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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 3711 86-0706940
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation organization) Classification Code Number) Identification Number)
SUBSIDIARY GUARANTORS:
DELAWARE BUSLEASE, INC. 86-0713116
DELAWARE HAUSMAN BUS SALES, INC. 86-0544345
DELAWARE MOTOR COACH INDUSTRIES, INC. 45-0277789
DELAWARE TRANSIT BUS INTERNATIONAL, INC. 86-0286696
DELAWARE UNIVERSAL COACH PARTS, INC. 86-0300647
(State or other jurisdiction of (Exact name of Registrant as (I.R.S. Employer
Incorporation or Organization) specified in its charter) Identification Number)
</TABLE>
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10 EAST GOLF ROAD
DES PLAINES, IL 60016
(847) 299-9900
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
------------------------------
JAMES P. BERNACCHI
CHIEF EXECUTIVE OFFICER
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
10 EAST GOLF ROAD
DES PLAINES, IL 60016
(847) 299-9900
(Name, address, including zip code, and telephone number, including area code of
agent for service)
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COPY OF ALL COMMUNICATIONS TO:
R. CABELL MORRIS, JR.
WINSTON & STRAWN
35 WEST WACKER DRIVE
CHICAGO, IL 60601-9703
(312) 558-5600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If any of 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. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SECURITY(1) PRICE REGISTRATION FEE
11 1/4% Senior Subordinated
Notes due 2009.................... $152,250,000 100% $152,250,000 $42,325.50
Guarantees of the 11 1/4% Senior
Subordinated Notes Due 2009....... $152,250,000 None(2) None(2) None(2)
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(1) Estimated solely for purposes of calculating the registration fees pursuant
to Rule 457(c).
(2) Pursuant to Rule 457(n) under the Securities Act, no separate fee is payable
for the guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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<PAGE>
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THE EXCHANGE NOTES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THE EXCHANGE NOTES, AND IT IS NOT SEEKING AN OFFER TO BUY THE
EXCHANGE NOTES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS WILL BE AMENDED OR COMPLETED
DATED JULY 28, 1999
PROSPECTUS
$152,250,000
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
(FORMERLY TRANSPORTATION MANUFACTURING OPERATIONS, INC.)
OFFER TO EXCHANGE
OUR 11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR
ANY AND ALL OF OUR OUTSTANDING
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED.
We are offering to exchange our 11 1/4% Senior Subordinated Notes due 2009
which have been registered under the Securities Act of 1933 for any and all of
our outstanding 11 1/4% Senior Subordinated Notes due 2009 issued on June 16,
1999.
THE EXCHANGE NOTES
- The terms of the registered exchange notes to be issued are substantially
identical to the terms of the outstanding notes that we issued on June 16,
1999, except for transfer restrictions, registration rights and liquidated
damages provisions relating to the outstanding notes which will not apply
to the exchange notes.
- Interest on the exchange notes accrues at the rate of 11 1/4% per year,
payable in cash every six months on May 1 and November 1, with the first
interest payment on November 1, 1999.
- We may redeem any of the exchange notes beginning on May 1, 2004. The
initial redemption price is 105.625% of their principal amount plus
accrued interest. In addition before May 1, 2002, we may redeem up to 35%
of the exchange notes at a redemption price of 111.25% of their principal
amount plus accrued interest using proceeds from certain equity offerings
of our capital stock.
- The exchange notes will rank equally with all of our other unsecured
senior subordinated debt and will be junior to our senior debt. The
exchange notes are guaranteed on a senior subordinated basis by our
present and future domestic restricted subsidiaries.
MATERIAL TERMS OF THE EXCHANGE OFFER
- The exchange offer expires at 5:00 p.m., New York City time, on
, 1999, unless extended.
- All outstanding notes that are validly tendered and not validly withdrawn
will be exchanged for an equal principal amount of exchange notes which
are registered under the Securities Act.
- Tenders of outstanding notes may be withdrawn at any time prior to the
expiration of the exchange offer.
- The exchange offer is not subject to any minimum tender condition, but is
subject to the terms of the registration rights agreement that we entered
into on June 16, 1999 with the placement agents for the outstanding notes
and the subsidiary guarantees.
- We will not receive any proceeds from the exchange offer.
- We will pay the expenses of the exchange offer.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 16 OF THIS
PROSPECTUS BEFORE INVESTING.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE NOTES OR PASSED UPON THE ADEQUACY
OR ACCURACY OF THIS PROSPECTUS OR THE INVESTMENT MERITS OF THE SECURITIES
OFFERED IN THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL WE ACCEPT SURRENDER FOR
EXCHANGE FROM, HOLDERS OF OUTSTANDING NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
--------------------------
The date of this prospectus is , 1999
<PAGE>
TABLE OF CONTENTS
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Important Information About this Prospectus.......................................... i
Forward-Looking Statements........................................................... i
Where You Can Find More Information.................................................. i
Industry and Sales Data.............................................................. ii
Name Change.......................................................................... ii
Prospectus Summary................................................................... 1
Risk Factors......................................................................... 16
The Exchange Offer................................................................... 25
Capitalization....................................................................... 35
Selected Consolidated Historical Financial Data...................................... 36
Pro Forma Unaudited Condensed Consolidated Financial Information..................... 38
Management's Discussion and Analysis of Financial Condition and Results of
Operations......................................................................... 43
Business............................................................................. 51
Management........................................................................... 67
Security Ownership of Certain Beneficial Owners and Management....................... 71
Certain Transactions; Relationship with Grupo Dina................................... 73
Description of the Senior Credit Facility............................................ 77
Description of the Exchange Notes.................................................... 78
Material Federal Tax Considerations.................................................. 116
Plan of Distribution................................................................. 119
Legal Matters........................................................................ 120
Experts.............................................................................. 120
Index to Consolidated Financial Statements........................................... F-1
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IMPORTANT INFORMATION ABOUT THIS PROSPECTUS
The information in this prospectus is current only as of the date on its
cover, and may change after that date. For any time after the date on the cover
of this prospectus, we do not represent that our affairs are the same as
described or that the information in this prospectus is correct--nor do we imply
those things by delivering this prospectus or selling securities to you.
We have used information that we believe comes from reliable sources, but we
do not assure you that the information in this prospectus is accurate or
complete. This prospectus contains summaries, believed to be accurate, of
certain terms of certain documents. All such summaries are qualified in their
entirety by reference to the actual documents. Copies of the actual documents
will be made available upon request to us. In making an investment decision, you
must rely upon your own examination of this prospectus and the terms of the
offering and these notes, including the merits and risks involved.
You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with the different
information. If anyone provides you with different or inconsistent information,
you should not rely on it.
You might not be legally able to participate in the exchange offer--we are
not giving you legal, business, financial or tax advice about any matter. You
should consult with your own attorney, accountant and other advisors about those
matters.
FORWARD-LOOKING STATEMENTS
WE MAKE "FORWARD-LOOKING STATEMENTS" THROUGHOUT THIS PROSPECTUS. WHENEVER
YOU READ A STATEMENT THAT IS NOT SIMPLY A STATEMENT OF HISTORICAL FACT, SUCH AS
WHEN WE DESCRIBE WHAT WE "BELIEVE," "EXPECT" OR "ANTICIPATE" WILL OCCUR, AND
OTHER SIMILAR STATEMENTS, YOU MUST REMEMBER THAT OUR EXPECTATIONS MAY NOT BE
CORRECT, EVEN THOUGH WE BELIEVE THEY ARE REASONABLE. WE DO NOT GUARANTEE THAT
THE TRANSACTIONS AND EVENTS DESCRIBED IN THIS PROSPECTUS WILL HAPPEN AS
DESCRIBED, OR THAT THEY WILL HAPPEN AT ALL. YOU SHOULD READ THIS PROSPECTUS
COMPLETELY AND WITH THE UNDERSTANDING THAT ACTUAL FUTURE RESULTS MAY BE
MATERIALLY DIFFERENT FROM WHAT WE EXPECT. WE WILL NOT UPDATE THESE FORWARD-
LOOKING STATEMENTS, EVEN THOUGH OUR SITUATION WILL CHANGE IN THE FUTURE. MANY OF
THE FACTORS THAT WILL DETERMINE THESE RESULTS ARE BEYOND OUR ABILITY TO CONTROL
OR PREDICT. YOU ARE CAUTIONED NOT TO PUT UNDUE RELIANCE ON ANY FORWARD-LOOKING
STATEMENT.
YOU SHOULD UNDERSTAND THAT A NUMBER OF FACTORS, IN ADDITION TO THOSE
DISCUSSED HEREIN, COULD AFFECT US AND COULD CAUSE RESULTS TO DIFFER MATERIALLY
FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS. AMONG THESE FACTORS
ARE: (1) INCREASED COMPETITION IN OUR MARKETS, (2) OUR SUBSTANTIAL LEVERAGE AND
UNCERTAINTIES ASSOCIATED WITH SERVICING OUR DEBT, (3) CHANGES IN LAWS OR
REGULATIONS AND APPROVALS AND DECISIONS OF COURTS, REGULATORS AND GOVERNMENTAL
BODIES, (4) UNCERTAINTIES ASSOCIATED WITH THE GENERAL ECONOMIC CONDITIONS IN OUR
MARKETS, (5) DEPENDENCE ON THE INTER-CITY COACH AND TRANSIT BUS INDUSTRIES, (6)
CHANGES IN PRODUCT DEMAND, (7) CHANGES IN CUSTOMER CONCENTRATION, (8) INTEREST
RATE FLUCTUATIONS, (9) RISKS ASSOCIATED WITH MEXICAN OPERATIONS, (10) FOREIGN
CURRENCY RISKS AND (11) DEPENDENCE ON SUPPLIERS. FURTHER, WE OPERATE IN AN
INDUSTRY SECTOR WHERE SECURITIES' VALUES MAY BE VOLATILE AND MAY BE INFLUENCED
BY ECONOMIC AND OTHER FACTORS BEYOND OUR CONTROL. WE DO NOT INTEND, AND
UNDERTAKE NO OBLIGATION, TO UPDATE THESE FORWARD-LOOKING STATEMENTS.
WHERE YOU CAN FIND MORE INFORMATION
Motor Coach Industries International, Inc. and the subsidiary guarantors
have filed a registration statement with the SEC under the Securities Act to
register the exchange notes to be issued in this exchange offer. As allowed by
the SEC's rules, this prospectus does not contain all of the information that
you can find in the registration statement and its exhibits. You will find
additional information
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about MCII, the subsidiary guarantors and the exchange notes in the registration
statement. Any statements made in this prospectus concerning the contents of a
contract, agreement or other document are not necessarily complete. If we have
filed any contract, agreement or other document as an exhibit to the
registration statement, you should read the exhibit for a more complete
understanding of the document or matter involved.
The indenture governing the outstanding notes will also govern the exchange
notes. The outstanding notes and the exchange notes, together, are a single
series of debt securities. The indenture requires us to provide quarterly and
annual financial reports to holders of the exchange notes.
You should not assume that the information in this prospectus is accurate as
of any date other than the date of this prospectus, or the respective dates of
those documents we incorporate herein by reference, regardless of when you
received this prospectus. You should rely only on the information provided in
the registration statement. We have not authorized anyone else to provide you
with different information. The exchange offer is being made to, and we will
accept surrender for exchange from, holders of outstanding notes only in
jurisdictions where the exchange offer is permitted.
As a result of the exchange offer, MCII will become subject to the
informational requirements of the Securities Exchange Act of 1934 and will file
periodic reports, statements and other information with the SEC. We do not
expect that the subsidiary guarantors will be subject to the informational
requirements of the Exchange Act. You may inspect and copy the registration
statement, including exhibits, and, when filed, our periodic reports, statements
and other information filed with the SEC at the public reference facilities
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located at 7
World Trade Center, New York, New York 10048 and at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies may be obtained from
the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The SEC also maintains a Web site at
HTTP://WWW.SEC.GOV which will contain, when filed, our reports, statements and
other information filed with the SEC.
If we are not required to be subject to the reporting requirements of the
Exchange Act in the future, we will be required under the indenture for the
exchange notes and the outstanding notes to continue to file with the SEC and to
furnish to holders of the new notes and the outstanding notes the reports,
statements and other information specified in Sections 13 and 15(d) of the
Exchange Act, including annual reports containing audited consolidated financial
statements of MCII and quarterly reports containing unaudited condensed
consolidated financial data for the first three quarters of each fiscal year.
INDUSTRY AND SALES DATA
Unless otherwise indicated, all inter-city coach industry data and
statistics contained in the prospectus are estimates contained in or derived
from independent reports and surveys periodically issued by NATIONAL BUS TRADER
magazine and BUS BOOK PUBLISHING. Industry and sales publications generally
state that the information contained in these publications have been obtained
from sources believed to be reliable, but that the accuracy and completeness of
such information is not guaranteed. We have not independently verified this
industry and sales data.
NAME CHANGE
Concurrent with the closing of the offering of the outstanding notes, we
changed our name from Transportation Manufacturing Operations, Inc. to Motor
Coach Industries International, Inc.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THE PROSPECTUS
AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. WE
ENCOURAGE YOU TO READ THIS PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS"
SECTION AND FINANCIAL STATEMENTS. IN THIS PROSPECTUS, (1) GRUPO DINA REFERS TO
CONSORCIO G GRUPO DINA, S.A. DE C.V., A MEXICAN CORPORATION, (2) MCII HOLDINGS
REFERS TO MCII HOLDINGS (USA), INC., A DELAWARE CORPORATION, AND (3) WE, US, OUR
AND SIMILAR TERMS, AS WELL AS REFERENCES TO OUR COMPANY AND MCII REFER TO MOTOR
COACH INDUSTRIES INTERNATIONAL, INC. AND ITS SUBSIDIARIES INCLUDING DINA
AUTOBUSES, S.A. DE C.V. AND ITS SUBSIDIARIES.
THE COMPANY
We are the leading designer, manufacturer and marketer of inter-city coaches
and related replacement parts for the North American market. We began
manufacturing inter-city coaches and distributing replacement parts in 1933.
Since the late 1970s, we have consistently maintained a market share in excess
of 50% of the United States and Canadian inter-city coach market and estimate
that our 1998 market share was 56%. Our established market position and product
longevity have led to an installed base that, according to a BUS BOOK PUBLISHING
report, exceeds 70% of the estimated 38,000 industry-wide fleet of inter-city
coaches operating in the United States and Canada in 1998. We believe that
strong brand name recognition under the MCI-Registered Trademark- logo and a
reputation for quality products have led to our large installed customer base
and lead to new coach purchases and demand for our replacement parts. We also
believe that we are the largest distributor of replacement parts for inter-city
coaches and transit buses in the United States and Canada with an estimated 33%
of this combined market.
From 1995 to 1998, our annual revenues have grown from $527.1 million to
$931.7 million, representing a 20.9% compound annual growth rate. We attribute
our growth to the successful introduction of new coach models, the upgrading and
expansion of several of our existing product lines and strong industry
fundamentals. Over that same period, our annual EBITDA has increased from $59.1
million in 1995 to $108.6 million in 1998, representing a 22.5% compound annual
growth rate. Our revenues and Adjusted EBITDA for the twelve months ended March
31, 1999 were $951.4 million and $113.4 million, respectively.
Our principal lines of business are:
MANUFACTURING AND SELLING NEW COACHES. We design, manufacture and market
new coaches in the United States, Canada and Mexico. In the United States and
Canada, we sell our coaches under the MCI-Registered Trademark- and
VIAGGIO-REGISTERED TRADEMARK- names and in Mexico and Latin America we sell
under the DINA and VIAGGIO-Registered Trademark- names. Our broad product lines
and comprehensive option offerings target each level of the inter-city coach
market, ranging from high-end charter coaches to lower-cost line-haul coaches.
For the twelve months ended March 31, 1999, new coach sales represented 70.1%
and 82.4% of our revenues and EBITDA, respectively.
MANUFACTURING AND SELLING REPLACEMENT PARTS. We manufacture and/or
distribute throughout North America more than 60,000 replacement parts for
inter-city coaches, approximately 20% of which are our proprietary products.
Besides our OEM products, we also distribute non-OEM replacement parts under our
COACH GUARD-REGISTERED TRADEMARK- and DIESEL GUARD-REGISTERED TRADEMARK- brand
names. For the twelve months ended March 31, 1999, replacement parts represented
19.4% and 24.1% of our revenues and EBITDA, respectively.
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To support our principal business lines, we engage in the following related
activities:
USED COACH SALES AND SERVICE. Through our broad sales network, we provide
used coach brokerage and dealership services. Due to our large installed base of
coaches, our extensive maintenance and repair capabilities, longstanding
customer relationships and industry knowledge, we are able to further support
our customers by purchasing and reselling used coaches. In addition, we have one
of the largest coach service center networks, with five centers located
throughout the United States and Canada. We believe our dedicated sales, parts
and service network enhances the high residual values enjoyed by our coaches,
which in turn is a major selling point when marketing new coaches.
LEASING AND FINANCING COACHES. To further support our sales efforts, we
offer a comprehensive package of leasing and financing services to our
customers. Our leasing and financing services allow us to generate incremental
sales and provide us with an additional competitive advantage due to our ability
to assist customers in financing their coach purchases.
According to NATIONAL BUS TRADER, a leading industry publication, the growth
of the inter-city coach industry has been driven by several factors including
the overall strength of the U.S. economy, the expected increase in coach tourism
resulting from the aging U.S. population and the fleet upgrading being
undertaken by many inter-city coach operators. According to NATIONAL BUS TRADER,
the general health of the U.S economy and the resulting increase in disposable
incomes and consumer confidence has led to increased leisure travel. NATIONAL
BUS TRADER also believes that inter-city coach fleet improvement and
modernization may have been the most significant factor behind new coach unit
growth in 1998. Operators are replacing older 40-foot, manual transmission
coaches with newer 45-foot, automatic transmission models. NATIONAL BUS TRADER
believes that this fleet improvement and modernization trend will continue to
drive demand in 1999. In addition, inter-city coach sales have benefited from
the prevailing low interest rates experienced in recent years.
COMPETITIVE STRENGTHS
RECOGNIZED INDUSTRY LEADER. We have been a leading manufacturer of
inter-city coaches and replacement parts in the United States and Canada for
more than 30 years. According to the NATIONAL BUS TRADER, we had the two most
popular, and four of the top six, seated coach models delivered in the United
States and Canada in 1998. We offer our customers what we believe is the
broadest range of parts and provide our customers with prompt delivery,
generally within 24-hours.
FIRMLY ESTABLISHED RELATIONSHIP WITH GREYHOUND LINES. For over 30 years, we
have been the principal supplier of coaches to Greyhound Lines, Inc. and
Greyhound Lines of Canada, Ltd., which are both owned by Laidlaw Inc., the
largest buyer of coaches in North America. Our coaches currently represent
greater than 90% of the approximately 3,100 vehicles in Greyhound's combined
fleet. We currently have dedicated supplier agreements with Greyhound Lines and
Greyhound Canada for inter-city coaches which requires Greyhound Lines to
purchase at least 80% of its new coaches from us and Greyhound Canada to
purchase at least 75% of its new coaches from us. In addition, we are developing
our next generation line-haul coach, the G-Series, in consultation with
Greyhound Lines. We expect that we will begin pilot production of the G-Series
in late 1999.
FAVORABLE TRENDS. We expect to benefit from several favorable trends in the
coach industry, including (1) the resurgence of Greyhound as a national
line-haul operator, and the commitment to the inter-city coach business shown by
Laidlaw's acquisition of Greyhound, (2) the growth of Coach USA, Inc., the
leading tour and charter operator in the United States, adding stability in the
tour and charter segment of the industry, and (3) the acceleration of the fleet
replacement cycle for our top two customers, Greyhound and Coach USA.
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CONTINUED MANUFACTURING EFFICIENCY IMPROVEMENTS. During 1998, we decreased
per unit manufacturing costs. We have improved our manufacturing capacity while
reducing costs through improved product design and manufacturing process
improvements. For example, the new E-Series RENAISSANCE-REGISTERED TRADEMARK-
coach was introduced during 1997 and is built using approximately one-third
fewer parts than previous models. The advanced design of the E-Series coach
significantly reduces production labor hours and is intended to increase product
quality.
COMPLEMENTARY PRODUCT LINES MITIGATE CYCLICAL MARKETS. Our operations
combine the new coach manufacturing business, which performs best in a strong
general economic environment, with the replacement parts, used coach sales and
service businesses, which have historically performed more favorably during
general economic downturns. Replacement parts and service sales tend to increase
during an economic downturn as customers defer new coach purchases and extend
the useful lives of their existing fleets. The complementary nature of our
businesses tends to mitigate the impact of reduced new coach sales during
periods of economic downturns.
BARRIERS TO ENTRY. To be competitive, potential participants looking to
enter the inter-city coach manufacturing industry would need to make significant
capital investments in plant and equipment and hire from a limited pool of
experienced engineering, manufacturing and R&D personnel. We believe that
further barriers include our brand recognition and customer loyalty that result
from our leading market position and significant installed customer base. A
successful coach manufacturer must make significant capital investments to
support its customers through a large inventory of replacement parts and
nationwide service centers. Furthermore, switching coach manufacturers is
expensive and time consuming for fleet operators, as drivers and maintenance
personnel would need to be retrained and replacement parts would need to be
restocked in order to service and maintain multiple coach brands.
STATE-OF-THE-ART DESIGNS. The E-Series RENAISSANCE-Registered Trademark-,
which was introduced in 1997, has been well received by customers and the
inter-city coach industry. The E-Series was the co-winner of the 1996 Concurrent
Engineering Award for new product design given jointly by Structural Dynamics
Research Corporation and MACHINE DESIGN magazine. The E-Series was engineered to
maximize manufacturing efficiencies by requiring fewer assembly hours and parts.
We believe that the E-Series' patented spiral staircase, advanced audio systems
and larger overhead luggage racks and lavatories are innovative features that
have contributed to its success. Our G-Series coach incorporates the engineering
advances and lessons learned from the development of the E-Series.
BUSINESS STRATEGY
Our business objective is to profitably grow our position as the leading
North American manufacturer of inter-city coaches. In order to do so, we will
pursue the following strategies:
CONTINUE NEW PRODUCT INTRODUCTIONS AND REFINEMENTS. In the last two years,
we have introduced two new model lines, the E-Series
RENAISSANCE-REGISTERED TRADEMARK- coach, for use in the luxury tour and charter
markets, and the F-Series coach, a lower cost line-haul model initially designed
for the Mexican marketplace. Each unit is highly competitive within its specific
market, and customer acceptance of both units was high in 1998. In late 1999, we
intend to begin pilot production of our G-Series coach. The all-new G-Series is
being designed in consultation with Greyhound primarily to serve the needs of
the U.S. line-haul market. Going forward, we intend to refine existing and new
product lines to meet the needs of our customers.
LEVERAGE LOW COST MANUFACTURING. We continue to seek to improve our margins
by lowering our manufacturing costs. In particular, we have an opportunity to
utilize available production capacity at our ISO 9001 certified facility in
Sahagun, Mexico. This process began in a limited manner with the introduction of
the DOT certified VIAGGIO-REGISTERED TRADEMARK- 1000 model, which addresses the
lower-cost niche in the United States and Canadian markets. As part of our
long-term strategy, we plan to use our Sahagun
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facility to manufacture the new F- and G-Series models. We expect that this will
allow us to manufacture these vehicles at a lower unit cost than they could be
produced in our existing U.S. and Canadian facilities due to significantly lower
labor costs in Mexico.
SEEK NEW MARKET NICHES. In the near term, we intend to build on the success
of recently launched model lines. In the United States, we will increase our
marketing of E-Series coaches in shell form into the high-end motor home
conversion segment. In the longer term, we are considering marketing the
F-Series unit to select U.S. niche markets, including the motor home conversion
and airport transfer markets.
CONTINUE TO IMPROVE SERVICE OFFERINGS. We believe that our success is
largely attributable to our dedication to customer service. Our full-service
approach is applied to all segments of our business, including new coach sales,
used coach sales, replacement parts, service, financing and leasing. Since the
beginning of 1998, we opened new service facilities in Dallas, Montreal and Los
Angeles, and further service facilities are under consideration. We also
recently announced plans to consolidate our existing parts facilities into a new
single facility to be built in Louisville, Kentucky. The strategic location of
this facility will permit us to accept orders later than our current
capabilities for next day delivery. In addition to increasing customer service,
the Louisville facility is expected to significantly reduce overall operating
costs and benefit from local government tax incentives.
FURTHER RATIONALIZE OPERATIONS. We believe we can continue to reduce costs
through further process and manufacturing re-engineering. In the U.S. and
Canadian coach business, we improved our operating margin through reductions in
support personnel and the elimination of redundancies. We continue to
re-engineer our manufacturing processes and component designs in order to
increase parts standardization and reduce manufacturing costs. We believe that
parts standardization will result in faster parts delivery to our customers and
increased profitability and market penetration due to higher product quality.
------------------------
We are a Delaware corporation. Our principal executive offices are located
at 10 East Golf Road, Des Plaines, Illinois 60016 (Telephone (847) 299-9900).
THE TRANSACTIONS
The offering of the outstanding notes was part of an overall plan to
recapitalize and restructure substantially all of the indebtedness of Grupo Dina
and its subsidiaries, including MCII, through a series of dependent transactions
(the "Transactions"). The Transactions were comprised of the following
transactions, each of which occured simultaneously with the offering of the
outstanding notes.
SALE OF MAJORITY EQUITY INTEREST IN MCII HOLDINGS. On June 16, 1999, Joseph
Littlejohn & Levy Fund III L.P., an affiliate of Joseph Littlejohn & Levy, Inc.,
along with affiliates of Canadian Imperial Bank of Commerce, an affiliate of
CIBC World Markets Corp., an initial purchaser of the outstanding notes,
invested $175 million in MCII Holdings comprised of (1) a $125 million
investment in common equity and warrants to purchase common equity, and (2) a
$50 million investment in the form of MCII Holdings' senior notes. MCII
Holdings' investment in MCII took the form of an equity contribution of the
amounts received from the equity investors. As a result of this investment and
certain redemption transactions, the equity investors own in the aggregate 61%
of MCII Holdings, leaving Grupo Dina with a 39% minority interest.
THE ASSET TRANSFERS. Concurrent with the consummation of the Transactions,
Grupo Dina made certain transfers of assets and subsidiaries in order to
concentrate its core coach business assets at or under MCII. In addition, MCII
Holdings cancelled certain intercompany advances and receivables due from Grupo
Dina. The asset transfers included, among others, the following significant
transfers and inter-company cancelations:
4
<PAGE>
- MCII Holdings transferred its Dina Autobuses, S.A. de C.V. subsidiary to
us and Autobuses became our subsidiary;
- One of our Canadian subsidiaries entered into a sale-leaseback transaction
with Grupo Dina for tooling and equipment located at the facility at St.
Matthews Street in Winnipeg, Manitoba. The market value of the tooling and
equipment at the facility was between $2 million and $4 million and the
transfer price and lease payments were for nominal amounts.
- Autobuses transferred certain immaterial Mexican subsidiaries to Grupo
Dina;
- Autobuses exchanged certain of its unimproved property in Mexico for
unimproved property and two facilities of a Grupo Dina subsidiary;
- Autobuses transferred to Grupo Dina a group of transit buses that are
leased to a company affiliated with Grupo Dina, together with the related
lease rights;
- Autobuses canceled certain inter-company advances due from Grupo Dina that
totaled approximately $115 million; and
- MCII transferred its Universal Coach Parts Mexico, S.A. de C.V. subsidiary
to Grupo Dina and canceled $7.3 million related receivables.
For further information regarding the asset transfers, see the discussion under
the caption "Certain Transactions; Relationship with Grupo Dina" on page 73.
THE FINANCING TRANSACTIONS. As part of the Transactions:
- MCII issued $152.3 million aggregate principal amount of the outstanding
notes.
- MCII entered into a $445 million senior credit facility and made initial
borrowings of $333 million in the form of term loans, leaving an
additional $112 million in revolving credit commitments available.
- MCII repaid or redeemed (1) all amounts outstanding under our old senior
credit facility, approximately $166 million, including accrued interest,
(2) our approximately $100 million outstanding 9.02% senior notes, (3) our
approximately $40 million outstanding increasing rate notes due 1999, and
(4) approximately $14.0 million outstanding under Autobuses' existing
credit facility.
- Grupo Dina completed tender offers and consent solicitations for (1) its
$206.5 million aggregate principal amount of senior secured discount notes
due 2002, plus accrued interest, and (2) the $35 million outstanding
senior secured guaranteed notes due 2000, plus accrued interest, of Dina
Trucks (USA) L.L.C., a subsidiary of Grupo Dina. We distributed proceeds
from the outstanding notes as well as proceeds from borrowings under our
senior credit facility to Grupo Dina as a partial redemption of MCII
Holdings common stock held by Grupo Dina to finance the tender offers.
- MCII made the $71.4 million final distribution to Grupo Dina that
represents the excess of the foregoing debt and equity proceeds over the
amount required to repurchase and repay the foregoing indebtedness and to
pay accrued interest, transaction premiums, fees and expenses. The final
distribution occurred pursuant to a partial redemption distribution for
MCII Holdings common stock owned by Grupo Dina. Motor Coach Industries
International's indenture and senior credit facility restrict any further
dividends or distributions to Grupo Dina or MCII Holdings.
ADDITIONAL ARRANGEMENTS. MCII Holdings and Autobuses have entered into
several agreements with Grupo Dina and a subsidiary of Grupo Dina to provide
various transitional and support services. In addition, agreements were entered
into relating to licensing of trademarks and tradenames, rights of
5
<PAGE>
Grupo Dina to supply parts to us, distribution rights and non-competition
matters which are on terms at least as favorable as those that could be obtained
by us in comparable transactions made on an arm's-length basis between
unaffiliated parties. For further information regarding these additional
agreements, see the discussion under the caption "Certain Transactions;
Relationship with Grupo Dina" on page 73.
SOURCES AND USES OF FUNDS. The following table sets forth the sources and
uses of funds in connection with the Transactions:
<TABLE>
<CAPTION>
AMOUNT
-------------
(IN MILLIONS)
<S> <C>
SOURCES OF FUNDS:
Cash on hand at MCII............................................................................... $ 33.1
Senior credit facility(1).......................................................................... 333.0
Outstanding notes, net of issue discount........................................................... 150.1
Equity investment from MCII Holdings............................................................... 175.0
------
Total Sources.................................................................................. $ 691.2
------
------
USES OF FUNDS:
Repayment of MCII's old senior credit facility(2).................................................. $ 165.5
Repayment of MCII's 9.02% senior notes............................................................. 100.0
Repayment of Autobuses' old credit facility(2)..................................................... 14.0
Purchase of Dina Trucks' senior secured guaranteed notes(3)........................................ 35.0
Purchase of Grupo Dina's senior secured discount notes(4).......................................... 206.5
Repayment of MCII's senior subordinated increasing rate notes...................................... 40.0
Final distribution to Grupo Dina................................................................... 71.4
Accrued interest, transaction premiums, fees and expenses(5)....................................... 58.8
------
Total Uses..................................................................................... $ 691.2
------
------
</TABLE>
- ------------------------------
(1) The borrowings consisted of term loans with an additional $112 million in
revolving credit commitments available.
