any cause whatsoever, and pay when due all claims for labor performed and
materials furnished therefor; Grantor shall comply in all material respects with
all laws, ordinances, regulations, covenants, conditions and restrictions now or
hereafter affecting the Collateral or any part thereof or requiring any
alterations or improvements, PROVIDED, HOWEVER, that Grantor shall be entitled
to contest in good faith such laws, ordinances, regulations, covenants,
conditions and restrictions so long as the Premises are not subject to
forfeiture and there is no risk of criminal liability to Grantor or Grantee;
Grantor shall not commit or permit any waste of the Collateral; Grantor shall
comply with the provisions of any lease, if this Security Deed is on a
leasehold; and Grantor shall not commit, suffer or permit any act to be done in
or upon the Premises in violation of any law, ordinance or regulation.
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1.03. REQUIRED INSURANCE. Grantor shall at all times provide,
maintain and keep in force or cause to be provided, maintained and kept in
force, at no expense to Grantee or any Lender, policies of insurance in form and
amounts and issued by financially sound and reputable insurance companies,
associations or organizations, covering such casualties, risks, perils,
liabilities and other hazards as required under the terms of the Credit
Agreement. All such policies of insurance required by the terms of the Credit
Agreement shall contain an endorsement or agreement by the insurer that any loss
shall be payable in accordance with the terms of such policy notwithstanding any
act or negligence of Grantor or any party holding under Grantor which might
otherwise result in forfeiture of said insurance and the further agreement of
the insurer waiving all rights of setoff, counterclaim or deductions against
Grantor.
1.04. DELIVERY OF POLICIES, PAYMENT OF PREMIUMS.
(A) At Grantee's option all policies of insurance shall either have
attached thereto a lender's loss payable endorsement for the benefit of Grantee,
on behalf of and as Collateral Agent for the Lenders, in form satisfactory to
Grantee or shall name Grantee, on behalf of and as Collateral Agent for the
Lenders, as an additional insured. Grantor shall furnish Grantee, on behalf of
and as Collateral Agent for the Lenders, with an original of all policies of
insurance required under SECTION 1.03 above or a certificate of insurance for
each required policy setting forth the coverage, the limits of liability, the
name of the carrier, the policy number and the period of coverage. Until such
time as Grantee otherwise requests, Grantor may provide any of the required
insurance through blanket policies carried by Grantor and covering more than one
location, or by policies procured by a tenant or other party holding under
Grantor; provided, however, all such policies shall be in form and substance and
issued by companies reasonably satisfactory to Grantee. At least thirty (30)
days prior to the expiration of each required policy, Grantor shall deliver to
Grantee, on behalf of and as Collateral Agent for the Lenders, evidence
reasonably satisfactory to Grantee of the payment of premium and the renewal or
replacement of such policy continuing insurance in form as required by this
Security Deed. All such policies shall contain a provision that,
notwithstanding any contrary agreement between Grantor and insurance company,
such policies will not be cancelled, allowed to lapse without renewal,
surrendered or materially amended, which term shall include any reduction in the
scope or limits of coverage, without at least thirty (30) days' prior written
notice to Grantee.
(B) In the event Grantor fails to provide, maintain, keep in force or
deliver to Grantee, on behalf of and as
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Collateral Agent for the Lenders, the policies of insurance required by this
Security Deed or by any Loan Document, Grantee may, upon written notice to
Grantor, procure such insurance or single-interest insurance for such risks
covering the interest of Grantee, on behalf of and as Collateral Agent for the
Lenders, and Grantor will pay all premiums thereon promptly upon demand by
Grantee, and until such payment is made by Grantor, the amount of all such
premiums shall bear interest at the Agreed Rate. In the event Grantee, in its
reasonable discretion, deems the Lenders insecure or under-collateralized, then
upon Grantee's request, Grantor shall deposit with Grantee, in monthly
installments, an amount equal to one-twelfth (1/12th) of the reasonably
estimated aggregate annual insurance premiums for the current policy year on all
policies of insurance required by this Security Deed (funds deposited for such
purpose shall hereinafter be referred to as "INSURANCE IMPOUNDS"). In such
event, Grantor further agrees to cause all bills, statements or other documents
relating to the foregoing insurance premiums to be sent or mailed directly to
Grantee. Upon receipt of such bills, statements or other documents evidencing
that a premium for a required policy is then payable, and providing Grantor has
deposited sufficient Insurance Impounds with Grantee pursuant to this
SECTION 1.04, Grantee shall timely pay such amounts as may be due thereunder out
of the Insurance Impounds so deposited with Grantee. If at any time and for any
reason (other than the application by Grantee of Insurance Impounds against the
Indebtedness as may be permitted hereby) the Insurance Impounds deposited with
Grantee are or will be insufficient to pay such amounts as may be then or
subsequently due during the current policy year, Grantee shall notify Grantor
and Grantor shall promptly deposit an amount equal to such deficiency with
Grantee. Notwithstanding the foregoing, nothing contained herein shall cause
Grantee to be deemed a trustee of said funds for Grantor or to be obligated to
pay any amounts in excess of the amount of the Insurance Impounds deposited with
Grantee pursuant to this SECTION 1.04, nor shall anything contained herein
modify the obligation of Grantor set forth in SECTION 1.03 hereof to maintain
and keep such insurance in force at all times. Grantee shall establish a
separate account for the Insurance Impounds and may not commingle Insurance
Impounds with its own funds, but Grantor shall be entitled to no interest
thereon. Upon an Event of Default under any of the Loan Documents or this
Security Deed, Grantee may apply the balance of the Insurance Impounds upon any
Indebtedness or obligation secured hereby in such order as Grantee may
determine, notwithstanding that said Indebtedness or the performance of said
obligation may not yet be due according to the terms thereof. Should Grantor
fail to deposit with Grantee (exclusive of that portion of said payments which
has been applied by Grantee upon any Indebtedness or obligations secured hereby)
sums sufficient to pay fully such insurance premiums at least fifteen (15) days
before delinquency thereof, Grantee may,
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without any obligation to do so, advance any amounts required to make up the
deficiency, which advances, if any, shall be secured hereby, together with
interest at the Agreed Rate, and shall be repayable to Grantee with interest
thereon at the Agreed Rate, as Collateral Agent for the benefit and account of
the Lenders, as herein elsewhere provided, or Grantee may, without making any
advance whatever, apply any Insurance Impounds held by it upon any Indebtedness
or obligation secured hereby in such order as Grantee may determine,
notwithstanding that said Indebtedness or the performance of said obligation may
not yet be due according to the terms thereof. Should any Event of Default (as
defined in Sections 1.1 and 8 of the Credit Agreement) occur or exist on the
part of the Grantor in the payment or performance of any of Grantor's or any
guarantor's obligations under the terms of the Loan Documents, Grantee may apply
any sums or amounts in its hands received pursuant to Section 1.04(B) or 1.08(E)
hereof, or as Rents or otherwise, to any Indebtedness or obligation of the
Grantor secured hereby in such manner and order as Grantee may determine,
notwithstanding that such Indebtedness or the performance of such obligations
may not yet be due according to the terms thereof. Except as expressly set
forth herein, the receipt, use or application of any such Insurance Impounds
paid by Grantor hereunder to Grantee, on behalf of and as Collateral Agent for
the Lenders, shall not be construed to affect the maturity of any Indebtedness
secured by this Security Deed or any of the rights or powers of Grantee or the
Lenders under the terms of the Loan Documents or any of the obligations of
Grantor or any guarantor under the Loan Documents. Should the indebtedness be
paid and performed in full, all agreements to make further advances be
terminated, and this security deed be cancelled and surrendered, then any
remaining Insurance Impounds shall be repaid to Debtor without interest thereon.
1.05. CASUALTIES; INSURANCE PROCEEDS. Grantor shall give prompt
written notice thereof to Grantee after the happening of any casualty to or in
connection with the Collateral or any part thereof, whether or not covered by
insurance where the reasonably estimated loss or cost to repair equals or
exceeds $50,000. In the event of such casualty, all proceeds of insurance equal
to or exceeding $50,000 shall be payable to Grantee, on behalf of and as
Collateral Agent for the Lenders, and Grantor hereby authorizes and directs any
affected insurance company to make payment of such proceeds directly to Grantee.
If Grantor receives any proceeds of insurance resulting from such casualty equal
to or exceeding $50,000, Grantor shall promptly pay over such proceeds to
Grantee, subject to the provisions contained in any lease superior to this
Security Deed and covering the portion of the Collateral which is damaged or
destroyed by the casualty, which provisions require payment of such proceeds to
a person other than Grantee. Grantee is
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hereby authorized to pay out such proceeds with interest as provided in this
SECTION 1.05, all such interest to be the income of Grantor to be held by
Grantee, on behalf of and as Collateral Agent for the Lenders, subject to the
terms of this Security Deed. Grantor shall pay all taxes upon such income and
agrees to indemnify and hold harmless Grantee and the Lenders against such
liability. If an Event of Default then exists under the terms of the Loan
Documents or this Security Deed, Grantee shall not be obligated to make any
further disbursements pursuant to the Credit Agreement and Grantee shall apply
all loss proceeds remaining after deduction of all reasonable expenses and
collection and settlement thereof, including without limitation, reasonable
attorneys' and adjustors' fees and charges, to the repayment of the outstanding
balance of the Indebtedness together with accrued interest, notwithstanding that
the outstanding balance may not be due and payable. Otherwise, Grantee shall
disburse such proceeds to Grantor in periodic intervals, upon delivery by
Grantor of bills and invoices for repair or replacement work, if Grantor submits
a plan to Grantee for repair or replacement of the Collateral or Improvements
thereon which were damaged, lost, stolen or destroyed within ninety (90) days
after said casualty, and Grantee approves such plan, which approval shall not be
unreasonably withheld or delayed. In the event Grantee disburses insurance
proceeds to Grantor, Grantor shall use such funds solely in the manner and for
the purposes set forth in the plan for repair or replacement of the Collateral
or Improvements thereon. Any portion of such funds not used for such repair or
replacement shall be delivered to Grantee. If, however, Grantee does not
receive such plan from Grantor within ninety (90) days, Grantee shall apply such
insurance proceeds to the indebtedness. Nothing herein contained shall be
deemed to excuse Grantor from repairing or maintaining the Collateral as
provided in SECTION 1.02 hereof or restoring all damage or destruction to the
Collateral, regardless of whether or not there are insurance proceeds available
to Grantor or whether any such proceeds are sufficient in amount, and the
application or release by Grantee of any insurance proceeds shall not cure or
waive any Potential Event of Default or Event of Default under this Security
Deed or invalidate any act done pursuant to such notice.
1.06. ASSIGNMENT OF POLICIES UPON FORECLOSURE. In the event of
foreclosure of this Security Deed or other transfer of title or assignment of
the Collateral in extinguishment, in whole or in part, of the Indebtedness
secured hereby, all right, title and interest of Grantor in and to all policies
of insurance required by SECTION 1.03 shall inure to the benefit of and pass to
the successor in interest to Grantor or the purchaser or grantee of the
Collateral.
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1.07. INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET.
(A) If Grantee or any Lender is made a party to any litigation
instituted by a third party unaffiliated with Grantor concerning this Security
Deed, any of the other Loan Documents, the Collateral or any part thereof or
interest therein, or the occupancy of the Collateral by Grantor (other than
litigation arising from the negligence or willful misconduct of Grantee, any
Lender or their respective employees, agents and contractors), then Grantor
shall indemnify, defend and hold Grantee, each such Lender harmless from all
liability by reason of said litigation, including reasonable attorneys' fees and
expenses (including the allocated cost of staff counsel) incurred by Grantee or
any Lender as a result of any such litigation, whether or not any such
litigation is prosecuted to judgment. Grantee may employ an attorney or
attorneys to protect its rights and the rights of the Lenders hereunder, and in
the event of such employment following any breach by Grantor, Grantor shall pay
Grantee reasonable attorneys' fees and expenses incurred by Grantee, whether or
not an action is actually commenced against Grantor by reason of its breach.