(2) Represented the amount outstanding immediately prior to the consummation of
the Transactions. As of March 31, 1999, the balance of MCII's existing
senior credit facility was $153.0 million plus outstanding letters of credit
totalling $11.0 million and the balance of Autobuses' existing credit
facility was $16.3 million.
(3) On May 14, 1999, Grupo Dina commenced a tender offer to purchase and consent
solicitation for all of the $35.0 million principal amount outstanding
senior secured guaranteed notes of Dina Trucks. All senior secured
guaranteed notes were tendered and purchased pursuant to the tender offer
concurrent with the closing of the Transactions.
(4) On May 14, 1999, Grupo Dina commenced a tender offer to purchase and consent
solicitation for all of the $206.5 million outstanding senior secured
discount notes that were jointly issued by Grupo Dina and MCII Holdings.
Approximately 99.97% of the senior secured discount notes were tendered and
purchased pursuant to the tender offer concurrent with the closing of the
Transactions. On July 19, 1999, Grupo Dina redeemed all senior secured
discount notes not purchased in the tender offer.
(5) Accrued interest, transaction premiums, fees and expenses included (A) a
redemption premium and accrued interest on MCII's 9.02% senior notes of
approximately $5.3 million and $0.4 million, respectively, (B) $0.2 million
of accrued interest on Autobuses' existing credit facility, (C) $0.6 million
of accrued interest on Dina Trucks' senior secured guaranteed notes, (D)
$14.5 million of accrued interest on Grupo Dina's senior secured discount
notes, (E) $0.2 million of accrued interest and a $0.2 million redemption
premium on MCII's senior subordinated increasing rate notes and (F) $0.5
million of accrued interest and $0.2 million of redemption premium on the
senior credit facilities.
6
<PAGE>
THE EQUITY INVESTORS
Pursuant to the terms of the investment agreement, the equity investors
invested $175 million in debt and equity of MCII Holdings, in order to effect
the restructuring of MCII Holdings, including the repayment of the indebtedness
described under "--The Transactions" on page 4. The equity investors own in the
aggregate 61% of MCII Holdings.
JLL, the sponsoring equity investor, was founded in 1988 as a private
partnership dedicated to making strategic investments in consolidating
industries and to investing in corporate divestitures, recapitalizations and
restructurings. To date, the firm has raised $1.6 billion of capital from a
variety of institutional investors. Since its formation, JLL has made
investments in various industries, including food products, automotive parts,
healthcare, media, building products, specialty chemicals, and basic
manufacturing. In February 1998, JLL closed on its third fund, the $1.0 billion
JLL Fund III.
7
<PAGE>
THE EXCHANGE OFFER
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION REGARDING THE EXCHANGE
OFFER AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. YOU
SHOULD READ "THE EXCHANGE OFFER" BEGINNING ON PAGE 25 FOR A MORE COMPLETE
DESCRIPTION.
<TABLE>
<S> <C>
OUTSTANDING NOTES................. 11 1/4% Senior Subordinated Notes due 2009, which were
issued on June 16, 1999.
EXCHANGE NOTES.................... 11 1/4% Senior Subordinated Notes due 2009, which have
been registered under the Securities Act. The terms of
the exchange notes are substantially identical to those
of the outstanding notes, except that the transfer
restrictions, registration rights and liquidated damages
provisions relating to the outstanding notes do not
apply to the exchange notes.
THE EXCHANGE OFFER................ Up to $152,250,000 aggregate principal amount of
exchange notes registered under the Securities Act of
1933 are being offered in exchange for the same
principal amount of the outstanding notes. The terms of
the exchange notes and the outstanding notes are
substantially identical. Outstanding notes may be
tendered for exchange in whole or in part in any
integral multiple of $1,000. We are making the exchange
offer in order to satisfy our obligations under the
registration rights agreement relating to the
outstanding notes.
EXPIRATION DATE................... 5:00 p.m., New York City time, , 1999, unless the
exchange offer is extended, in which case the expiration
date will be the latest date and time to which the
exchange offer is extended.
CONDITIONS TO THE EXCHANGE
OFFER........................... The exchange offer is subject to customary conditions.
See the discussion under the caption "The Exchange
Offer-- Conditions to the Exchange Offer" beginning on
page 31 for more information regarding the conditions to
the exchange offer. The exchange offer is not
conditioned upon any minimum principal amount of
outstanding notes being tendered. We reserve the right
in our sole and absolute discretion, subject to
applicable law, at any time and from time to time:
- to delay the acceptance of the outstanding notes for
exchange;
- to terminate the exchange offer if one or more
specific conditions have not been satisfied;
- to extend the expiration date of the exchange offer
and retain all outstanding notes tendered pursuant to
the exchange offer, subject, however, to the right of
holders of outstanding notes to withdraw their
tendered outstanding notes; or
- to waive any condition or otherwise amend the terms
of the exchange offer in any respect.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
WITHDRAWAL RIGHTS................. Tenders of outstanding notes may be withdrawn at any
time on or prior to the expiration date by delivering a
written notice of withdraw to the exchange agent in
conformity with the procedures discussed under "The
Exchange Offer-- Withdrawal of Tenders" beginning on
page 31.
PROCEDURES FOR TENDERING
OUTSTANDING NOTES............... Unless you comply with the procedures described below
under the caption "The Exchange Offer--Guaranteed
Delivery Procedures" on page 30, you must do one of the
following on or prior to the expiration of the exchange
offer to participate in the exchange offer.
- tender your outstanding notes by sending the
certificates for your outstanding notes, in proper form
for transfer, a properly completed and duly executed
letter of transmittal, with any required signature
guarantees, and all other documents required by the
letter of transmittal, to IBJ Whitehall Bank and Trust
Company, as exchange agent, at the address listed
under the caption "The Exchange Offer-- Exchange
Agent" on page 32; or
- tender your outstanding notes by using the book-entry
transfer procedures described below and transmitting a
properly completed and duly executed letter of
transmittal, with any required signature guarantees,
or an agent's message instead of the letter of
transmittal, to the exchange agent. In order for a
book-entry transfer to constitute a valid tender of
your outstanding notes in the exchange offer the
exchange agent must receive a confirmation of book-
entry transfer of your outstanding notes into its
account at The Depository Trust Company prior to the
expiration of the exchange offer. For more information
regarding the use of book-entry transfer procedures,
including a description of the required agent's
message, see the discussion under the caption "The
Exchange Offer--Procedures for Tendering Outstanding
Notes" beginning on page 28.
GUARANTEED DELIVERY PROCEDURES.... If you are a registered holder of the outstanding notes
and wish to tender your outstanding notes in the
exchange offer, but
- the outstanding notes are not immediately available,
- time will not permit your outstanding notes or other
required documents to reach the exchange agent before
the expiration of the exchange offer, or
- the procedure for book-entry transfer cannot be
completed prior to the expiration of the exchange offer,
you may tender outstanding notes by following the
procedures described below under the caption "The
Exchange Offer-- Guaranteed Delivery Procedures"
beginning on page 30.
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
ACCEPTANCE OF OUTSTANDING NOTES
AND DELIVERY OF EXCHANGE
NOTES........................... Upon consummation of the exchange offer, we will accept
any and all outstanding notes that are properly tendered
in the exchange offer and not withdrawn 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 after acceptance of the
outstanding notes.
RESALES OF EXCHANGE NOTES......... We believe that you will be able to offer for resale,
resell or otherwise transfer exchange notes issued in
the exchange offer without compliance with the
registration and prospectus delivery provisions of the
federal securities laws, provided that:
- you are not a broker-dealer;
- you are not participating in a distribution of the
exchange notes; and
- you are not an "affiliate" of Motor Coach Industries
International, Inc., as the term is defined in Rule
144A under the Securities Act.
Our belief is based on interpretations by the staff of
the SEC, as set forth in no-action letters issued to
third parties unrelated to us. The staff has not
considered this exchange offer in the context of a
no-action letter, and we cannot assure you that the
staff would make a similar determination with respect to
this exchange offer.
If our belief is not accurate and you transfer an
exchange note without delivering a prospectus meeting
the requirements of the federal securities laws or
without an exemption from these laws, you may incur
liability under the federal securities laws. We do not
and will not assume, or indemnify you against, this
liability.
Each broker-dealer that receives exchange notes for its
own account in exchange for outstanding notes which were
acquired by the broker-dealer as a result of
market-making or other trading activities must agree to
deliver a prospectus meeting the requirements of the
federal securities laws in connection with any resale of
the exchange notes.
EXCHANGE AGENT.................... The exchange agent with respect to the exchange offer is
IBJ Whitehall Bank & Trust Company.
USE OF PROCEEDS................... We will not receive any cash proceeds from the issuance
of the exchange notes offered hereby.
MATERIAL FEDERAL TAX
CONSIDERATIONS.................. The exchange of outstanding notes for exchange notes in
the exchange offer will not be a taxable transaction for
United States federal income tax purposes. You should
review the information set forth under "Material Federal
Tax Considerations" beginning on page 116 prior to
tendering outstanding notes in the exchange offer.
CONSEQUENCES OF NOT EXCHANGING
OUTSTANDING NOTES............... If you do not exchange your outstanding notes in the
exchange
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
offer, your outstanding notes will continue to be
subject to the restrictions on transfer described in the
legend on the certificate for your outstanding notes. In
general, you may offer or sell your outstanding notes
only:
- if they are registered under the Securities Act and
applicable state securities laws;
- if they are offered or sold under an exemption from
registration under the Securities Act and applicable
state securities laws; or
- if they are offered or sold in a transaction not
subject to the Securities Act and applicable state
securities laws.
We do not currently intend to register the outstanding
notes under the Securities Act. For more information
regarding the consequences of not tendering your
outstanding notes, see "The Exchange Offer--Consequences
of Failure to Exchange" on page 33.
</TABLE>
TERMS OF THE EXCHANGE NOTES
The exchange offer applies to an aggregate principal amount of $152,250,000
of the outstanding notes. The form and terms of the exchange notes will be
identical in all material respects to the form and terms of the outstanding
notes except:
- the exchange notes have been registered under the Securities Act and,
therefore, will not bear legends restricting their transfer;
- holders of exchange notes will not be entitled to any liquidated damages
under the registration rights agreement relating to the outstanding notes;
and
- holders of the exchange notes will not be, and upon consummation of the
exchange offer, holders of the outstanding notes will no longer be,
entitled to specific rights under the registration rights agreement for
the outstanding notes intended for the holders of unregistered securities.
The exchange notes will be our obligations entitled to the benefits of the
indenture. See "Description of the Exchange Notes" beginning on page 78.
<TABLE>
<S> <C>
EXCHANGE NOTES OFFERED............ $152,250,000 aggregate principal amount of 11 1/4%
Senior Subordinated Notes.
MATURITY DATE..................... May 1, 2009.
INTEREST.......................... Interest on the exchange notes is payable semi-annually
in cash on May 1 and November 1, commencing on November
1, 1999.
SUBSIDIARY GUARANTEES............. Our present and future domestic restricted subsidiaries
will guarantee the exchange notes. If MCII cannot make
payments on the exchange notes when they are due, the
subsidiary guarantors must make the payments instead.
RANKING........................... The exchange notes and subsidiary guarantees are
unsecured senior subordinated obligations of MCII and
the subsidiary guarantors, respectively. The exchange
notes will rank junior to all of the senior indebtedness
of MCII, including borrowings
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
under the credit facility and the subsidiary guarantees
will rank junior to the senior indebtedness of the
subsidiary guarantors.
OPTIONAL REDEMPTION............... We may redeem any of the exchange notes beginning on May
1, 2004, initially at 105.625% of their principal
amount, plus accrued interest. The redemption price will
decline each year after 2004 and will be 100% of the
principal amount, plus accrued and unpaid interest
beginning on May 1, 2007.
Before May 1, 2002, we may redeem up to 35% of the
exchange notes with the proceeds from some equity
offerings at a redemption price of 111.25% of their
principal amount, plus accrued interest. However, we may
only make such redemptions if at least 65% of the
principal amount of exchange notes remains outstanding
after each redemption, excluding exchange notes held by
us or the subsidiary guarantors, and such redemption
occurs within 90 days of the date of the closing of the
equity offering.
MANDATORY OFFER TO REPURCHASE..... If we experience specific kinds of changes of control,
or under certain circumstances, if we sell assets, we
must offer to repurchase the exchange notes at the
prices listed in "Description of the Exchange Notes" on
page 78.
BASIC COVENANTS OF THE The terms of the outstanding notes do, and of the
INDENTURE....................... exchange notes will, restrict our ability to, among
other things:
- borrow money;
- pay dividends on our capital stock;
- redeem or repurchase our capital stock;
- make investments;
- incur liens on our assets to secure debt;
- merge or consolidate with another company; and
- transfer or sell our assets.
These covenants are subject to important exceptions and
qualifications which are described in "Description of
the Exchange Notes--Certain Covenants" beginning on page
81.
</TABLE>
RISK FACTORS
You should carefully consider all the information contained in this
prospectus before deciding to tender your outstanding notes in the exchange
offer. In particular, you should carefully review the specific factors described
below under the caption "Risk Factors" beginning on page 16, which contain
important information about us and the risks that may affect our business.
12
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA
The summary consolidated financial data for the three years ended December
31, 1998 are derived from our consolidated financial statements and should be
read in conjunction with those statements, which are included in this
prospectus.
The summary consolidated financial data as of and for the three months ended
March 31, 1998 and March 31, 1999 are derived from our unaudited consolidated
financial statements included in this prospectus. The unaudited consolidated
financial statements, in our opinion, have been prepared on the same basis as
the audited consolidated financial statements and include all adjustments
necessary for a fair presentation of our financial condition and results of
operations for such periods. The results of operations as of and for the three
and twelve month periods ended March 31, 1999 are not necessarily indicative of
results of operations for the full year ending December 31, 1999.
The summary pro forma financial data are derived from the historical data
modified, as described in the notes to the summary below, to reflect the
Transactions, which include (1) the equity investment, (2) the asset transfers
and (3) the financing transactions. The summary pro forma financial data include
certain estimates made by us based upon currently available information and are
subject to change.
The following summary consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and related
notes included in this prospectus.
13
<PAGE>
SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS
YEAR ENDED DECEMBER 31, MARCH 31, ENDED
------------------------------------- -------------------- MARCH 31,
1996 1997 1998 1998 1999 1999
----------- ----------- ----------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
INCOME STATEMENT DATA:
Total revenues............................... $ 667,084 $ 739,783 $931,727 $ 223,552 $ 243,213 $ 951,388
Cost of sales................................ 506,199 549,001 730,954 174,966 185,589 741,577
Depreciation and amortization................ 17,618 22,035 24,815 5,813 6,376 25,378
Research and development expenses............ 7,346 6,655 8,741 1,863 2,406 9,284
Other operating expenses(1).................. 72,483 83,639 83,413 17,639 24,962 90,736
Operating income............................. 59,833 78,453 83,804 23,271 23,880 84,413
Interest expense, net(2)..................... 35,579 43,494 45,179 10,521 12,020 46,678
Other expense (income)....................... (2,344 ) (2,835 ) (7,814 ) (2,158) 2,919 (2,737 )
Income from continuing operations............ 8,124 16,526 14,649 7,143 442 7,948
OTHER DATA (UNAUDITED):
New inter-city coach deliveries(3)........... 1,511 1,732 2,173 506 466 2,133
EBITDA (4)................................... $ 77,451 $ 100,488 $108,619 $ 29,084 $ 30,256 $ 109,791
Capital expenditures......................... 25,609 32,096 11,740 6,506 2,959 8,193
EBITDA margin................................ 11.6% 13.6% 11.7% 13.0% 12.4% 11.5%
Net cash provided by (used in):
Operating activities....................... $ 44,320 $ (52,585 ) $ 73,732 $ 30,507 $ 1,749 $ 44,974
Investing activities....................... (30,338 ) (71,170 ) (14,683 ) (5,139) 8,517 (1,027 )
Financing activities....................... (35,254 ) 128,349 (49,008 ) (13,388) (1,419) (37,039 )
PRO FORMA FINANCIAL DATA (UNAUDITED)(5):
Adjusted EBITDA(6)........................... $112,283 $ 31,401 $ 113,394
Total interest expense(7).................... 48,723 12,181 48,723
Ratio of Adjusted EBITDA to interest expense,
net........................................ 2.3x 2.6x 2.3x
Ratio of total debt to Adjusted EBITDA(8).... 4.3x 4.3x
</TABLE>
<TABLE>
<CAPTION>
AS OF
MARCH 31,
1999
------------------------
ACTUAL PRO FORMA(9)
--------- -------------
(UNAUDITED)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................................................... $ 32,885 $ 54,188
Working capital(10)..................................................................... 211,983 219,052
Total assets............................................................................ 827,535 855,877
Total debt, including pushed down debt(2)............................................... 477,519 484,799
Stockholder's equity(11)................................................................ 99,659 137,928
</TABLE>
(SEE FOOTNOTES ON FOLLOWING PAGE)
14
<PAGE>
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(1) Other operating expenses are comprised of selling, general and
administrative expenses and other miscellaneous operating expenses. In
1998, other operating expenses were offset by $8.5 million for business
insurance recoveries.
(2) As proceeds from the Transactions were used to repay the $206.5 million of
Grupo Dina's senior secured discount notes, our consolidated financial
statements have been adjusted to include the "push down" of the senior
secured discount notes, and the related interest expense, in order to
comply with applicable Securities and Exchange Commission accounting
policies.
(3) 1998 deliveries include 31 units under demonstration lease agreements.
(4) EBITDA represents income before interest expense, income taxes,
discontinued operations, extraordinary items, depreciation and amortization
and other non-operating income and expenses, each of which can
significantly affect our results of operations and liquidity and should be
considered in evaluating our financial performance. EBITDA is included
because we understand that such information is considered to be an
additional basis on which to evaluate our ability to pay interest, repay
debt and make capital expenditures. EBITDA is not intended to represent and
should not be considered more meaningful than, or as an alternative to,
measures of performance, profitability or liquidity determined in
accordance with generally accepted accounting principles. However,
management believes that EBITDA is a meaningful measure of performance but
understands that it is not necessarily comparable to similarly titled
amounts of other companies.
(5) Adjusted to give effect to the Transactions as if the Transactions had
occurred on January 1, 1998. See "Use of Proceeds", "Capitalization" and
"Prospectus Summary--The Transactions."
(6) Adjusted EBITDA represents EBITDA that has been adjusted for the following:
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS THREE MONTHS TWELVE MONTHS
DECEMBER 31, ENDED MARCH 31, ENDED MARCH 31, ENDED MARCH 31,
1998 1998 1999 1999
------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
EBITDA................................ $ 108,619 $ 29,084 $ 30,256 $ 109,791
Pro forma adjustments(a).............. (1,876) (584) (902) (2,194)
Non-recurring executive
compensation(b)..................... 1,550 -- 489 2,039
Non-recurring royalty expense(c)...... 3,990 1,790 1,558 3,758
------------- ------- ------- ---------------
Adjusted EBITDA....................... $ 112,283 $ 30,290 $ 31,401 $ 113,394
------------- ------- ------- ---------------
------------- ------- ------- ---------------
</TABLE>
(a) See Pro Forma Unaudited Condensed Consolidated Financial Information
beginning on page 38.
(b) Adjusted to exclude the effect of the discontinuance of certain
discretionary compensation to an executive officer. Upon consummation of
the Transactions, we entered into a new employment agreement with Mr.
Rafael Gomez Flores. See "Management--Employment Agreement" and
"Management--Executive Compensation."
(c) Adjusted to exclude the effect of the discontinuance of royalty
payments to Grupo Dina as part of the equity investment.
(7) Represents estimated interest expenses on the new senior credit facility
and the notes.
(8) The ratio of total debt to Adjusted EBITDA for the year ended December 31,
1998 represents the ratio of pro forma long-term debt (including current
maturities) as of December 31, 1998 to Adjusted EBITDA for the year ended
December 31, 1998. The ratio of total debt to Adjusted EBITDA for the
twelve months ended March 31, 1999 represents the ratio of pro forma
long-term debt (including current maturities) as of March 31, 1999 to
Adjusted EBITDA for the twelve month period ended March 31, 1999.
(9) Adjusted to give effect to the Transactions as if they occurred on March
31, 1999.
(10) Working capital is defined as current assets (excluding cash and cash
equivalents) less current liabilities (excluding short-term debt and
current portion of long-term debt).
(11) The change in stockholder's equity reflects (A) the equity investment, net
of related costs, (B) the early redemption premium on our 9.02% senior
notes, net of income taxes, (C) certain transaction expenses, (D) the cash
distribution to Grupo Dina for the repayment of Dina Trucks' $35 million
senior secured guaranteed notes, (E) the estimated final distribution to
Grupo Dina and (F) forgiveness of receivables from former subsidiaries of
the Company.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN
THIS PROSPECTUS BEFORE DECIDING TO TENDER YOUR OUTSTANDING NOTES IN THE EXCHANGE
OFFER. THE RISK FACTORS DESCRIBED BELOW--OTHER THAN "CONSEQUENCES OF NOT
EXCHANGING OUTSTANDING NOTES INCLUDE RESTRICTIONS ON TRANSFER AND THE
TERMINATION OF REGISTRATION RIGHTS"--ARE GENERALLY APPLICABLE TO THE OUTSTANDING
NOTES AS WELL AS THE EXCHANGE NOTES.
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION
AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER THESE NOTES.
We have a substantial amount of indebtedness. The following chart shows
certain important credit statistics and reflects the completion of the
Transactions as of the dates or at the beginning of the periods specified below
and applied the proceeds as intended:
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
---------------------
ACTUAL PRO FORMA
--------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Total debt.................................................................................. $ 477.5 $484.8
Stockholder's equity........................................................................ 99.7 137.9
Debt to equity ratio........................................................................ 4.8x 3.5x
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31, 1998
---------------------
ACTUAL PRO FORMA
--------- ----------
<S> <C> <C>
Ratio of earnings to fixed charges.......................................................... 1.9x 1.8x
</TABLE>
Our indenture allows us to borrow a significant amount of additional money.
Our substantial indebtedness could have important consequences to you. For
example, it could:
- make it more difficult for us to perform our obligations with respect to
these notes;
- increase our vulnerability to general adverse economic and industry
conditions;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing amounts
available for working capital, capital expenditures and other general
corporate purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- place us at a competitive disadvantage compared to our competitors that
have less debt; and
- limit our ability to borrow additional funds.
In addition, a portion of our debt, including debt under our senior credit
facility, bears interest at variable rates. An increase in the interest rates on
our debt will reduce the funds available to repay the notes and our other debt
and for operations and future business opportunities and will intensify the
consequences of our leveraged capital structure.
OUR ABILITY TO INCUR SUBSTANTIALLY MORE DEBT COULD FURTHER INCREASE THE
RISKS DESCRIBED ABOVE.
We may be able to incur substantial additional indebtedness in the future
pursuant to our indenture for working capital and general corporate purposes.
Our senior credit facility permits additional borrowing of approximately $112
million. All of the borrowings under our senior credit facility are or will be
senior to these notes. If new debt is added to our current debt levels, the
related risks that we now face could intensify.
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TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH,
THE AVAILABILITY OF WHICH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness, including
these notes and our senior credit facility, will depend on our ability to
generate cash in the future. Our ability to generate cash is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond our control.
We cannot assure you that our business will generate sufficient cash flow or
that future borrowings will be available to us in an amount sufficient to enable
us to pay our indebtedness, including these notes, or to fund our other
liquidity needs including new product and other future developments. We may need
to refinance all or a portion of our indebtedness, including these notes and our
senior credit facility, on or before maturity. We cannot assure you that we will
be able to refinance any of our indebtedness, including these notes, on
commercially reasonable terms or at all.
YOUR RIGHT TO RECEIVE PAYMENTS ON THESE NOTES WILL BE JUNIOR TO OUR SENIOR
DEBT AND BE EFFECTIVELY JUNIOR TO ALL THE DEBT OF OUR SUBSIDIARIES' THAT ARE NOT
GUARANTORS.
These notes and the subsidiary guarantees of these notes will be junior to
all of our and our subsidiaries existing and future indebtedness, other than
trade payables and any future indebtedness that expressly provides that it ranks
equal with or junior to the notes or the subsidiary guarantees. As of March 31,
1999, on a pro forma basis, after giving effect to the Transactions, our debt
would have totaled $484.8 million, of which $334.7 million would have ranked
senior in right of payment to these notes. As a result, upon any distribution to
our creditors in a bankruptcy, liquidation or reorganization or similar
proceeding, the holders of our senior indebtedness or the guarantors' senior
indebtedness will be entitled to be paid in full before any payment may be made
on these notes. In addition, following the consummation of the Transactions,
approximately $112.0 million was available for borrowing as additional senior
debt under our senior credit facility. We also are permitted to incur
substantial additional indebtedness, including senior debt, in the future under
the terms of our indenture.
Our foreign restricted subsidiaries are not guarantors of these notes. We
may designate other subsidiaries to be non-guarantors in the future, if we meet
the requirements of our indenture. In the event of a bankruptcy, liquidation or
reorganization of any non-guarantor subsidiary in the future, holders of their
debt will generally be entitled to payment of their claims from the assets of
that subsidiary before any assets are made available for distribution to us. As
of March 31, 1999, on a pro forma basis, after giving effect to the consummation
of the Transactions, our non-guarantor subsidiaries had no outstanding
indebtedness, other than trade payables.
Substantially all of our assets consist of the capital stock of our
subsidiaries. We refer you to note 11 to our unaudited consolidated financial
statements as of and for the three months ended March 31, 1998 and 1999 and note
27 to our audited consolidated financial statements as of and for the three
years ended December 31, 1998, which contain certain consolidating condensed
financial data concerning us and our subsidiaries.
In addition, all payments on these notes will be blocked in the event of a
payment default under our senior credit facility and may be blocked for up to
179 consecutive days in any given year in the event of non-payment defaults on
senior debt. In the event of a default on these notes and any resulting
acceleration of these notes, the holders of senior indebtedness then outstanding
will be entitled to payment in full in cash of all obligations in respect of
such senior indebtedness before any payment or distribution may be made with
respect to the notes.
In a bankruptcy, liquidation or reorganization or similar proceeding
relating to us, holders of these notes will participate with trade creditors and
all other holders of subordinated indebtedness in the assets remaining after we
have paid all of the senior debt. However, because our indenture requires
17
<PAGE>
that amounts otherwise payable to holders of these notes in a bankruptcy or
similar proceeding be paid to holders of senior debt instead, holders of these
notes may receive proportionately less than holders of trade payables in any
such proceeding. In any of these cases, we cannot assure you that sufficient
assets will remain to make any payments on these notes.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE
CHANGE OF CONTROL OFFER REQUIRED BY OUR INDENTURE.
If we undergo a change of control under our indenture, we may need to
refinance large amounts of our debt, including these notes and our senior credit
facility. If a change of control occurs, we must offer to buy back your notes
for a price equal to 101% of the principal amount, plus interest that has
accrued but has not been paid as of the repurchase date. We cannot assure you
that we will have sufficient funds available to make the required repurchases of
these notes in that event, or that we will have sufficient funds to pay our
other debts. In addition, our senior credit facility prohibits us from
repurchasing these notes after a change of control until we have repaid in full
our debt under our senior credit facility. If we fail to repurchase these notes
upon a change of control, we will be in default under both these notes and our
senior credit facility. Any future debt that we incur may also contain
restrictions on repurchases in the event of a change of control or similar
event. These purchase requirements may delay or make it harder for others to
obtain control of our company.
OUR SENIOR CREDIT FACILITY AND INDENTURE RESTRICT OUR OPERATIONS.
Our indenture and our senior credit facility include restrictive covenants
that, among other things, restrict our ability to:
- borrow money;
- pay dividends on our capital stock;
- redeem or repurchase our capital stock;
- make investments;
- incur liens on our assets to secure debt;
- merge or consolidate with another company; and
- transfer or sell substantially all of our assets.
We are also be required by our senior credit facility to maintain certain
financial ratios, including maximum debt to EBITDA ratios and minimum fixed
charge coverage ratios. All of these restrictive covenants may restrict our
ability to expand or to pursue our business strategies. Our ability to comply
with these and other provisions of our indenture and our senior credit facility
may be affected by changes in our business condition or results of operations,
adverse regulatory developments or other events beyond our control. The breach
of any of these covenants would result in a default under our indebtedness. If
we default, we could be prohibited from making payments with respect to these
notes until the default is cured or all indebtedness under our senior credit
facility or other senior debt is paid in full. This default could allow our
creditors to accelerate the related debt, as well as any other debt to which a
cross-acceleration or cross-default provision applies. If our indebtedness were
to be accelerated, there can be no assurance that we would be able to repay it.
In addition, a default could give the lenders the right to terminate any
commitments they had made to provide us with further funds.
WE MAY BE ADVERSELY AFFECTED BY FRAUDULENT CONVEYANCE LAWS TO WHICH WE ARE
SUBJECT.
If a bankruptcy case or lawsuit is initiated by our unpaid creditors, the
debt represented by these notes and the subsidiary guarantees may be reviewed
under the federal bankruptcy laws and comparable provisions of state fraudulent
transfer laws. Under these laws, the debt could be voided, or
18
<PAGE>
claims in respect of these notes and the subsidiary guarantees could be
subordinated to all of our other debts or the guarantors if, among other things,
the court found that, at the time we incurred the debt represented by these
notes and the subsidiary guarantors executed the guarantees, we or any
guarantor:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such debt; and
- were insolvent or rendered insolvent by reason of such incurrence; or
- were engaged in a business or transaction for which the remaining assets
constituted unreasonably small capital; or
- intended to incur, or believed that we, or a guarantor, would incur, debts
beyond the ability to pay such debts as they matured; or
- intended to hinder, delay or defraud creditors.
The measure of insolvency for purposes of fraudulent transfer laws varies
depending on the law applied. Generally, however, a debtor would be considered
insolvent if:
- the sum of its debts, including contingent liabilities, were greater than
the fair saleable value of all of its assets; or
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
We believe that we will receive fair value for these notes and that the
subsidiary guarantors will receive fair value for their guarantees. On the basis
of historical financial information, recent operating history and other factors,
we believe that after giving effect to the exchange offer, neither we nor any
subsidiary guarantor are insolvent, have unreasonably small capital for the
business in which such entity is engaged, or have incurred debts beyond such
entity's ability to pay such debts as they mature. We can give no assurance,
however, what standard a court will apply in making such determinations or that
a court would agree with our conclusions in this regard.