(B) Grantor waives any and all right to claim or recover against
Grantee, each Lender, the officers, employees, agents and representatives of
each of them, for loss of or damage to Grantor, the Collateral, Grantor's
property or the property of others under Grantor's control from any cause
insured against or required to be insured against by the provisions of this
Security Deed including, without limitation, if caused by negligence.
(C) All sums payable by Grantor pursuant to this Security Deed shall
be paid without notice, demand, counterclaim, setoff, deduction or defense and
without abatement, suspension, deferment, diminution or reduction, and the
Indebtedness, obligations and liabilities of Grantor hereunder shall in no way
be released, discharged or otherwise affected (except as expressly provided
herein or required by law) by reason of: (i) any damage to or destruction of or
any condemnation or similar taking of the Collateral or any part thereof;
(ii) any restriction or prevention of or interference by any third party with
any use of the Collateral or any part thereof; (iii) any title defect or
encumbrance or any eviction from the Premises or the Improvements or any part
thereof by title paramount or otherwise; (iv) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to Grantee, or any action taken with respect to this
Security Deed by any trustee or receiver of Grantee, or by any court, in any
such proceeding; (v) any claim which Grantor has or might have against Grantee
or any Lender; (vi) any default or failure on
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the part of Grantee or any Lender to perform or comply with any of the terms
hereof; or (vii) any default or failure on the part of Grantee or any Lender to
perform or comply with any of the terms of any other agreement with Grantor; or
(viii) any other occurrence whatsoever, whether similar or dissimilar to the
foregoing; whether or not Grantor shall have notice or knowledge of any of the
foregoing. Except as expressly provided herein, Grantor waives all rights now
or hereafter conferred by statute or otherwise to any abatement, suspension,
deferment, diminution or reduction of any sum secured hereby and payable by
Grantor.
1.08. TAXES AND IMPOSITIONS.
(A) Except to the extent that any of the following payments are
required to be made and are made by Grantor in accordance with the terms and
provisions of any lease covering any Leasehold Property (as defined in
SECTION 4.01 hereof) which constitutes a portion of the Collateral, Grantor
shall pay, or cause to be paid prior to delinquency, all real property taxes and
assessments, general and special, and all other taxes and assessments of any
kind or nature whatsoever, including, without limitation, nongovernmental levies
or assessments such as maintenance charges, levies or charges resulting from
covenants, conditions and restrictions affecting the Collateral, which are
assessed or imposed upon the Collateral, or become due and payable, and which
create or may create a lien upon the Collateral, or any part thereof, or upon
any person, property, equipment or other facility used in the operation or
maintenance thereof (all the above collectively hereinafter referred to as
"IMPOSITIONS"); provided, however, that if, by law any such Impositions is
payable, or may at the option of the taxpayer be paid, in installments, Grantor
may pay the same or cause it to be paid, together with any accrued interest on
the unpaid balance of such Impositions, in installments before any fine,
penalty, interest or cost may be added thereto for the nonpayment of any such
installment and interest.
(B) If at any time after the date hereof there shall be assessed or
imposed (i) a tax or assessment on the Collateral or any part thereof in lieu of
or in addition to the Impositions payable by Grantor pursuant to
SECTION 1.08(A), or (ii) a license fee, tax or assessment imposed on Grantee and
measured by or based in whole or in part upon the amount of the outstanding
Indebtedness secured hereby, then all such taxes, assessments or fees shall be
deemed to be included within the term "IMPOSITIONS" as defined in
SECTION 1.08(A) and Grantor shall pay and discharge the same as herein provided
with respect to the payment of Impositions, except as otherwise provided in the
immediately following sentence. If Grantor fails to pay such Impositions prior
to delinquency or if Grantor is prohibited by law from paying
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such Impositions, Grantee may at its option, after written notice to Grantor and
Grantor's failure to pay such Imposition within thirty (30) days after receipt
of such notice, declare all Indebtedness secured hereby, together with all
accrued interest thereon, immediately due and payable. Anything to the contrary
herein notwithstanding, Grantor shall have no obligation to pay any franchise,
estate, inheritance, income, excess profits or similar tax levied on Grantee or
on the Indebtedness secured hereby.
(C) Subject to the provisions of SECTION 1.08(D) and upon request by
Grantee, Grantor shall deliver to Grantee within thirty (30) days after the date
upon which any such Impositions would become delinquent, official receipts of
the appropriate taxing authority, or other proof satisfactory to Grantee,
evidencing the payment thereof.
(D) Grantor shall have the right before any delinquency occurs to
contest or object to the amount or validity of any such Impositions by
appropriate proceedings, but this shall not be deemed or construed in any way as
relieving, modifying or extending Grantor's covenant to pay any such Impositions
at the time and in the manner provided in this SECTION 1.08, unless Grantor has
given prior written notice to Grantee of Grantor's intent to so contest or
object to an Imposition, and unless (i) Grantor shall demonstrate to the
satisfaction of Grantee that the proceedings to be initiated by Grantor shall
conclusively operate to prevent the sale of the Collateral, or any part thereof,
to satisfy such Imposition prior to final determination of such proceedings; or
(ii) Grantor shall furnish a good and sufficient bond or surety as requested by
and satisfactory to Grantee; or (iii) Grantor shall demonstrate to the
satisfaction of Grantee that Grantor has provided a good and sufficient
undertaking as may be required or permitted by law to accomplish a stay of any
such sale.
(E) In the event Grantee, in its reasonable discretion, deems the
Lenders to be insecure or under-collateralized, then upon request by Grantee,
Grantor shall pay to Grantee, on behalf of and as Collateral Agent for the
Lenders, an initial cash reserve in an amount adequate to pay all Impositions
for the ensuing tax fiscal year and shall thereafter continue to deposit with
Grantee, on behalf of and as Collateral Agent for the Lenders, in monthly
installments, an amount equal to one-twelfth (1/12th) of the sum of the annual
Impositions reasonably estimated by Grantee, for the purpose of paying the
installment of Impositions next due on the Collateral (funds deposited for this
purpose shall hereinafter be referred to as "IMPOUNDS"). In such event Grantor
further agrees to cause all bills, statements or other
documents relating to Impositions to be sent or mailed directly to Grantee. Upon
receipt of such bills, statements or other
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documents, and providing Grantor has deposited sufficient Impounds with Grantee,
on behalf of and as Collateral Agent for the Lenders, pursuant to this
SECTION 1.08(E), Grantee shall timely pay such amounts as may be due thereunder
out of the Impounds so deposited with Grantee. If at any time and for any
reason (other than the application by Grantee of Impounds against the
Indebtedness as permitted hereunder) the Impounds deposited with Grantee, on
behalf of and as Collateral Agent for the Lenders, are or will be insufficient
to pay such amounts as may then or subsequently be due during the then current
tax year, Grantee may notify Grantor and upon such notice Grantor shall deposit
promptly an amount equal to such deficiency with Grantee. Notwithstanding the
foregoing, nothing contained herein shall cause Grantee to be deemed a trustee
of said funds for the benefit of Grantor or to be obligated to pay any amounts
in excess of the amount of funds deposited with Grantee pursuant to this
SECTION 1.08(E). Grantee shall establish a separate account for the Impounds
and may not commingle Impounds with its own funds, but Grantor shall not be
entitled to any interest on any Impounds held by Grantee pending disbursement or
application hereunder. Grantee may reserve for future payment of Impositions
such portion of the Impounds as Grantee may determine necessary. Upon an Event
of Default under any of the Loan Documents or this Security Deed, Grantee may
apply the balance of the Impounds upon any Indebtedness or obligation secured
hereby in such order as Grantee may determine, notwithstanding that said
Indebtedness or the performance of said obligation may not yet be due according
to the terms thereof. Should Grantor fail to deposit with Grantee (exclusive of
that portion of said payments which has been applied by Grantee upon any
Indebtedness or obligation secured hereby) sums sufficient to pay fully such
Impositions at least fifteen (15) days before delinquency thereof, Grantee may,
without any obligation to do so, advance any amounts required to make up the
deficiency, which advances, if any, shall be secured hereby, together with
interest at the Agreed Rate, and shall be repayable to Grantee for the benefit
and account of the Lenders as herein elsewhere provided, or, Grantee may,
without making any advance whatever, apply any Impounds held by it upon any
Indebtedness or obligation secured hereby in such order as Grantee may
determine, notwithstanding that such Indebtedness or the performance of said
obligation may not yet be due according to the terms thereof. Should any Event
of Default occur or exist on the part of the Grantor in the payment or
performance of any of Grantor's or any guarantor's obligations under the terms
of the Loan Documents, Grantee may apply any sums or amounts in its hands
received pursuant to SECTION 1.04(B) or SECTION 1.08(E) hereof, or as Rents or
otherwise, to any Indebtedness or obligation of the Grantor secured hereby in
such manner and order as Grantee may determine, notwithstanding such
Indebtedness or the performance of such obligation may not yet be due according
to the terms thereof. Except as
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expressly provided herein, the receipt, use or application of any such Impounds
paid by Grantor hereunder to Grantee, on behalf of and as Collateral Agent for
the Lenders, shall not be construed to affect the maturity of any Indebtedness
secured by this Security Deed or any of the rights or powers of Grantee or the
Lenders under the terms of the Loan Documents or any of the obligations of
Grantor or any guarantor under the Loan Documents.
(F) Other than with respect to any leasehold estate constituting a
portion of the Collateral, Grantor shall not initiate the joint assessment of
any real and personal property which may constitute all or a portion of the
Collateral or initiate any other procedure whereby the lien of the real property
taxes and the lien of the personal property taxes shall be assessed, levied or
charged to the Collateral as a single lien.
(G) If requested by Grantee, Grantor shall cause to be furnished to
Grantee a tax reporting service covering the Collateral of the type, duration
and with a company satisfactory to Grantee.
1.09. UTILITIES. Grantor shall pay or shall cause to be paid when
due all utility charges which are incurred by Grantor for the benefit of the
Collateral or which may become a charge or lien against the Collateral for gas,
electricity, water or sewer services furnished to the Collateral and all other
assessments or charges of a similar nature, whether public or private
(including, without limitation, common area maintenance assessments under any
lease covering a leasehold estate which constitutes a portion of the
Collateral), affecting or related to the Collateral or any portion thereof,
whether or not such taxes, assessments or charges are or may become liens
thereon.
1.10. ACTIONS AFFECTING COLLATERAL. Grantor shall and, at the option
of Grantee, Grantee may appear in and contest any action or proceeding
purporting to affect the security hereof or the rights or powers of Grantee or
any Lender; and shall pay all reasonable costs and expenses, including cost of
evidence of title and attorneys' fees, in any such action or proceeding in which
Grantee may appear.
1.11. ACTIONS BY GRANTEE TO PRESERVE COLLATERAL. If Grantor fails to
make any payment or to do any act as and in the manner provided in any of the
Loan Documents, Grantee, in its own discretion, without obligation so to do,
without releasing Grantor from any obligation, and upon notice to Grantor, may
make or do the same in such manner and to such extent as either may deem
necessary to protect the security hereof. In connection therewith (without
limiting its general powers, whether conferred herein, in another Loan Document
or
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by law), Grantee shall have and is hereby given the right, but not the
obligation, (i) to enter upon and take possession of the Collateral; (ii) to
make additions, alterations, repairs and improvements to the Collateral which
Grantee may consider necessary or proper to keep the Collateral in good
condition and repair; (iii) to appear and participate in any action or
proceeding affecting or which may affect the security hereof or the rights or
powers of Grantee or any Lender; (iv) to pay, purchase, contest or compromise
any encumbrance, claim, charge, lien or debt which in the judgment of Grantee
may affect or appears to affect the security of this Security Deed or be prior
or superior hereto; and (v) in exercising such powers, to pay necessary
expenses, including employment of counsel (including the allocated cost of staff
counsel) or other necessary or desirable consultants. Grantor shall, promptly
upon demand therefor by Grantee, pay to Grantee an amount equal to all
reasonable costs and expenses incurred by Grantee in connection with the
exercise by Grantee of the foregoing rights, including, without limitation,
costs of evidence of title, court costs, appraisals, surveys and receiver's,
trustee's and attorneys' fees, together with interest thereon from the date of
such expenditures at the Agreed Rate.
1.12. TRANSFER OF COLLATERAL BY GRANTOR. Grantor agrees that, in the
event of any transfer of the Collateral or any portion thereof or interest
therein without the prior written consent of Grantee, Grantee shall have the
absolute right, without prior demand or notice, to declare all sums secured
hereby allocable to the Collateral immediately due and payable. Consent to one
such transaction shall not be deemed to be a waiver of the right to require
consent to future or successive transactions. Any such transfer shall be
subject to this Security Deed, and any such transferee shall assume all
obligations hereunder and agree to be bound by all provisions contained herein.
Such assumption shall not, however, release Grantor or any maker or guarantor of
the Indebtedness from any liability thereunder without the prior written consent
of Grantee. If Grantee does not deliver its written approval, disapproval or
confirmation, as requested by Grantor, within ten (10) Business Days (as defined
in the Credit Agreement) after receipt of same, such failure shall be deemed to
be disapproval by Grantee of the proposed transfer. As used herein, "TRANSFER"
includes any sale, agreement to sell, transfer, conveyance, encumbrance, lease
or sublease or other disposition of the entire Collateral, or any material
portion thereof or interest therein, whether voluntary, involuntary, by
operation of law or otherwise, except as expressly permitted under the Credit
Agreement. "TRANSFER" shall also include the transfer, assignment,
hypothecation or conveyance of legal or beneficial ownership of any of the
voting stock of Grantor, if any such transfer would constitute an Event of
Default under the Credit Agreement or the Notes.
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1.13. FULL PERFORMANCE REQUIRED; SURVIVAL OF WARRANTIES. All
representations, warranties and covenants of Grantor contained in the Loan
Documents, or made to Grantee, or the Lenders in connection with the
Indebtedness secured hereby, or incorporated by reference therein, shall survive
the execution and delivery of this Security Deed and shall remain continuing
obligations, warranties and representations of Grantor so long as any portion of
the Indebtedness secured by this Security Deed remains outstanding.
1.14. EMINENT DOMAIN. In the event that any proceeding or action be
commenced for the taking of the Collateral, or any part thereof or interest
therein, for public or quasi-public use under the power of eminent domain,
condemnation or otherwise, or if the same be taken or damaged by reason of any
public improvement or condemnation proceeding, or in any other manner, or should
Grantor receive any notice or other information regarding such proceeding,
action, taking or damage, Grantor shall give prompt written notice thereof to
Grantee and the Lenders. Grantee shall be entitled at its option, without
regard to the adequacy of its security, to commence, appear in and prosecute in
its own name, on behalf of and as Collateral Agent for the Lenders, any such
action or proceeding. Grantee, on behalf of and as Collateral Agent for the
Lenders, and in consultation with Grantor, shall also be entitled to make any
compromise or settlement in connection with such taking or damage. Subject to
the provisions contained in any lease superior to this Security Deed and
covering the portion of the Collateral which is so taken or damaged, which
provisions require payment of the Condemnation Proceeds (as hereinafter defined)
to a person other than Grantee, all compensation, awards, damages, rights of
action and proceeds awarded to Grantor by reason of any such taking or damage
(the "CONDEMNATION PROCEEDS") are hereby assigned to Grantee, on behalf of and
as Collateral Agent for the Lenders, and Grantor agrees to execute such further
assignments of the Condemnation Proceeds as Grantee may require. After
deducting therefrom all reasonable costs and expenses (regardless of the
particular nature thereof and whether incurred with or without suit), including
attorneys' fees, incurred by it in connection with any such action or
proceeding, Grantee shall apply all such Condemnation Proceeds to the
restoration of the Improvements, provided that the taking or damage will not, in
Grantee's reasonable judgment, materially affect the contemplated use and
operation of the Improvements, and, provided further, in the case of any
leasehold estate constituting a portion of the Collateral with respect to which
Condemnation Proceeds have been received by Grantee, neither party to the lease
covering such leasehold estate has delivered any notice of termination of such
lease on account of the taking or damage with respect to which the Condemnation
Proceeds have been paid and, in the case of Grantor, such right of termination
shall be exercised, if at
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all, in accordance with the provisions of SECTION 4.01 hereof. If all of the
above conditions are met, Grantee shall disburse the Condemnation Proceeds as
repairs or replacements are effected and continuing expenses become due and
payable. If any one or more of the above conditions are not met, Grantee shall
apply all of the Condemnation Proceeds, after deductions as herein provided, to
the repayment of the Indebtedness secured hereby. Application or release of the
Condemnation Proceeds as provided herein shall not cure or waive any Potential
Event of Default or Event of Default hereunder or under any other Loan Document
or invalidate any act done pursuant to such notice.
1.15. ADDITIONAL SECURITY. No other security now existing, or
hereafter taken, to secure the Indebtedness or the obligations secured hereby
shall be impaired or affected by the execution of this Security Deed; and all
additional security shall be taken, considered and held as cumulative. The
taking of additional security, execution of partial releases of the security, or
any extension of the time of payment of any of the Indebtedness shall not
diminish the force, effect or lien of this Security Deed and shall not affect or
impair the liability of any maker, surety or endorser for the payment of the
Indebtedness. In the event Grantee at any time holds additional security for
any of the Indebtedness secured hereby, it may enforce the sale thereof or
otherwise realize upon the same, at its option, either before, concurrently, or
after a sale is made hereunder.
1.16. (Intentionally omitted)
1.17. SUCCESSORS AND ASSIGNS. This Security Deed applies to, inures
to the benefit of and binds all parties hereto, the Lenders, and the respective
devisees, administrators, successors and assigns of each. The term "GRANTEE"
shall mean the Collateral Agent (as such term is defined in the Credit
Agreement), including any successor thereto, whether or not named as Grantee
herein.
1.18. INSPECTIONS. Upon prior notice to Grantor, Grantee, any
Lender, or any of their respective agents, representatives or workers, are
authorized to enter at any reasonable time upon or in any part of the Collateral
for the purpose of inspecting the same and for the purpose of performing any of
the acts authorized to be performed hereunder or under the terms of any of the
Loan Documents.
1.19. LIENS. Grantor shall pay and promptly discharge, at Grantor's
cost and expense, all liens, encumbrances and charges upon the Collateral, or
any part thereof or interest therein other than the Permitted Encumbrances (as
defined in SECTION 1.26(A) hereof); provided that such obligation shall not
apply to any lien, encumbrance or charge
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being contested by Grantor in good faith. If Grantor shall fail to remove and
discharge any such lien, encumbrance or charge, then, in addition to any other
right or remedy of Grantee, Grantee, acting on behalf of and as Collateral Agent
for the Lenders, may, but shall not be obligated to, discharge the same, either
by paying the amount claimed to be due, or by procuring the discharge of such
lien, encumbrance or charge by depositing in a court a bond or the amount
claimed or otherwise giving security for such claim, or by procuring such
discharge in such manner as is or may be prescribed by law. Grantor shall,
promptly upon demand therefor by Grantee, pay to Grantee an amount equal to all
reasonable costs and expenses incurred by Grantee in connection with the
exercise by Grantee of the foregoing right to discharge any such lien,
encumbrance or charge, together with interest thereon from the date of such
expenditure at the Agreed Rate.
1.20. (Intentionally omitted)
1.21. GRANTEE'S POWERS. Without affecting the liability of any other
person liable for the payment of any Indebtedness or obligation herein
mentioned, and without affecting the lien or charge of this Security Deed upon
any portion of the Collateral not then or theretofore released as security for
the full amount of all unpaid Indebtedness and obligations, Grantee may, from
time to time and without notice and at the direction of the person to whom such
Indebtedness or obligation is owed (i) release any person so liable, (ii) extend
the maturity of any such obligation, (iii) grant other indulgences, (iv) release
or reconvey, or cause to be released or reconveyed with respect to such
Indebtedness or obligation at any time any parcel, portion or all of the
Collateral, (v) take or release any other or additional security for any
Indebtedness or obligation herein mentioned, or (vi) make compositions or other
arrangements with debtors in relation thereto.
1.22. REPORTS. Grantor shall furnish to Grantee and the Lenders from
time to time such reports in connection with the Collateral as Grantee and
Lenders may reasonably request, all in reasonable detail.
1.23. TRADE NAMES. Grantor shall execute a certificate in form
satisfactory to Grantee listing the trade names or fictitious business names
under which Grantor intends to operate the Collateral or any business located
thereon and representing and warranting that Grantor does business under no
other trade names or fictitious business names with respect to the Collateral.
Grantor shall promptly notify Grantee in writing of any change in said trade
names or fictitious business names, and will, upon request of Grantee, execute
any additional financing statements and other certificates necessary to reflect
the change in trade names or fictitious business names.
1.24. LEASEHOLD. If a leasehold estate constitutes a portion of the
Collateral, Grantor agrees not to amend, change, terminate or modify the lease
covering such leasehold estate or any interest therein without the prior written
consent of Grantee. If Grantee does not deliver its written approval or
disapproval to Grantor's written request within twenty (20) Business Days after
receipt of same, such failure shall be deemed to be disapproval by Grantee.
Consent to one amendment, change, agreement or modification shall not be deemed
to be a waiver of the right to require consent to other, future or successive
amendments, changes, agreements or modifications. Grantor agrees to perform all
of its obligations and agreements under said leasehold and shall not take,
except in accordance with the provisions set forth above in this SECTION 1.24,
any action or omit to take any action which would effect or permit the
termination of said leasehold. Grantor agrees to notify promptly Grantee in
writing with respect to any default or alleged default by any party thereto
which would be a basis for any party thereto to terminate the lease and to
deliver to Grantee copies of all notices, demands, complaints or other
communications received or given by Grantor with respect to any such default or
alleged default. Grantee shall have the option to cure any such default and to
perform any or all of Grantor's obligations thereunder. All reasonable sums
expended by Grantee in curing any such default shall be secured hereby, together
with interest at the Agreed Rate, and shall be due and payable promptly after
demand or notice and shall bear interest from date of expenditure at the Agreed
Rate.
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1.25 GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) Grantor shall remain liable under all contracts and
agreements relating to the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Security Deed had not been executed, (b) the exercise by Grantee or the
Lenders of any of their rights hereunder shall not release Grantor from any of
its duties or obligations under any contracts and agreements related to the
Collateral, and (c) neither Grantee nor the Lenders shall have any obligations
or liability under any of the contracts or agreements related to the Collateral
by reason of this Security Deed, and neither Grantee nor the Lenders shall be
obligated to perform any of the obligations or duties of Grantor thereunder or
to take any action to collect or enforce any claim for payment assigned
hereunder.
1.26. WARRANTIES AND REPRESENTATIONS OF GRANTOR. Grantor represents
and warrants to Grantee and Lenders as follows:
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(A) Grantor is the owner of good and marketable title to the
Collateral free and clear of any lien, security interest, charge or
encumbrance except for the lien and charge of this Security Deed and all
Liens (as defined in the Credit Agreement) permitted under SECTIONS 4.5 and
6.2 of the Credit Agreement (the "PERMITTED ENCUMBRANCES").
(B) Grantor has good right and lawful authority to encumber the
Collateral with and grant the lien and charge created by this Security
Deed, and the execution, delivery and performance by Grantor of this
Security Deed have been duly authorized by all necessary corporate action
of Grantor and do not and will not (i) violate any provision of any law,
rule or regulation (including, without limitation, Regulation U or X of the
Board of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Grantor, or the charter or by-laws of Grantor, or (ii)
result in a breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which
Grantor is a party or by which Grantor or its properties may be bound or
affected. Grantor will warrant and defend its title to the Collateral
against claims of all persons whomsoever, except claimants under any of the
Permitted Encumbrances, and Grantor will maintain and preserve the lien and
charge of this Security Deed so long as any of the Indebtedness secured
hereby is outstanding, subject only to the Permitted Encumbrances.
(C) No authorization, approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body, other than
the recordation of this Security Deed in the official records of the County
in which the Collateral is located, is required (i) for the grant by
Grantor of the lien created hereby or for the execution, delivery and
performance by Grantor of this Security Deed, or (ii) for the perfection of
or the exercise by Grantee, on behalf of Lenders, of the rights and
remedies conferred hereunder (except as may be required by the express
terms of this Security Deed).