OUR INDEPENDENT PUBLIC ACCOUNTANTS HAVE NOTED SIGNIFICANT DEFICIENCIES IN
OUR INTERNAL CONTROLS.
A number of significant deficiencies in the design or operation of our
internal control environment were noted to management and the Grupo Dina board
of directors by our predecessor independent accountants as a result of their
review of the third quarter of 1997 and by our current independent accountants
as a result of their audits of our 1997 and 1998 financial statements.
Specifically, our accountants noted a lack of senior level accounting
leadership, deficiencies in the preparation of consolidated financial statements
for Autobuses and inadequacies in the design and operating effectiveness of our
accounting operations required for a complex public corporation. We have been
implementing changes that we believe will address the significant deficiencies,
including the hiring of a Chief Financial Officer and Chief Accounting Officer.
Implementing the recommended changes continues to be a priority, however, we
cannot assure you that we will achieve the desired improvements to our internal
controls.
WE OPERATE IN A HIGHLY CYCLICAL INDUSTRY, WHICH COULD AFFECT OUR ABILITY TO
SERVICE THESE NOTES.
The inter-city coach industries in the U.S., Canada and Mexico are all
highly dependent on economic and tourism conditions. Slowdowns in tourism and
economic recessions have negatively impacted our business in the past. For
example, we delivered 1,367 units during 1989, but delivered only 602 units
during the tourism and economic slowdown in 1991. Similar reductions in
deliveries could occur in the future, as we cannot assure you that favorable
economic and tourism conditions will
19
<PAGE>
continue. We cannot predict the scope of any future tourism slowdown or economic
recession, or the total impact it would have on us.
A FEW CUSTOMERS REPRESENT A SIGNIFICANT PORTION OF OUR SALES.
We have historically sold a significant percentage of new coaches each year
to a limited number of large United States and Canadian coach fleet operators,
including the following operators which we account for our consolidated revenue
for the years ended December 31, 1996, 1997 and 1998 as follows:
- Greyhound Lines and Greyhound Canada, which combined accounted for 11.1%,
9.5%, and 8.0%, respectively; and
- Coach USA, which accounted for 1.8%, 8.6%, and 9.2%, respectively.
Our contract with Greyhound Lines can be terminated at the end of any
calendar year upon 180 days prior notice, and the contract with Coach USA
expires in 1999. Coach USA publicly announced on June 14, 1999 that it expects
to be acquired by Stagecoach Holdings Plc, Great Britain's largest independent
bus and railroad operator. We are not able to predict what effect, if any, the
acquisition of Coach USA will have on negotiations to renew Coach USA's contract
with us, or on their status as a customer generally. We cannot assure you that
we will be able to enter into new contracts with any customer. The loss of any
one of these customers could have a material adverse effect on us. Furthermore,
demand from government agencies, such as the New Jersey Transit Authority and
New York City Transit Authority, varies widely from year to year. Governmental
agencies periodically make large purchases every three to six years on average
and in any given year may represent over 10% of our total coach sales. We cannot
assure you that the New Jersey Transit Authority, New York City Transit
Authority or any other government agency will order new coaches or if any such
order is placed that we will be awarded the contract.
WE OPERATE IN HIGHLY COMPETITIVE MARKETS AND COMPETE AGAINST A NUMBER OF
LARGE NATIONAL AND REGIONAL BRANDS.
Our principal competitors in the United States and Canadian coach markets
include (1) Prevost Car, a subsidiary of Volvo Bus Corporation, which is the
leading supplier of coaches to the custom conversion market, (2) Van Hool, which
is one of the leading European coach manufacturers, and (3) Setra, which is
another leading European coach manufacturer. Our principal competitors in the
replacement parts market include both OEMs, including Prevost, and parts
distributors, including ABC Bus, Inc., the representative for Van Hool. In
November 1999, Novabus, a transit bus maker that is restricted from competing
with us in the transit bus replacement parts market, will be free to enter the
replacement parts market. We cannot predict the impact of Novabus' potential
entry into the replacement parts market. As a result of a five-year
non-competition agreement entered into in connection with the June 1996 sale of
our custom coach subsidiary, we participate in the custom conversion market
solely through the sale of shell coaches to third party coach converters. Should
we determine to enter into the custom conversion market in June 2001, we will
face competition from numerous existing participants. Many of our competitors
have greater financial, research and development, manufacturing and marketing
resources than us. There can be no assurance that we will be able to compete
successfully against such competition.
WE DEPEND ON SUPPLIERS FOR PRINCIPAL RAW MATERIALS, COMPONENT PARTS AND
DESIGN TECHNOLOGY.
Our coach manufacturing operations consist primarily of manufacturing
components and sub-components from raw materials and assembling these
manufactured components with component parts provided by third party sources. We
rely primarily on these suppliers for major components:
- Meritor Automotive, formerly known as Rockwell International Corporation,
for axles;
- Detroit Diesel for engines;
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<PAGE>
- Allison Transmission for transmissions; and
- Carrier for air conditioning units.
Although we use additional alternate suppliers, our customers demand the
component parts which are currently assembled into their coaches. An
interruption in the supply of or a significant increase in the price of any raw
material, component part or the termination of any design technology agreement
could adversely affect our profitability or our ability to obtain and fulfill
orders.
OUR SUCCESS DEPENDS ON THE IMPLEMENTATION OF NEW PRODUCT INTRODUCTIONS,
WHICH WILL REQUIRE SUBSTANTIAL EXPENDITURES.
We will be launching new products besides the
RENAISSANCE-REGISTERED TRADEMARK- coach, such as the G-Series model, in the near
future and these significant development efforts may increase our capital
expenditures over the next few years. We estimate that our capital expenditures
for development of this new family of coach models will be $5.8 million in 1999
and $6.3 million in 2000. As is common with major new product launches, we may
experience manufacturing problems or delays, which could be material. We cannot
predict the extent of manufacturing problems or duration of delays that may
occur.
Introducing new products could result in a decrease in revenues from our
existing products or otherwise adversely affect our business, financial
condition or results of operations. You should read the discussion under the
heading "Business--Products--Inter-city Coaches" beginning on page 56 for a more
detailed discussion regarding our new and existing products.
Consistent with our strategy of offering new products and product
refinements, we expect to continue to use a substantial amount of capital for
further product development and refinement. We may need more working capital for
product development and refinement than is available to us, which could
adversely affect our business, financial condition or results of operations.
OUR BUSINESS DEPENDS UPON ORGANIZED LABOR.
Our previous labor agreements with the International Association of
Machinists and Aerospace Workers, covering substantially all of our Canadian and
United States employees at our Winnipeg, Manitoba and Pembina, North Dakota
facilities, expired on September 30, 1997. We negotiated new labor agreements
for those facilities which run through September 2000. We previously had labor
agreements in Mexico with the independent union of workers in the automotive and
related industries. Generally, labor agreements in Mexico have economic terms
and non-economic terms for one-year and two-years, respectively. We negotiated
both economic and non-economic terms in February 1998 and economic terms in
February 1999. If after negotiations we experience higher labor costs or other
work condition changes, our business could be materially and adversely effected.
We experienced a one day labor strike in Sahagun, Mexico in February 1994 which
resulted in a loss of one day's production. During 1999, we also experienced a
four day strike at our Sahagun, Mexico manufacturing plant. Work stoppages could
occur again in the future in connection with labor agreement negotiations and we
cannot predict the financial impact of such a stoppage. A work stoppage or
strike could have a material adverse effect on us and our results of operations.
OUR HISTORICAL SEASONALITY COULD IMPAIR OUR ABILITY TO MAKE INTEREST
PAYMENTS ON THESE NOTES.
Our sales and earnings are seasonal. Historically, we have realized a
majority of our annual sales and profits during the second and fourth quarters
of our fiscal year. If for any reason demand for our products during any second
and fourth quarters is insufficient, our total sales and profits could be
materially reduced for such period and for the fiscal year in general. Further,
we are required to establish inventory levels in anticipating projected seasonal
demand. To the extent that we underestimate such demand, we could lose sales and
profits. To the extent that we establish inventories in excess of actual demand,
we may be required to sell inventory at reduced prices or write-off the excess
inventory as unsaleable. You should read "Management's Discussion and Analysis
of Financial
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Condition and Results of Operations" beginning on page 43 for more information
regarding the seasonality of our profits.
FLOODING COULD INTERRUPT OUR BUSINESS OPERATIONS.
Our manufacturing and distributing facilities located near the Red River in
North Dakota and Canada are subject to periodic flooding that has caused us to
experience business interruption and increased operating expenses. Any flood or
other severe weather condition could result in damage to our assets and lead to
the loss of use of our manufacturing and distributing facilities in those
locations for an extended period. In addition, although our properties are
currently covered by flood insurance, we cannot give assurance that flood
insurance will be available in the future at reasonable rates or at all. The
loss or interruption of business as a result could have a material adverse
effect on our financial results. See "Business--Manufacturing and Distribution"
beginning on page 62 for a complete description of our material properties.
WE MAY BE ADVERSELY AFFECTED BY GOVERNMENTAL REGULATIONS TO WHICH WE ARE
SUBJECT.
As a manufacturer of coaches and replacement parts, our facilities,
operations and products are subject to many laws and regulations applicable in
the United States, Canada and other countries, including those relating to the
environment, employee health and safety, motor vehicle safety, access for the
disabled, and local content.
Our failure to comply with one or more laws or regulations could result in
the imposition of sanctions. Such sanctions could include the closing of all or
a portion of our facilities for an indeterminate period of time or the recall of
products that were manufactured improperly, either of which could have a
material adverse effect on our business, financial condition and results of
operations. Likewise, we cannot predict for you with any degree of certainty the
cost of compliance or other liability related to such laws and regulations in
the future and such future costs could significantly affect our business,
financial condition and results of operations.
The nature of our current and former operations, and those of our
predecessors in interest, expose us to the risk of claims with respect to
environmental matters and there can be no assurance that material costs or
liabilities will not be incurred in connection with such claims. Based upon our
experience to date, we believe that the future cost of compliance with existing
environmental laws and regulations, and liability for known environmental claims
pursuant to such laws and regulations, will not have a material adverse effect
on our business, financial condition or results of operation. However, future
events, such as new information, changes in existing environmental laws and
regulations or their interpretation, and more vigorous enforcement policies of
regulatory agencies, may give rise to additional expenditures or liabilities
that could be material. You should read "Business--Government
Regulation--Environmental Matters" beginning on page 64 for further information
about regulations within our various operations.
WE MAY BE ADVERSELY AFFECTED BY HANDICAPPED ACCESSIBILITY STANDARDS TO WHICH
WE ARE SUBJECT.
We are subject to the Americans With Disabilities Act's handicapped
accessibility standards for coaches, as promulgated by the U.S. Department of
Transportation. On September 28, 1998, the DOT issued final regulations
regarding coach accessibility requirements. The rules require, among other
things, that all new coaches delivered to large line haul operators beginning
October 2000 must be handicapped accessible. Further, the rules also contain
certain other requirements concerning accessible fleet percentages and providing
accessible service. The final regulations will be effective for operators with
larger fleets in October 2000 and for operators with smaller fleets in October
2001. We cannot predict the effect these regulations may have on our business,
financial condition and results of operations with any degree of certainty.
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THE MCI CANADIAN TAX REVIEW COULD RESULT IN A SUBSTANTIAL ADDITIONAL INCOME
TAX LIABILITY.
The Canadian income tax returns of our subsidiary, Motor Coach Industries
Limited, for the years 1982 through 1992 are currently under review by Revenue
Canada, the Canadian tax authority, which is reviewing the profit allocation
procedures between MCI Canada and Motor Coach Industries, Inc., a wholly owned
U.S. subsidiary of Motor Coach Industries International, Inc. Revenue Canada's
position is that, under such procedures, insufficient income was allocated to
MCI Canada, the Canadian taxpaying entity, and that, as a result, Canadian
income taxes were underpaid. A formal reassessment has been issued by Revenue
Canada with respect to the 1985 return. We have filed a notice of objection for
1985. In the event of an adverse judgment, as of March 31, 1999 the additional
income taxes for 1982 through 1992 could amount up to $23 million plus interest
of approximately $49 million and, in addition, we may be subject to potential
reassessments for years subsequent to 1992 on the same basis which could result
in additional income taxes and interest, all before recoveries of U.S. Federal
income taxes which may be available to offset a portion of any additional taxes
paid to Canada. We have recently submitted an advance transfer pricing agreement
to Revenue Canada which applies to the years 1995 through 1997. Although we are
still in the process of obtaining additional information, we are currently
negotiating to resolve these claims and expect that the resolution will not be
material to our financial condition or results of operations. We cannot,
however, assure you that this matter will be resolved in our favor.
WE MAY BE EXPOSED TO SIGNIFICANT PRODUCT LIABILITY CLAIMS BY CONSUMERS.
We are subject to various product liability lawsuits in the United States
and Canada for personal injuries and property damage allegedly relating to the
use of products manufactured or sold by us. We consider litigation of this
nature to be in the ordinary course of our business. We cannot presently
determine the ultimate outcome of these lawsuits, or potential future lawsuits.
We maintain product liability insurance in customary amounts, but we cannot
assure you that such insurance will be available in the future or on terms
acceptable to us.
We do not, however, carry product liability insurance for our Mexican
operations. Although we have never had a product liability lawsuit brought
against us in Mexico and Mexican laws providing for liability appear to have
been seldom utilized, product liability litigation could occur in Mexico in the
future involving our products. However, if any lawsuits are successful, we
believe that we will have sufficient resources to cover these lawsuits.
WE HAVE BEEN INFORMED THAT THE MANUFACTURERS AND DEALERS LICENSES OF OUR
DALLAS, TEXAS COACH DEALERSHIP MAY BE INVALID.
The validity of our manufacturing and dealer licenses associated with our
Dallas, Texas dealership facility have recently come into question by the Texas
Department of Transportation, Motor Vehicle Division pursuant to a statute that
prohibits a manufacturer from also operating as a dealer. Although we believe
the Texas law was not intended to be applied to bus dealerships, we cannot
assure you that our Texas licenses will be renewed. In such event we may be
required to close our Dallas dealership or face civil penalties. We are working
with appropriate state officials to resolve this matter and believe there are
numerous solutions available to us and the ultimate outcome is unlikely to have
a material adverse effect on our business. Our Dallas dealership serves a
regional market and we believe we could operate effectively from a nearby state
that does not have such restrictions, however, such a move would cause a
temporary interruption to the business of our Texas dealership.
ADVERSE FOREIGN ECONOMIC CONDITIONS AND GOVERNMENT POLICIES MAY AFFECT OUR
BUSINESS OPERATIONS.
Social instability or other adverse social, political or economic
developments in or affecting Latin America could adversely affect our business,
financial condition, results of operations, ability to obtain financing and
prospects. In addition, the Mexican government has exercised, and continues to
exercise, significant influence over the Mexican economy. Accordingly, Mexican
governmental actions could have a significant effect on us and on market
conditions.
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The values of the peso and the Canadian dollar have been subject to
significant fluctuations with respect to the U.S. dollar in the past and may be
subject to significant fluctuations in the future. The Mexican economy has
suffered balance of payment deficits and shortages in foreign exchange reserves.
While the Mexican government does not currently restrict the ability of Mexican
or foreign persons or entities to convert pesos to U.S. dollars, no assurance
can be given that the Mexican government will not institute a restrictive
exchange control policy in the future. Any such restrictive exchange control
policy could adversely affect our ability to meet our U.S. dollar obligations,
including payments on these notes, and could have a material adverse effect on
our business, financial condition and results of operations.
THERE IS NO PUBLIC TRADING MARKET FOR THE EXCHANGE NOTES.
To the extent that outstanding notes are tendered and accepted in the
exchange offer, the trading market for the remaining untendered or tendered but
not accepted outstanding notes could be adversely affected. Because we
anticipate that most holders of the outstanding notes will elect to exchange the
outstanding notes for these notes due to the absence of restrictions on the
resale of these notes under the Securities Act, we anticipate that the liquidity
of the market for any outstanding notes remaining after the consummation of the
exchange offer may be substantially limited.
These notes are a new issue of securities for which there is currently no
active trading market. If these notes are traded after their initial issuance,
they may trade at a discount from their initial offering price, depending upon
prevailing interest rates, the market for similar securities, our financial
condition and other factors beyond our control, including general economic
conditions. We do not intend to apply for a listing or quotation of these notes.
No assurance can be given as to the development or liquidity of any trading
market for these notes to sell their notes or the prices at which such holders
may be able to sell their notes.
Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for these notes will not
be subject to similar disruptions. Any such disruptions may have an adverse
effect on holders of these notes.
CONSEQUENCES OF NOT EXCHANGING OUTSTANDING NOTES INCLUDE RESTRICTIONS ON
TRANSFER AND THE TERMINATION OF REGISTRATION RIGHTS.
Notes that are not tendered or are tendered but not accepted will, following
the completion of the exchange offer, continue to be subject to existing
restrictions on transfer, and, upon completion of the exchange offer,
registration rights with respect to the outstanding notes will terminate. In
addition, any outstanding note holder who tenders in the exchange offer for the
purpose of participating in a distribution of the registered 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 transaction. To the extent that outstanding notes
are tendered and accepted in the exchange offer, the trading market for
untendered and tendered but unaccepted outstanding notes could be adversely
affected.
OUR FAILURE, OR THE FAILURE OF OUR THIRD PARTY SUPPLIERS OR CUSTOMERS, TO
ADDRESS INFORMATION TECHNOLOGY ISSUES RELATED TO THE YEAR 2000 COULD ADVERSELY
AFFECT OUR OPERATIONS.
Although we believe that we have identified our systems applications that
will need to be modified and developed a plan to ensure Year 2000 compliance, we
cannot assure you that these efforts will be successful. We will utilize both
internal and external resources to reprogram and test software for Year 2000
compliance at an estimated total cost of approximately $2 million. We are also
in the process of evaluating whether significant suppliers and customers are
Year 2000 compliant. If we are unable to achieve Year 2000 compliance in a
timely manner or the cost of such compliance significantly exceeds our current
estimates, such events could have a material effect on our 1999 business,
financial condition and results of operations.
24
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
On June 16, 1999 we sold $152.25 million in principal amount at maturity of
the outstanding notes in a private placement through CIBC World Markets Corp.
(formerly CIBC Oppenheimer Corp.) and Merrill Lynch, Pierce, Fenner & Smith
Incorporated to a limited number of "Qualified Institutional Buyers," as defined
under the Securities Act. In connection with the sale of the outstanding notes,
we and CIBC entered into a registration rights agreement, dated as of June 16,
1999. Under that agreement, we must, among other things, use our best efforts to
file with the SEC a registration statement under the Securities Act covering the
exchange offer and to cause that registration statement to become effective
under the Securities Act. Upon the effectiveness of that registration statement,
we must also offer each holder of the outstanding notes the opportunity to
exchange its securities for an equal principal amount of exchange notes. You are
a holder with respect to the exchange offer if you are a person in whose name
any outstanding notes are registered on our books or any other person who has
obtained a properly completed assignment of outstanding notes from the
registered holder.
We are making the exchange offer to comply with our obligations under the
registration rights agreement. A copy of the registration rights agreement has
been filed as an exhibit to the registration statement of which this prospectus
is a part.
In order to participate in the exchange offer, you must represent to Motor
Coach Industries International, among other things, that:
- you are not a broker-dealer;
- you are not participating in a distribution of the exchange notes; and
- you are not an "affiliate" of Motor Coach Industries International, as the
term is defined in Rule 144 under the Securities Act.
RESALE OF THE EXCHANGE NOTES
Based on previous interpretations by the staff of the SEC set forth in
no-action letters issued to third parties, we believe that the exchange notes
issued in the exchange offer may be offered for resale, resold and otherwise
transferred by you, except if you are our affiliate, without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that the representations set forth in "Purpose and Effect of the Exchange Offer"
above apply to you.
If you tender in the exchange offer with the intention of participating in a
distribution of the exchange notes, you cannot rely on the interpretation by the
staff of the SEC as set forth in the no-action letters and you must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. In the event that our belief
regarding resale is inaccurate, those who transfer exchange notes in violation
of the prospectus delivery provisions of the Securities Act and without an
exemption from registration under the federal securities laws may incur
liability under these laws. We do not assume, nor will we indemnify you against,
this liability.
The exchange offer is not being made to, nor will we accept surrenders for
exchange from, holders of outstanding notes in any jurisdiction in which the
exchange offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of the particular jurisdiction. Each broker-dealer
that receives exchange notes for its own account in exchange for outstanding
notes, where the outstanding notes were acquired by that 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 the exchange
notes. In order to facilitate the disposition of exchange notes by
broker-dealers participating in the exchange offer, we have agreed, subject to
specific conditions, to make this
25
<PAGE>
prospectus, as it may be amended or supplemented from time to time, available
for delivery by those broker-dealers to satisfy their delivery obligations under
the Securities Act.
TERMS OF THE EXCHANGE OFFER
Upon the terms and conditions in this prospectus, and in the accompanying
letter of transmittal, we will accept all outstanding notes validly tendered
prior to 5:00 p.m., New York City time, on the expiration date. We will issue
$1,000 in principal amount of exchange notes in exchange for an equal principal
amount of outstanding notes tendered and accepted in the exchange offer. You may
tender some or all of your outstanding notes in the exchange offer in any
denomination of $1,000 or in integral multiples thereof.
In addition, in connection with any resales of exchange notes, any
broker-dealers who acquired outstanding notes for its own account as a result of
market-making activities or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
the exchange notes. The SEC has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements for the
exchange notes other than a resale of an unsold allotment from the original
sales of outstanding notes, with the prospectus contained in the exchange offer
registration statement. Under the registration rights agreement we are required
to allow participating broker-dealers, and other persons, if any, subject to
similar prospectus delivery requirements, to use the prospectus contained in the
exchange offer registration statement in connection with the resale of exchange
notes. However, we are not required to amend or supplement this prospectus for a
period exceeding 90 days after the date of the last expiration date. "Expiration
Date" means 5:00 p.m. New York City time, on , 1999 unless we, in
our sole discretion, extended the exchange offer. If we do, the "expiration
date" will be 5:00 p.m. New York City time on the latest date to which the
exchange offer is extended. The expiration date will be at least 30 business
days from the date that this prospectus is mailed to the holders of the
outstanding notes. We have also agreed that in the event that we do not
consummate the exchange offer or a shelf registration statement is not declared
effective prior to December 13, 1999, or, if we are required to file a shelf
registration statement, we do not keep it effective until June 16, 2001 (each a
"registration default") the annual interest rate on the notes will increase by
0.50%. The annual interest rate on the notes will increase by an additional
0.25% for each subsequent 90 day period during which the registration default
continues, up to a maximum additional interest rate of 2.00% per year over of
the outstanding notes.
If we consummate the exchange offer on or before December 13, 1999, we will
not be required to file a shelf registration statement to register any
outstanding notes, and the interest rate on any outstanding notes will remain at
the initial level of 11 1/4% per annum. The exchange offer will be deemed to
have been consummated upon our having exchanged, pursuant to the exchange offer,
exchange notes for all outstanding notes that have been properly tendered and
not withdrawn by the expiration date. In this event, holders of outstanding
notes not participating in the exchange offer who are seeking liquidity in their
investment would have to rely on exemptions to registration requirements under
the securities laws, including the Securities Act.
The form and terms of the exchange notes will be the same as the form and
terms of the outstanding notes except that the exchange notes will not bear
legends restricting the transfer thereof. The exchange notes will be issued
under and entitled to the benefits of the indenture.
As of the date of this prospectus, $152,250,000 aggregate principal amount
of the outstanding notes are outstanding and there is one registered holder
thereof. In connection with the issuance of the outstanding notes, we arranged
for the outstanding notes to be eligible for trading in the Private Offering,
Resale and Trading through Automated Linkages Market. The PORTAL market is the
National Association of Securities Dealers' screen based, automated market for
trading of securities
26
<PAGE>
eligible for resale under Rule 144A. The exchange notes will be issuable and
transferable in book-entry form through DTC but will not be eligible for trading
in the PORTAL market.
We will be deemed to have accepted validly tendered outstanding notes when,
as and if we have given oral or written notice of acceptance to the exchange
agent. See "--Exchange Agent" on page 32. The exchange agent will act as agent
for the tendering holders of outstanding notes for the purposes of receiving
exchange notes from us and delivering exchange notes to the holders.
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender or the occurrence of certain other events described in this
prospectus, certificates for the unaccepted outstanding notes will be returned,
without expense, to the tendering holder as promptly as practicable after the
expiration date.
Holders of outstanding notes who tender in the exchange offer will not be
required to pay:
- brokerage commissions or fees; or
- transfer taxes with respect to the exchange of outstanding notes pursuant
to the exchange offer, subject to the instructions in the accompanying
letter of transmittal.
We will pay all charges and expenses, other than specified taxes, in
connection with the exchange offer as further described under the caption
"--Fees and Expenses" beginning on page 32.
Holders of outstanding notes do not have any appraisal or dissenters' rights
in connection with the exchange offer. We intend to conduct the exchange offer
in accordance with the provisions of the registration rights agreement and the
applicable requirements of the Securities Act and the rules and regulations of
the SEC interpreting the Securities Act. Outstanding notes that are not tendered
for exchange in the exchange offer will remain outstanding and be entitled and
continue to accrue interest, but will not be entitled to any rights or benefits
under the registration rights agreement.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" means 5:00 p.m. New York City time, on
, 1999 unless we, in our sole discretion, extend the exchange offer.
If we do, the "expiration date" will be 5:00 p.m. New York City time on the
latest date to which the exchange offer is extended.
If we extend the expiration date, we will:
- notify the exchange agent of any extension by oral or written notice; and
- mail an announcement of the extension to the record holders of outstanding
notes prior to 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
Any announcement may state that we are extending the exchange offer for a
specified period of time.
If any of the conditions listed under "Conditions to the Exchange Offer"
occur and are not waived by us, by giving oral or written notice to the exchange
agent, we reserve the right:
- to delay acceptance of any outstanding notes;
- to extend the exchange offer;
- to terminate the exchange offer;
- to refuse to accept outstanding notes not previously accepted, and
- to amend the terms of the exchange offer in any manner we deem to be
advantageous to the holders of the outstanding notes.
27
<PAGE>
Any delay in acceptance, extension, termination or amendment will be
followed as promptly as possible by oral or written notice to the exchange
agent. If the exchange offer is amended in a manner we determine constitutes a
material change, we will promptly disclose the amendment in a way reasonably
calculated to inform you of the amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we have no obligation to publish, advertise, or otherwise
communicate any 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 at a rate of 11 1/4% per annum.
Interest on the exchange notes will be payable semi-annually, in arrears, on
each May 1 and November 1 following the consummation of the exchange offer.
Untendered outstanding notes that are not exchanged for exchange notes pursuant
to the exchange offer will bear interest at a rate of 11 1/4% per annum after
the expiration date.
The exchange notes will bear interest from the last interest payment date on
which interest was paid on the outstanding notes. If interest has not yet been
paid, the exchange notes will bear interest from June 16, 1999. Interest will be
paid with the first interest payment on the exchange notes. Interest on the
outstanding notes accepted for exchange will cease to accrue upon issuance of
the exchange notes.
PROCEDURES FOR TENDERING OUTSTANDING NOTES
To tender in the exchange offer, you must do the following:
- complete, sign and date the letter of transmittal, or a facsimile of it;
- have the signatures guaranteed, if required by the letter of transmittal;
and
- mail or deliver the letter of transmittal, or the facsimile, together with
the outstanding notes and any other required documents, to the exchange
agent.
The exchange agent must receive these documents by 5:00 p.m., New York City
time, on the expiration date.
Any financial institution that is a participant in DTC's Book-Entry Transfer
Facility system may make book-entry delivery of the outstanding notes by causing
DTC to transfer the outstanding notes into the exchange agent's account via the
ATOP system in accordance with DTC's transfer procedure. Although delivery of
outstanding notes may be effected through book-entry transfer into the exchange
agent's account at DTC, the letter of transmittal, or its facsimile, with any
required signature guarantees, or an agent's message instead of the letter of
transmittal, and documents, must, in any case, be transmitted to and received or
confirmed by the exchange agent at its addresses in the prospectus prior to 5:00
p.m., New York City time, on the expiration date. The term agent's message means
a message, transmitted by The Depository Trust Company and received by the
exchange agent and forming a part of the book-entry confirmation, which states
that DTC has received an express acknowledgment from you that you have received
and have agreed to be bound by the letter of transmittal. If you use this
procedure, we may enforce the letter of transmittal against you. DELIVERY OF
DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE EXCHANGE AGENT.
Your tender of outstanding notes will constitute an agreement between you
and us in accordance with the terms and subject to the conditions in this
prospectus and in the letter of transmittal.
28
<PAGE>
Delivery of all documents must be made to the exchange agent at its address
listed in this prospectus. Holders may also request that their respective
brokers, dealers, commercial banks, trust companies or nominees effect tender
for them.
The method of delivery of outstanding notes, the letter of transmittal and
the agent's message and all other required documents to the exchange agent is up
to you. However, you also bear the risks of non-delivery. Instead of delivery by
mail, we recommend that you use an overnight or hand delivery service. In all
cases, you should allow sufficient time to assure timely delivery. No letter of
transmittal should be sent to us.
Only a holder of outstanding notes may tender outstanding notes in the
exchange offer. The term "holder" with respect to the exchange offer means any
person in whose name outstanding notes are registered on our books or any other
person who has obtained a properly completed bond power from the registered
holder or any person whose outstanding notes are held of record by DTC who
desires to deliver the outstanding notes by book-entry transfer at DTC.
Any beneficial holder whose outstanding notes are registered in the name of
the holder's broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact the registered holder promptly and instruct
the registered holder to tender on the holder's behalf. If the beneficial holder
wishes to tender on the holder's own behalf, the beneficial holder must, prior
to completing and executing the letter of transmittal and delivering the
outstanding notes, either make appropriate arrangements to register ownership of
the outstanding notes in the 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 an "eligible institution" unless the outstanding
notes tendered are:
- tendered by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the
letter of transmittal; or
- tendered for the account of an "eligible institution."
An eligible institution is:
- 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; or
- an "eligible institution" that is a participant in a recognized medallion
signature guarantee program.
If the letter of transmittal is signed by a person other than the registered
holder of any outstanding notes listed therein, the outstanding notes tendered
must be endorsed or accompanied by appropriate bond powers which authorize that
person to tender the outstanding notes on behalf of the registered holder, in
either case signed as the name of the registered holder or holders appears on
the outstanding notes.
If the letter of transmittal or any outstanding 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, the person should indicate this when signing, and unless waived by us,
submit evidence satisfactory to us of that person's authority to so act with the
letter of transmittal.
29
<PAGE>
We will determine, in our sole discretion, all questions as to the validity,
form, and eligibility, including time of receipt, acceptance and withdrawal of
the tendered outstanding notes. Our determination will be final and binding. We
reserve the absolute right to reject any all outstanding notes not properly
tendered or any outstanding notes of which our acceptance would, in the opinion
of our counsel, be unlawful. We also reserve the absolute right to waive any
irregularities or conditions of tender as to particular outstanding notes. Our
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 outstanding notes must be cured within the time as we determine. Neither we,
the exchange agent nor any other person is under any duty to give notification
of defects or irregularities with respect to tenders of outstanding notes.
Additionally, none of them will incur any liability for failure to give this
notification. Tenders of outstanding notes will not be deemed to have been made
until these irregularities have been cured or waived. Any outstanding notes
received by the exchange agent that have defects or irregularities not cured or
waived by us will be returned to you without cost by the exchange agent, unless
otherwise provided in the letter of transmittal as soon as practicable after the
expiration date.
In addition, we reserve the right in our sole discretion to:
- purchase or make offers for any outstanding notes that remain outstanding
subsequent to the expiration date;
- terminate the exchange offer according to the terms in "--Conditions to
the Exchange Offer"; and
- to the extent permitted by applicable law, purchase outstanding notes in
the open market, in privately negotiated transactions or otherwise.
The terms of any of these purchases or offers may differ from the terms of
the exchange offer.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your outstanding notes and either your outstanding
notes are not immediately available, or you cannot deliver your outstanding
notes, the letter of transmittal or any other required documents to the exchange
agent prior to the expiration date, or if you cannot complete the procedure for
book-entry transfer on a timely basis, you may effect a tender if:
- the tender is made through an eligible institution;
- prior to the expiration date, the exchange agent receives from an eligible
institution a properly completed and duly executed notice of guaranteed
delivery, by facsimile transmission, mail or hand delivery, stating the
name and address of the holder of the outstanding notes, the certificate
number or numbers of such outstanding notes and the principal amount of
outstanding notes tendered, stating the tender is being made, and
guaranteeing that, within three business days after the expiration date,
the letter of transmittal, or facsimile thereof, together with the
certificate(s) representing the outstanding notes, unless the book-entry
transfer procedures are to be used, to be tendered in proper form for
transfer and any other documents required by the letter of transmittal,
will be deposited by the eligible institution with the exchange agent; and
- the properly completed and executed letter of transmittal, or facsimile
thereof, together with the certificates representing all tendered
outstanding notes in proper form for transfer, or confirmation of a
book-entry transfer in to the exchange agent's account at DTC of
outstanding notes delivered electronically, and a properly completed
letter of transmittal, or an agent's message instead of a letter of
transmittal and all other documents required by the letter of
30
<PAGE>
transmittal are received by the exchange agent within three New York Stock
Exchange trading days after the expiration date.
If you wish to tender your outstanding notes according to the guaranteed
delivery procedures, make your request to the exchange agent and a notice of
guaranteed delivery will be sent to you.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of outstanding
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 outstanding notes in the exchange offer, a written
or facsimile transmission notice of withdrawal must be received by the exchange
agent at the address given in the prospectus prior to 5:00 p.m., New York City
time, on the expiration date. Any notice of withdrawal must:
- specify the name of the person having deposited the outstanding notes to
be withdrawn;
- identify the outstanding notes to be withdrawn, including the certificate
number or numbers and principal amount of the outstanding notes;
- be signed by the depositor in the same manner as the original signature on
the letter of transmittal, including any required signature guarantees, or
be accompanied by documents of transfer sufficient to permit the trustee
of the outstanding notes to register the transfer of the outstanding notes
into the name of the depositor withdrawing the tender; and
- specify the name in which any outstanding notes are to be registered, if
different from that of the depositor.
All questions as to the validity, form and eligibility, including time of
receipt, of any withdrawal notices will be determined by us, and will be final
and binding on all parties. Any outstanding 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 unless the outstanding notes previously withdrawn
are validly retendered. Any outstanding notes that have been tendered but which
are not accepted for exchange will be returned to the holder without cost to the
holder as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn outstanding notes may be
retendered by following one of the procedures described above under "Procedures
for Tendering Outstanding Notes" at any time prior to the expiration date.
CONDITIONS TO THE EXCHANGE OFFER
Regardless of any other term of the exchange offer, we are not required to
accept for exchange or to exchange any outstanding notes that are not accepted
for exchange according to the terms of the exchange offer. Additionally, we may
terminate or amend the exchange offer as provided in this prospectus before
accepting the outstanding notes if:
- any action or proceeding is instituted or threatened in any court or by or
before any governmental agency with respect to the exchange offer, which,
in our judgment, might materially impair our ability to proceed with the
exchange offer, or
- any law, statute, rule or regulation is proposed, adopted or enacted, or
any existing law, statute, rule or regulation is interpreted by the staff
of the SEC in a manner, which, in our judgment, might materially impair
our ability to proceed with the exchange offer.
These conditions are for our sole benefit. We may assert them in whole or in
part at any time and from time to time, in our sole discretion. Our failure at
any time to exercise any of the foregoing rights
31
<PAGE>
shall not be deemed a waiver of any right and the right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any outstanding notes tendered,
and no exchange notes will be issued in exchange for any outstanding notes, if
at the time of tender:
- a stop order is threatened by the SEC or is in effect for the registration
statement that this prospectus is a part of, or
- a stop order is threatened or in effect regarding qualification of the
indenture under the Trust Indenture Act of 1939, as amended.
If we determine that we may terminate or amend the exchange offer, we may:
- refuse to accept any outstanding notes and return any tendered outstanding
notes to the holder;
- extend the exchange offer and retain all outstanding notes tendered prior
to the expiration of the exchange offer, subject to the rights of the
holders of tendered outstanding notes to withdraw their tendered
outstanding notes;
- waive the termination event with respect to the exchange offer and accept
all properly tendered outstanding notes that have not been withdrawn; or
- amend the exchange offer at any time prior to 5:00 p.m. New York City time
on the expiration date.
If the waiver or amendment constitutes a material change in the exchange
offer, we will disclose the change by means of a supplement to this prospectus
that will be distributed to each registered holder of outstanding notes, and we
will extend the exchange offer for a period of five to ten business days, if the
exchange offer would otherwise expire during that period, depending on the
significance of the waiver or amendment and the manner of disclosure to the
registered holders of the outstanding notes.
The exchange offer is not conditioned on any minimum principal amount of
outstanding notes being tendered for exchange.
EXCHANGE AGENT
IBJ Whitehall Bank & Trust Company 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:
BY MAIL, OVERNIGHT COURIER OR HAND DELIVERY:
IBJ Whitehall Bank & Trust Company
One State Street
New York, NY 10004
Telephone number: (212) 858-2000
Facsimile transmission: (212) 425-0542
FEES AND EXPENSES
We will bear the expenses of soliciting tenders pursuant to the exchange
offer. The principal solicitation for tenders pursuant to the exchange offer is
being made by mail.
Additional solicitations may be made by our officers and regular employees
and our affiliates in person, by telegraph or by telephone.
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<PAGE>
We will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We will, however, pay the exchange
agent reasonable customary fees for its services and will reimburse the exchange
agent for its reasonable out-of-pocket expenses in connection with this exchange
offer. We may also pay brokerage houses and other custodians, nominees and
fiduciaries the reasonable out-of-pocket expenses they incur in forwarding
copies of this prospectus, letter of transmittal and related documents to the
beneficial owners of the outstanding notes and in handling or forwarding tenders
for exchange.
We will pay the fees and expenses incurred in connection with the exchange
offer, for the following:
- the exchange agent;
- the trustee;
- accounting; and
- legal services.
We will pay all transfer taxes, if any, applicable to the exchange of
outstanding notes pursuant to the exchange offer. The amount of these transfer
taxes, whether imposed on the registration holder or any other persons, will be
payable by the tendering holder if:
- certificates representing exchange notes or outstanding notes 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 outstanding notes tendered;
- tendered outstanding notes are registered in the name of any person other
than the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of
outstanding notes pursuant to the exchange offer.
If satisfactory evidence of payment of, or exemption from, these taxes is
not submitted with the letter of transmittal, the amount of these transfer taxes
will be billed directly to the tendering holder.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
outstanding notes, which is face value net of issue discount, as reflected in
our accounting records on the date of the exchange. Accordingly, no gain or loss
for accounting purposes will be recognized by us upon the consummation of the
exchange offer. The expenses of the exchange offer will be amortized by us over
the term of the exchange notes under generally accepted accounting principles.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. You are urged to consult
with your financial and tax advisors in making your decision on what action to
take.
The outstanding notes which are not exchanged for the exchange notes
pursuant to the exchange offer will remain restricted securities. Accordingly,
such outstanding notes may be resold only:
- to a person whom the seller reasonably believes is a qualified
institutional buyer, as defined in Rule 144A under the Securities Act, in
a transaction meeting the requirements of Rule 144A;
- in a transaction meeting the requirements of Rule 144 under the Securities
Act;
- outside the United States to a foreign person in a transaction meeting the
requirements of Rule 904 under the Securities Act;
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<PAGE>
- in accordance with another exemption from the registration requirements of
the Securities Act, and based upon an opinion of counsel, if we so
request, to us; or
- pursuant to an effective registration statement.
and, in each case, in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction. We do not
currently anticipate that we will register the outstanding notes under the
Securities Act.
As a result of the making of, and upon acceptance for exchange of all
validly tendered outstanding notes pursuant to the terms of, this exchange
offer, we will have fulfilled a covenant contained in the registration rights
agreement. Holders of outstanding notes who do not tender their outstanding
notes in the exchange offer will continue to hold such outstanding notes and
will be entitled to all the rights and limitations applicable thereto under the
indenture, except for any such rights under the registration rights agreement
that by their terms terminate or cease to have further effectiveness as a result
of the making of this exchange offer. All untendered outstanding notes will
continue to be subject to the restrictions on transfer set forth in the
indenture. To the extent that outstanding notes are tendered and accepted in the
exchange offer, the trading market for untendered outstanding notes could be
adversely affected.
34
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 1999 as
adjusted to give pro forma effect to the Transactions as if they had been
consummated on March 31, 1999. This table should be read in conjunction with
"Prospectus Summary--The Transactions," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial
statements, including the notes thereto, which appear elsewhere in this
prospectus.
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1999
-----------------
PRO FORMA
-----------------
(DOLLARS IN
MILLIONS)
<S> <C>
Long-term debt:
Senior credit facility(1)................................................ $ 333.0
Senior subordinated notes offered hereby, net of issue discount.......... 150.1
Other debt............................................................... 1.7
-------
Total long-term debt................................................... 484.8
-------
Total stockholder's equity(2).............................................. 137.9
-------
Total capitalization....................................................... $ 622.7
-------
-------
</TABLE>
- ------------------------
(1) The borrowings consist of term loans with an additional $112 million in
revolving credit commitments available.
(2) Pro forma stockholder's equity has been adjusted to reflect (A) the equity
investment, net of related costs, (B) the early redemption premium on our
9.02% senior notes, net of income taxes, (C) certain transaction expenses,
(D) the cash distribution to Grupo Dina for the repayment of Dina Trucks'
$35 million senior secured guaranteed notes, (E) the final distribution paid
to Grupo Dina and (F) forgiveness of receivables from former subsidiaries of
the Company.
35
<PAGE>
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The selected consolidated financial data as of and for the two years ended
December 31, 1998 are derived from our audited consolidated financial statements
included in this prospectus. They have been audited by Arthur Andersen LLP, our
independent public accountants. The selected consolidated financial data for the
year ended December 31, 1996 are derived from our audited financial statements
included in this prospectus. They have been audited by PricewaterhouseCoopers
LLP, our predecessor independent accountants.
The selected unaudited consolidated financial data as of and for the years
ended December 31, 1994 and December 31, 1995 are derived from our financial
records. The selected consolidated financial data for the three months ended
March 31, 1998 and March 31, 1999 are derived from our unaudited consolidated
financial statements included in this prospectus. The unaudited consolidated
financial statements, in our opinion, have been prepared on the same basis as
the audited consolidated financial statements and include all adjustments
necessary for a fair presentation of our financial condition and results of
operations for such periods. The results of operations for the three month
period ended March 31, 1999 are not necessarily indicative of results of
operations for the full year ending December 31, 1999.
The following selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and related
notes included in this prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994(1) 1995 1996 1997 1998 1998 1999
--------- --------- --------- --------- --------- --------- ---------
(UNAUDITED)
INCOME STATEMENT DATA:
Total revenues.................................. $ 536,079 $ 527,053 $ 667,084 $ 739,783 $ 931,727 $ 223,552 $ 243,213
Operating expenses:
Cost of sales................................. 439,931 396,802 509,804 549,001 730,954 174,966 185,589
Depreciation and amortization................. 11,240 15,494 17,618 22,035 24,815 5,813 6,376
Research and development expenses............. 1,730 2,925 7,346 6,655 8,741 1,863 2,406
Other operating expenses(2)................... 76,353 68,182 72,483 83,639 83,413 17,639 24,962
--------- --------- --------- --------- --------- --------- ---------
Total operating expenses.................... 529,254 483,403 607,251 661,330 847,923 200,281 219,333
--------- --------- --------- --------- --------- --------- ---------
Operating income................................ 6,825 43,650 59,833 78,453 83,804 23,271 23,880
Interest expense, net........................... 16,960 34,954 16,029 21,859 19,985 4,692 5,647
Interest expense pushed down from related
party(3)...................................... 5,006 15,019 19,550 21,635 25,194 5,829 6,373
Other expenses (income)......................... 8,200 (16,764) (2,344) (2,835) (7,814) (2,158) 2,919
--------- --------- --------- --------- --------- --------- ---------
Income before income (loss) taxes............... (23,341) 10,441 26,598 37,794 46,439 14,908 8,941
Income taxes.................................... 15,546 17,129 18,474 21,268 31,790 7,765 8,499
--------- --------- --------- --------- --------- --------- ---------
Income from continuing operations............... (38,887) (6,688) 8,124 16,526 14,649 7,143 442
Loss from discontinued operations............... 3,500 -- 5,000 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary item................ (42,387) (6,688) 3,124 16,526 14,649 7,143 442
Extraordinary charge for early retirement of
debt.......................................... -- -- 851 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income...................................... $ (42,387) $ (6,688) $ 2,273 $ 16,526 $ 14,649 $ 7,143 $ 442
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
OTHER DATA (UNAUDITED):
EBITDA(4)....................................... $ 18,065 $ 59,144 $ 77,451 $ 100,488 $ 108,619 $ 29,084 $ 30,256
Capital expenditures............................ 7,739 12,559 25,609 32,096 11,740 6,506 2,959
Ratio of earnings to fixed charges(5)........... N.M. 1.2x 1.7x 1.8x 1.9x 2.3x 1.7x
Ratio of earnings to fixed charges excluding
effect of push down debt(5)................... N.M. 1.7x 3.2x 3.3x 4.0x 4.7x 3.3x
Net cash provided by (used in):
Operating activities.......................... $ (9,170) $ 44,320 $ (52,585) $ 73,732 $ 30,507 $ 1,749
Investing activities.......................... 13,202 (30,338) (71,170) (14,683) (5,139) 8,517
Financing activities.......................... 18,914 (35,254) 128,349 (49,008) (13,388) (1,419)
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents....................... 7,727 $ 30,675 $ 9,403 $ 13,997 $ 24,038 $ 25,646 $ 32,885
Working capital(6).............................. 74,005 146,080 166,679 261,096 203,420 280,113 211,983
Total assets.................................... 626,819 649,368 642,780 820,673 801,755 871,716 827,535
Total debt, excluding pushed down debt.......... 195,000 217,914 210,668 313,251 267,965 333,408 271,019
Long-term debt pushed down from related
party(3)...................................... 143,040 143,040 162,588 184,225 206,500 195,883 206,500
Stockholder's equity............................ 126,190 183,413 144,539 147,693 102,921 146,199 99,659
</TABLE>
(SEE FOOTNOTES ON FOLLOWING PAGE)
36
<PAGE>
NOTES TO SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
- --------------------------
(1) The information provided for the year ended December 31, 1994 is not
comparable to the information provided for the Company for the periods
thereafter as a majority of the Company's current subsidiaries were acquired
from its predecessor owner during such period.
(2) Other operating expenses are comprised of selling, general and
administrative expenses and other miscellaneous operating expenses. In 1998,
other operating expenses were offset by $8.5 million for business insurance
recoveries.
(3) As proceeds from the Transactions were used to repay the $206.5 million of
Grupo Dina's senior secured discount notes, our consolidated financial
statements have been adjusted to include the "push down" of the senior
secured discount notes, and the related interest expense, in order to comply
with applicable Securities and Exchange Commission accounting policies.
(4) EBITDA represents income before interest expense, income taxes, discontinued
operations, extraordinary items, depreciation and amortization and other
non-operating income and expenses, each of which can significantly affect
our results of operations and liquidity and should be considered in
evaluating our financial performance. EBITDA is included because we
understand that such information is considered to be an additional basis on
which to evaluate our ability to pay interest, repay debt and make capital
expenditures. EBITDA is not intended to represent and should not be
considered more meaningful than, or as an alternative to, measures of
performance, profitability or liquidity determined in accordance with
generally accepted accounting principles. However, management believes that
EBITDA is a meaningful measure of performance but understands that it is not
necessarily comparable to similarly titled amounts of other companies.
(5) For the purpose of this calculation, earnings are defined as income from
continuing operations before income taxes, plus fixed charges. Fixed charges
include interest expense on all indebtedness (including amortization of
deferred financing costs) and the portion of operating lease rental expense
which management believes is representative of the interest factor of rent
expense (approximately one-third of rent expense). In addition, we have
calculated the ratio of earnings to fixed charges excluding the effect of
the long-term debt pushed down from Grupo Dina. Ratios of earnings to fixed
charges are not presented for the predecessor for the year ended December
31, 1994 because the Company believes they would not be meaningful as the
Company was acquired during such year.
(6) Working capital is defined as current assets (excluding cash and cash
equivalents) less current liabilities (excluding short-term debt and current
portion of long-term debt).
37
<PAGE>
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following pro forma unaudited condensed consolidated financial
statements assume the consummation of the Transactions, which include the (1)
sale of the Majority Equity Interest in MCII Holdings, (2) the Asset Transfers
and (3) the Financing Transactions. See "Prospectus Summary -- The
Transactions." The pro forma unaudited condensed consolidated balance sheet
assumes that the Transactions occurred on March 31, 1999 and the pro forma
unaudited condensed consolidated statements of earnings assumes that the
Transactions occurred on January 1, 1998 for the twelve months ended December
31, 1998 and the three months ended March 31, 1999.
The pro forma unaudited condensed consolidated statements of earnings for
the year ended December 31, 1998 reflects the audited income statement of MCII
for the year ended December 31, 1998.
The pro forma unaudited condensed consolidated statements of earnings for
the period ended March 31, 1999 reflects the unaudited income statement of MCII
for the period ended March 31, 1999.
The pro forma financial information is a presentation of historical results
with accounting and other adjustments.
THE PRO FORMA STATEMENTS ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND
SHOULD NOT BE CONSTRUED TO BE INDICATIVE OF THE COMPANY'S FINANCIAL POSITION OR
RESULTS OF OPERATIONS HAD THE TRANSACTIONS BEEN CONSUMMATED ON THE DATES ASSUMED
AND DO NOT PROJECT THE COMPANY'S RESULTS OF OPERATIONS FOR ANY FUTURE PERIOD.
38
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
MCII
MCII ADJUSTMENTS(1) ADJUSTED ADJUSTMENTS PRO FORMA
---------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Sales....................................... $ 242,505 $ (6,362) $ 236,143 $ $ 236,143
Financial income............................ 708 708 708
---------- ------- ---------- ----------- -----------
243,213 (6,362) 236,851 236,851
---------- ------- ---------- ----------- -----------
Operating costs and expenses:
Cost of sales (exclusive of items shown
separately below)......................... 184,899 (5,063) 179,836 179,836
Interest expense, finance operations........ 690 690 690
Depreciation and amortization............... 6,376 (125) 6,251 6,251
Research and development expenses........... 2,406 2,406 2,406
Selling, general and administrative
expenses.................................. 24,962 (397) 24,565 24,565
---------- ------- ---------- ----------- -----------
219,333 (5,585) 213,748 213,748
---------- ------- ---------- ----------- -----------
Operating income.............................. 23,880 (777) 23,103 23,103
---------- ------- ---------- ----------- -----------
Other income and (expense)
Interest (expense).......................... (5,647) (3) (5,650) (6,531)(2) (12,181)
Interest (expense) pushed down from related
party..................................... (6,373) (6,373) 6,373(2)
Foreign currency translation gain (loss).... (1,003) 85 (918) (918)
Other (income)/expenses..................... (1,916) 203 (1,713) (1,713)
---------- ------- ---------- ----------- -----------
(14,939) 285 (14,654) (158) (14,812)
---------- ------- ---------- ----------- -----------
Income before income taxes.................... 8,941 (492) 8,449 (158) 8,291
Income taxes.................................. 8,499 (170) 8,329 (2,743)(3) 5,586
---------- ------- ---------- ----------- -----------
Income from continuing operations............. $ 442 $ (322) $ 120 $ 2,585 $ 2,705
---------- ------- ---------- ----------- -----------
---------- ------- ---------- ----------- -----------
</TABLE>
See accompanying notes to pro forma unaudited condensed consolidated financial
statements
39
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
MCII
MCII ADJUSTMENTS(1) ADJUSTED ADJUSTMENTS PRO FORMA
---------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues:
Sales....................................... $ 925,889 $ (20,014) $ 905,875 $ $ 905,875
Finance income.............................. 5,838 5,838 5,838
---------- -------------- ---------- ----------- -----------
931,727 (20,014) 911,713 911,713
---------- -------------- ---------- ----------- -----------
Operating costs and expenses:
Cost of sales (exclusive of items shown
separately below)......................... 728,189 (18,003) 710,186 710,186
Depreciation and amortization............... 24,815 (1,200) 23,615 23,615
Interest expense, finance operations........ 2,765 -- 2,765 2,765
Research and development expenses........... 8,741 8,741 8,741
New product start-up costs.................. 981 981 981
Business insurance recoveries............... (8,462) (8,462) (8,462)
Selling, general and administrative
expenses.................................. 90,894 (135) 90,759 90,759
---------- -------------- ---------- ----------- -----------
847,923 (19,338) 828,585 828,585
---------- -------------- ---------- ----------- -----------
Operating income.............................. 83,804 (676) 83,128 83,128
---------- -------------- ---------- ----------- -----------
Other income and (expense)
Interest (expense)--net..................... (19,985) 670 (19,315) (29,408)(2) (48,723)
Interest (expense) pushed down from related
party..................................... (25,194) (25,194) 25,194(2)
Other income (expense)...................... (511) 609 98 98
Gain (loss) on equity investments........... 5,000 5,000 5,000
Foreign currency translation gain (loss).... 3,325 (520) 2,805 2,805
---------- -------------- ---------- ----------- -----------
(37,365) 759 (36,606) (4,214) (40,820)
---------- -------------- ---------- ----------- -----------
Income before income taxes.................... 46,439 83 46,522 (4,214) 42,308
Income taxes.................................. 31,790 (157) 31,633 (12,352)(3) 19,281
---------- -------------- ---------- ----------- -----------
Income from continuing operations............. $ 14,649 $ 240 $ 14,889 $ 8,138 $ 23,027
---------- -------------- ---------- ----------- -----------
---------- -------------- ---------- ----------- -----------
</TABLE>
See accompanying notes to pro forma unaudited condensed consolidated financial
statements
40
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
MCII
MCII ADJUSTMENTS(1) ADJUSTED ADJUSTMENTS PRO FORMA
--------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................. $ 32,885 $ (1,117) $ 31,768 $ 22,420(4) $ 54,188
Trade and other accounts receivable........ 150,498 (2,280) 148,218 148,218
Current portion of notes receivable........ 11,428 11,428 11,428
Inventories................................ 229,280 (7,055) 222,225 222,225
Deferred income taxes...................... 19,684 19,684 19,684
Other current assets....................... 6,595 (602) 5,993 5,993
--------- -------------- ---------- ----------- -----------
Total Current Assets..................... 450,370 (11,054) 439,316 22,420 461,736
Property plant and equipment................. 91,966 (4,756) 87,210 87,210
Notes receivable............................. 29,627 29,627 29,627
Investment in affiliates..................... 23,238 23,238 23,238
Intangible assets............................ 215,023 215,023 215,023
Other assets................................. 17,311 (389) 16,922 22,121(4) 39,043
--------- -------------- ---------- ----------- -----------
Total Assets............................. $ 827,535 $ (16,199) $ 811,336 $ 44,541 $ 855,877
--------- -------------- ---------- ----------- -----------
--------- -------------- ---------- ----------- -----------
LIABILITIES AND
STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable........................... $ 90,583 $ (3,124) $ 87,459 $ 87,459
Accrued compensation and other benefits.... 12,586 12,586 12,586
Accrued warranties......................... 13,094 13,094 13,094
Accrued income taxes....................... 29,215 (159) 29,056 (1,639)(4) 27,417
Self insurance reserves.................... 6,240 6,240 6,240
Net liabilities of discontinued
operations............................... 5,082 5,082 5,082
Other current liabilities.................. 48,702 (126) 48,576 (11,958)(4) 36,618
--------- -------------- ---------- ----------- -----------
Total Current Liabilities................ 205,502 (3,409) 202,093 (13,597) 188,496
Long-term debt............................... 271,019 271,019 213,780(4) 484,799
Long-term debt pushed down from related
party...................................... 206,500 206,500 (206,500)(4) --
Pensions and other benefits.................. 19,900 (234) 19,666 19,666
Other deferred items and insurance reserves.. 18,564 18,564 18,564
Deferred income taxes........................ 6,391 33 6,424 6,424
--------- -------------- ---------- ----------- -----------
Total Liabilities.......................... 727,876 (3,610) 724,266 (6,317) 717,949
Stockholder's Equity:
Common Stock and additional capital........ 238,876 (10,174) 228,702 160,381(5) 389,083
Accumulated deficit........................ (108,652) (4,280) (112,932) (109,523) (6) (222,455)
Accumulated other comprehensive income..... (30,565) 1,865 (28,700) (28,700)
--------- -------------- ---------- ----------- -----------
Total Stockholder's Equity................. 99,659 (12,589) 87,070 50,858 137,928
--------- -------------- ---------- ----------- -----------
Total Liabilities and Stockholder's
Equity................................... $ 827,535 $ (16,199) $ 811,336 $ 44,541 $ 855,877
--------- -------------- ---------- ----------- -----------
--------- -------------- ---------- ----------- -----------
</TABLE>
See accompanying notes to pro forma unaudited condensed consolidated financial
statements
41
<PAGE>
NOTES TO PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following notes identify the pro forma adjustments made to the
historical amounts in the pro forma unaudited condensed consolidated financial
statements.
(1) Represents the net effect of the transfer of certain assets and subsidiaries
and their related results of operations between Grupo Dina and MCII,
including a charge to equity related to the forgiveness of receivables from
former subsidiaries of MCII.
(2) Represents increased interest expense as a result of the Transactions,
including the amortization of deferred financing fees of approximately $22.1
million over the life of the new debt. The new debt incurred by MCII bears
interest at an assumed rate of 8.398% on the term loans and 11.25% on the
subordinated notes. An increase in the assumed interest rate of 1/8% would
decrease net income by approximately $0.6 million and $0.2 million for the
year ended December 31, 1998 and for the three months ended March 31, 1999,
respectively.
(3) Represents the income tax effects of the pro forma adjustments. The
Company's pro forma effective income tax rate is 46% for the year ended
December 31, 1998 and 68% for the three months ended March 31, 1999.
(4) Represents the impact of the Transactions, which includes the net cash
proceeds of $22.4 million prior to the payment of accrued interest; $22.1
million of deferred financing costs; refinancing of substantially all of
MCII indebtedness, including $9.3 million of accrued interest, the write-off
of an unamortized swap accretion of $2.7 million and an extraordinary charge
related to the early extinguishment of debt of $2.3 million net of income
taxes ($1.6 million); and the issuance of the new debt facilities.
(5) Represents the contribution of $175 million of equity by MCII Holdings to
MCII as part of the equity investment, net of $14.6 million of equity
transaction costs.
(6) Represents the final distribution to Grupo Dina, which includes $71.4
million of excess funds remaining after the Transactions and $35 million
used by Grupo Dina to purchase Dina Camiones' senior secured guarantee
notes, net of tender offer costs.
42
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
We are the leading designer, manufacturer and marketer of inter-city coaches
and related replacement parts for the North American market. We believe that
strong brand name recognition under the MCI(-Registered Trademark-) logo and a
reputation for quality products have led to our large installed customer base
and lead to new coach purchases and demand for our replacement parts. According
to NATIONAL BUS TRADER, the growth of the inter-city coach industry has been
driven by several factors including the overall strength of the U.S. economy,
the expected increase in coach tourism resulting from the aging of the U.S.
population and the fleet upgrading being undertaken by many inter-city coach
operators. According to NATIONAL BUS TRADER, the general health of the U.S.
economy and the resulting increase in disposable incomes and consumer confidence
has led to increased leisure travel. NATIONAL BUS TRADER also believes that
inter-city coach fleet improvement and modernization may have been the most
significant factor behind new coach unit growth in 1998. Operators are replacing
older 40-foot, manual transmission coaches with newer, 45-foot, automatic
transmission models. In addition, inter-city coach sales have benefited from the
prevailing low interest rates experienced in recent years.
The following discussion of our historical results of operations and
financial condition should be read in conjunction with our consolidated
financial statements and the notes thereto which appear elsewhere in this
prospectus.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1998
OVERVIEW
REVENUES. Revenues for the three months ended March 31, 1999 were $243.2
million, an increase of 8.8% from $223.6 million in 1998. Increased revenues
were due to higher coach sales in the United States and Canada.
GROSS PROFIT. Gross profit for the three months ended March 31, 1999
increased to $57.6 million from $48.6 million for the three months ended March
31, 1998, representing an increase of 18.6%. Our overall gross profit margin,
excluding depreciation and amortization, for the three months ended March 31,
1999 as a percentage of sales increased to 23.7%, compared with 21.7% for the
three months ended March 31, 1998, which was due to improved margins in coach
operations.