(D) Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly execute and deliver, in recordable form, all further
instruments and documents, and take all further action, that may be
reasonably necessary or desirable, or that Grantee may reasonably request,
in order to perfect and protect any lien, charge or encumbrance created or
purported to be created by this Security Deed upon the Collateral or any
portion thereof, or to enable Grantee and Lenders to
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exercise their rights and remedies hereunder with respect to any portion of
the Collateral.
ARTICLE II
ASSIGNMENT OF RENTS, ISSUES AND PROFITS
2.01. ASSIGNMENT OF RENTS, ISSUES AND PROFITS. Grantor hereby
absolutely and unconditionally assigns and transfers to Grantee, on behalf of
and as Collateral Agent for the Lenders, all the Rents of the Collateral, and
hereby gives to and confers upon Grantee, on behalf of and as Collateral Agent
for the Lenders, the right, power and authority to collect such Rents. Grantor
irrevocably appoints Grantee, on behalf of and as Collateral Agent for the
Lenders, its true and lawful attorney-in-fact, at any time and from time to
time, to demand, receive and enforce payment, to give receipts, releases and
satisfactions, and to sue, in the name of Grantor or Grantee, for all such Rents
and apply the same to the Indebtedness secured hereby as more particularly
described in Section 2.02 below; provided, however, that Grantee hereby grants
to Grantor a license to collect such Rents (but not more than thirty (30) days
in advance unless the written approval of Grantee has first been obtained), and
to retain and enjoy same, and to demand, receive and enforce payment and to give
receipts, so long as an Event of Default shall not have occurred hereunder and
be continuing. Upon request of Grantee, Grantor shall execute and deliver to
Grantee, on behalf of and as Collateral Agent for the Lenders, in recordable
form, a specific assignment of any lease, sublease, license, concession or other
agreement (collectively, the "LEASES") now or hereafter affecting the Collateral
or any portion thereof to evidence further the assignment hereby made. The
assignment of the rents, of the Collateral in this ARTICLE II is intended to be
an absolute and present assignment from Grantor to Grantee and not merely the
passing of a security interest.
2.02. COLLECTION UPON DEFAULT. Upon the occurrence of an Event of
Default, Grantee may, at any time without notice, either in person, by agent or
by a receiver appointed by a court, and without regard to the adequacy of any
security for the indebtedness hereby secured and, with or without taking
possession of the Premises or any portion thereof in its own name, sue for or
otherwise collect such Rents including those past due and unpaid, and apply the
same, less costs and expenses of operation and collection, including, without
limitation, attorneys' fees, upon any Indebtedness secured hereby, and in such
order as Grantee may determine. A written demand by Grantee on any tenant for
payment directly to Grantee of Rents due or to become due under any of the
Leases shall be sufficient to warrant and require such tenant to make payments
of such Rents and all future payments thereof
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directly to Grantee without any further consent of or reference to Grantor.
Grantor hereby authorizes each such tenant to rely upon any such written demand
by Grantee and after any such demand to pay all Rents to Grantee. Each such
tenant shall be fully protected from all claims by Grantor in making such
payments to Grantee. Grantor hereby authorizes Grantee to give notice in
writing of this assignment at any time to any tenant under any of the Leases.
In order to collect such Rents, Grantee shall be entitled to notify any payor of
such Rents, including without limitation, any tenant under any lease, to make
such payments directly to Grantee. The collection of such Rents or the
application thereof as aforesaid shall not cure or waive any Potential Event of
Default, Event of Default or notice of default hereunder or invalidate any act
done in response to such default or pursuant to such notice of default.
ARTICLE III
REMEDIES UPON DEFAULT
3.01. EVENTS OF DEFAULT. (1) Any of the events specified in the
Credit Agreement as an Event of Default, or (2) a breach or default by Grantor
of any of its obligations under this Security Deed that remains uncured thirty
(30) days after Grantee shall have given Grantor written notice thereof, shall
be an Event of Default hereunder (an "EVENT OF DEFAULT").
3.02. ACCELERATION UPON DEFAULT, ADDITIONAL REMEDIES. Upon the
occurrence of an Event of Default, Grantee may declare all Indebtedness secured
hereby to be immediately due and payable. Grantee may do any one or more of the
following:
(A) Either in person or by agent, with or without bringing any action
or proceeding, or by a receiver appointed by a court and without regard to
the adequacy of its security, enter upon and take possession of the
Collateral, or any part thereof, in its own name or in the name of a
trustee or receiver, and do any acts which it deems necessary or desirable
to preserve the value, marketability or rentability of the Collateral, or
any part thereof or interest therein, increase the income therefrom or
protect the security hereof and, with or without taking possession of the
Collateral, sue for or otherwise collect the Rents, including those past
due and unpaid, and apply the same, less reasonable costs and expenses of
operation and collection including, without limitation, attorneys' fees,
upon any Indebtedness secured hereby, all in such order as Grantee may
determine. The entering upon and taking possession of the Collateral, the
collection of such Rents and the ap-
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plication thereof as aforesaid, shall not cure or waive any Potential Event
of Default, Event of Default or notice of default hereunder or invalidate
any act done in response to such default or pursuant to such notice of
default and, notwithstanding the continuance in possession of all or any
portion of the Collateral or the collection, receipt and application of
Rents, Grantee shall be entitled to exercise every right provided for in
any of the Loan Documents or by law upon occurrence of any Event of
Default, including the right to exercise the power of sale; or
(B) Exercise all other rights and remedies provided herein, in any
Loan Document or other document or agreement now or hereafter securing all
or any portion of the Indebtedness secured hereby, or by law.
3.03. FORECLOSURE BY POWER OF SALE. If an Event of Default shall
have occurred, Grantee, at its option, may sell the Premises or any part of the
Premises at one or more public sale or sales before the door of the courthouse
of the county in which the Premises or any part of the Premises is situated, to
the highest bidder for cash, in order to pay the Indebtedness and all expenses
of sale and of all proceedings in connection therewith, including reasonable
attorneys' fees, after advertising the time, place and terms of sale once a week
for four (4) weeks immediately preceding such sale (but without regard to the
number of days) in a newspaper in which Sheriff's sales are advertised in said
county. At any such public sale, Grantee may execute and deliver to the
purchaser a conveyance of the Premises or any part of the Premises with full
warranties of title, and to this end Grantor hereby constitutes and appoints
Grantee the agent and attorney-in-fact of Grantor to make such sale and
conveyance, and thereby to divest Grantor of all right, title and equity that
Grantor may have in and to the Premises and to vest the same in the purchaser or
purchasers at such sale or sales, and all the acts and doings of said agent and
attorney-in-fact are hereby ratified and confirmed and any recitals in said
conveyance or conveyances as to facts essential to a valid sale shall be binding
upon Grantor. The aforesaid power of sale and agency hereby granted are coupled
with an interest and are irrevocable by death or otherwise, are granted as
cumulative of the other remedies provided hereby or by law for collection of the
Indebtedness and shall not be exhausted by one exercise thereof but may be
exercised until full payment of all of the secured obligations. In the event of
any sale under this Security Deed by virtue of the exercise of the powers herein
granted, or pursuant to any order in any judicial proceeding or otherwise, the
Premises may be sold as an entirety or in separate parcels and in such manner or
order as Grantee in its sole discretion may elect, and if Grantee so elects,
Grantee may sell the personal property covered by this Security Deed
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at one or more separate sales in any manner permitted by the Uniform Commercial
Code of the State of Georgia, and one or more exercises of the powers herein
granted shall not extinguish nor exhaust such powers, until the entire
Collateral are sold or the Indebtedness is paid in full. If the Indebtedness is
now or hereafter further secured by any chattel deeds, pledges, contracts of
guaranty, assignments of lease or other security instruments, Grantee may at its
option exhaust the remedies granted under any of said security instruments
either concurrently or independently, and in such order as Grantee may
determine.
3.04 PURCHASE BY GRANTEE. Upon any foreclosure sale by exercise of
power of sale or otherwise, Grantee may bid for and purchase the Collateral or
any portion thereof and shall be entitled to apply all or any part of the
Indebtedness secured hereby as a credit to the purchase price.
3.05 APPLICATION OF PROCEEDS OF SALE. In the event of a foreclosure
sale of the Collateral, the proceeds of said sale shall be applied, first, to
the expenses of such sale and of all proceedings in connection therewith,
including attorney's fees, then to insurance premiums, liens, assessments, taxes
and charges including utility charges advanced by Grantee, then to payment of
the outstanding principal balance of the indebtedness secured hereby, then to
the accrued interest on all of the foregoing, and finally the remainder, if any,
shall be paid to Grantor or to the person or entity lawfully entitled to same.
3.06 GRANTOR AS TENANT HOLDING OVER. In the event of any such
foreclosure sale by Grantee, Grantor shall be deemed a tenant holding over and
shall forthwith deliver possession to the purchaser or purchasers at such sale
or be summarily dispossessed according to provisions of law applicable to
tenants holding over.
3.07 WAIVER OF APPRAISEMENT. VALUATION, STAY, EXTENSION AND
REDEMPTION LAWS. Grantor agrees, to the full extent permitted by law, that in
case of a default on the part of Grantor hereunder, neither Grantor nor anyone
claiming through or under it shall or will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension, homestead, exemption
or redemption laws now or hereafter in force, in order to prevent or hinder the
enforcement or foreclosure of this Security Deed, or the absolute sale of the
Collateral, or the final and absolute putting into possession thereof,
immediately after such sale, of the purchasers thereat, and Grantor, for itself
and all who may at any time claim through or under it, hereby waives to the full
extent that it may lawfully so do, the benefit of all such laws, and any and all
right to have the assets comprised
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in the security intended to be created hereby marshalled upon any foreclosure of
this Security Deed.
3.08 WAIVER OF HOMESTEAD. Grantor hereby waives and renounces all
homestead and exemption rights provided for by the Constitution and the laws of
the United States and of any state, in and to the Collateral as against the
collection of the secured obligations, or any part hereof.
3.09 LEASES. Grantee, at its option, is authorized to foreclose this
Security Deed subject to the rights of any tenants of the Premises, and the
failure to make any such tenants parties to any such foreclosure proceedings and
to foreclose their rights will not be, nor be asserted to be by Grantor, a
defense to any proceedings instituted by Grantee to collect the secured
obligations.
3.10 (Intentionally Omitted)
3.11. PERSONAL PROPERTY. The provisions of the Security Agreement of
even date herewith, among Grantor, Grantee and the Lenders are made a part
hereof by this reference, and an Event of Default thereunder shall be an Event
of Default under this Security Deed. It is the express understanding and intent
of the parties that as to any personal property interests subject to ARTICLE 9
of the Uniform Commercial Code (the "CODE") as enacted in the State of Georgia,
Grantee, upon an Event of Default, may proceed under the Code or may proceed as
to both real and personal property interests in accordance with the provisions
of this Security Deed and its rights and remedies in respect to real property,
as specifically permitted under the Code and treat both real and personal
property interests as one parcel or package or security.
3.12. APPOINTMENT OF RECEIVER. Upon the occurrence of an Event of
Default hereunder, Grantee, on behalf of and as Collateral Agent for the
Lenders, and without regard to the then value of the Collateral or the interest
of Grantor therein, shall have the right to apply to any court having
jurisdiction to appoint a receiver or receivers of the Collateral, and Grantor
hereby irrevocably consents to such appointment and waives notice of any
application therefor. Any such receiver or receivers shall have all the usual
powers and duties of receivers in like or similar cases and all the powers and
duties of Grantee in case of entry as provided herein, and shall continue as
such and exercise all such powers until the date of confirmation of sale of the
Collateral unless such receivership is sooner terminated.
3.13. REMEDIES NOT EXCLUSIVE. Grantee, on behalf of and as
Collateral Agent for the Lenders, and each of them,
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shall be entitled to enforce payment and performance of any Indebtedness or
obligations secured hereby and to exercise all rights and powers under this
Security Deed or under any Loan Document or other agreement or any laws now or
hereafter in force, notwithstanding some or all of the said Indebtedness and
obligations secured hereby may now or hereafter be otherwise secured, whether by
mortgage, deed of trust, pledge, lien, assignment or otherwise. Neither the
acceptance of this Security Deed nor its enforcement whether by court action or
pursuant to the power of sale or other powers herein contained, shall prejudice
or in any manner affect Grantee's right to realize upon or enforce any other
security now or hereafter held by Grantee or any Lender, it being agreed that
Grantee shall be entitled to enforce this Security Deed and any other security
now or hereafter held by Grantee on behalf of the Lenders, in such order and
manner as Grantee may determine. No remedy herein conferred upon or reserved to
Grantee is intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute. Every power or remedy given by any of the Loan Documents
to Grantee or any Lender, or to which any of them may be otherwise entitled, may
be exercised, concurrently or independently, from time to time and as often as
may be deemed expedient by Grantee and Grantee may pursue inconsistent remedies
on behalf of the Lenders.
ARTICLE IV
MISCELLANEOUS
4.01. AMENDMENTS. No amendment or waiver of any provision of this
Security Deed nor consent to any departure by Grantor herefrom shall in any
event be effective unless the same shall be in writing and signed by the
Requisite Lenders (as that term is defined in Section 1.1 of the Credit
Agreement), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
4.02. SUCCESSOR GRANTEE. Upon the resignation of Grantee as Agent
(as defined in the Credit Agreement) for the Lenders, Grantee shall have the
right to assign all of its right, title and interest under this Security Deed to
such Person as may be designated by the Lenders. The assignment of Grantee's
right, title and interest hereunder pursuant to this SECTION 4.02 shall become
effective upon the execution and recordation of an assignment of this Security
Deed by Grantee in the official records of the County in which the Collateral is
located in favor of the assignee designated in accordance with the provisions of
this SECTION 4.02.
27
<PAGE>
4.03. GRANTOR WAIVER OF RIGHTS. Grantor waives to the extent
permitted by law, (i) the benefit of all laws now existing or that may hereafter
be enacted providing for any appraisement before sale of any portion of the
Collateral, and, (ii) all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of the secured
Indebtedness and marshaling in the event of foreclosure of the liens hereby
created, and (iii) all rights and remedies which Grantor may have or be able to
assert by reason of applicable laws pertaining to the rights and remedies of
sureties.
4.04. STATEMENTS BY GRANTOR. Grantor and Grantee agree that each
shall, within ten (10) days after written notice thereof from the other, deliver
to the other a written statement stating the unpaid principal of and interest on
the Indebtedness and any other amounts secured by this Security Deed and stating
whether any offset or defense exists against such principal and interest.
Grantor shall pay any reasonable amount demanded by Grantee or its authorized
loan servicing agent for any statement regarding the obligations secured hereby;
provided, however, that such amount may not exceed the maximum amount allowed by
law at the time request for the statement is made.
4.05. (Intentionally omitted)
4.06. NOTICES. All notices, requests and demands to be made
hereunder to the parties hereto shall be in writing and may be personally
served, telecopied or sent by United States mail or courier service and shall be
deemed to have been given when delivered in person, receipt of telecopy or four
Business Days after depositing it in the United States mail, registered or
certified, with postage prepaid and properly addressed; PROVIDED that notices to
Agent shall not be effective until received. For the purposes hereof, the
addresses of the parties hereto (until notice of a change thereof is delivered
as provided herein) shall be as follows:
To Grantor: ___________________________
___________________________
___________________________
___________________________
Attention: _______________
To Grantee: Bankers Trust Company
300 South Grand Avenue
Los Angeles, California 90071
Attention: Patrice Daniels
4.07. (Intentionally omitted)
28
<PAGE>
4.08. CAPTIONS. The captions or headings at the beginning of each
Section hereof are for the convenience of the parties and are not a part of this
Security Deed.
4.09. INVALIDITY OF CERTAIN PROVISIONS. Every provision of this
Security Deed is intended to be severable. In the event any term or provision
hereof is declared to be illegal or invalid for any reason whatsoever by a court
of competent jurisdiction, such illegality or invalidity shall not affect the
balance of the terms and provisions hereof, which terms and provisions shall
remain binding and enforceable. If the lien of this Security Deed is invalid or
unenforceable as to any part of the Indebtedness, or if the lien is invalid or
unenforceable as to any part of the Collateral, the unsecured or partially
secured portion of the Indebtedness shall be completely paid prior to the
payment of the remaining and secured or partially secured portion of the
Indebtedness, and all payments made on the debt, whether voluntary or under
foreclosure or other enforcement action or procedure, shall be considered to
have been first paid on and applied to the full payment of that portion of the
Indebtedness which is not secured or fully secured by the lien of this Security
Deed.
4.10. SUBROGATION. To the extent that proceeds of the Indebtedness
are used to pay any outstanding lien, charge or prior encumbrance against the
Collateral, such proceeds have been or will be advanced by Grantee at Grantor's
request and Grantee shall be subrogated to any and all rights and liens held by
any owner or holder of such outstanding liens, charges and prior encumbrances,
irrespective of whether said liens, charges or encumbrances are released.
4.11. ATTORNEYS' FEES. If the Indebtedness is not paid when due or
if any Event of Default occurs, Grantor promises to pay all reasonable costs of
enforcement and collection, including but not limited to, reasonable attorneys'
fees, whether or not such enforcement and collection includes the filing of a
lawsuit.
4.12. GOVERNING LAW. The enforcement of this Security Deed shall be
governed by and construed in accordance with the laws of the state of Georgia.
Enforcement of the Credit Agreement and the Notes shall be governed by and
construed in accordance with the laws of the state of New York.
4.13. INTERPRETATION AND TERMINOLOGY. In this Security Deed the
singular shall include the plural and the masculine shall include the feminine
and neuter and vice versa, if the context so requires. The terms "lease" and
"leasehold" shall mean and include both usufructs and estates for years.
29
<PAGE>
4.14. COUNTERPARTS. This Security Deed may be executed and
acknowledged in counterparts, all of which executed and acknowledged
counterparts shall together constitute a single document. Signature and
acknowledgment pages may be detached from the counterparts and attached to a
single copy of this Security Deed to form physically one document, which may be
recorded.
4.15. FIXTURE FILING. This Security Deed is intended to be and
constitutes a financing statement filed as a fixture filing pursuant to the
provisions of SECTION 11-9-402(6) of the Uniform Commercial Code of Georgia with
respect to those portions of the Collateral consisting of goods which are now or
are to become fixtures relating to the Premises. Grantor grants to Grantee on
behalf of and as Collateral Agent for the Lenders a security interest in all
existing and future goods which are now or in the future become fixtures
relating to the Premises and the proceeds thereof, including, without
limitation, the goods and proceeds thereof described in EXHIBIT B attached
hereto. Grantor covenants and agrees that the filing of this Security Deed in
the real estate records of the county where the Premises are located shall also
operate from the date of such filing as a fixture filing in accordance with
SECTION 11-9-313 of the Uniform Commercial Code of Georgia. Grantor agrees to
execute and deliver to Grantee, upon Grantee's request, any financing
statements, as well as extensions, renewals and amendments thereof, and any
reproductions of this Security Deed in such form as Grantee may require to
perfect a security interest with respect to such extensions, renewals,
amendments and releases thereof, and shall pay all reasonable costs and expenses
of any record searches for financing statements Grantee may require. Without
the prior written consent of Grantee, Grantor shall not create or suffer to be
created pursuant to the Georgia Uniform Commercial Code any other security
interest in such items, including replacements and additions thereto. Upon the
occurrence of an Event of Default, Grantee shall have on behalf of Lenders, the
remedies of a secured party under the Georgia Uniform Commercial Code and may
also invoke the other remedies provided in this Security Deed. The name of the
debtor is Blue Bird Body Company, a Georgia corporation. The address of the
debtor is ___________________________________________________________________,
Attention: _____________. The name of the secured party is Bankers Trust
Company, a New York banking corporation. The address of the secured party is
300 South Grand Avenue, Los Angeles, California 90071, Attention: Patrice
Daniels.
4.16 TERMINATION OF FIXTURE FILINGS. If Grantor removes any
Improvements pursuant to Section 1.02 hereof, then Grantee shall provide to
Grantor a UCC-3 termination statement as to such Improvements removed to
terminate the effect of any
30
<PAGE>
filing with respect to Grantee's security interest in such Improvements.
4.17 LENDERS' CONSENT. In any circumstance hereunder wherein Lender's
consent or approval is required, such consent or approval may be granted,
withheld or conditioned in Lender's sole discretion, with no express or implied
requirement of reasonableness.
4.18 WAIVER OF GRANTOR'S RIGHTS. BY EXECUTION OF THIS SECURITY DEED,
GRANTOR EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT TO ACCELERATE THE INDEBTEDNESS
SECURED HEREBY AND THE POWER OF ATTORNEY GIVEN HEREIN TO GRANTEE TO SELL THE
PREMISES BY NON-JUDICIAL FORECLOSURE UPON DEFAULT BY GRANTOR WITHOUT ANY
JUDICIAL HEARING AND WITHOUT ANY NOTICE OTHER THAN SUCH NOTICE (IF ANY) AS IS
SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF THIS SECURITY DEED;
(B) TO THE EXTENT PERMITTED BY LAW, WAIVES ANY AND ALL RIGHTS WHICH GRANTOR MAY
HAVE UNDER THE CONSTITUTION OF THE UNITED STATES (INCLUDING THE FIFTH AND
FOURTEENTH AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR
THE SEVERAL STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW, (1) TO NOTICE AND
JUDICIAL HEARING PRIOR TO THE EXERCISE BY GRANTEE OF ANY RIGHT OR REMEDY HEREIN
PROVIDED TO GRANTEE EXCEPT SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO
BE PROVIDED IN THIS SECURITY DEED; AND (2) CONCERNING THE APPLICATION, RIGHTS OR
BENEFITS OF ANY STATUTE OF LIMITATION OR ANY MORATORIUM, REINSTATEMENT,
MARSHALLING, FORBEARANCE, APPRAISEMENT, VALUATION, STAY, EXTENSION, HOMESTEAD,
EXEMPTION OR REDEMPTION LAWS; (C) ACKNOWLEDGES THAT GRANTOR HAS READ THIS
SECURITY DEED AND ANY AND ALL QUESTIONS REGARDING THE LEGAL EFFECT OF THIS
SECURITY DEED AND ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO GRANTOR AND
GRANTOR HAS CONSULTED WITH COUNSEL OF GRANTOR'S CHOICE PRIOR TO EXECUTING THIS
SECURITY DEED; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF
GRANTOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY GRANTOR AS PART
OF A BARGAINED FOR LOAN TRANSACTION AND THAT THIS SECURITY DEED IS VALID AND
ENFORCEABLE BY GRANTEE AGAINST GRANTOR IN ACCORDANCE WITH ALL THE TERMS AND
CONDITIONS HEREOF.
4.19 Should the Indebtedness be paid and performed in full, and all
agreements between Grantor and Grantee to make further advances be terminated,
then Grantee shall reconvey this Security Deed to Grantor.
[SIGNATURES ON NEXT PAGE]
31
<PAGE>
IN WITNESS WHEREOF, Grantor has executed, sealed and delivered this
Security Deed as of the day and year first above written.
GRANTOR: BLUE BIRD BODY COMPANY,
a Georgia corporation
By: _________________________
Printed name: _______________
Its: [Vice] President
Attest: _____________________
Printed name: _______________
Its: [Assistant] Secretary
[Corporate Seal]
Signed, sealed and delivered in the presence of:
Unofficial witness:
_____________________________
Printed name: _______________
Notary Public:
_____________________________
Printed name: _______________
Commission expiration
Date: ______________________
[Notarial Seal]
32
<PAGE>
EXHIBIT XIX
FORM OF ACKNOWLEDGEMENT AND CONFIRMATION
Reference is made to that certain First Amended and Restated Credit
Agreement dated as of November 15, 1996 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT") by
and among Blue Bird Body Company, Blue Bird Corporation, the lenders party
thereto, Bankers Trust Company, as administrative agent, and Merrill Lynch &
Co., as syndication agent. Capitalized terms used herein without definition
shall have the meanings assigned in the Credit Agreement.