OPERATING INCOME. Operating income was $23.9 million for the three months
ended March 31, 1999, compared with $23.3 million for the three months ended
March 31, 1998, representing an increase of 2.6%. Higher gross profit margins
were partially offset by increased selling, general and administrative expenses.
COACH OPERATIONS
REVENUES. Our coach operations reported revenues of $194.0 million for the
three months ended March 31, 1999, an increase of 12.4% over the $172.5 million
for the same period of the prior year. Sales of new inter-city coaches totaled
466 for the three months ended March 31, 1999, compared to 506 units in the same
period of the prior year. Order backlog as of March 31, 1999 was 917 units (589
units in our U.S. and Canadian operations), compared with 1,217 units, 575 units
in our U.S. and Canadian operations, at March 31, 1998. Used coach sales were
335 units for the three months ended March 31, 1999, compared with 150 units for
the three months ended March 31, 1998. Used coach sales benefited from a
first-ever three-day inventory clearance sale, held to coincide with the opening
of our new service center in Dallas.
43
<PAGE>
GROSS PROFIT. Gross profit from coach operations for the three months ended
March 31, 1999 increased 22.2% to $46.1 million from $37.7 million for the three
months ended March 31, 1998. Gross profit margin for the first quarter of 1999
also increased to 23.7%, compared with 21.8% in the same quarter of the prior
year. New coach operations benefited considerably from a significant reduction
in labor hours per coach produced on the E-Series coach, which was still in the
start-up phase in early 1998. Gross profit margin on used coaches declined to
26.9% in the first quarter of 1999, compared with 40.7% in 1998. Used coach
margins have been under pressure as trade-ins on new coaches have increased and
some traditional used coach buyers have moved to new coaches.
OPERATING INCOME. Operating income for the coach operations for the three
months ended March 31, 1999 was $18.2 million, an increase of 5.4% compared to
$17.3 million for the same period in 1998. Our improved results were due to
increased new coach sales volume and better control of costs, largely offset by
reduced used coach margins, higher research and development expenses, higher
selling, general, and administrative expenses, and by start-up costs for a
component parts manufacturing facility in Mexico.
REPLACEMENT PARTS OPERATIONS
REVENUES. Replacement parts operations reported revenues for the three
months ended March 31, 1999 of $47.6 million, down 2.3%, compared to $48.7
million for the same period in 1998. Demand for replacement parts tends to be
counter-cyclical to sales of new coaches as operators choose to replace their
fleets rather than experience increased maintenance requirements.
GROSS PROFIT. Gross profit from replacement parts increased 14.1% to $10.7
million for the three months ended March 31, 1999, from $9.4 million for the
three months ended March 31, 1998. Gross profit margins in the replacement parts
segment also increased to 22.4% for the three months ended March 31, 1999
compared to 19.2% for the same period in 1998. Our improvement in gross margin
is due primarily to lower operating costs compared to the same period in the
prior year, when the distribution operations in Mexico incurred start-up costs.
OPERATING INCOME. Operating income in the replacement parts segment for the
three months ended March 31, 1999 was $5.8 million, an increase of 6.1% compared
to $5.5 million for the same period in 1998. The improved first quarter results
were due to the improved margins and lower operating costs.
FINANCE OPERATIONS
REVENUES. Revenues from finance operations were $1.6 million for the three
months ended March 31, 1999, a decrease of 28.9% compared to $2.3 million for
the same period in 1998. Our lower revenues were a direct result of efforts to
reduce our total lease and loan portfolio to generate cash for working capital
needs.
GROSS PROFIT. Gross profit from finance operations decreased 42.9% to $0.9
million for the three months ended March 31, 1999, from $1.5 million for the
three months ended March 31, 1998. Gross profit margin in the finance operations
for the three months ended March 31, 1999 also declined to 53.3% compared to
66.5% in the first quarter of 1998, due to the reduced volume of business.
OPERATING INCOME. Our finance operations recorded an operating loss of $0.2
million for the three months ended March 31, 1999, compared to operating income
of $0.5 million for the same period in 1998 due to a higher external cost of
capital in the three months ended March 31, 1999.
44
<PAGE>
INTEREST EXPENSE
For the three months ended March 31, 1999, net interest expense was $12.0
million, a 14.2% increase over the $10.5 million in the same period in 1998.
Interest expense included additional interest of $6.4 million and $5.8 million
for the three months ended March 31, 1999 and 1998, respectively, as a result of
the application of Securities and Exchange Commission accounting policies
requiring us to "push down" debt principal and interest expense related to Grupo
Dina's $206.5 million senior secured discount notes, see Note 12 to our audited
consolidated financial statements.
YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997
OVERVIEW
REVENUES. Revenues increased 25.9% in 1998 to $931.7 million from $739.8
million in 1997 due to strong customer demand for new and used coaches. Low
interest rates and solid economic growth in the United States and Canada,
coupled with slowly improving economic conditions in Mexico, allowed for record
sales volumes. In addition, strong customer acceptance of our high-end E-Series
coach, following its initial introduction in late 1997, further stimulated
revenue growth.
GROSS PROFIT. Gross profit increased 5.2% to $200.8 million in 1998 from
$190.8 million in 1997. However, overall gross profit margins declined to 21.5%
in 1998 from 25.8% in 1997. Lower gross margins in 1998 were due primarily to
the mix of new coaches sold in the United States and Canada and depressed used
coach prices.
OPERATING INCOME. Operating income for 1998 was $83.8 million, an increase
of 6.8% over the $78.5 million recorded in 1997. The increase in operating
income resulted from higher new coach sales volumes and improved margins on
replacement parts, partially offset by lower new coach and used coach margins.
Reductions in product development and launch costs also contributed to the
growth in operating income.
COACH OPERATIONS
REVENUES. Our coach operations reported revenues of $736.2 million in 1998,
an increase of 37.1% over the $537.2 million reported in 1997. New coach
deliveries totaled 2,173 units for 1998, compared to 1,732 units in the prior
year. Demand for new coaches in the U.S. and Canadian markets continued to grow
in 1998 due to the availability of low-cost financing and favorable economic
conditions. Our used coach business responded well to management initiatives to
increase inventory turnover, with sales increasing to 779 units, compared to 496
units to 1997.
GROSS PROFIT. Gross profit from coach operations increased to $157.6
million in 1998, a 3.6% increase over the $152.1 million recorded in 1997.
However, gross margins declined to 21.4% in 1998, compared to 28.3% in 1997.
Gross profit was primarily impacted by lower margins on used coaches in the
United States and Canada resulting from the acceleration of fleet replacement
programs by our major new coach customers.
OPERATING INCOME. Operating income for our coach operations declined to
$59.3 million in 1998, or 2.0%, compared to $60.5 million recorded in 1997. The
decline was primarily due to losses associated with used coaches which were
partially offset by approximately $8.5 million in business insurance recoveries
in 1998. In addition, operating income in 1997 was depressed by approximately
$7.3 million of new product start-up costs.
REPLACEMENT PARTS OPERATIONS
REVENUES. Revenues within our replacement parts operations were down 3.8%
to $186.1 million in 1998, compared to $193.4 million in 1997. Historically, the
demand for replacement parts tends to run
45
<PAGE>
counter-cyclical to the demand for new coaches, and this trend continued during
1998 in the U.S. and Canadian markets.
GROSS PROFIT. Gross profit from replacement parts operations increased to
$37.0 million, a 14.7% increase over the $32.3 million recorded in 1997. Gross
margins increased to 19.9% in 1998 compared to 16.7% in 1997, due primarily to
lower operating costs in parts distribution operations.
OPERATING INCOME. Operating income in the replacement parts operations
increased 38.8% to $22.1 million in 1998, compared to $15.9 million in 1997. The
combination of improved gross margins and lower selling, general and
administrative costs contributed to the positive improvement in operating
income.
FINANCE OPERATIONS
REVENUES. Revenues from our finance operations increased marginally to $9.4
million in 1998, compared to $9.2 million in 1997. Flat revenues reflect
management efforts to limit growth of the loan and lease portfolio by referring
financing business to MCII Financial Services, while attempting to maintain
financing support for new coach sales through use of external financing sources.
GROSS PROFIT. Gross profit from finance operations declined to $6.1
million, a 4.4% decrease from $6.4 million in 1997. Gross margins also declined
to 64.9% in 1998, compared to 69.4% in 1997. Finance margins were negatively
impacted by a higher external cost of capital in 1998.
OPERATING INCOME. Operating income from our finance operations increased
19.8% to $2.4 million in 1998, compared to $2.0 million in 1997. Operating
income was impacted favorably by lower selling, general and administrative
costs.
INTEREST EXPENSE
Interest expense increased 3.9% to $45.2 million in 1998, compared to $43.5
million in the prior year. Interest expense includes $25.2 million and $21.6
million, respectively, of interest expense relating to the push down of Grupo
Dina's $206.5 million senior secured discount notes.
YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996
OVERVIEW
REVENUES. Revenues increased 10.9% in 1997 to $739.8 million from $667.1
million in 1996 due to strong customer demand for new and used coaches, despite
the flooding of the Red River in the second quarter of 1997, which effectively
halted production for four weeks.
GROSS PROFIT. Gross profit in 1997 increased 21.3% to $190.8 million from
$157.3 million in 1996. Gross profit margins also increased to 25.8% in 1997,
compared to 23.6% in 1996. Higher gross margins in 1997 were primarily due to
increased leveraging of fixed costs resulting from higher unit sales.
OPERATING INCOME. Operating income for 1997 was $78.5 million, an increase
of 31.3% over the $59.8 million recorded in 1996. The increase in our operating
income resulted from the increased leveraging of fixed costs resulting from
higher unit sales.
COACH OPERATIONS
REVENUES. Revenues from coach operations increased 8.3% in 1997 to $537.2
million from $496.1 million in 1996. New coach deliveries totaled 1,732 units
for 1997, compared to 1,511 units in the prior year. Demand for new coaches
reflected continued strength in the U.S. and Canadian economies and
46
<PAGE>
low interest rates, along with the gradual recovery of the Mexican economy. Used
coach unit sales of 496 units in 1997 decreased from 571 units in 1996. This
decrease was primarily due to the strength of the new coach sales, especially
the VIAGGIO-Registered Trademark- which is priced at levels to compete with used
coaches. We experienced revenue growth in 1997 despite the flooding of the Red
River in the second quarter of 1997, which effectively halted production for
four weeks. In addition, we introduced the E-Series coach which, due to the
flood, experienced product launch difficulties.
GROSS PROFIT. Gross profit from coach operations in 1997 increased 30.3% to
$152.1 million from $116.7 million in 1996. Gross profit margins also increased
to 28.3% in 1997, compared to 23.5% in 1996. Higher gross margins in 1997 were
primarily due to lower used coach margins in 1996, which were driven by large
industry-wide volumes of trade-ins. In addition, the higher gross profit
reflects the increased leveraging of fixed costs resulting from higher unit
sales.
OPERATING INCOME. Operating income from coach operations for 1997 was $60.5
million, an increase of 45.8% over the $41.5 million recorded in 1996. The
increase in our operating income primarily resulted from the increased
leveraging of fixed costs resulting from higher unit sales.
REPLACEMENT PARTS OPERATIONS
REVENUES. Revenues from our replacement parts operations for 1997 was
$193.4 million, an increase of 21.5% over the $159.2 million recorded in 1996.
The increase in our revenues resulted from a full year effect of the acquisition
of the inventory of Flxible Parts, Inc., which was acquired in late 1996.
GROSS PROFIT. Gross profit from our replacement parts operations decreased
1.5% to $32.3 million in 1997 from $32.8 million in 1996. Gross profit margins
also decreased to 16.7% in 1997, compared to 20.6% in 1996. Lower gross margins
in 1997 were primarily due to a higher proportion of lower margin parts sales
for transit buses resulting from the acquisition of Flxible inventory.
OPERATING INCOME. Operating income from our replacement parts operations
increased 12.0% in 1997 to $15.9 million from $14.2 million in 1996 due to a
reduction in selling, general and administrative expenses resulting from cost
synergies from the acquisition of Flxible inventory.
FINANCE OPERATIONS
REVENUES. Revenues from our finance operations decreased 22.0% to $9.2
million in 1997 from $11.8 million in 1996. The decrease in revenues primarily
resulted from the reduction in size of the loan portfolio resulting from the
formation of, and transfer of loans and leases to, MCII Financial Services Inc.
GROSS PROFIT. Gross profit from our finance operations for 1997 was $6.4
million, a decrease of 16.9% from the $7.7 million recorded in 1996. The
decrease in gross profit primarily resulted from the corresponding decline in
revenues. Gross profit margins increased to 69.4% in 1997, compared to 65.2% in
1996.
OPERATING INCOME. Operating income from our finance operations decreased
52.4% in 1997 to $2.0 million from $4.2 million in 1996 primarily due to the
increasing effect of the decline in revenues spread over fixed cost.
INTEREST EXPENSE
Interest expense increased 22.2% to $43.5 million in 1997, compared to $35.6
million in the prior year. Interest expense includes $21.6 million and $19.6
million, respectively, of interest expense relating to the push down of Grupo
Dina's $206.5 million senior secured discount notes, in 1997 and 1996.
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<PAGE>
Interest expense was also higher due to an increase in bank borrowings at the
U.S. and Canadian operations.
LIQUIDITY AND CAPITAL RESOURCES
We have significant indebtedness and debt service requirements. As a result
of the Transactions, we have significantly increased our cash requirements for
debt service relating to the outstanding notes and our senior credit facility.
As of March 31, 1999, on a pro forma basis, we had long-term debt outstanding of
approximately $484.8 million and up to $112.0 million available under our senior
credit facility. Principal on our new senior credit facility is required to be
repaid quarterly in annual amounts of $3.3 million for the first six years and
$313.0 million in the seventh year after the closing. Our intention is to fund
those quarterly payments through the senior secured credit facility. Our
principal liquidity requirements are for debt service requirements under the
notes and our senior credit facility and for working capital and capital
expenditures. Historically, we have funded our capital and operating
requirements with a combination of cash on hand, operating cash flow, proceeds
from asset sales and proceeds from credit facilities and other debt borrowings.
We expect to rely on internally generated funds and, to the extent necessary,
borrowings under our senior credit facility to meet our liquidity needs in the
foreseeable future.
Net cash provided by operating activities for the first three months of 1999
was $1.7 million, compared to $30.5 million for the first three months of 1998.
The decrease in cash provided by operating activities was principally due to a
greater increase in accounts receivable as we approach the peak spring selling
season for new coaches with a higher planned production volume. Net cash
provided by operating activities was $73.7 million in 1998, compared to net cash
used in operating activities of $52.6 million in 1997. The increase in cash
provided by operating activities was due principally to reductions in inventory
levels in 1998 following significant increases in inventory and other working
capital requirements during 1997 due to the introduction of the E-Series coach.
Net cash provided by investing activities was $8.5 million for the first
three months of 1999, compared to net cash used in investing activities of $5.1
million for the first three months in 1998. The increase in cash provided by
investing activities resulted primarily from sales of notes receivable to third
party finance companies and lower capital expenditures. Net cash used in
investing activities was $14.7 million in 1998 compared to $71.2 million in
1997. The decrease in cash used in investing activities reflects reductions in
capital expenditures in 1998 and the initial investment we made in MCII
Financial Services Inc. in 1997 that did not reoccur in 1998.
Capital expenditures for the first three months of 1999 were $3.0 million
compared to $6.5 million for the same period in 1998. Capital expenditures for
the first three months of 1999 consisted primarily of maintenance capital
expenditures, while the same period in 1998 included certain expenditures on new
coach tooling for the E-Series. Capital expenditures totaled $11.7 million in
1998 compared to $32.1 million in 1997. Capital expenditures included $1.8
million and $3.8 million for new coach tooling for the E- and G-Series in 1998
and 1997, respectively.
Net cash used in financing activities for the first three months of 1999 was
$1.4 million compared to $13.4 million for the same period in 1998. The decrease
in cash used in financing activities was primarily due to reductions in
intercompany payables accounts with related parties. Net cash used in financing
activities was $49.0 million in 1998 compared to net cash provided by financing
activities of $128.3 million in 1997. During 1997, we increased borrowings from
our revolving credit facilities and issued new debt to finance increases in
working capital and product development projects in both the U.S. and Mexico,
including the E-Series. In 1998, cash generated from operations and working
capital reductions was used to service debt principal payments to reduce our
borrowings under our revolving credit facilities.
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<PAGE>
FINANCIAL RESTRUCTURING
As of December 31, 1998, we had a $170 million U.S. senior revolving credit
facility with a nine-bank syndicate to finance working capital and other general
corporate needs. This facility was scheduled to expire on October 1, 1999, and
the lenders indicated that they were not willing to extend its maturity. In
addition, during 1998, we were required to reduce existing long-term debt
obligations by $50 million, consisting of a $25 million principal payment on our
9.02% senior notes, a $12 million reduction in our Canadian credit facility, and
a $13 million principal payment on Autobuses' pre-export notes due 1999.
As a result of the debt reductions during 1998 and the additional debt
obligations and working capital requirements for 1999, we did not expect to
generate sufficient cash flow from operations to fund both short term
requirements and meet the required expiration of our then existing senior credit
facility.
On March 18, 1999, we engaged CIBC World Markets Corp. (formerly CIBC
Oppenheimer Corp.) and its affiliates ("CIBC"), to act as our lead bank agent,
financial advisor, placement agent, or underwriter to undertake a financial
restructuring of the debt obligations of our company and Grupo Dina.
On April 19, 1999, we executed an agreement with CIBC for the issuance of
$40 million of senior subordinated increasing rate notes due December 31, 1999
(subject to extension to March 31, 2000), which were subsequently paid off in
connection with the Transactions. We used this bridge financing to meet
short-term working capital requirements during the financial restructuring
process.
In addition to the bridge financing, we developed and executed, in
association with CIBC, a financial restructuring plan to refinance substantially
all of the indebtedness of Grupo Dina, our company, and our respective
subsidiaries. See "Prospectus Summary--The Transactions."
SECOND QUARTER EVENTS
In connection with our restructuring and the sale of a majority interest in
us, our net income for the second quarter of 1999 is expected to be impacted.
There will be an extraordinary charge associated with the early repayment of
certain of our indebtedness in connection with the Transactions. The charge
consists of redemption premiums, the write-off of deferred debt issuance costs,
and incurring financing costs associated with the repayment of our existing
senior credit facility and Autobuses' existing credit facility. The charge will
be partially offset by a gain resulting from the recognition of unamortized swap
accretion deferred credits. In addition, following the consummation of the
Transactions, new management brought in by the equity investors determined to
change our asset management strategies regarding used coaches in response to the
changing dynamics of the marketplace. We are currently evaluating the impact of
the change in strategy and expect to take a charge in our second quarter
financial statements.
YEAR 2000 MATTERS
We have developed a plan to ensure that our systems have the ability to
process transactions in the year 2000. We believe that we have identified the
applications that will need to be modified to properly utilize dates beyond
December 31, 1999. Both internal and external resources will be utilized to
reprogram and test software for year 2000 compliance.
It is anticipated that the year 2000 project will be completed no later than
September 1999. The estimated total cost of making the systems year 2000
compliant is approximately $2.0 million. This cost will be expensed as incurred
except for the installation of new applications that are already year 2000
compliant.
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<PAGE>
Based on present information, we believe that we will be able to achieve
year 2000 compliance through a combination of modifications to some existing
systems and the purchase of other systems that are already year 2000 compliant.
We believe that the expenses and capital expenditures associated with achieving
year 2000 compliance will not have a material effect on our financial results in
1999.
We are contacting business partners whose year 2000 non-compliance could
adversely affect our operations, employees, or customers. We believe the most
likely worst case scenario would be the failure of a material business partner
to be year 2000 compliant. Therefore, we will continue to work with and monitor
the progress of our partners and formulate a contingency plan if we do not
believe a business partner will be compliant.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact the financial
position, results of our operations or cash flows due to adverse changes in
financial and commodity market prices and rates. As a result of the financial
restructuring discussed above, we are exposed to market risk in the area of
changes in U.S. interest rates. This exposure is directly related to our normal
operating and funding activities.
Because our obligations under our senior credit facility include interest at
floating rates, based on certain quoted base rates we are sensitive to changes
in prevailing interest rates. An increase of 1% in the applicable base interest
rates, based upon $343 million of borrowings under the facility as of June 30,
1999, would result in addition annual interest expense of approximately $3.4
million, $2.0 million after tax, to us and would not be material to our cash
flow or financial position.
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<PAGE>
BUSINESS
We are the leading designer, manufacturer and marketer of inter-city coaches
and related replacement parts for the North American market. We began
manufacturing inter-city coaches and distributing replacement parts in 1933.
Since the late 1970s, we have consistently maintained a market share in excess
of 50% of the United States and Canadian inter-city coach market and estimate
that our 1998 market share was 56%. Our established market position and product
longevity have led to an installed base that, according to a BUS BOOK PUBLISHING
report, exceeds 70% of the estimated 38,000 industry-wide fleet of inter-city
coaches operating in the United States and Canada in 1998. We believe that
strong brand name recognition under the MCI-Registered Trademark- logo and a
reputation for quality products have led to our large installed customer base
and lead to new coach purchases and demand for our replacement parts. We also
believe that we are the largest distributor of replacement parts for inter-city
coaches and transit buses in the United States and Canada with an estimated 33%
of this combined market.
From 1995 to 1998, our annual revenues have grown from $527.1 million to
$931.7 million, representing a 20.9% compound annual growth rate. We attribute
our growth to the successful introduction of new coach models, the upgrading and
expansion of several of our existing product lines and strong industry
fundamentals. Over that same period, our annual EBITDA has increased from $59.1
million in 1995 to $108.6 million in 1998, representing a 22.5% compound annual
growth rate. Our revenues and Adjusted EBITDA for the twelve months ended March
31, 1999 were $951.4 million and $113.4 million, respectively.
Our principal lines of business are:
MANUFACTURING AND SELLING NEW COACHES. We design, manufacture and market
new coaches in the United States, Canada and Mexico. In the United States and
Canada, we sell our coaches under the MCI-Registered Trademark- and
VIAGGIO-REGISTERED TRADEMARK- names and in Mexico and Latin America we sell
under the DINA and VIAGGIO-Registered Trademark- names. Our broad product lines
and comprehensive option offerings target each level of the inter-city coach
market, ranging from high-end charter coaches to lower-cost line-haul coaches.
For the twelve months ended March 31, 1999, new coach sales represented 70.1%
and 82.4% of our revenues and EBITDA, respectively.
MANUFACTURING AND SELLING REPLACEMENT PARTS. We manufacture and/or
distribute throughout North America more than 60,000 replacement parts for
inter-city coaches, approximately 20% of which are our proprietary products.
Besides our OEM products, we also distribute non-OEM replacement parts under our
COACH GUARD-REGISTERED TRADEMARK- and DIESEL GUARD-REGISTERED TRADEMARK- brand
names. For the twelve months ended March 31, 1999, replacement parts represented
19.4% and 24.1% of our revenues and EBITDA, respectively.
To support our principal business lines, we engage in the following related
activities:
USED COACH SALES AND SERVICE. Through our broad sales network, we provide
used coach brokerage and dealership services. Due to our large installed base of
coaches, our extensive maintenance and repair capabilities, longstanding
customer relationships and industry knowledge, we are able to further support
our customers by purchasing and reselling used coaches. In addition, we have one
of the largest coach service center networks, with five centers located
throughout the United States and Canada. We believe our dedicated sales, parts
and service network enhances the high residual values enjoyed by our coaches,
which in turn is a major selling point when marketing new coaches.
LEASING AND FINANCING COACHES. To further support our sales efforts, we
offer a comprehensive package of leasing and financing services to our
customers. Our leasing and financing services allow us to generate incremental
sales and provide us with an additional competitive advantage due to our ability
to assist customers in financing their coach purchases.
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REVENUES AND GROSS PROFIT BY BUSINESS SEGMENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------- COMPOUND ANNUAL
1995 1996 1997 1998 GROWTH RATE
---------- ---------- ---------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Coach (New and Used).......................... $ 377,661 $ 496,078 $ 537,184 $ 736,216 24.9%
Replacement Parts............................. 140,500 159,201 193,358 186,072 9.8%
Finance and Other............................. 8,892 11,805 9,241 9,439 2.0%
---------- ---------- ---------- ----------
Total..................................... $ 527,053 $ 667,084 $ 739,783 $ 931,727 20.9%
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
GROSS PROFIT
Coach (New and Used).......................... $ 91,811 $ 116,695 $ 152,095 $ 157,615 19.7%
Replacement Parts............................. 32,572 32,849 32,278 37,033 4.4%
Finance and Other............................. 5,868 7,736 6,409 6,125 1.4%
---------- ---------- ---------- ----------
Total..................................... $ 130,251 $ 157,280 $ 190,782 $ 200,773 15.5%
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
GROSS MARGIN
Coach (New and Used).......................... 24.3% 23.5% 28.3% 21.4%
Replacement Parts............................. 23.2% 20.6% 16.7% 19.9%
Finance and Other............................. 66.0% 65.5% 69.4% 64.9%
---------- ---------- ---------- ----------
Total..................................... 24.7% 23.6% 25.8% 21.5%
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
COMPETITIVE STRENGTHS
RECOGNIZED INDUSTRY LEADER. We have been a leading manufacturer of
inter-city coaches and replacement parts in the United States and Canada for
more than 30 years. According to the NATIONAL BUS TRADER, we had the two most
popular, and four of the top six, seated coach models delivered in the United
States and Canada in 1998. We offer our customers what we believe is the
broadest range of parts and provide our customers with prompt delivery,
generally within 24-hours.
FIRMLY ESTABLISHED RELATIONSHIP WITH GREYHOUND LINES. For over 30 years, we
have been the principal supplier of coaches to Greyhound Lines, Inc. and
Greyhound Lines of Canada, Ltd., which are both owned by Laidlaw Inc., the
largest buyer of coaches in North America. Our coaches currently represent
greater than 90% of the approximately 3,100 vehicles in Greyhound's combined
fleet. We currently have dedicated supplier agreements with Greyhound Lines and
Greyhound Canada for inter-city coaches which requires Greyhound Lines to
purchase at least 80% of its new coaches from us and Greyhound Canada to
purchase at least 75% of its new coaches from us. In addition, we are developing
our next generation line-haul coach, the G-Series, in consultation with
Greyhound Lines. We expect that we will begin pilot production of the G-Series
in late 1999.
FAVORABLE TRENDS. We expect to benefit from several favorable trends in the
coach industry, including (1) the resurgence of Greyhound as a national
line-haul operator, and the commitment to the inter-city coach business shown by
Laidlaw's acquisition of Greyhound, (2) the growth of Coach USA, the leading
tour and charter operator in the United States, adding stability in the tour and
charter segment of the industry, and (3) the acceleration of the fleet
replacement cycle for our top two customers, Greyhound and Coach USA.
CONTINUED MANUFACTURING EFFICIENCY IMPROVEMENTS. During 1998, we decreased
per unit manufacturing costs. We have improved our manufacturing capacity while
reducing costs through improved product design and manufacturing process
improvements. For example, the new E-Series
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RENAISSANCE-REGISTERED TRADEMARK- coach was introduced during 1997 and is built
using approximately one-third fewer parts than previous models. The advanced
design of the E-Series coach significantly reduces production labor hours and is
intended to increase product quality.
COMPLEMENTARY PRODUCT LINES MITIGATE CYCLICAL MARKETS. Our operations
combine the new coach manufacturing business, which performs best in a strong
general economic environment, with the replacement parts, used coach sales and
service businesses, which have historically performed more favorably during
general economic downturns. Replacement parts and service sales tend to increase
during an economic downturn as customers defer new coach purchases and extend
the useful lives of their existing fleets. The complementary nature of our
businesses tends to mitigate the impact of reduced new coach sales during
periods of economic downturns.
BARRIERS TO ENTRY. To be competitive, potential participants looking to
enter the inter-city coach manufacturing industry would need to make significant
capital investments in plant and equipment and hire from a limited pool of
experienced engineering, manufacturing and R&D personnel. We believe that
further barriers include our brand recognition and customer loyalty that result
from our leading market position and significant installed customer base. A
successful coach manufacturer must make significant capital investments to
support its customers through a large inventory of replacement parts and
nationwide service centers. Furthermore, switching coach manufacturers is
expensive and time consuming for fleet operators, as drivers and maintenance
personnel would need to be retrained and replacement parts would need to be
restocked in order to service and maintain multiple coach brands.
STATE-OF-THE-ART DESIGNS. The E-Series RENAISSANCE-Registered Trademark-,
which was introduced in 1997, has been well received by customers and the
inter-city coach industry. The E-Series was the co-winner of the 1996 Concurrent
Engineering Award for new product design given jointly by Structural Dynamics
Research Corporation and MACHINE DESIGN magazine. The E-Series was engineered to
maximize manufacturing efficiencies by requiring fewer assembly hours and parts.
We believe that the E-Series' patented spiral staircase, advanced audio systems
and larger overhead luggage racks and lavatories are innovative features that
have contributed to its success. Our G-Series coach incorporates the engineering
advances and lessons learned from the development of the E-Series.
BUSINESS STRATEGY
Our business objective is to profitably grow our position as the leading
North American manufacturer of inter-city coaches. In order to do so, we will
pursue the following strategies:
CONTINUE NEW PRODUCT INTRODUCTIONS AND REFINEMENTS. In the last two years,
we have introduced two new model lines, the E-Series
RENAISSANCE-REGISTERED TRADEMARK- coach, for use in the luxury tour and charter
markets, and the F-Series coach, a lower cost line-haul model initially designed
for the Mexican marketplace. Each unit is highly competitive within its specific
market, and customer acceptance of both units was high in 1998. In late 1999, we
intend to begin pilot production of our G-Series coach. The all-new G-Series is
being designed in consultation with Greyhound primarily to serve the needs of
the U.S. line-haul market. Going forward, we intend to refine existing and new
product lines to meet the needs of our customers.
LEVERAGE LOW COST MANUFACTURING. We continue to seek to improve our margins
by lowering our manufacturing costs. In particular, we have an opportunity to
utilize available production capacity at our ISO 9001 certified facility in
Sahagun, Mexico. This process began in a limited manner with the introduction of
the DOT certified VIAGGIO-REGISTERED TRADEMARK- 1000 model, which addresses the
lower-cost niche in the United States and Canadian markets. As part of our
long-term strategy, we plan to use our Sahagun facility to manufacture the new
F- and G-Series models. We expect that this will allow us to manufacture these
vehicles at a lower unit cost than they could be produced in our existing U.S.
and Canadian facilities due to significantly lower labor costs in Mexico.
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<PAGE>
SEEK NEW MARKET NICHES. In the near term, we intend to build on the success
of recently launched model lines. In the United States, we will increase our
marketing of E-Series coaches in shell form into the high-end motor home
conversion segment. In the longer term, we are considering marketing the
F-Series unit to select U.S. niche markets, including the motor home conversion
and airport transfer markets.
CONTINUE TO IMPROVE SERVICE OFFERINGS. We believe that our success is
largely attributable to our dedication to customer service. Our full-service
approach is applied to all segments of our business, including new coach sales,
used coach sales, replacement parts, service, financing and leasing. Since the
beginning of 1998, we opened new service facilities in Dallas, Montreal and Los
Angeles, and further service facilities are under consideration. We also
recently announced plans to consolidate our existing parts facilities into a new
single facility to be built in Louisville, Kentucky. The strategic location of
this facility will permit us to accept orders later than our current
capabilities for next day delivery. In addition to increasing customer service,
the Louisville facility is expected to significantly reduce overall operating
costs and benefit from local government tax incentives.
FURTHER RATIONALIZE OPERATIONS. We believe we can continue to reduce costs
through further process and manufacturing re-engineering. In the U.S. and
Canadian coach business, we improved our operating margin through reductions in
support personnel and the elimination of redundancies. We continue to
re-engineer our manufacturing processes and component designs in order to
increase parts standardization and reduce manufacturing costs. We believe that
parts standardization will result in faster parts delivery to our customers and
increased profitability and market penetration due to higher product quality.
INDUSTRY OVERVIEW
INTER-CITY COACH INDUSTRY
The domestic market for inter-city coaches is broad and diverse. The primary
customers for inter-city coaches are independent coach operators, national coach
fleet operators, government agencies that use coaches for public transit
services and custom coach converters. Based on a BUS BOOK PUBLISHING report, our
installed base exceeds 70% of the estimated 38,000 industry-wide fleet of inter-
city coaches operating in the United States and Canada in 1998. We estimate the
United States and Canadian market for new inter-city coaches to have exceeded
$1.0 billion of which we had an estimated 56% market share in 1998.
U.S. AND CANADIAN
NEW INTER-CITY COACH DELIVERIES(1)
<TABLE>
<CAPTION>
1997 1998
--------- ---------
<S> <C> <C>
Total MCII Units(2)............................................................ 1,492 1,797
Total Industry Units........................................................... 2,769 3,200
MCII Market Share.............................................................. 54% 56%
Industry Growth................................................................ 22% 16%
</TABLE>
- --------------------------
SOURCE: BASED ON DATA PUBLISHED BY NATIONAL BUS TRADER
(1) In addition to the amounts in the table, we delivered 232 and 325 inter-city
coaches in Mexico for each of the two years in the period ending December
31, 1998. Inter-city coach deliveries do not include shells delivered for
the conversion market.
(2) Includes 50 and 37 coaches during each of the two years in the period ending
December 31, 1998 that we delivered to customers leasing their coaches from
the Company's leasing subsidiary.
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Since the late 1970s, we have consistently maintained a market share in
excess of 50% of the U.S. and Canadian inter-city coach market, and have
historically maintained a market share that more than doubles our next largest
competitor. The total new coach market deliveries have increased between 1994
and 1998 at a compound annual growth rate of 18.7%, while our unit deliveries
have increased at a compound annual growth rate of 14.5% over the same time
period. In 1997, our market share fell to 54% reflecting the four week plant
closure caused by the flooding of the Red River. The significant delivery delays
during the peak demand season caused many of our customers to cancel orders. We
fully rebounded in 1998 delivering a record 1,797 units.
According to NATIONAL BUS TRADER, a leading industry publication, the growth
of the inter-city coach industry has been driven by several factors including
the overall strength of the U.S. economy, the expected increase in coach tourism
resulting from the aging U.S. population and the fleet upgrading being
undertaken by many inter-city coach operators. According to NATIONAL BUS TRADER,
the general health of the U.S. economy and the resulting increase in disposable
incomes and consumer confidence has led to increased leisure travel. NATIONAL
BUS TRADER also believes that inter-city coach fleet improvement and
modernization may have been the most significant factor behind new coach unit
growth in 1998. Operators are replacing older 40-foot, manual transmission
coaches with newer 45-foot, automatic transmission models. NATIONAL BUS TRADER
believes that this fleet improvement and modernization trend will continue to
drive demand in 1999. In addition, inter-city coach sales have benefited from
the prevailing low interest rates experienced in recent years.
REPLACEMENT PARTS INDUSTRY
The inter-city and transit bus replacement parts market is highly fragmented
and is comprised of many regional manufacturers and distributors. We estimate
that we maintain an approximate 33% share of the estimated $550 million market
for replacement parts in the United States and Canada. Our three next largest
competitors each maintain an approximate 5% to 8% share. We believe that the
demand for replacement parts is related to the number of inter-city and transit
buses currently in operation, the average level of usage for each bus and the
average age of the bus fleet. We believe the inter-city coach replacement parts
market segment will remain relatively flat partially due to the planned
reduction in fleet age for major line-haul and tour and charter operators such
as Greyhound and Coach USA, and that the recent pricing pressure will continue
as small local competitors enter the market and try to establish market share.
In addition, we believe that the transit market will be a flat to down market as
federal budget cuts will continue to put pressure on order volume and on
pricing.
COMPETITIVE ENVIRONMENT
In the inter-city coach market, we compete on the basis of the quality of
our products, features and services. We believe that our full product array of
both new and used coaches, our leasing and financing packages, and the
nationwide presence of our replacement parts business (which gives us the
ability to supply customers with replacement parts in a timely fashion,
generally within 24 hours) and service business give us distinct advantages over
our competitors. In the replacement parts market, we compete on the basis of
availability of product, speed of delivery and price. We are refining our
replacement parts delivery system to be more efficiently provided by a single
centralized parts distribution center that feeds our service centers and
customers directly.
Competitors within the coach market include: (1) Prevost Car, a subsidiary
of Volvo Bus Corporation; (2) Van Hool, one of the leading European coach
manufacturers; and (3) Setra, another leading European coach manufacturer. We
estimate that Prevost had a 25% market share of the U.S. and Canadian 1998
inter-city coach market. We estimate that Van Hool had approximately a 15% share
of the 1998 inter-city coach market in the United States and Canada. Van Hool
distributes its products through ABC Bus, Inc. Setra, the brand name for Evobus
GmbH, was formed through the merger of Kassbohrer Fahrzeugwerke GmbH and
Mercedes-Benz AG. Although Setra has not historically had a
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strong North American presence, the new business combination could potentially
strengthen the financial and/or competitive position of Setra.
Competitors within the replacement parts market include both OEMs and parts
distributors. OEM participants include Prevost, Neopart (Neoplan) and BIA in the
inter-city and transit segment. Distributors include ABC, the representative for
Van Hool in both the coach and the replacement parts business, and Mohawk.
Competitors in the transit parts market include Neopart and North American Bus
Industries. Novabus, a transit bus maker, may enter the replacement parts market
beginning in November 1999.
RELATIONSHIP BETWEEN THE NEW COACH INDUSTRY AND REPLACEMENT PARTS INDUSTRY
The new coach manufacturing industry, which performs best in a strong
general economic environment, and the replacement parts, used coach sales and
service industries, which have historically performed more favorably during
general economic downturns, are complementary. Replacement parts and service
sales tend to increase during an economic downturn as customers defer new coach
purchases and extend the useful lives of their existing fleets. The
complementary nature of these businesses tends to mitigate the impact of reduced
new coach sales during periods of economic downturns.
PRODUCTS
INTER-CITY COACHES
Our current product offerings include five inter-city coach models with
selling prices ranging from $105,000 to $395,000. Substantially all of our
coaches are built to order with over 2,000 options available. We also have the
ability to custom engineer our products to meet the specific design needs of our
customers. Options include engine and transmission alternatives, specified
seating configurations, interior appointments, driver ergonomics, exterior paint
schemes, safety features and handicap accessibility packages. In addition, we
offer several higher-end options including a compressed natural gas engine, a
global positioning satellite navigation system and various audio/video systems.
D-SERIES. The D-Series, designed for both the line-haul and tour and
charter markets, consists of a 40-foot long, 102-inch wide, three-axle coach and
a 45-foot long version. Our deliveries for the D-Series models in 1998 totaled
1,100 units constituting 59.5% of gross new coach units delivered in the United
States and Canada. Seating capacity ranges from 43 to 61 passengers depending on
the model and configuration. The increased seating capacity on the 45-foot
version allows for lower per passenger operating costs than the 40-foot version.
The units have a standard twenty-four month warranty. The 45-foot version was
the most popular and the 40-foot version was the sixth most popular seated coach
model in the United States and Canada in 1998 according to NATIONAL BUS TRADER.
E-SERIES. The E-Series, also known as the RENAISSANCE-REGISTERED TRADEMARK-
coach, was developed for the tour and charter market. The E-Series is a 45-foot
long, 102-inch wide, three-axle coach. In developing the E-Series, we utilized
customer input to include standard features desired by tour and charter
operators, such as more window glass for improved viewing, as well as extensive
option packages. The E-Series represents the top of our product line in terms of
comfort and styling. The seating capacity totals 54 to 56 passengers. The
E-Series accounted for approximately 27.6% of gross new coach units delivered in
1998 in the United States and Canada with unit deliveries of 510 vehicles. The
units have a standard thirty month warranty, which is the longest warranty
currently offered in the industry. The E-Series, launched in September 1997, was
the second most popular seated coach model in the United States and Canada in
1998 according to NATIONAL BUS TRADER.
F-SERIES. This low-cost, two-axle coach has been designed primarily for the
Latin American and Mexican marketplaces. In the future, we plan to introduce
products based on the F-Series coach
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product in select U.S. niche marketplaces, including the motor home and airport
transfer markets. The F-Series coach is 36.5 feet long and 102 inches wide. The
coach is manufactured using our latest technology and European styling. We plan
to use our existing new coach sales force to market the F-Series for airport
transfer and use dealerships to penetrate the motor home market. We delivered
170 F-Series units in Mexico in 1998.
VIAGGIO-REGISTERED TRADEMARK-. The VIAGGIO-REGISTERED TRADEMARK- coach is a
43-foot long, 102-inch wide coach manufactured and assembled at our Sahagun,
Mexico production facility utilizing a body manufactured by Marcopolo, a
Brazilian manufacturer. This lower priced tour and charter and line-haul vehicle
seats 54 to 56 passengers. The DOT certified model meets all applicable safety
regulations in the United States and Canada. In 1998, we delivered 314
VIAGGIO-REGISTERED TRADEMARK- units. Of these units, 159 were DOT certified
models sold in the United States and Canada constituting 8.6% of gross new coach
units sold in 1998 in the United States and Canada. We also delivered 38 DOT
certified models to Greyhound affiliates in Mexico and the remaining 117
VIAGGIO-REGISTERED TRADEMARK- units were delivered in Mexico. The DOT certified
units have a standard twenty-four month warranty. The DOT certified
VIAGGIO-REGISTERED TRADEMARK- was the fifth most popular seated coach model in
the United States and Canada in 1998 according to NATIONAL BUS TRADER.
MC-12. The MC-12 model is a 40-foot long, 96-inch wide line-haul coach
initially developed for Greyhound, but is now primarily manufactured for the
prisoner transport market. In 1998, we delivered 79 units of this model, or 4.3%
of gross new coach units delivered in the United States and Canada. This model
is being phased out by our D-Series coach and will eventually be replaced by the
G-Series which we expect to begin pilot production in late 1999.
New coach products that we are currently developing include:
G-SERIES. The G-Series is being designed for the line-haul segment of the
market and will include 41-foot and 45-foot long versions. Like the E-Series, we
sought design input from our customers, in this case primarily Greyhound. We
anticipate that pilot production of the G-Series will begin in late 1999. The
G-Series, having been developed in collaboration with Greyhound, is expected to
replace older models over time. This coach is being designed to have mass market
appeal, lower operating costs and improved fuel economy. The G-Series will have
an enhanced thirty-six month warranty, which exceeds any standard warranty
currently available in the market.
RESIDUAL VALUE
We believe that our coaches enjoy among the highest residual values in the
industry. For example, our D-Series coach retained a higher average resale value
over the past 10 years as a percentage of 1997's average resale price than our
competitors' comparable coaches according to the OFFICIAL BUS BOOK MARKET
REPORT-TM-. We believe that this is attributable to several factors, including
the quality of our coach manufacturing, the depth of our distribution network
for spare parts and our customer service and support network. We believe that
higher residual values imply that customers benefit from a higher trade-in value
upon resale and more favorable financing options, which in turn facilitates
their decision to purchase our new coaches.
REPLACEMENT PARTS
We have one of the broadest product lines in the industry with more than
60,000 OEM and non-OEM parts. We believe that the current strength of our parts
business is in providing a broad array of OEM parts that are either manufactured
by us or acquired from the original equipment manufacturer. In an effort to
leverage further the competitive strength of our replacement parts business and
distribution facilities, we have developed our own brand of alternate, non-OEM
parts under the COACH GUARD-REGISTERED TRADEMARK- name. More than 75 products
have been introduced for this segment since its inception in 1993. We also
market diesel engine parts under the name DIESEL GUARD-REGISTERED TRADEMARK-. In
addition, we
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have developed a line of remanufactured parts and components. We believe that
the availability of remanufactured parts will permit us to access new markets
that are currently served by local and regional parts rebuilders.
MANUFACTURING OPERATIONS
During 1998, we produced a record number of motor coaches, while at the same
time decreasing per unit manufacturing costs. We have improved our manufacturing
capacity while reducing costs through improved product design and production
improvements. For example, during the E-Series product launch period, September
1997 to December 1997, we averaged 3,472 labor hours per unit produced, while in
1998, we further improved by averaging 1,788 labor hours per E-Series unit
produced. This trend continued in the three months ended March 31, 1999, when we
averaged 1,555 labor hours per E-Series unit produced.
We have reduced manufacturing costs through improved product design and
production improvements. These company-wide improvements have resulted in
lowered production costs, stabilized margins and increased customer
satisfaction. The manufacturing efficiencies realized as a result of the
E-Series' mechanical and structural simplicity, demonstrates our commitment to
streamlining operations and rationalizing costs. The new E-series coach design
includes fewer parts and greatly refines the manufacturing process by creating
an environment that is less prone to error. We build the new E-Series model
using approximately one-third fewer parts than previous models, which in turn,
results in a significant reduction in production labor hours. These successful
results will serve as an example for all future coach model production lines,
including the new G-Series which will incorporate many of the manufacturing and
engineering design processes.
The new E-, F- and G-Series coaches have been designed for greater
reliability and shorter maintenance cycles, thereby improving customers'
utilization and efficiency ratios. By eliminating parts, we can create a coach
that is much easier to both mechanically and structurally build and maintain. We
believe that this type of innovative development will continue to reduce costs
and increase capacity.
MANUFACTURING CAPACITY
We do not anticipate needing additional manufacturing facilities in order to
bring the G-Series to market in the United States and Canada, which is expected
to occur in late 1999. As part of our long term strategic plan, we will use our
ISO 9001 certified facility in Sahagun, Mexico to manufacture the F- and G-
Series coaches. We estimate that manufacturing these coaches in Mexico should
result in lower manufacturing costs than those we incurred in the United States
and Canada, and thus, should improve gross profit margins. Currently, we have
the capacity to produce approximately 2,000 coaches per year in the United
States and Canada, and our Sahagun, Mexico facility has the physical capacity to
produce in excess of 3,500 coaches per year. We believe our current plants are
more than adequate to meet our foreseeable production needs.
SALES AND MARKETING
In the United States and Canada, we rely on our direct-sales force to market
the MCI-REGISTERED TRADEMARK- and VIAGGIO-Registered Trademark- 1000 coaches. We
have 18 full-time new and used coach sales representatives who make regular
visits to both current and potential customers and attend major industry trade
shows. We believe that the product knowledge, attentiveness and visibility of
our sales force among coach operators enhance our ability to sell coaches.
We rely on a combination of direct sales, telemarketing, and direct mail
solicitation to market our replacement parts. We have 14 full-time sales
representatives with sales territories in the United States and Canada who call
on existing and potential accounts each week of the year. Our marketing group
handles direct mail efforts to our customer base. In addition, we also have 39
full-time customer service
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representatives to accept orders from customers. Outbound telemarketing is
performed within this group to certain market segments. Orders are also received
from customers through electronic transmission from three hundred customer-based
terminals, supplied by us, as well as through telephone, fax and mail.
CUSTOMERS
The customer base in the inter-city coach market in the United States and
Canada is highly diversified. The primary customers include independent coach
operators, national coach fleet operators, including Greyhound and Coach USA,
and government agencies that use coaches for public transit services, including
New Jersey Transit Authority and New York City Transit Authority. We estimate
that in the United States and Canada, independent regional operators of regular
route or tour and charter operations, i.e., operators other than Greyhound and
Coach USA, account, on average, for approximately 52.3% of our annual coach unit
sales. In 1998, we delivered 1,848 new and 779 used coaches to 702 different
customers, or approximately 3.7 units per customer. Our average order size
(excluding Greyhound and Coach USA orders) for any single operator in the past
three years has been approximately 2.9 units. Our largest customer is Greyhound,
which represented 16.0%, 13.5% and 17.2% of United States and Canadian gross new
coach units delivered in 1996, 1997, and 1998, respectively. We also sell
coaches to Coach USA, which accounted for 12.9% of United States and Canadian
gross new coach units delivered in 1998. Coach USA is obligated to use us as its
primary source of new coaches (estimated to be 75% of its requirements) through
1999. In addition, sales to federal and local governments accounted for
approximately 14.7% of total United States and Canadian gross new coach units
delivered in 1998. In Mexico, our principal customers are line-haul operators,
including Greyhound affiliates in Mexico, and operators of transit buses.
We have identified certain criteria used by purchasers of our coaches and
have endeavored to design our coaches to satisfy these criteria. We believe that
independent regional operators and operators of tour and charter operations
consider a number of factors when purchasing new coaches, including service and
parts availability, trade-in availability, operating costs, resale value,
financing terms, curbside appeal and interior amenities. With respect to
governmental agencies, we believe that the primary buying criterion for these
customers is the initial price for a given set of design specifications, while
overall lifecycle costs are a secondary concern. In contrast, we believe
line-haul operators' primary buying criterion is overall lifecycle costs, while
initial coach purchase price is a secondary concern.
MARKET SEGMENT ANALYSIS
End users of inter-city coaches consist of four categories:
- tour and charter segment, consisting mostly of Coach USA and small
regional operators;
- the line-haul segment, consisting mostly of Greyhound, regional companies
owned by Laidlaw and Coach USA;
- the public segment, including all government transit orders, as well as
prisoner transport buses; and
- the conversion/other segment.
The tour and charter segment has experienced significant growth since 1995,
primarily as a result of the growth of Coach USA, as well as the aging of the
population and the resultant growth in the touring segment of the industry. The
line-haul segment has also expanded as a result of Greyhound's lowering the age
of its fleet.
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GREYHOUND LINES AND GREYHOUND CANADA. We maintain close relationships with
the Greyhound entities. Laidlaw, Inc. acquired Greyhound Lines in March 1999,
which resulted in common ownership of both Greyhound Lines and Greyhound Canada.
Our coaches currently represent greater than 90% of the approximately 3,100
vehicles in Greyhound's combined fleet. For the years ended 1996, 1997 and 1998,
Greyhound accounted for 11.1%, 9.5%, and 8.0%, respectively, of our consolidated
revenue in the United States and Canada. We currently have a dedicated supply
agreement with Greyhound Lines, that provides that Greyhound Lines will purchase
from us at least 80% of its annual requirements for new coaches. Greyhound Lines
has regularly exceeded this requirement. We have entered into a similar
agreement with Greyhound Canada that provides that Greyhound Canada will
purchase from us at least 75% of its annual requirements for new coaches. The
agreements with Greyhound Lines and Greyhound Canada expire in 2007 and 2002,
respectively, however, the Greyhound Lines agreement can be terminated at the
end of any calendar year by either party upon 180 days prior notice.
COACH USA. From its inception in September 1995, Coach USA has grown
through acquisition and internal growth to become the largest provider of coach
charter, tour and sightseeing services and one of the five largest non-municipal
providers of commuter and transit coach services in the United States. Coach USA
operates across the United States, servicing a broad customer base with a
growing fleet of over 4,500 coaches. For the years ended 1996, 1997 and 1998,
sales to Coach USA accounted for 1.8%, 8.6% and 9.2% respectively, of our
consolidated revenue. In June 1997, Coach USA agreed that we would be its
primary supplier, estimated to be 75%, of Coach USA annual new coach
requirements for the period through 1999. Coach USA publicly announced on June
14, 1999 that it expects to be acquired by Stagecoach Holdings Plc, Great
Britain's largest independent bus and railroad operator. We are not able to
predict what effect, if any, that the acquisition of Coach USA will have on
negotiations to renew Coach USA's contract with us, or on their status as a
customer generally.
GOVERNMENT AGENCIES. Government-funded public transportation agencies
utilize a variety of commuter, wheelchair-lift compatible and other specialty
coaches. We believe that the primary buying criterion for such customers is
initial price for a given set of design specifications, while overall lifecycle
costs are a secondary concern. The demand from such customers varies widely from
year to year as government agencies periodically make large procurements, every
three to six years on average, and in any given year such customers may
represent over 10% of our sales of new coaches. For example, in 1998, we
delivered 180 coaches to the New York City Transit Authority representing 9.7%
of 1998 gross new coach units delivered.
REPLACEMENT PARTS. We have approximately 7,000 active replacement parts
customers, including primarily operators of coaches and transit buses. We
benefit from having the largest installed base, which is estimated to be over
70% of the approximately 38,000 inter-city coaches operating in the United
States and Canada in 1998, according to a BUS BOOK PUBLISHING report. We offer a
comprehensive line of replacement parts and industry-leading distribution and
support services. Our distribution network is comprised of four strategically
located distribution centers in Dayton, New Jersey; Loudonville, Ohio; Des
Plaines, Illinois; and Newcastle, Ontario. We also recently announced plans to
consolidate our existing parts facilities into a new single facility to be built
in Louisville, Kentucky. We have five customer service centers in: Blackwood,
New Jersey; Des Plaines, Illinois; Dallas, Texas; Los Angeles, California; and
Montreal, Quebec, with a planned expansion facility in Orlando, Florida. In
addition to servicing used coaches, our custom service centers carry inventory
of selected parts which may be shipped to customers for immediate availability.
The combination of these facilities enables us to quickly supply parts to our
customers, generally within 24 hours. We staff a toll-free customer service line
more than 60 hours a week, including Saturdays, that enables customers to place
orders and verify pricing. We also offer a toll-free 24-hour fax line for
placing orders and a 24-hour emergency hotline. We cater to our most important
customers by installing our Customer Order Assistance Computerized Handling
System (C.O.A.C.H.) order-entry terminals in their offices to facilitate parts
ordering and minimize turnaround time. We believe that our efficiency and
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responsiveness allow customers to minimize inventory holding costs and to
increase fleet utilization ratios.
We believe that our customers in the inter-city coach segment base their
purchasing decisions on the quality of parts purchased as well as the speed and
efficiency provided by their parts suppliers. In the transit bus segment, we
believe that our customers are more price-sensitive and less service sensitive
than our customers in the coach aftermarket, as the opportunity cost to the
transit authority of a transit bus out of operation is less significant than the
lost revenue of a line-haul coach operator. As a result, a large percentage of
transit parts purchases are conducted on a public bid basis. Customers often
choose to make a major purchase of parts inventory upon the procurement of
additional new transit buses to ensure the availability of parts and to minimize
cost through volume purchasing.
In addition, we provide inventory management services to Greyhound. Under
this arrangement, we stock our own inventory in 13 Greyhound warehouses
throughout the United States. We have on-site representatives in four of
Greyhound's facilities to monitor the inventory and assist in inventory
management.
BACKLOG
As of March 31, 1999, we had a backlog of firm orders for 917 units, 589
units in our U.S. and Canadian operations, compared with 1,217 units, 575 units
in our U.S. and Canadian operations, at March 31, 1998. Orders are included in
backlog upon receipt from our customers of a signed purchase contract and
deposit. The March 31, 1998 amount included the 180 coaches ordered by the New
York City Transit Authority that were delivered in 1998. We expect each of the
backlog orders to be filled by the end of 1999.
SUPPLIERS; RAW MATERIALS AND COMPONENTS
We have multiple vendors for most of the raw and component inventory sourced
for both the new coach and replacement part businesses. We often find it more
economical to rely on a single component provider, but alternate providers are
generally available to provide the same components, if necessary.
In manufacturing new coaches, raw materials, including steel, aluminum and
wiring, are sourced from multiple vendors for use in manufacturing the coach
shell. Once the shell is completed, component inventory, including chassis,
drive trains, seating, electronics, and air conditioning units, are sourced from
multiple vendors.
Our top vendors include Namasco Limited (steel) and Atlas Alloys (aluminum)
for raw materials, Detroit Diesel and Cummins Engine for engines, Allison
Transmission for transmissions, Meritor for axles, National Seating and American
Seating for seats, and Carrier for air-conditioning units. See "Risk Factors."
EMPLOYEES
We had approximately 4,500 employees as of March 31, 1999. Approximately
3,400 employees of our total work force are represented by labor unions. The
largest contracts are with the International Association of Machinists and
Aerospace Workers at Winnipeg, Manitoba and Pembina, North Dakota. Our labor
agreements with the Machinists Association covering substantially all of our
Canadian and United States employees at our Winnipeg, Manitoba and Pembina,
North Dakota facilities, run through September 2000. The Independent Union of
Workers in the Automotive and Related Industries represents approximately 845
Mexican employees of Autobuses. Generally, labor agreements in Mexico
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have economic terms and non-economic terms for one-year and two-years,
respectively. We negotiated both economic and non-economic terms in February
1998, and economic terms in February 1999.
We experienced a one day labor strike in Mexico in February 1994 which
resulted in a loss of one day's production. During February 1999, we also
experienced a four day strike at our Sahagun manufacturing plant. These strikes
were resolved when we entered into collective bargaining agreements with the
automotive workers union. Work stoppages could occur again in the future in
connection with labor agreement negotiations and we cannot predict the financial
impact of such a stoppage. Currently, we believe that relations with the unions
are good.
MANUFACTURING AND DISTRIBUTION
We own manufacturing and assembly plants and own or lease various
replacement parts and repair facilities in the United States, Canada and Mexico.
COACH MANUFACTURING FACILITIES
WINNIPEG, MANITOBA. We own or lease several facilities in Winnipeg that
are utilized for the conversion of raw materials into the proprietary coach
bodies or "shells." The manufacturing process entails shaping, welding and
riveting raw metal into an exterior shell and then attaching a limited number of
preliminary components, including the front windshield, interior carpeting, and
portions of the lavatory and air conditioning equipment. Production of the
shells takes approximately four to five days after which they are shipped to
Pembina, a distance of approximately 90 miles. The MC-12, D-and E-Series shells
are manufactured at this location.
PEMBINA, NORTH DAKOTA. We own an assembly facility in Pembina, which totals
approximately 188,500 square feet. This facility is responsible for completing
the coach manufacturing process. Once the shells are delivered to the Pembina
facility they enter the production line where they are integrated with component
materials supplied by outside vendors. This process yields a monocoque, or
one-piece, coach body that is more durable than a body-on-chassis design within
the inter-city coach market. Once the body of the coach is assembled, the
interior is installed, including all necessary electrical wiring, electronics,
seating, air conditioning, parcel racks, and lavatory units as stipulated by the
customer in the purchase order or, in the case of units produced without
purchase orders, to a standard option package frequently requested by customers.
Once this process is completed, the units are either painted to customer
specifications or, in the case of coaches built for inventory, plain white. We
outsource some painting and final delivery preparation functions when necessary.
SAHAGUN, MEXICO. Our Sahagun facility is approximately 246,000 square feet
and is ISO 9001 certified. This facility is responsible for all aspects of new
coach manufacturing, including the manufacturing of the shells and the assembly
of the interior. The majority of the coaches currently manufactured in this
facility are produced to specifications. We currently manufacture the
VIAGGIO-REGISTERED TRADEMARK- and F-Series models in this facility. The Sahagun
facility currently has excess manufacturing capacity. However, as we begin to
manufacture the F-Series coaches for sale in the United States and introduce the
G-Series coach, the facility will become integral to our future operations.
OTHER PROPERTIES
We distribute products from locations strategically located across the
United States, Canada and Mexico, with sites in Dayton, New Jersey; Des Plaines,
Illinois; Loudonville, Ohio; and Newcastle, Ontario. In addition, we have parts
manufacturing locations in Canada and Loudonville, Ohio.
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We believe that our facilities are adequate for our present needs and that
our properties are generally in good condition, well maintained and suitable for
their intended use. The following table is a summary of our primary facilities
and the approximate square footage of such facilities.
<TABLE>
<CAPTION>
BUILDING
STATUS SQ. FT. SEGMENT
------------------ --------- ------------------------
<S> <C> <C> <C>
MANUFACTURING/ASSEMBLY/R&D PLANTS:
1475 Clarence Ave. ..................................... Owned 391,000 Shell assembly/ research
Winnipeg, Manitoba and development
552 W. Stutsman Ave. ................................... Owned 188,500 Final coach assembly
Pembina, ND
Sahagun, Mexico ........................................ Owned 246,000 Coach manufacturing
150 S. 5th Street ...................................... Owned 35,400 Final paint facility
Pembina, ND
1149 St. Matthews Ave. ................................. Owned 118,000 Parts manufacturing
Winnipeg, Manitoba
841 & 850 Erin Street(1) ............................... Owned 75,000 Parts manufacturing
Winnipeg, Manitoba
140 Otter Street ....................................... Owned 144,000 Warehousing/
Winnipeg, Manitoba parts manufacturing
Building 1081 RHC ...................................... Leased 66,000 Research and development
Roswell, NM engineering
350 Archibald Street ................................... Leased 28,000 Parts manufacturing
Winnipeg, Manitoba
400 Archibald Street ................................... Owned 36,000 Parts manufacturing
Winnipeg, Manitoba
422 W. Stutsman Ave. ................................... Owned 3,200 Service response center
Pembina, ND
553 W. Stutsman Ave. ................................... Leased 6,000 Warehousing/ warranty
Pembina, ND parts storage
5th Street ............................................. Leased 6,250 New parts warehousing
Pembina, ND
MODIFICATION OR REPAIR FACILITIES:
10 E. Golf Road ........................................ Owned 60,000 Corporate headquarters/
Des Plaines, IL used coach/service
center
10850 Portal Drive ..................................... Leased 50,000 Used coach/service
Los Alamitos, CA center
Two Harmon Dr. ......................................... Leased 28,000 Used coach/service
Blackwood, NJ center
3530 Richelieu Street .................................. Leased 8,162 Used coach/service
St. Hubert, Quebec center
9787 Clifford Drive .................................... Leased 36,000 Used coach/service
Dallas, TX center
</TABLE>
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<TABLE>
<CAPTION>
BUILDING
STATUS SQ. FT. SEGMENT
------------------ --------- ------------------------
REPLACEMENT PARTS FACILITIES:
<S> <C> <C> <C>
105 E. Oakton .......................................... Leased 180,000 Parts distribution
Des Plaines, IL
9 Nicholas Court ....................................... Leased 106,000 Parts distribution
Dayton, NJ
260 Toronto Street ..................................... Owned 44,000 Parts distribution/
Newcastle, Ontario manufacturing
520 North Spring Drive ................................. Owned 356,000 Parts distribution/
Loudonville, OH manufacturing
</TABLE>
- --------------------------
(1) 850 Erin Street is currently under contract to be sold.