This Acknowledgement and Confirmation (this "ACKNOWLEDGEMENT AND
CONFIRMATION") is entered into by the undersigned (each an "ACKNOWLEDGING
PARTY") for the benefit of Agents and Lenders pursuant to subsections 3.1A5 and
3.1B5 of the Credit Agreement and the execution and delivery of this
Acknowledgement and Confirmation by each Acknowledging Party is a condition to
the effectiveness of the Credit Agreement and the extension of credit
thereunder.
Each Acknowledging Party hereby acknowledges and confirms that, as of
the Restatement Effective Date, each Collateral Document will support to the
fullest extent possible the payment and performance of the Obligations. Without
limiting the generality of the foregoing, each Acknowledging Party hereby
acknowledges and confirms that, as of the Restatement Effective Date, the term
"SECURED OBLIGATIONS" under and as defined in the Borrower Security Agreement,
Borrower Pledge Agreement, Holding Security Agreement and Holding Pledge
Agreement shall include all Obligations under and as defined in the Credit
Agreement.
This Acknowledgement and Confirmation shall be governed by, and shall
be construed and enforced in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, each Acknowledging Party has caused this
Acknowledgement and Confirmation to be duly executed by its officer thereunto
duly authorized as of the 15th day of November, 1996.
BLUE BIRD BODY COMPANY
By:_________________________
Title:
BLUE BIRD BODY COMPANY
By:_________________________
Title:
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
BLUE BIRD BODY COMPANY AND SUBSIDIARIES
STATEMENTS RE: COMPUTATION OF EARNINGS TO FIXED CHARGES
FOR THE NINE MONTHS ENDED JULY 27, 1996 AND JULY 29, 1995,
FOR THE YEARS ENDED OCTOBER 28, 1995, OCTOBER 29, 1994, AND OCTOBER 30, 1993,
FOR THE SIX MONTHS ENDED OCTOBER 31, 1992 AND APRIL 30, 1992,
AND FOR THE YEAR ENDED NOVEMBER 2, 1991
(In Thousands Except Ratios)
<TABLE>
<CAPTION>
BBC Predecessor
-------------------------------------------------------------------------------- -----------------------
July 27, July 29, October 28, October 29, October 30, October 31, April 30, November 2,
1996 1995 1995 1994 1993 1992 1992 1991
------- -------- ----------- ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
Interest Expense $11,270 $12,339 $16,282 $15,224 $15,973 $ 8,443 $ 1,745 $ 4,344
Interest element of
rentals 348 414 536 521 448 178 198 413
Amortization of debt
issuance costs 1,526 1,666 2,245 2,209 2,202 1,104 4 0
------- ------- ------- ------- ------- ------- ------- -------
$13,144 $14,419 $19,063 $17,954 $18,623 $ 9,725 $ 1,947 $ 4,757
======= ======= ======= ======= ======= ======= ======= =======
EARNINGS:
Net income (loss) $ 9,216 $ 6,704 $16,852 $15,408 $ 9,595 $ 3,686 $(3,466) $26,596
Provision (benefit)
for income taxes 5,997 4,929 11,686 10,157 6,930 4,257 (3,026) 12,136
Fixed charges 13,144 14,419 19,063 17,954 18,623 9,725 1,947 4,757
Interest capitalized 0 (208) (208) (145) 0 (4) 0 (82)
------- ------- ------- ------- ------- ------- ------- -------
$28,357 $25,844 $47,393 $43,374 $35,148 $17,664 $(4,545) $43,407
======= ======= ======= ======= ======= ======= ======= =======
RATIO OF EARNINGS
TO FIXED CHARGES 2.2x 1.8x 2.5x 2.4x 1.9x 1.8x * 9.1x
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
* Earnings are inadequate to cover fixed charges by approximately $6,500
<PAGE>
Exhibit 21.1
Subsidiaries of BBC and the Company
Subsidiaries
Shareholder(s)
Organized Under and Percentage
Name & Address of Entity Laws of Ownership Interest
- ------------------------ --------------- ------------------
Blue Bird Body Company Georgia Blue Bird Corporation
3920 Arkwright Road -- #275 100%
Macon, GA 31210
Blue Bird Capital Corporation Delaware Blue Bird Body
3920 Arkwright Road -- #275 Company
Macon, GA 31210 100%
Blue Bird de Mexico, S.A. Mexico Blue Bird Body
de C.V. Company
Anillo Periserico Km. 37 100%
Apodaca, N.L. 66600
A.P. 139
APODACA
Mexico
Canadian Blue Bird Coach Ltd. Provincial Canada, Blue Bird Body
P.O. Box 880 Ontario Company
Brantford, Ontario N3T 5R7 100%
Blue Bird Centro Americana, SA Federal Charter, Blue Bird Body
Apartado Postal 810 Guatemala Company
Guatemala City, Guatemala 100%
(Inactive)
Carrocerias Assemplajadors Federal Charter, Blue Bird Body
Guatemala Guatemala Company
Guatemalteca, S.A. 100%
(CAGUASA)
(Inactive)
<PAGE>
[Letterhead of Arthur Andersen LLP]
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation in
this Registration Statement of our report dated December 14, 1995 on the
financial statements of Blue Bird Corporation and subsidiaries as of October 28,
1995 and October 29, 1994 and for the three years in the period ended October
28, 1995 and to all references to our firm included in this Registration
Statement.
Arthur Andersen LLP
Atlanta, Georgia
December 6, 1996
<PAGE>
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
BLUE BIRD BODY COMPANY
(Exact name of obligor as specified in its charter)
GEORGIA 58-0813156
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3920 ARKWRIGHT ROAD
MACON, GEORGIA 31210
(Address of principal executive offices) (Zip Code)
______________________________
BLUE BIRD CORPORATION
(Exact name of guarantor as specified in its charter)
DELAWARE 13-3638126
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
3920 ARKWRIGHT ROAD
MACON, GEORGIA 31210
(Address of principal executive offices) (Zip Code)
___________________________________________
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
(Title of the indenture securities)
_____________________________________________________
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty Street,
New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996,
in connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
(On July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving corporation,
was renamed The Chase Manhattan Bank).
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 29TH day of NOVEMBER, 1996.
THE CHASE MANHATTAN BANK
By /s/ Anne G. Brenner
-------------------------
Anne G. Brenner
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business September 30, 1996, in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS
ASSETS IN MILLIONS
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ....................................... $ 11,095
Interest-bearing balances ............................... 4,998
Securities: ...............................................
Held to maturity securities................................. 3,231
Available for sale securities............................... 38,078
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ....................................... 8,018
Securities purchased under agreements to resell .......... 731
Loans and lease financing receivables:
Loans and leases, net of unearned income $130,513
Less: Allowance for loan and lease losses 2,938
Less: Allocated transfer risk reserve 27
------------
Loans and leases, net of unearned income,
allowance, and reserve ................................... 127,548
Trading Assets .............................................. 48,576
Premises and fixed assets (including capitalized
leases)................................................... 2,850
Other real estate owned ..................................... 300
Investments in unconsolidated subsidiaries and
associated companies...................................... 92
Customer's liability to this bank on acceptances
outstanding .............................................. 2,777
Intangible assets .......................................... 1,361
Other assets ............................................... 12,204
------
TOTAL ASSETS ............................................... $261,859
=========
- 4 -
<PAGE>
LIABILITIES
Deposits
In domestic offices ..................................... $80,163
Noninterest-bearing ..............................$30,596
Interest-bearing ................................. 49,567
------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ............................................... 65,173
Noninterest-bearing ..............................$ 3,616
Interest-bearing ................................ 61,557
Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ................................. 14,594
Securities sold under agreements to repurchase .......... 14,110
Demand notes issued to the U.S. Treasury .................. 2,200
Trading liabilities ....................................... 30,136
Other Borrowed money:
With a remaining maturity of one year or less ........... 16,895
With a remaining maturity of more than one year ......... 449
Mortgage indebtedness and obligations under capitalized
leases .................................................. 49
Bank's liability on acceptances executed and outstanding 2,764
Subordinated notes and debentures ......................... 5,471
Other liabilities ......................................... 13,997
TOTAL LIABILITIES ......................................... 246,001
-------
Limited-Life Preferred stock and related surplus 550
EQUITY CAPITAL
Common stock ............................................ 1,209
Surplus ................................................... 10,176
Undivided profits and capital reserves .................... 4,385
Net unrealized holding gains (Losses)
on available-for-sale securities .......................... (481)
Cumulative foreign currency translation adjustments ........ 19
TOTAL EQUITY CAPITAL ....................................... 15,308
______
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL ................................. $261,859
==========
I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true to the best of my knowledge and
belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this Report of Condition and declare that it has been
examined by us, and to the best of our knowledge and
belief has been prepared in conformance with the in-
structions issued by the appropriate Federal regulatory
authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
- 5 -
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
BLUE BIRD BODY COMPANY
OFFER TO EXCHANGE
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
FOR ANY AND ALL OF THE OUTSTANDING
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1997,
UNLESS THE OFFER IS EXTENDED
The Chase Manhattan Bank
(the "Exchange Agent")
BY MAIL, HAND OR OVERNIGHT DELIVERY:
The Chase Manhattan Bank
55 Water Street
Room 234
North Building
New York, New York 10041
Attention: Carlos Esteves
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(212) 638-7375
(212) 344-9367
CONFIRM BY TELEPHONE:
Carlos Esteves: (212) 638-0828
Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the ones listed
above will not constitute a valid delivery. The instructions accompanying this
Letter of Transmittal should be read carefully before this Letter of Transmittal
is completed.
The undersigned hereby acknowledges receipt of the Prospectus dated December
, 1996 (the "Prospectus") of Blue Bird Body Company (the "Company") and this
Letter of Transmittal, which together constitute the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 10 3/4% Senior
Subordinated Notes due 2006, Series B (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which the Prospectus is a part, for each
$1,000 principal amount of its outstanding 10 3/4% Senior Subordinated Notes due
2006 (the "144A Notes"), respectively. The term "Expiration Date" shall mean
5:00 p.m., New York City time, on , 1997, unless the Exchange Offer
is extended, in which case the term "Expiration Date" means the latest date and
time to which the Exchange Offer is extended. Capitalized terms used but not
defined herein have the meaning given to them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS
INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND
REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS
LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List on the next page the 144A Notes to which this Letter of Transmittal
relates. If the space indicated is inadequate, the Certificate or Registration
Numbers and Principal Amounts should be listed on a separately signed schedule
affixed hereto.
<PAGE>
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SENIOR SUBORDINATED NOTES TENDERED HEREBY
<CAPTION>
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) OF CERTIFICATE OR AMOUNT PRINCIPAL
REGISTERED OWNER(S) REGISTRATION REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBERS* BY 144A NOTES TENDERED**
<S> <C> <C> <C>
TOTAL
</TABLE>
* Need not be completed by Book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered the
full aggregate principal amount represent by such 144A Notes. All tenders
must be in integral multiples of $1,000.
This Letter of Transmittal is to be used (i) if certificates of 144A Notes
are to be forwarded herewith, (ii) if delivery of 144A Notes is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company (the "Depository" or "DTC"), pursuant to the
procedures set forth in "The Exchange Offer--Procedures for Tendering" in the
Prospectus or (iii) tender of the 144A Notes is to be made according to the
guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2.
Delivery of documents to a book-entry transfer facility does not constitute
delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person in
whose name 144A Notes are registered on the books of the Company or any other
person who has obtained a properly completed bond power from the registered
holder. The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer. Holders who wish to tender their 144A Notes
must complete this letter in its entirety.
/ / CHECK HERE IF TENDERED 144A NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ____________________________________________
/ / The Depository Trust Company
Account Number ___________________________________________________________
Transaction Code Number __________________________________________________
Holders whose 144A Notes are not immediately available or who cannot
deliver their 144A Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their 144A Notes
according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer--Guaranteed Delivery Procedures." See
Instruction 2.