RESEARCH AND DEVELOPMENT
We devote significant resources to developing new products and proprietary
technology in order to lower our production costs, improve quality and serve the
needs of our customers in the coach market. We conduct engineering, testing and
design at our facilities located in Winnipeg, Manitoba; Roswell, New Mexico; and
Sahagun, Mexico. In addition, we contract with other engineering, testing and
design companies. We spent $7.3 million, $6.7 million and $8.7 million on
research and development in the fiscal years ended December 31, 1996, 1997 and
1998, respectively, and expect to incur an additional approximate $10.3 million
in expenses to complete the development of all of our current projects which
primarily consist of the development of the G-Series and extensions to the
F-Series coaches.
TRADEMARKS AND PATENTS
We manufacture and sell our coaches under the MCI-REGISTERED TRADEMARK- and
RENAISSANCE-Registered Trademark- trademarks and manufacture and sell
replacement parts under the COACH GUARD-REGISTERED TRADEMARK-, DIESEL
GUARD-REGISTERED TRADEMARK- and FLXIBLE-REGISTERED TRADEMARK- trademarks. In
addition we own patents on several products used in components of our coaches.
We operate under licenses for numerous patents relating to products and
their manufacture held by third parties and pay royalties under these licenses.
While many of these patents are considered to be important to particular
products, we consider no particular patent or group of related patents to be
essential to our business as a whole.
GOVERNMENT REGULATION
As a manufacturer of coaches and replacement parts, our operations and
products are subject to many laws and regulations applicable in the United
States, Canada and other countries, including environmental laws, motor vehicle
safety standards, laws governing access for the disabled and local content laws.
Our failure to comply with one or more regulations could result in the
imposition of sanctions. Such sanctions could include the closing of all or a
portion of our facilities for an indeterminate period of time or the recall of
products that were improperly manufactured, either of which could have a
material adverse effect on us and our results of operations. Likewise, we cannot
predict for you with any degree of certainty the cost of compliance in the
future and such future costs could significantly affect our operations and
financial results.
ENVIRONMENTAL MATTERS
Our facilities, operations and products are subject to a wide variety of
increasingly complex and stringent United States federal, state and local, and
foreign environmental laws and agency regulations,
64
<PAGE>
including those governing the use, storage, handling, generation, treatment,
emission, release, discharge and disposal of certain materials and wastes, the
remediation of contaminated soil and groundwater, damage to natural resources,
and the health and safety of employees.
In the United States, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, and similar state laws,
provide for responses to and liability for releases of certain hazardous
materials into the environment. Such liability may be imposed on the current and
prior owners or operators of property or businesses, among others, without
regard to fault or knowledge of the condition or action causing the liability,
and may be joint and several. Certain federal environmental laws, including the
Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act,
the Safe Drinking Water Act, the Emergency Planning and Community Right to Know
Act, each as amended, and similar state and local environmental laws, regulate
air emissions, water discharges, hazardous materials and wastes, and require
public disclosure related to the use of various hazardous materials. Our
operations are also governed by environmental laws relating to workplace safety
and worker health, primarily pursuant to the Occupational Safety and Health Act.
Similar regulatory schemes exist in Canada and Mexico, where we also have
facilities.
Compliance with environmental laws may require the acquisition of permits or
other authorizations for certain activities and compliance with various
standards or procedural requirements. We believe our facilities and operations
are in material compliance with current environmental laws. The environmental
laws are subject to frequent amendment and have historically become increasingly
stringent. The sanction for failure to comply with such environmental laws can
include significant civil and criminal penalties, injunctive relief and denial
or loss of, or imposition of significant restrictions on, environmental permits.
In addition, we could be subject to suit by third parties in connection with
violations of or liability under environmental laws.
For each of the last three fiscal years, our environmental capital
expenditures have not been material, and we currently estimate that
environmental capital expenditures for fiscal years 1999 and 2000 will also not
be material. However, because environmental laws have historically become
increasingly more stringent, costs and expenses relating to environmental
control and compliance may increase in the future.
The nature of our current and former operations, and those of our
predecessors in interest, expose us to the risk of claims with respect to
environmental matters and there can be no assurance that material costs or
liabilities will not be incurred in connection with such claims.
Based upon our experience to date, we believe that the future cost or
compliance with existing environmental laws, and liability for known
environmental claims pursuant to such laws, will not have a material adverse
effect on our business, financial condition or results of operation. 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. See "Risk Factors."
HANDICAPPED ACCESSIBILITY STANDARDS FOR COACHES
We are subject to the Americans With Disabilities Act's handicapped
accessibility standards for coaches, as promulgated by the Department of
Transportation. On September 28, 1998, the Department of Transportation issued
final regulations regarding coach accessibility requirements. The rules require,
among other things, that all new coaches delivered to large line-haul operators
beginning October 2000 must be handicapped accessible. Further, the rules also
contain certain other requirements concerning accessible fleet percentages and
providing accessible service. The final regulations will be effective for
operators with larger fleets in October 2000 and to operators with smaller
fleets in October 2001. We cannot predict with any degree of certainty the
effect these regulations may have on our business, financial condition and
operating results.
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<PAGE>
LEGAL AND ADMINISTRATIVE PROCEEDINGS
In the ordinary course of our business, we are party to various employment
and other legal actions, as plaintiff or defendant. We are not involved in any
litigation or arbitration proceedings which, if determined adversely to us,
individually or in the aggregate would, in our opinion, have a material adverse
effect on us or our operations, nor, so far as we are aware, are any such
proceedings threatened.
We are subject to various product liability lawsuits in the United States
and Canada for personal injuries and property damage allegedly relating to the
use of products manufactured or sold by us. We consider litigation of this
nature to be in the ordinary course of its business. We cannot presently
determine the ultimate outcome of these lawsuits, or potential future lawsuits.
We maintain product liability insurance in customary amounts, but we cannot
assure you that such insurance will be available in the future or on terms
acceptable to us.
The Canadian income tax returns of Motor Coach Industries Limited, our
Canadian subsidiary, for the years 1982 through 1992 are currently under review
by Revenue Canada, the Canadian tax authority, which is reviewing the profit
allocation procedures between MCI Canada and Motor Coach Industries, Inc., a
wholly owned U.S. subsidiary of MCII. Revenue Canada's position is that, under
such procedures, insufficient income was allocated to MCI Canada, and that, as a
result, Canadian income taxes were underpaid. A formal reassessment has been
issued by Revenue Canada with respect to the 1985 return. We have filed a notice
of objection for 1985. In the event of an adverse judgment, as of March 31, 1999
the additional income taxes for 1982 through 1992 could amount up to $23 million
plus interest of approximately $49 million and, in addition, we may be subject
to potential reassessments for years subsequent to 1992 on the same basis which
could result in additional income taxes and interest, all before recoveries of
U.S. Federal income taxes which may be available to offset a portion of any
additional taxes paid to Canada. We have recently submitted an advance transfer
pricing agreement to Revenue Canada which applies to the years 1995 through
1997. Although we are still in the process of obtaining additional information,
we are currently negotiating to resolve these claims and expect that the
resolution will not be material to our financial condition or results of
operations.
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<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
We are a wholly owned subsidiary of MCII Holdings. MCII Holdings is a
corporation whose affairs are governed by a board of directors. The following
table sets forth certain information about the directors of MCII Holdings and
our executive officers and their ages as of March 31, 1999. There are seven
members of the board of directors of MCII Holdings. Pursuant to the terms of a
stockholders agreement, the board is comprised of three representatives from
Grupo Dina, including the Chief Executive Officer of MCII Holdings and MCII, Mr.
James P. Bernacchi, and four representatives from JLL.
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- ----------- ----------------------------------------------------
<S> <C> <C>
James P. Bernacchi............... 52 Chief Executive Officer and Director
Horst Sieben..................... 60 Chief Financial Officer
Alexander C. Baker............... 52 Vice President, Sales and Marketing
Valente Espinosa................. 37 Vice President, Corporate Procurement
Pablo Fierros.................... 43 Vice President, General Manager
Mario Gonzalez................... 47 Vice President, Plant Operations
Timothy J. Nalepka............... 43 Vice President and General Counsel
Harold Zuschlag.................. 55 Vice President, Customer Care
Rafael Gomez Flores.............. 42 Director, Chairman of the Board
Gamaliel Garcia Cortes........... 46 Director
Paul S. Levy..................... 51 Director
Jeffrey Lightcap................. 40 Director
David Ying....................... 44 Director
Frank Rodriguez.................. 27 Director
</TABLE>
JAMES P. BERNACCHI. Mr. Bernacchi became Chief Executive Officer in
December 1998. Prior to his current position, Mr. Bernacchi was the Chief
Operating Officer and Chief Executive Operating Officer from February 1996. From
August 1995 until February 1996, he was Executive Vice President-- Operations,
responsible for the manufacturing operations of Grupo Dina in Mexico. From
December 1991 until August 1995, Mr. Bernacchi held the position of Vice
President--Group Procurement and worked on various special projects for MCII and
various of its subsidiaries. Mr. Bernacchi joined MCII in 1988 and has held
numerous manufacturing positions. Prior to joining MCII, Mr. Bernacchi held
positions at American Motors Corporation for 17 years and J. I. Case Company for
three years.
HORST SIEBEN. Mr. Sieben became Chief Financial Officer on June 16, 1999.
During the last eleven years, Mr. Sieben served as Chief Financial Officer of a
number of portfolio companies controlled by JLL. From 1994 through May 1997, Mr.
Sieben was Senior Vice President and Chief Financial Officer of Foodbrands
America Inc. (formerly Doskocil Inc.), and after the sale of Foodbrands to IBP
Inc. he assumed the same position at Freedom Chemical Company where he served
until it was sold to BF Goodrich Chemical Company in March 1998.
ALEXANDER C. BAKER. Mr. Baker has been Vice President of Sales and
Marketing since October of 1993, except for an 11-month period during 1996 and
1997 when he was Vice President of Sales and Marketing for Metrotrans
Corporation. Mr. Baker joined us in June 1979 in school bus and small commercial
vehicle sales.
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<PAGE>
VALENTE ESPINOSA. Mr. Espinosa has been Vice President of Corporate
Procurement and a director of Grupo Dina since 1996. From 1992 to 1996, Mr.
Espinosa served as Vice President of Aftermarket and Product Support of Detroit
Diesel Allison of Mexico.
PABLO FIERROS. Mr. Fierros has been the Vice President and General Manager
of Universal Coach Parts since August 1997. Previously, Mr. Fierros was Vice
President of Branch Operations for Detroit Diesel Allison Mexico since March
1997. From 1993 through 1996, Mr. Fierros held various positions with Detroit
Diesel Allison Mexico.
MARIO GONZALEZ. Mr. Gonzalez has been Vice President of Plant Operations
since September 1996. From April 1995 to September 1996, Mr. Gonzalez was
appointed Vice President of Plant Operations (Dina Camiones and Autobuses). From
October 1994 to April 1995, Mr. Gonzalez was employed as a consultant for Grupo
Dina. Prior to October 1994, Mr. Gonzalez was a consultant to a company in the
manufacturing industry.
TIMOTHY J. NALEPKA. Mr. Nalepka has been the Vice President and General
Counsel since November 1998. Previously, Mr. Nalepka, who joined MCII in January
1997, served as senior counsel. Prior to joining MCII, Mr. Nalepka was employed
from 1989 to 1996 as senior counsel for Sears, Roebuck and Co.
HAROLD ZUSCHLAG. Mr. Zuschlag has been a Vice President since 1982. His
varied assignments have included plant operations management, division
acquisition & relocation, product engineering management, plant & facilities
construction, product planning & customer relations, division operating
executive, and product design & operations launch of our recently introduced
E-Series RENAISSANCE-REGISTERED TRADEMARK- coach. His current focus is the
launch of the G-Series coach and on product integrity and customer support
operations.
RAFAEL GOMEZ FLORES. Mr. Gomez Flores has been Chairman and President since
1996, and has been Chairman and President of Grupo Dina, and the holding company
of Grupo Dina, Grupo Empresarial G, for the past ten years. Mr. Gomez Flores
maintains full executive and board member responsibilities with Grupo Dina and
maintains board member responsibilities with MCII. Mr. Gomez Flores is a
director of Grupo Empresarial G's other companies including Grupo Minsa, the
second largest corn flour manufacturer in Mexico, and Grupo Immobiliario G, a
real estate development company engaged in the construction and sale of housing
units, office buildings, commercial malls, hotels, sports clubs, and industrial
complexes. Prior to his current activities at the holding company and its
subsidiaries, Mr. Gomez Flores was Chairman and Chief Executive of Arrendadora
Financiera Dina, a lease finance company.
GAMALIEL GARCIA CORTES. Mr. Garcia Cortes was appointed a director on June
16, 1999. Mr. Garcia Cortes has been Chief Executive Officer of Grupo Dina for
Mexico and Latin America since December 1996. From August 1996 until December
1996, he was the Chief Operating Officer of Grupo Dina for Mexico and Latin
America. From July 1996 until August 1996, he was the Sales, Marketing and
Operations Vice President of Grupo Dina for Mexico and Latin America. From July
1995 until July 1996, Mr. Garcia Cortes was a Commercial Director for Grupo
Dina. From April 1995 until July 1995, he was a transportation sub-director for
Grupo Dina. Prior to joining Grupo Dina, Mr. Garcia Cortes was Chief Executive
Officer for Premium Internacional, S.A. de C.V. since June 1994.
PAUL S. LEVY. Mr. Levy was appointed a director on June 16, 1999. Mr. Levy
has been a partner of JLL since its formation in May 1988. Mr. Levy serves on
the boards of directors of Hayes Lemmerz International, Inc., BSL Holdings,
Inc., Jackson Automotive Group, Inc., Fairfield Manufacturing Company, Inc. and
New World Pasta Company.
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<PAGE>
JEFFREY LIGHTCAP. Mr. Lightcap was appointed a director on June 16, 1999.
Mr. Lightcap is a partner of JLL, which he joined in 1997. From 1993 to 1997, he
was a Managing Director and head of leveraged buyout firm coverage for the
mergers and acquisitions group at Merrill Lynch & Co., Inc. Mr. Lightcap serves
on the boards of directors of Hayes Lemmerz International, Inc., Jackson
Automotive Group, Inc. and New World Pasta Company.
DAVID YING. Mr. Ying was appointed as a director on June 16, 1999. Mr. Ying
is a partner of JLL, which he joined in 1997. He was previously a Managing
Director at Donaldson, Lufkin & Jenrette, Inc., which he joined in January 1993
and the head of its restructuring department. Mr. Ying serves on the boards of
directors of Hayes Lemmerz International, Inc., BSL Holdings, Inc. and New World
Pasta Company.
FRANK RODRIGUEZ. Mr. Rodriguez was appointed as a director on June 16,
1999. Mr. Rodriguez is a Vice President of JLL, which he joined in 1995. He was
formerly a member of the Merchant Banking Group of Donaldson, Lufkin and
Jenrette which he joined in 1992. Mr. Rodriguez serves on the board of directors
of Jackson Automotive Group, Inc.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid or accrued by us during 1998 to our chief executive officer and each of our
executive officers whose total annual salary and bonus for each of such fiscal
year exceeded $100,000 for the year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------
ALL OTHER
SALARY COMPENSATION
NAME AND PRINCIPAL POSITION ($) BONUS ($) ($)
- ---------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
Rafael Gomez Flores,
Chairman of the Board................................... 427,080 2,612,338 6,928
James P. Bernacchi,
Chief Executive Officer................................. 257,040 372,845 58,875
Alexander C. Baker,
Vice President, Sales and Marketing..................... 109,615 204,660 1,873
Mario Gonzalez,
Vice President, Plant Operations........................ 148,174 152,375 75,251
Harold Zuschlag,
Vice President, Customer Care........................... 171,335 130,000 21,546
</TABLE>
BENEFIT PLANS
We sponsor various retirement plans for most full-time employees, with
benefits generally based on years of service and employees' compensation. For
executive employees, we have had a supplemental employee retirement plan and
executive incentive compensation plan. For detailed information regarding
pension costs, benefit obligations, plan assets and other related information,
please see notes 15 and 16 in the notes to our consolidated financial statements
included in this prospectus.
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<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not our employees are not compensated for serving on the
board. All directors will receive reimbursement of reasonable out-of-pocket
expenses incurred in connection with meetings of the board.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with certain key employees. The
employment agreements contain terms that are customary for executive officers in
similarly situated capital goods companies. In addition, we have entered into an
employment agreement with Mr. Gomez Flores, who is chairman of the board, that
provides for total annual compensation of $1.5 million, which represents a $1.6
million reduction from 1998 compensation of $3.1 million. The employment
agreement provides that Mr. Gomez Flores will receive a lump sum payment of $6.0
million upon consummation of a change of control of the Company. The initial
term of the employment agreement is five years and is automatically renewable
each year thereafter in the sole discretion of Mr. Gomez Flores unless
previously terminated by us for cause. The agreement also contains a non-compete
covenant for Mr. Gomez Flores for a three year period after the expiration or
termination of the employment agreement.
MANAGEMENT OPTIONS
Certain key senior executives of MCII Holdings and MCII, including its
chairman, Mr. Gomez Flores, either have been or will be allocated options to
purchase MCII Holdings' common stock. The options that were granted concurrently
with the consummation of the Transactions represent approximately 20% of the
fully-diluted equity value of MCII Holdings with an exercise price equivalent to
the value per share at which the equity investors invested in MCII Holdings. The
grant was designed as an incentive to selected employees or directors to acquire
a proprietary interest in MCII Holdings, to continue to perform services for
MCII Holdings, to increase their efforts on behalf of MCII Holdings and to
promote the success of the business. The stock options vest ratably commencing
on the first anniversary of grant and annually thereafter until the fifth
anniversary of grant. Pursuant to this plan, Messrs. Gomez Flores was granted
options to purchase 214,285 shares of MCII Holdings common stock. The remaining
options previously granted have not yet been allocated to the other senior
executives.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
MCII Holdings owns all of the issued and outstanding stock of MCII. The
following table sets forth certain information regarding the beneficial
ownership of the issued and outstanding stock of MCII Holdings as of June 16,
1999.
For descriptions of certain voting and other arrangements among such
holders, see "Certain Transactions; Relationship with Grupo Dina" beginning on
page 73.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(A)
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NUMBER OF NUMBER OF TOTAL
SHARES OF PERCENTAGE OF SHARES OF NUMBER OF TOTAL PERCENTAGE
VOTING VOTING NON-VOTING SHARES OF OF
BENEFICIAL OWNER COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
- ----------------------------------------- -------------- ----------------- -------------- -------------- -----------------
JLL Fund III(b)
450 Lexington Avenue
Suite 3350
New York, New York 10017............... 645,303.85 59.21% -- 645,303.85 56.46%
Consorcio G Grupo Dina,
S.A. de C.V.(c)
Tlacoquemecatl 41
Colonia Del Valle
03100, Mexico D.F., Mexico............. 390,000 35.79% -- 390,000 34.13%
CIBC(d)
161 Bay Street,
PP Box 500,
M51258, Toronto, Canada................ 54,478.20 4.99% 53,074.96 107,553.16 9.41%
James P. Bernacchi....................... -- -- -- -- --
Horst Sieben............................. -- -- -- -- --
Alexander C. Baker....................... -- -- -- -- --
Valente Espinosa......................... -- -- -- -- --
Pablo Fierros............................ -- -- -- -- --
Mario Gonzalez........................... -- -- -- -- --
Timothy J. Nalepka....................... -- -- -- -- --
Harold Zuschlag.......................... -- -- -- -- --
Rafael Gomez Flores(c)................... 390,000 35.79% -- 390,000 34.13%
Paul S. Levy(b).......................... 645,303.85 59.21% -- 645,303.85 56.46%
Jeffrey Lightcap(b)...................... 645,303.85 59.21% -- 645,303.85 56.46%
David Ying(b)............................ 645,303.85 59.21% -- 645,303.85 56.46%
Frank Rodriguez(b)....................... -- -- -- -- --
All directors and officers as a group
(13 persons)(e)........................ 1,305,303.85 95.00% -- 1,305,303.85 90.59%
</TABLE>
- --------------------------
(a) "Beneficial ownership" generally means any person who, directly or
indirectly, has or shares voting or investment power with respect to a
security or has the right to acquire such power within 60 days. Unless
otherwise indicated, we believe that each holder has sole voting and
investment power with regard to the equity interests listed as beneficially
owned.
(b) Includes warrants to purchase 122,448.45 shares of common stock, which
together with the warrants issued to the other equity investors, represents
10% of the fully diluted common stock of MCII Holdings. Messrs. Levy,
Lightcap, Ying and Rodriguez are all associated with JLL Fund III, which
owns 56.46% of the total common stock, 59.21% of the voting common stock, of
MCII Holdings. Mr. Rodriguez disclaims any beneficial ownership of such
common stock. Messrs. Levy, Lightcap and Ying are general partners of JLL
Associates III, LLC, the general partner of JLL Fund III, and, as a result,
each of them may be deemed to beneficially own all of the shares of common
stock held directly or indirectly by JLL Fund III.
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<PAGE>
(c) Based upon information available as of March 31, 1999, Grupo Empresarial G,
S.A. de C.V., a Mexican corporation, is the only person known to Grupo Dina
to be the beneficial owner of more than 5% of Grupo Dina. Grupo Empresarial
owns 127,912,420 shares, or 62.8%, of Grupo Dina's common stock. Grupo
Empresarial is a holding company owned by Mr. Rafael Gomez Flores and the
following members of his family: O. Raymundo Gomez Flores, Armando Gomez
Flores, Alfonso Miguel Gomez Flores and Guillermo Gomez Flores. Since each
of the named members of the Gomez Flores family has voting power or shares
voting power and/or investment power over the shares owned of record by
Grupo Empresarial, each such family member may be deemed to be the
beneficial owner of all 127,912,420 shares of Grupo Dina owned by Grupo
Empresarial. In addition, Mr. Rafael Gomez Flores and each of the foregoing
named family members each individually own approximately 1,666,300 shares,
or 0.8%, of Grupo Dina's common stock.
(d) Andrew R. Heyer, Jay R. Bloom and Dean C. Kehler, who are employees of an
affiliate of CIBC, have shared power to vote and dispose of the shares of
common stock reported in the table. The business address of Messrs. Heyer,
Bloom and Kehler is 425 Lexington Avenue, 7th Floor, New York, New York
10017. Share amounts include warrants to purchase 20,408.55 shares of
nonvoting common stock, which for calculation purposes are assumed to be
converted to voting common stock to the maximum level currently permissible
under regulatory requirements and the terms of such warrants. Together with
the warrants issued to JLL, such warrants represent 10% of the fully diluted
common stock of MCII Holdings.
(e) No director or officer of MCII directly owns any shares of common stock. Mr.
Rafael Gomez Flores may be deemed to beneficially own 34.13% of MCII
Holdings' total common stock, 35.79% of the voting common stock (see
footnote (c) above), and each of Messrs. Levy, Lightcap and Ying may be
deemed to beneficially own 56.46% of MCII Holdings' total common stock,
59.21% of the voting common stock (see footnote (b) above).
MCII HOLDINGS EQUITY STRUCTURE
MCII is a wholly-owned subsidiary of MCII Holdings. MCII Holdings has
authorized two classes of common stock, a voting and nonvoting class. The voting
common stock has one vote per share for the election of directors and all other
corporate matters. Except as provided by law, the nonvoting common stock will
have no vote on any matter and will not be included in determining the number of
shares voting or entitled to vote. Each holder of nonvoting common stock is
entitled to convert any or all of its nonvoting shares into an equal number of
voting common stock, unless as a result of such conversion, such holder or its
affiliates would own a greater quantity of securities than it is permitted to
own under any law, regulation order, rule or other requirement of any
governmental authority. According to the investment agreement, the stockholders
agreement will contain certain provisions relating to the governance of MCII and
restrictions on, and rights in the event of, the transfer of MCII Holdings'
common stock. See "Certain Transactions; Relationship with Grupo
Dina--Stockholders Agreement."
MANAGEMENT OPTIONS
Pursuant to the investment agreement, certain key executives of MCII
Holdings and MCII have been granted stock options to purchase up to 20% of MCII
Holdings' fully diluted common stock. See "Management--Management Options."
WARRANTS
In connection with the equity investment, the equity investors purchased $50
million in senior notes from MCII Holdings, which were accompanied by warrants
to purchase up to 10% of the fully diluted common stock of MCII Holdings. The
warrants are immediately exercisable at a price equivalent to the value per
share at which the equity investors invested in MCII Holdings.
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<PAGE>
CERTAIN TRANSACTIONS; RELATIONSHIP WITH GRUPO DINA
GENERAL
Prior to the consummation of the Transactions, we and Autobuses were
indirect wholly-owned subsidiaries of Grupo Dina. Grupo Dina is a leading
manufacturer of trucks and buses listed both on Bolsa Mexicana de Valores, the
Mexican Stock Exchange, and the New York Stock Exchange. In the ordinary course
of business, we and Autobuses have routinely made purchases and sales of goods
and services from Grupo Dina and other affiliated companies. For more
information about these historical transactions, see note 24 to our consolidated
financial statements and note 9 to our unaudited consolidated financial
statements included in this prospectus.
JLL owns in excess of 50% of MCII Holdings and MCII Holdings owns all of the
outstanding common stock of MCII. Consequently and subject to the terms of the
stockholders agreement described below, JLL is able to significantly influence
such actions as the election of directors of MCII Holdings, the approval of
matters submitted for stockholders approval or preventing a potential takeover.
Prior to the consummation of the Transactions, our Autobus subsidiary
obtained certain services from, and provided certain services to, Grupo Dina,
and was included as part of Grupo Dina's consolidated group for income tax
purposes. In connection with the Transactions, MCII Holdings and we entered into
agreements with Grupo Dina that cover transition services, sales, benefit
administration services, data center and software administration services,
procurement services, purchasing services, transfer of employees and general
management services. These agreements resulted from an "arm's-length"
negotiation and are on terms that we believe are at least as favorable as the
terms that could be obtained by us in comparable transactions made on an
arm's-length basis between unaffiliated parties. Grupo Dina and its subsidiaries
also have a first right and obligation to supply substantially all non-major
component parts to MCII Holdings and its subsidiaries for a period of 15 years,
so long as
(1) they are sold at a discount below any U.S. or Canadian supplier, and
(2) they meet quality and delivery standards.
Grupo Dina has agreed not to sell products to MCII Holdings' competitors.
Additionally, in connection with the Transactions, Autobuses entered into an
agreement with Grupo Dina or with one or more of its subsidiaries regarding the
exchange of certain of Autobuses' unimproved real property at the Sahagun
facility for certain of Grupo Dina's property, general maintenance and security
services at the Sahagun facility, and certain administrative and employee
services. These agreements resulted from an "arm's-length" negotiation and are
on terms that we believe are at least as favorable as the terms that could be
obtained by us in comparable transactions made on an arm's-length basis between
unaffiliated parties.
In connection with the Transactions, we made a final distribution to Grupo
Dina of approximately $71.4 million. See "Prospectus Summary--The Transactions."
ASSET TRANSFERS
Concurrent with the consummation of the Transactions, Grupo Dina made
certain transfers of its assets and subsidiaries in order to concentrate its
core coach business assets at or under us. Specifically:
- MCII Holdings transfered its Dina Autobuses, S.A. de C.V. subsidiary to us
and Autobuses then became our subsidiary. The financial position and
results of Autobuses and us are set forth in the consolidated financial
statements included elsewhere in this prospectus.
- Autobuses transfered the following immaterial subsidiaries to Grupo Dina,
Autopartes Hidalguenses, S.A. de C.V. and Carroceria Sahagun, S.A. de
C.V. Carroceria Sahagun is a
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dormant company with virtually no operations or assets. As at and during
the year ended December 31, 1998, Autopartes had revenues, excluding
intercompany, operating loss and total assets of approximately $3.7
million, ($0.5 million) and $3.6 million, respectively.
- Autobuses exchanged certain of its unimproved property in Mexico for
unimproved property and two facilities of a Grupo Dina subsidiary.
- Autobuses transfered to Grupo Dina a group of 240 transit buses that are
leased to a company affiliated with Grupo Dina, together with the related
lease rights. As at and during the year ended December 31, 1998,
Autobuses' financial statements reflected revenues, operating income and
net book value of approximately $1.5 million, $0.3 million and $3.0
million, respectively, relating to these leased transit buses.
- We transfered our Universal Coach Parts Mexico, S.A. de C.V. subsidiary to
Grupo Dina and canceled a $7.3 million receivable. As at and during the
year ended December 31, 1998, UCP Mexico had revenues, excluding
intercompany, operating income and total assets of $17.4 million, $0.6
million and $9.9 million, respectively.
In addition, Autobuses canceled certain intercompany advances due from Grupo
Dina of approximately $115 million which had been previously charged against
equity on Autobuses' financial statements.
LICENSE AGREEMENTS
In connection with the Transactions, MCII Holdings licensed from Grupo Dina
certain trademarks, trade names and service marks with respect to the name
"Dina" for a perpetual term which is exclusive and royalty-free in the United
States, Mexico, Canada, Argentina and Brazil.
OMNIBUS AGREEMENT
ST. MATTHEWS FACILITY
In connection with the Transactions, one of our Canadian subsidiaries
entered into a sale-leaseback transaction with Grupo Dina for certain tooling
and equipment located at the manufacturing facility of Motor Coach Industries,
Limited, a wholly owned subsidiary of ours, at St. Matthews Avenue, Winnipeg,
Manitoba. The purchase price and lease payment were for nominal amounts and the
estimated market value of the tooling and equipment is between $2 million and $4
million. We will lease the tooling and equipment for a period of up to three
years and prior to the expiration of such lease, we will transfer the
manufacturing operations at this facility to a wholly-owned subsidiary of Grupo
Dina who will then manufacture parts for us at this facility.