/ / CHECK HERE IF TENDERED 144A NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s) _____________________________________________
Name of Eligible Institution that Guaranteed Delivery ____________________
_________________________________________________________________________
If delivery by book-entry transfer:
Account Number __________________________________________________
Transaction Code Number _________________________________________
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name _________________________________________________________________
Address ______________________________________________________________
2
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the 144A Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
such 144A Notes tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such 144A Notes as are being tendered hereby, including all rights to
accrued and unpaid interest thereon as of the Expiration Date. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge that
said Exchange Agent acts as the agent of the Company in connection with the
Exchange Offer) to cause the 144A Notes to be assigned, transferred and
exchanged. The undersigned represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the 144A Notes and to acquire
Exchange Notes issuable upon the exchange of such tendered 144A Notes, and that
when the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered 144A Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.
The undersigned represents to the Company that (i) the Exchange Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned; (ii) neither the undersigned nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such Exchange Notes; and (iii) the undersigned and any such
other person acknowledge that, if they are participating in the Exchange Offer
for the purpose of distributing the Exchange Notes, (a) they cannot rely on the
position of the staff of the Securities and Exchange Commission enunciated in
EXXON CAPITAL HOLDINGS CORPORATION (available April 13, 1989), MORGAN STANLEY &
CO., INC. (available June 5, 1991) or similar no-action letters and, in the
absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale transaction and (b) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified by
the Company. If the undersigned or the person receiving the Exchange Notes
covered by this letter is an affiliate (as defined under Rule 405 of the
Securities Act) of the Company, the undersigned represents to the Company that
the undersigned understands and acknowledges that such Exchange Notes may not be
offered for resale, resold or otherwise transferred by the undersigned or such
other person without registration under the Securities Act or an exemption
therefrom. If the exchange offeree is a broker-dealer holding 144A Notes
acquired for its own account as a result of market-making activities or other
trading activities, it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of Exchange Notes received in
respect of such 144A Notes pursuant to the Exchange Offer; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered 144A Notes or transfer ownership of such 144A Notes on the account
books maintained by a book-entry transfer facility. The undersigned further
agrees that acceptance of any tendered 144A Notes by the Company and the
issuance of Exchange Notes in exchange therefor shall constitute performance in
full by the Company of its obligations under the Registration Rights Agreement
and that the Company shall have no further obligations or liabilities thereunder
for the registration of the 144A Notes or the Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer--Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the 144A Notes tendered
hereby and, in such event, the 144A Notes not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered 144A Notes may be withdrawn at any time
prior to the Expiration Date.
3
<PAGE>
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instruction" in this Letter
of Transmittal, certificates for all Exchange Notes delivered in exchange for
tendered 144A Notes, and any 144A Notes delivered herewith but not exchanged,
will be registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If an
Exchange Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the Exchange Note is to be mailed to someone other
than the person(s) signing this Letter of Transmittal or to the person(s)
signing this Letter of Transmittal at an address different than the address
shown on this Letter of Transmittal, the appropriate boxes of this Letter of
Transmittal should be completed. If 144A Notes are surrendered by Holder(s) that
have completed either the box entitled "Special Registration Instructions" or
the box entitled "Special Delivery Instructions" in this Letter of Transmittal,
signature(s) on this Letter of Transmittal must be guaranteed by an Eligible
Institution (defined in Instruction 4).
<TABLE>
<S> <C>
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the Exchange To be completed ONLY if the Exchange
Notes are to be issued in the name of someone Notes are to be sent to someone other
offer than the undersigned. than the undersigned, or to the undersigned
at an address other than that shown under
"Description of Senior Subordinated Notes
Tendered Hereby."
Name: Name:
Address: Address:
Book-Entry Transfer Facility Account:
Employer Identification or Social Security
Number:
(PLEASE PRINT OR TYPE) (PLEASE PRINT OR TYPE)
</TABLE>
4
<PAGE>
REGISTERED HOLDER(S) OF 144A NOTES SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
X ______________________________________________________________________________
X ______________________________________________________________________________
(SIGNATURE(S) OF REGISTERED HOLDER(S))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
144A Notes or on a security position listing as the owner of the 144A Notes or
by person(s) authorized to become registered holder(s) by properly completed
bond powers transmitted herewith. If signature is by attorney-in-fact, trustee,
executor, administrator, guardian, officer of a corporation or other person
acting in a fiduciary capacity, please provide the following information.
(PLEASE PRINT OR TYPE):
Name and Capacity (full title): ________________________________________________
Address (including zip code): __________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Area Code and Telephone Number: ________________________________________________
Taxpayer Identification or Social Security No.: ________________________________
Dated: _______________________________
SIGNATURE GUARANTEE
(IF REQUIRED--SEE INSTRUCTION 4)
Authorized Signature: __________________________________________________________
(SIGNATURE OF REPRESENTATIVE OF SIGNATURE GUARANTOR)
Name and Title: ________________________________________________________________
Name of Plan: __________________________________________________________________
Area Code and Telephone Number: ________________________________________________
(PLEASE PRINT OR TYPE)
Dated: _______________________________
5
<PAGE>
PAYOR'S NAME: BLUE BIRD BODY COMPANY
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
PLEASE PROVIDE YOUR SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION
NUMBER ON THE FOLLOWING SUBSTITUTE FORM W-9 AND CERTIFY THEREIN THAT YOU ARE
SUBJECT TO BACKUP WITHHOLDING.
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT <*> </*>
FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. SOCIAL SECURITY
DEPARTMENT OF THE PART 2--CHECK THE BOX IF YOU ARE NOT SUBJECT TO NUMBER OR EMPLOYEE
TREASURY INTERNAL BACKUP WITHHOLDING UNDER THE PROVISIONS OF SECTION IDENTIFICATION
REVENUE SERVICE 3406(A)(1)(C) OF THE INTERNAL REVENUE CODE BECAUSE NUMBER
PAYOR'S REQUEST (1) YOU ARE EXEMPT FROM BACKUP WITHHOLDING, (2) PART 3-
FOR TAXPAYER YOU HAVE NOT BEEN NOTIFIED THAT YOU ARE SUBJECT TO AWAITING TIN [ ]
IDENTIFICATION BACKUP WITHHOLDING AS A RESULT OF FAILURE TO
NUMBER ("TIN") REPORT ALL INTEREST OR DIVIDENDS OR (3) THE
INTERNAL REVENUE SERVICE HAS NOTIFIED YOU THAT YOU
ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING. [ ]
CERTIFICATION: UNDER PENALTIES OF PERJURY, I
CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM
IS TRUE, CORRECT, AND COMPLETE.
SIGNATURE:<*> </*>
DATE:<*> </*>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENTS
IN EXCESS OF $10.00 MADE TO YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME,
AND EITHER (A) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE
APPROPRIATE INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR (B) I INTEND TO
MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER
IDENTIFICATION NUMBER WITHIN 60 DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD,
UNTIL I PROVIDE A NUMBER.
<*> </*> <*> </*>
SIGNATURE DATE
</TABLE>
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered 144A Notes or confirmation of any book-entry
transfer to the Exchange Agent's account at a book-entry transfer facility of
144A Notes tendered by book-entry transfer, as well as a properly completed and
duly executed copy of this Letter of Transmittal or facsimile thereof, and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date (as defined in the Prospectus). The method of delivery of this
Letter of Transmittal, the 144A Notes and all other required documents is at the
election and risk of the Holder. Instead of delivery by mail, it is recommended
that Holders use an overnight or hand delivery service. Except as otherwise
provided below, the delivery will be deemed made only when actually received by
the Exchange Agent.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the 144A Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via a
facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their 144A Notes, and (i) whose Notes are not
immediately available, or (ii) who cannot deliver their 144A Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent (or comply
with the procedures for book-entry transfer) prior to the Expiration Date, may
effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder of the 144A Notes, the
certificate or registration number(s) of such 144A Notes and the
principal amount of 144A Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within five (5) business days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof),
together with the certificate(s) representing the 144A Notes to be
tendered in proper form for transfer (or a confirmation of book-entry
transfer of such 144A Notes into the Exchange Agent's account at the
Depository) and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or facsimile
thereof), as well as all tendered 144A Notes in proper form for transfer
(or a confirmation of book-entry transfer of such 144A Notes into the
Exchange Agent's account at the Depository) and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within five business days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their 144A Notes according to the guaranteed
delivery procedures set forth above. Any Holder who wishes to tender 144A Notes
pursuant to the guaranteed delivery procedures described above must ensure that
the Exchange Agent receives the Notice of Guaranteed Delivery relating to such
Notes prior to the Expiration Date. Failure to complete the guaranteed delivery
procedures outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and executed by
a Holder who attempted to use the guaranteed delivery procedures.
7
<PAGE>
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Notes evidenced by a submitted
certificate is tendered, the tendering Holder should fill in the principal
amount tendered in the column entitled "Principal Amount Tendered" of the box
entitled "Description of Senior Subordinated Notes Tendered Hereby." A newly
issued 144A Note for the principal amount of 144A Notes submitted but not
tendered will be sent to such Holder as soon as practicable after the Expiration
Date. All 144A Notes delivered to the Exchange Agent will be deemed to have been
tendered in full unless otherwise indicated.
Any 144A Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date, after which tenders of 144A Notes are
irrevocable. To withdraw a tender of 144A Notes in the Exchange Offer, a written
or facsimile transmission notice of withdrawal must be received by the Exchange
Agent by 5:00 p.m., New York City time, on the Expiration Date. Any such notice
of withdrawal must (i) specify the name of the person having deposited the 144A
Notes to be withdrawn (the "Depositor"), (ii) identify the 144A Notes to be
withdrawn (including the certificate or registration number(s) and principal
amount of such 144A Notes, or, in the case of 144A Notes transferred by
book-entry transfer, the name and number of the account at the DTC to be
credited), (iii) be signed by the Depositor in the same manner as the original
signature on this Letter of Transmittal (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the 144A Notes register the transfer of such 144A Notes
into the name of the Depositor withdrawing the tender and (iv) specify the name
in which any such notes are to be registered, if different from that of the
Depositor and (v) include a statement that such holder is withdrawing his
election to have such 144A Notes exchanged. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, whose determination shall be final and binding on all
parties. Any 144A Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer and no Exchange Notes will be issued
with respect thereto unless the 144A Notes so withdrawn are validly retendered.
Any 144A Notes which have been tendered but which are not accepted for exchange,
will be returned to the Holder thereof without cost to such Holder as soon as
practicable after withdrawal, rejection of tender or termination of Exchange
Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered Holder(s) of the
144A Notes tendered hereby, the signature must correspond with the name(s) as
written on the face of the certificates without alteration or enlargement or any
change whatsoever. If this Letter of Transmittal is signed by a participant in
the Depository, the signature must correspond with the name as it appears on the
security position listing as the owner of the 144A Notes.
If any of the 144A Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of 144A Notes registered in different names are tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of 144A Notes.
Signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the Notes
tendered hereby are tendered (i) by a registered Holder who has not completed
the box entitled "Special Registration Instructions or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of 144A Notes (which term, for the purposes described herein, shall include a
participant in the Depository whose name appears on a security listing as the
owner of the 144A Notes) listed and tendered hereby, no endorsements of the
tendered 144A Notes or separate written instruments of transfer or exchange are
required. In any other case, the registered Holder (or acting Holder) must
either properly endorse the 144A Notes or transmit properly completed bond
powers with this Letter of Transmittal (in either case, executed exactly as the
name(s) of the registered Holder(s) appear(s) on the 144A Notes, and, with
respect to a participant in the Depository whose name appears on a security
position listing as the owner of 144A Notes, exactly as the name of the
participant appears on such security position listing), with the signature on
the 144A Notes or bond power guaranteed by an Eligible Institution (except where
the 144A Notes are tendered for the account of an Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or other
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
8
<PAGE>
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the name and
address (or account at the Depository) in which the Exchange Notes or substitute
144A Notes for principal amounts not tendered or not accepted for exchange are
to be issued (or deposited), if different from the names and addresses or
accounts of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the employer identification number or social
security number of the person named must also be indicated and the tendering
Holder should complete the applicable box.
If no instructions are given, the Exchange Notes (and any 144A Notes not
tendered or not accepted) will be issued in the name of and sent to the acting
Holder of the 144A Notes or deposited at such Holder's account at the
Depository.
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the exchange
of 144A Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or 144A Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered Holder of the 144A Notes
tendered, or if tendered 144A Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of 144A Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered Holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted herewith, the amount of such transfer taxes will be billed
directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the 144A Notes listed in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the right, in its reasonable judgment, to waive, in
whole or in part, any of the conditions to the Exchange Offer set forth in the
Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any Holder whose 144A Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number(s) set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to BLUE BIRD BODY COMPANY, 3920 Arkwright Road,
Macon, Georgia, 31210, telephone (912) 757-7100.
10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered 144A Notes and withdrawal of tendered 144A
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all 144A Notes not properly tendered or any 144A Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular 144A Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions in
this Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of 144A Notes
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of 144A Notes,
nor shall any of them incur any liability for failure to give such notification.
Tenders of 144A Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any 144A Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent to the tendering Holders of 144A Notes, unless
otherwise provided herein, as soon as practicable following the Expiration Date.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering 144A Notes is required to
provide the Exchange Agent with such Holder's correct TIN on Substitute Form W-9
above. If such Holder is an individual, the TIN is the Holder's social security
number. The Certificate of Awaiting Taxpayer Identification Number should be
completed if the tendering Holder has not been issued a TIN and has applied for
a number or intends to apply for a number in the near future. If the Exchange
Agent is not provided with the correct TIN, the Holder may be subject to a $50
penalty imposed by the Internal Revenue Service. In addition, payments that are
made to such Holder with respect to tendered 144A Notes may be subject to backup
withholding.
Certain Holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. Such a Holder, who satisfies one
or more of the conditions set forth in Part 2 of the Substitute Form W-9 should
execute the certification following such Part 2. In order for a foreign Holder
to qualify as an exempt recipient, that Holder must submit to the Exchange Agent
a properly completed Internal Revenue Service Form W-9, signed under penalties
of perjury, attesting to that Holder's exempt status. Such forms can be obtained
from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder with
respect to 144A Notes tendered for exchange, the Holder is required to notify
the Exchange Agent of his or her correct TIN by completing the form herein
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii) such Holder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of failure to report all interest or dividends
or (iii) the Internal Revenue Service has notified such Holder that he or she is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the 144A
Notes. If 144A Notes are in more than one name or are not in the name of the
actual Holder, consult the instructions on Internal Revenue Service Form W-9,
which may be obtained from the Exchange Agent, for additional guidance on which
number to report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, write "Applied For"
in the space for the TIN or Substitute Form W-9, sign and date the form and the
Certificate of Awaiting Taxpayer Identification Number and return them to the
Exchange Agent. If such certificate is completed and the Exchange Agent is not
provided with the TIN within 60 days, the Exchange Agent will withhold 31% of
all payments made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
144A NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE
AGENT ON OR PRIOR TO THE EXPIRATION DATE.
10
<PAGE>
EXHIBIT 99.2
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
IRS INSTRUCTIONS
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.)
PURPOSE OF FORM.--A person who is required to file an information return
with the Internal Revenue Service (the IRS) must obtain your correct taxpayer
identification number (TIN) to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an individual retirement account
(IRA). Use Form W-9 to furnish your correct TIN to the requester (the person
asking you to furnish your TIN), and, when applicable, (1) to certify that the
TIN you are furnishing is correct (or that you are waiting for a number to be
issued), (2) to certify that you are not subject to backup withholding, and (3)
to claim exemption from backup withholding if you are an exempt payee.
Furnishing your correct TIN and making the appropriate certifications will
prevent certain payments from being subject to backup withholding.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN,
YOU MUST USE THE REQUESTER'S FORM.
HOW TO OBTAIN A TIN. If you do not have a TIN, apply for one immediately.
To apply, get Form SS-5, Application for a Social Security Card (SSN) (for
individuals), from your local office of the Social Security Administration, or
Form SS-4, Application for Employer Identification Number (EIN) (for businesses
and all other entities), from your local IRS office.
To complete Form W-9, if you do not have a TIN, check the box in Part 3 of
the substitute Form W-9, sign and date the form, and give it to the requester.
Generally, you will then have 60 days to obtain a TIN and furnish it to the
requester. If the requester does not receive your TIN within 60 days, backup
withholding, if applicable, will begin and continue until you furnish your TIN
to the requester. For reportable interest or dividend payments, the payer must
exercise one of the following options concerning backup withholding during this
60-day period. Under option (1), a payer must backup withhold on any withdrawals
you make from your account after 7 business days after the requester receives
this form back from you. Under option (2), the payer must backup withhold on any
reportable interest or dividend payments made to your account, regardless of
whether you make any withdrawals. The backup withholding under option (2) must
begin no later than 7 business days after the requester receives this form back.
Under option (2), the payer is required to refund the amounts withheld if your
certified TIN is received within the 60-day period and you were not subject to
backup withholding during the period.
NOTE: CHECKING THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9 MEANS THAT YOU
HAVE ALREADY APPLIED FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR
FUTURE.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date this form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING? Persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, non-employee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) The IRS notifies the requester that you furnished an incorrect TIN,
or
1
<PAGE>
(3) You are notified by the IRS that you are subject to backup
withholding because you failed to report all your interest and dividends on
your tax return (for reportable interest and dividends only), or
(4) You fail to certify to the requester that you are not subject to
backup withholding under (3) above (for reportable interest and dividend
accounts opened after 1983 only), or
(5) You fail to certify your TIN. This applies only to reportable
interest, dividend, broker or barter exchange accounts opened after 1983, or
broker accounts considered inactive in 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See PAYEES AND
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING, below, and EXEMPT PAYEES AND PAYMENTS
under SPECIFIC INSTRUCTIONS, on page 2, if you are an exempt payee.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. The following is a list
of payees exempt from backup withholding and for which no information reporting
is required. For interest and dividends, all listed payees are exempt except
item (9). For broker transactions, payees listed in (1) through (13) and a
person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in Items (1) through (7), except that a corporation that provides
medical and health care services or bills and collects payments for such
services is not exempt from backup withholding or information reporting. Only
payees described in items (2) through (6) are exempt from backup withholding for
barter exchange transactions, patronage dividends, and payments by certain
fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a), or an IRA, or
a custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United
States, or any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies
or instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the
U.S. or a possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under Section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or
listed in the most recent publication of the American Society of Corporation
Secretaries, Inc., Nominee List.
(15) A trust exempt from tax under Section 664 or described in Section
4947.
Payments of dividends and patronage dividends generally not subject to
backup withholding also include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in trade or business in the U.S. and
that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
2
<PAGE>
Payments of interest generally not subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE NOT
PROVIDED YOUR CORRECT TIN TO THE PAYER.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and their regulations.
PENALTIES
FAILURE TO FURNISH TIN. If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
NAME. If you are an individual, you must generally provide the name shown
on your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name. Enter your
name(s) as shown on your social security card and/or as it was used to apply for
your EIN on Form SS-4.
SIGNING THE CERTIFICATION.
(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. You are required to furnish your
correct TIN, but you are not required to sign the certification.
(2) INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER
1983 AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item (2) in the certification before signing the form.
(3) REAL ESTATE TRANSACTIONS. You must sign the certification. You may
cross out item (2) of the certification.
(4) OTHER PAYMENTS. You are required to furnish your correct TIN, but you
are not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
3
<PAGE>
(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, OR IRA CONTRIBUTIONS. You are requested to furnish your correct TIN,
but you are not required to sign the certification.
(6) EXEMPT PAYEES AND PAYMENTS. If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part 1, write "EXEMPT" in the block in Part 2, and
sign and date the form. If you are a nonresident alien or foreign entity not
subject to backup withholding, give the requester a completed Form W-8,
Certificate of Foreign Status.
(7) "AWAITING TIN". Follow the instructions under HOW TO OBTAIN A TIN, on
page 1, check the box in Part 3 of the Substitute Form W-9 and sign and date the
form.
SIGNATURE. For a joint account, only the person whose TIN is shown in Part
1 should sign the form.
PRIVACY ACT NOTICE. Section 6109 requires you to furnish your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, or contributions you made to an
IRA. The IRS uses the numbers for identification purposes and to help verify the
accuracy of your tax return. You must provide your TIN whether or not you are
required to file a tax return. Payers must generally withhold 31% of taxable
interest, dividends, and certain other payments to a payee who does not furnish
a TIN to a payer. Certain penalties may also apply.
4
<PAGE>
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE NAME AND SOCIAL SECURITY NUMBER OF:
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of the account or, if
combined funds, the first individual on the
account (1)
3. Custodian account of a minor (Uniform Gift to The minor (2)
Minors Act)
4. a. The usual revocable savings trust (grantor The grantor-trustee (1)
is also trustee)
b. So-called trust account that is not a legal The actual owner (1)
or valid trust under state law
5. Sole proprietorship The owner (3)
6. A valid trust, estate or pension trust Legal entity (4)
7. Corporate The corporation
8. Association, club, religious, charitable, The organization
educational, or other tax-exempt organization
9. Partnership The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of Agriculture in The public entity
the name of a public entity (such as a state
or local government, school district, or
prison) that receives agricultural program
payments
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the individual's name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL BE
CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
5
<PAGE>
EXHIBIT 99.3
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
10 3/4% SENIOR SUBORDINATED NOTES DUE 2006
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
BLUE BIRD BODY COMPANY
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Blue Bird Body Company (the "Company") made pursuant to the
Prospectus, dated , 1996 (the "Prospectus"), if certificates for the
outstanding 10 3/4% Senior Subordinated Notes Due 2006 of the Company (the "144A
Notes") are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Exchange Agent prior to 5:00 p.m., New York
time, on the Expiration Date of the Exchange Offer. Such form may be delivered
or transmitted by telegram, telex, facsimile transmission, mail or hand delivery
to The Chase Manhattan Bank (the "Exchange Agent") as set forth below. In
addition, in order to utilize the guaranteed delivery procedure to tender 144A
Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of
Transmittal (or facsimile thereof) must also be received by the Exchange Agent
prior to 5:00 p.m., New York City time, on the Expiration Date. Capitalized
terms not defined herein are defined in the Prospectus.
THE CHASE MANHATTAN BANK, EXCHANGE AGENT
BY MAIL, HAND OR OVERNIGHT DELIVERY:
The Chase Manhattan Bank
55 Water Street
Room 234
North Building
New York, New York 10041
Attention: Carlos Esteves
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(212) 638-7375
(212) 344-9367
CONFIRM BY TELEPHONE:
Carlos Esteves: (212) 638-0828
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Company the principal amount of 144A Notes set forth below, pursuant to the
guaranteed delivery procedure described in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of 144A Notes Tendered:*
$
- ---------------------------------
Certificate Nos. (if available):
- ------------------------------------
Total Principal Amount Represented by Certificate(s):
$
- ---------------------------------
*Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned.
PLEASE SIGN HERE
<TABLE>
<S> <C>
X
X
Signature(s) of Owner(s) Date
or Authorized Signatory
</TABLE>
Area Code and Telephone Number:
- ----------------------------
Must be signed by the holder(s) of 144A Notes as their name(s) appear(s) on
certificates for 144A Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below. If 144A Notes will be delivered by book-entry
transfer to The Depository Trust Company, provide account number.
<TABLE>
<S> <C>
Please print name(s) and address(es)
Name(s):
Capacity:
Address(es):
Account Number:
</TABLE>
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a financial institution (including most banks, savings and
loan associations and brokerage houses) that is a participant in the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Program or the Stock Exchanges Medallion Program, hereby guarantees
that the undersigned will deliver to the Exchange Agent the certificates
representing the 144A Notes being tendered hereby or confirmation of book-entry
transfer of such 144A Notes into the Exchange Agent's account at The Depository
Trust Company, in proper form for transfer, together with any other documents
required by the Letter of Transmittal within three New York Stock Exchange
trading days after the Expiration Date.
Name of Firm ___________________________________________________________________
Address ________________________________________________________________________
__________________________________________________________________________
Area Code & Telephone No. ______________________________________________________
Authorized Signature ___________________________________________________________
Name ___________________________________________________________________________
(Please Type or Print)
Title __________________________________________________________________________
Date ___________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES OF 144A NOTES WITH THIS FORM. CERTIFICATES OF
144A NOTES SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED
LETTER OF TRANSMITTAL.