LATIN AMERICA RIGHTS
In the event MCII Holdings determines (i) not to manufacture, distribute or
sell its products in any country in Latin America and (ii) that the business
should be conducted by a third party, it will offer to Grupo Dina the right to
manufacture, distribute, and sell MCII Holdings' products in such country to the
extent permitted by law.
DINA DISTRIBUTION RIGHTS
In addition, MCII Holdings has a right of first refusal to distribute any of
Grupo Dina's body-on-chassis bus products in the United States and Canada that
are not distributed by Grupo Dina itself. The rights are on terms and conditions
no less favorable to MCII Holdings and MCII than any other distribution rights
granted by Grupo Dina with respect to its products.
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MME INVESTMENT
The equity investors have the right to purchase 20%, and under certain
conditions up to 50% of Mexicana de Manufacturas Especiales, S.A. de C.V., for a
price and other terms that are mutually agreeable to the parties.
MCII FINANCIAL SERVICES INC.
In 1997, MCII and Mr. Gomez Flores and members of his family formed MCII
Financial Services Inc., a coach finance company. MCII acquired 25% of the
voting common stock and 15,000,000 shares of non-voting preferred stock for
$250,000 and $15,000,000 respectively. The remaining 75% of the voting common
stock was acquired by the Gomez Flores family members. In 1998, MCII increased
its investment by $7,650,000. Financial Services operates independently from
MCII and provides conditional sales contracts and operating leases to MCII's
customers. Financial Services was created to provide attractive financing
alternatives to our coach customers. As an independent company, Financial
Services is expected to have better access to funding on competitive terms.
Financial Services' initial transaction was the purchase of $19,406,000 of
loans and $12,742,000 of leases from certain subsidiaries of MCII. MCII has
guaranteed the full and prompt collection of the loans sold to Financial
Services. MCII received a fairness opinion from an independent third party as to
the basis for the selling price of these assets. No gain was recognized on the
transaction. Financial Services will in the future engage in loan and leasing
activities involving MCII and others in the motor coach and other industries.
During 1998, Financial Services purchased additional loans of $35,519,000 and
leases of $3,216,000 from MCII.
The terms of the business arrangement between MCII and certain of our
subsidiaries and Financial Services are governed by a finance services agreement
dated as of May 6, 1998. Pursuant to the agreement, Financial Services provides
advice and assistance to MCII in marketing MCI-REGISTERED TRADEMARK- coaches, in
analyzing the creditworthiness of the MCII's customers who are seeking
financing, and in documenting financing transactions that are approved by
Financial Services. The agreement further provides that MCII will not direct or
refer potential customers to any source of financing other than Financial
Services. MCII is obligated to pay Financial Services a one percent origination
fee for each MCII sale financed by Financial Services.
MCII is also required under the agreement to remarket motor coaches
designated by Financial Services. MCII earns a five percent remarketing fee to
be paid out of resale proceeds after MCII's lien has been satisfied. Financial
Services has the option to require MCII to repurchase any item of equipment that
has been remarketed for more than 150 days, the repurchase price being the
greater of (a) fair market value times 95%, or (b) the original invoice price
less one percent for each month that has elapsed from the original delivery date
to the date MCII receives possession of the equipment. The remarketing
obligation expires upon the later of (a) the expiration of the agreement, or (b)
the expiration of all outstanding finance documents, plus one year.
The finance services agreement has an initial term of ten years, and
Financial Services has the right and option to extend the agreement for an
additional ten years.
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STOCKHOLDERS AGREEMENT
In connection with the Transactions, Grupo Dina and the equity investors
entered into a stockholders agreement governing their ownership of MCII
Holdings. The following is a summary of the material terms included in the
stockholders agreement. The parties have agreed to modify certain provisions of
the stockholders agreement in the event of an initial public offering.
- The stockholders agreement provides that the board of directors will have
seven members, composed of three representatives of Grupo Dina, one of
which shall include the CEO of MCII Holdings, and four representatives of
JLL Fund III.
- Subject to certain exceptions, no stockholder other than JLL Fund III may
transfer any of its shares prior to June 16, 2004.
- Certain extraordinary transactions must be approved by at least six
directors.
- Following an initial public offering, the stockholders are entitled to an
unlimited number of "piggyback registrations," which allow them to include
shares of common stock held by them in certain registrations of common
shares by MCII Holdings.
- All parties to the stockholders agreement have a right to participate
proportionately in any sale by JLL Fund III or any permitted sale by Grupo
Dina of MCII Holdings' common stock.
- Grupo Dina entered into certain non-competition agreements with MCII
Holdings and its subsidiaries, including MCII, upon any sale of MCII
Holdings.
- Prior to an initial public offering, the stockholders have the right to
participate on a pro rata basis in any future private offerings of common
stock.
- Grupo Dina has a right of first offer to purchase the shares held by the
equity investors in any permitted sale by JLL Fund III of all of its
shares.
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DESCRIPTION OF THE SENIOR CREDIT FACILITY
In connection with the Transactions, we entered into a senior credit
facility. Under the senior credit facility, we can borrow up to $445 million,
consisting of $333 million in term loans and $112 million in revolving loans
from a syndicate of lenders, including the Canadian Imperial Bank of Commerce,
as agent.
The term loan is repayable in 28 quarterly installments of principal and
interest over a period of seven years, beginning approximately three months
after the date of the of the Transactions. Principal on our senior credit
facility is required to be repaid quarterly in annual amounts of $3.3 million
for the first six years and $313.0 million in the seventh year after the
closing. The term loan accrues interest at either LIBOR plus 3.25% or adjusted
base rate plus 2.25%.
The revolving loans accrue interest at either LIBOR plus 2.75% or adjusted
base rate plus 1.75%. The revolving loans mature six years after the date of the
closing of the Transactions.
The senior credit facility:
- is secured by a pledge of substantially all of our tangible and intangible
domestic assets;
- requires us to meet customary financial tests; and
- limits our ability to pay dividends, repurchase stock, redeem our other
debt, sell assets, make loans or investments, enter into transactions with
our affiliates, or merge or consolidate with other companies.
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DESCRIPTION OF THE EXCHANGE NOTES
Except as otherwise indicated below, the following summary applies to both
the outstanding notes and the exchange notes. For this section, the term "Notes"
means both the outstanding notes and the exchange notes unless otherwise
indicated. MCII issued the outstanding notes, and will issue the exchange notes,
under an indenture, dated as of June 16, 1999, by and among itself, the
guarantors and IBJ Whitehall Bank & Trust Company, as trustee. The terms of the
Notes include those stated in the indenture and those made part of the indenture
by reference to the Trust Indenture Act of 1939, as in effect on the date of the
indenture. The notes are subject to all such terms, and holders of the Notes are
referred to the indenture and the Trust Act for a statement of them. The
following is a summary of the material terms and provisions of the Notes. This
summary does not purport to be a complete description of the Notes and is
subject to the detailed provisions of, and qualified in its entirety by
reference to, the Notes and the indenture, including the definitions contained
therein. A copy of the form of indenture may be obtained from MCII by any holder
or prospective investor upon request. Definitions relating to certain
capitalized terms are set forth under "--Certain Definitions." Capitalized terms
used but not otherwise defined in this summary have the meanings given them in
the indenture and are incorporated to this summary by reference.
The terms of the exchange notes are nearly identical to the outstanding
notes in all material respects, including interest rate and maturity, except
that the exchange notes will not be subject to:
- the restrictions on transfer; and
- the registration rights agreement's covenants regarding registration.
GENERAL
The Notes will be limited in aggregate principal amount to $152.25 million
and one or more additional series of Notes to be issued from time to time in
aggregate principal amounts of not less than $25 million per series, subject to
compliance with the covenant described below under "Certain
Covenants--Limitation on Additional Indebtedness" and provided that no Default
or Event of Default exists under the indenture at the time of issuance or would
result therefrom. The Notes will be general unsecured obligations of MCII,
subordinated in right of payment to Senior Indebtedness of MCII and senior in
right of payment to any current or future subordinated Indebtedness of MCII.
The guarantors, together with each other Domestic Restricted Subsidiary of
MCII which guarantees payment of the pursuant to the covenant described under
"--Certain Covenants-- Limitation on Creation of Subsidiaries", will jointly and
severally Guarantee the Notes, on a senior subordinated basis, as to payment of
principal, premium, if any, and interest.
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on May 1, 2009. The Notes will bear interest at a rate
of 11.25% per annum from the Issue Date until maturity. Interest is payable
semi-annually in arrears on each May 1 and November 1 commencing November 1,
1999, to holders of record of the Notes at the close of business on the
immediately preceding April 15 and October 15, respectively. The interest rate
on the Notes is subject to increase, and such Additional Interest will be
payable on the payment dates set forth above, in certain circumstances, if the
Notes, or other securities substantially similar to the Notes, are not
registered with the Commission within the prescribed time periods. See "Exchange
Offer; Registration Rights."
OPTIONAL REDEMPTION
MCII may redeem the Notes at its option, in whole at any time or in part
from time to time, on or after May 1, 2004 at the following redemption prices,
which are expressed as percentages of the
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principal amount thereof, together, in each case, with accrued and unpaid
interest, if any, to the redemption date, if redeemed during the twelve-month
period beginning on May 1 of each year listed below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -----------
<S> <C>
2004.............................................................................. 105.625%
2005.............................................................................. 103.750%
2006.............................................................................. 101.875%
2007 and thereafter............................................................... 100.000%
</TABLE>
Notwithstanding the foregoing, MCII may redeem in the aggregate up to 35% of
the original principal amount of Notes at any time and from time to time prior
to May 1, 2002 at a redemption price equal to 111.25% of the aggregate principal
amount so redeemed, plus accrued and unpaid interest, if any, to the redemption
date out of the Net Proceeds of one or more Equity Offerings; PROVIDED that
(1) at least 65% of the principal amount of Notes originally issued
remains outstanding immediately after the occurrence of any such redemption
and
(2) any such redemption occurs within 90 days following the closing of
any Equity Offering.
In the event of a redemption of fewer than all of the Notes, the trustee
shall select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which such Notes are listed,
or if such Notes are not then listed on a national securities exchange, on a PRO
RATA basis, by lot or in such other manner as the trustee shall deem fair and
equitable. The Notes will be redeemable in whole or in part upon not less than
30 nor more than 60 days' prior written notice, mailed by first class mail to a
holder's last address as it shall appear on the register maintained by the
registrar of the Notes. On and after any redemption date, interest will cease to
accrue on the Notes or portions thereof called for redemption unless MCII shall
fail to redeem any such Note.
SUBORDINATION
The indebtedness represented by the Notes is, to the extent and in the
manner provided in the indenture, subordinated in right of payment to the prior
indefeasible payment and satisfaction in full in cash of all existing and future
Senior Indebtedness of MCII. As of March 31, 1999, after giving PRO FORMA effect
to the Transactions, the principal amount of outstanding Senior Indebtedness of
MCII, on a consolidated basis, would have been $334.7 million.
In the event of any
(1) bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to MCII or to its creditors, as such, or to its assets;
(2) liquidation or dissolution or other winding-up of MCII;
(3) assignment for the benefit of creditors of MCII; or
(4) marshalling of assets or liabilities of MCII;
(all of the foregoing events described in clauses (1) through (4) referred to
herein individually as a "Bankruptcy Proceeding" and collectively as "Bankruptcy
Proceedings"), the holders of Senior Indebtedness of MCII will be entitled to
receive payment and satisfaction in full in cash of all amounts due on or in
respect of all Senior Indebtedness of MCII before the holders of the Notes are
entitled to receive or retain any payment or distribution of any kind on account
of the Notes. By reason of such subordination, in the event of any such
Bankruptcy Proceeding, creditors of MCII who are holders of
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Senior Indebtedness may recover more, ratably, than other creditors of MCII,
including holders of the Notes.
If a Payment Default on Designated Senior Indebtedness occurs, no payment or
distribution of any kind or character, including, without limitation, cash,
property and any payment or distribution which may be payable or deliverable by
reason of the payment of any other indebtedness of MCII being subordinated to
the payment of the Notes by MCII, may be made by or on behalf of MCII or any
Restricted Subsidiary of MCII, including, without limitation, by way of set-off
or otherwise, for or on account of the Notes, or for or on account of the
purchase, redemption or other acquisition of any Notes, and neither the trustee
nor any holder or owner of any Notes shall take or receive from MCII or any
Restricted Subsidiary of MCII, directly or indirectly in any manner, payment in
respect of all or any portion of Notes commencing on the date of receipt by the
trustee of written notice from the representative of the holders of Designated
Senior Indebtedness of the occurrence of any Payment Default, and in any such
event, such prohibition shall continue until any Payment Default is cured,
waived in writing or otherwise ceases to exist. At such time as the prohibition
set forth in the preceding sentence shall no longer be in effect, subject to the
provisions of the following paragraph, MCII shall resume making any and all
required payments in respect of the Notes, including any missed payments.
Upon the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness, no payment or distribution of any kind or character, including,
without limitation, cash, property and any payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of
MCII being subordinated to the payment of the Notes by MCII, may be made by MCII
or any Restricted Subsidiary of MCII, including, without limitation, by way of
set-off or otherwise, for or on account of the Notes, or for or on account of
the purchase, redemption or other acquisition of any Notes, and neither the
trustee nor any holder or owner of any Notes shall take or receive from MCII or
any Restricted Subsidiary of MCII, directly or indirectly in any manner, payment
in respect of all or any portion of the Notes for a period (a "Payment Blockage
Period") commencing on the date of receipt by the trustee of written notice from
the representative of such Non-Payment Event of Default unless and until,
subject to any blockage of payments that may then be in effect under the
preceding paragraph, the earliest of
(1) more than 179 days shall have elapsed since receipt of such written
notice by the trustee,
(2) such Non-Payment Event of Default shall have been cured or waived in
writing or otherwise shall have ceased to exist or such Designated Senior
Indebtedness shall have been paid in full or
(3) such Payment Blockage Period shall have been terminated by written
notice to MCII or the trustee from such representative,
after which, in the case of clause (1), (2) or (3), MCII shall resume making any
and all required payments in respect of the Notes, including any missed
payments. Notwithstanding any other provision of the indenture, in no event
shall a Payment Blockage Period commenced in accordance with the provisions of
the indenture described in this paragraph extend beyond 179 days from the date
of the receipt by the trustee of the notice referred to above (the "Initial
Blockage Period"). Any number of additional Payment Blockage Periods may be
commenced during the Initial Blockage Period; PROVIDED, HOWEVER, that no
additional Payment Blockage Period shall extend beyond the Initial Blockage
Period. After the expiration of the Initial Blockage Period, no Payment Blockage
Period may be commenced until at least 180 consecutive days have elapsed from
the last day of the Initial Blockage Period. Notwithstanding any other provision
of the indenture, no Non-Payment Event of Default with respect to Designated
Senior Indebtedness which existed or was continuing on the date of the
commencement of any Payment Blockage Period initiated by the representative
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period initiated by the representative, whether or not
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within the Initial Blockage Period, unless such Non-Payment Event of Default
shall have been cured or waived for a period of not less than 90 consecutive
days.
In the event that, notwithstanding the foregoing, the trustee or any holder
of Notes receives any payment or distribution of assets of MCII of any kind,
whether in cash, property or securities, including, without limitation, by way
of set-off or otherwise, in respect of the Notes before all Senior Indebtedness
of MCII is paid and satisfied in full in cash, then such payment or distribution
will be held by the recipient in trust for the benefit of holders of Senior
Indebtedness and will be immediately paid over or delivered to the holders of
Senior Indebtedness or their representative or representatives to the extent
necessary to make payment in full of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution, or provision
therefor, to or for the holders of Senior Indebtedness.
Each Guarantee will, to the extent set forth in the indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness of the respective Guarantor and will be subject to the rights of
holders of Designated Senior Indebtedness of such Guarantor to initiate blockage
periods, upon terms substantially comparable to the subordination of the Notes
to all Senior Indebtedness of MCII.
If MCII or any Guarantor fails to make any payment on the Notes or any
Guarantee, as the case may be, when due or within any applicable grace period,
whether or not on account of payment blockage provisions, 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."
A holder of Notes by its acceptance of Notes agrees to be bound by such
provisions and authorizes and expressly directs the trustee, on its behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the indenture and appoints the trustee its
attorney-in-fact for such purpose.
CERTAIN COVENANTS
The indenture contains, among others, the following covenants:
LIMITATION ON ADDITIONAL INDEBTEDNESS
MCII will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, incur, as defined, any Indebtedness, including Acquired
Indebtedness, PROVIDED that MCII or any of the Guarantors may incur
Indebtedness, including Acquired Indebtedness, if after giving effect to the
incurrence of Indebtedness and the receipt and application of the proceeds
thereof, MCII's Consolidated Fixed Charge Coverage Ratio is at least 2.0 to 1.
Notwithstanding the foregoing, MCII and its Restricted Subsidiaries may
incur Permitted Indebtedness; PROVIDED that MCII will not incur any Permitted
Indebtedness that ranks junior in right of payment to the Notes that has a
maturity or mandatory sinking fund payment prior to the maturity of the Notes.
Notwithstanding any other provision of this "Limitation on Additional
Indebtedness" covenant,
- the maximum amount of Indebtedness that MCII or a Restricted Subsidiary
may incur pursuant to this covenant shall not be deemed to be exceeded,
with respect to any outstanding Indebtedness, due solely to the result of
fluctuations in the exchange rates of currencies and
- in the event that an item of Indebtedness meets the criteria of more than
one of the categories of Permitted Indebtedness or is otherwise entitled
to be incurred pursuant to this covenant, MCII may, in its sole
discretion, classify, or reclassify, such item of Indebtedness in any
manner
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that complies with this covenant and such items of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof.
Accrual of interest or accretion of accreted value will not be deemed to be
an incurrence of Indebtedness for purposes of this covenant. Accruals of
dividends or the payment of dividends through the issuance of additional shares
of the same class of Capital Stock in accordance with the provisions thereof
permitting such pay-in-kind dividends will not be deemed an issuance of Capital
Stock for purposes of this covenant.
LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS
MCII will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, incur, contingently or otherwise, any Indebtedness,
other than the Notes and the Guarantees, as the case may be, that is both
(1) subordinated in right of payment to any Senior Indebtedness of MCII or
any of its Restricted Subsidiaries, as the case may be, and
(2) senior in right of payment to the Notes and the Guarantees, as the case
may be.
For purposes of this covenant, Indebtedness is deemed to be senior in right
of payment to the Notes or the Guarantees, as the case may be, if it is not
explicitly subordinated in right of payment to Senior Indebtedness at least to
the same extent as the Notes and the Guarantees, as the case may be, are
subordinated to such Senior Indebtedness.
LIMITATION ON RESTRICTED PAYMENTS
MCII will not make, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, make, any Restricted Payment, unless:
(1) no Default or Event of Default shall have occurred and be continuing
at the time of or immediately after giving effect to a Restricted Payment;
(2) immediately after giving PRO FORMA effect to a Restricted Payment,
MCII could incur $1.00 of additional Indebtedness, other than Permitted
Indebtedness, under "--Limitation on Additional Indebtedness" above; and
(3) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
does not exceed the sum of
(a) 50% of MCII's Cumulative Consolidated Net Income or minus 100% of
any cumulative deficit in Consolidated Net Income,
(b) 100% of the aggregate Net Proceeds received by MCII from the
issue or sale after the Issue Date of Capital Stock, other than any
Disqualified Capital Stock, Designated Preferred Stock, or Capital Stock
of MCII issued to any Subsidiary of MCII, of MCII or any Indebtedness or
other securities of MCII convertible into or exercisable or exchangeable
for Capital Stock, other than Disqualified Capital Stock or Designated
Preferred Stock, of MCII which have been so converted, exercised or
exchanged, as the case may be,
(c) without duplication of any amounts included in clause (3)(b)
above, 100% of the aggregate Net Proceeds received by MCII from any
equity contribution from a holder of MCII's Capital Stock, excluding, in
the case of clauses (3)(b) and (c), any Net Proceeds from an Equity
Offering to the extent used to redeem the Notes, and
(d) without duplication, the sum of
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(i) the aggregate amount returned in cash on or with respect to
Investments, other than Permitted Investments, made subsequent to the
Issue Date whether through interest payments, principal payments,
dividends or other distributions;
(ii) the net proceeds received by MCII or any of its Restricted
Subsidiaries from the disposition, retirement or redemption of all or
any portion of such Investments,other than to a Subsidiary of MCII;
and
(iii) upon redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary, the fair market value of the net assets of
such Subsidiary,
PROVIDED, HOWEVER, that the sum of clauses (i), (ii) and (iii) above shall not
exceed the aggregate amount of all such Investments made subsequent to the Issue
Date.
For purposes of determining under clause (3) above, the amount expended for
Restricted Payments, cash distributed shall be valued at the face amount thereof
and property other than cash shall be valued at its fair market value.
The provisions of this covenant shall not prohibit
(1) the payment of any distribution within 60 days after the date of
declaration thereof, if at such date of declaration such payment would
comply with the provisions of the indenture,
(2) the repurchase, redemption or other acquisition or retirement of any
shares of Capital Stock of MCII or Indebtedness subordinated to the Notes by
conversion into, or by or in exchange for, shares of Capital Stock of MCII,
other than Disqualified Capital Stock, or out of the Net Proceeds of the
substantially concurrent sale, other than to a Subsidiary of MCII, of other
shares of Capital Stock of MCII, other than Disqualified Capital Stock,
(3) the redemption or retirement of Indebtedness of MCII subordinated to
the Notes in exchange for, by conversion into, or out of the Net Proceeds of
a substantially concurrent sale or incurrence of, Indebtedness of MCII,
other than any Indebtedness owed to a Subsidiary, that is Refinancing
Indebtedness,
(4) the retirement of any shares of Disqualified Capital Stock of MCII
by conversion into, or by exchange for, shares of Disqualified Capital Stock
of MCII, or out of the Net Proceeds of the substantially concurrent sale,
other than to a Subsidiary of MCII, of other shares of Disqualified Capital
Stock of MCII,
(5) the declaration and payment of regularly accruing dividends to
holders of any class or series of Disqualified Capital Stock of MCII or its
Restricted Subsidiaries issued after the Issue Date in accordance with the
"Limitation on Additional Indebtedness" covenant,
(6) the declaration and payment of regularly accruing dividends to
holders of any class or series of Designated Preferred Stock of MCII issued
after the Issue Date; PROVIDED that at the time of such issuance, and after
giving effect to such issuance on A PRO FORMA basis, for purposes of making
determinations on A PRO FORMA basis pursuant to this clause (6), treating
all dividends which will accrue on such Designated Preferred Stock during
the four full fiscal quarters immediately following such issuance, as well
as all other Designated Preferred Stock then outstanding, as if same will in
fact be, or have in fact been, paid in cash, MCII would have been able to
incur at least $1.00 of additional Indebtedness, other than Permitted
Indebtedness, pursuant to the "Limitation on Additional Indebtedness"
covenant,
(7) Restricted Payments in aggregate amount not to exceed $25 million,
(8) payments made under any Permitted Tax Sharing Agreement,
(9) payments made to effect the Transactions on the Issue Date, and
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(10) repurchases by MCII of Capital Stock, other than Disqualified
Capital Stock, or options therefor, of MCII from directors, officers or
employees of MCII or any of its Restricted Subsidiaries or their authorized
representatives upon the death, disability or termination of employment of
such officers or employees, in an aggregate amount not to exceed, in any
calendar year, $2 million; PROVIDED that unused amounts in any calendar
year, beginning with calendar year 1999, may be carried forward and used to
make repurchases as described above in this clause (10) in any succeeding
calendar year, PROVIDED FURTHER that the aggregate amount expended pursuant
to this clause (10) in any calendar year, both pursuant to the immediately
preceding proviso and the portion of this clause (10) which precedes said
proviso, does not exceed $4 million in any calendar year.
In calculating the aggregate amount of Restricted Payments made subsequent
to the Issue Date for purposes of clause (3) of the first paragraph above,
amounts expended pursuant to clause (1) of the immediately preceding paragraph
shall be included in such calculation.
For purposes of determining compliance with this "Limitation on Restricted
Payments" covenant, in the event that a Restricted Payment meets the criteria of
more than one of the types of Restricted Payments described in the above
clauses, MCII, in its sole discretion, may order and classify, and from time to
time may reclassify, such Restricted Payment if it would have been permitted at
the time such Restricted Payment was made and at the time of such
reclassification.
LIMITATION ON INVESTMENTS
MCII will not, and will not permit any of its Restricted Subsidiaries to,
make any Investment other than
(1) a Permitted Investment, or
(2) an Investment that is made after the Issue Date as a Restricted
Payment in compliance with the "Limitation on Restricted Payments" covenant.
LIMITATION ON LIENS
MCII will not, and will not permit any of its Restricted Subsidiaries to,
create, incur or otherwise cause or suffer to exist or become effective any
Liens of any kind securing Indebtedness other than Senior Indebtedness upon any
property or asset of MCII or any of its Restricted Subsidiaries or any shares of
Capital Stock or Indebtedness of any Restricted Subsidiary of MCII which owns
property or assets, now owned or hereafter acquired, unless:
(1) if such Lien secures Indebtedness which is subordinated to the
Notes, any such Lien shall be subordinated to the Lien granted to the
holders of the Notes to the same extent as such Indebtedness is subordinated
to the Notes; and
(2) in all other cases, the Notes are equally and ratably secured.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
MCII will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, enter into or suffer to exist any transaction or series
of related transactions, including, without limitation, the sale, purchase,
exchange or lease of assets, property or services, with any Affiliate or extend,
renew, waive or otherwise modify the terms of any Affiliate transaction entered
into prior to the Issue Date unless
(1) such Affiliate transaction is between or among MCII and its
Restricted Subsidiaries; or
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(2) the terms of such Affiliate transaction are fair and reasonable to
MCII or such Restricted Subsidiary, as the case may be, and the terms of
such Affiliate transaction are at least as favorable as the terms which
could be obtained by MCII or such Restricted Subsidiary, as the case may be,
in a comparable transaction made on an arm's-length basis between
unaffiliated parties.
In any Affiliate transaction, or any series of related Affiliate
transactions which are similar or part of a common plan, involving an amount or
having a fair market value in excess of $5 million which is not permitted under
clause (1) above, MCII must obtain a resolution of the board of directors of
MCII certifying that such Affiliate transaction complies with clause (2) above.
In any Affiliate transaction, or any series of related Affiliate transactions
which are similar or part of a common plan, involving an amount or having a fair
market value in excess of $10 million which is not permitted under clause (1)
above, MCII must obtain a favorable written opinion as to the fairness of such
transaction or transactions, as the case may be, from an Independent Financial
Advisor.
The foregoing provisions will not apply to
(1) any Restricted Payment that is not prohibited by the provisions
described under "--Limitation on Restricted Payments" above or any Permitted
Investment,
(2) reasonable fees and compensation paid to, and indemnity provided on
behalf of, officers, directors or employees of MCII or any Restricted
Subsidiary of MCII as determined in good faith by MCII's board of directors
or senior management,
(3) any agreement as in effect as of the Issue Date, including, without
limitation, any agreement entered into on the Issue Date in connection with
the Transactions, or any amendment thereto or any transaction contemplated
thereby (including pursuant to any amendment thereto) in any replacement
agreement thereto so long as any such amendment or replacement agreement is
not more disadvantageous to the holders in any material respect than the
original agreement as in effect on the Issue Date,
(4) transactions with a Receivables Subsidiary in connection with
Permitted Receivables Financing,
(5) any transaction between MCII and any of its Affiliates involving
ordinary course of business investment banking, commercial banking,
financial advisory services and related activities,
(6) the payment of management fees to any Affiliate of MCII not to
exceed in the aggregate to all Affiliates, in any calendar year, $1 million,
(7) customer financing and financing services transactions between MCII
or any of its Restricted Subsidiaries on the one hand and MCII Financial
Services on the other hand occurring in the ordinary course of business,
PROVIDED that the terms of each such transaction are at least as favorable
as the terms which could be obtained by MCII or such Restricted Subsidiary
in a comparable transaction made on an arm's-length basis between
unaffiliated parties,
(8) issuances of Capital Stock of MCII, other than Disqualified Capital
Stock, to the extent otherwise permitted under the Indenture,
(9) the existence of, or the performance by MCII or any of its
Restricted Subsidiaries of its obligations under the terms of, any
stockholders agreement, including any registration rights agreement or
purchase agreement related thereto, to which it is a party as of the Issue
Date and any similar agreements which it may enter into thereafter, in each
case subject to compliance with the other provisions of the indenture;
PROVIDED, HOWEVER, that the existence, or the performance by MCII or any of
its Restricted Subsidiaries of obligations under any future amendment to any
such existing agreement or under any similar agreement entered into after
the Issue Date shall only be permitted by this clause (9) to the extent that
the terms, taken as a whole, of any such amendment
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or new agreement are not otherwise disadvantageous to the holders of the
Notes in any material respect, and
(10) payments made under any Permitted Tax Sharing Agreement.
LIMITATION ON CREATION OF SUBSIDIARIES
MCII will not create or acquire, and will not permit any of its Restricted
Subsidiaries to create or acquire, any Subsidiary other than
(1) a Restricted Subsidiary existing as of the Issue Date,
(2) a Restricted Subsidiary that is acquired or created after the Issue
Date;
(a) PROVIDED, HOWEVER, that each Domestic Restricted Subsidiary
acquired or created pursuant to this clause (2) shall have executed a
guarantee, pursuant to which such Domestic Restricted Subsidiary will
become a Guarantor;
(b) PROVIDED, FURTHER, in the event MCII or any of its Restricted
Subsidiaries incurs Acquired Indebtedness, assuming such incurrence is in
accordance with the "Limitation on Additional Indebtedness" covenant, as
a result of the acquisition of a Restricted Subsidiary and as long as the
terms of such Acquired Indebtedness prohibit the Guarantee of the Notes
by such newly-acquired Restricted Subsidiary or such newly-acquired
Restricted Subsidiary would be in breach or default of the terms of the
Acquired Indebtedness as a result of such Guarantee, such Restricted
Subsidiary will not be required to execute a Guarantee;
(c) PROVIDED that, until such Restricted Subsidiary executes and
delivers a Guarantee in accordance with this covenant,
(i) none of MCII or any other Restricted Subsidiary of MCII will
transfer any assets, other than in the ordinary course of business,
to such newly-acquired Restricted Subsidiary,
(ii) such newly-acquired Restricted Subsidiary will not transfer
such Acquired Indebtedness to MCII or any other Restricted Subsidiary
and
(iii) neither MCII nor any Restricted Subsidiary of MCII shall
provide any guarantee of, or similar credit support for, or otherwise
become directly or indirectly liable for any Indebtedness of such
newly-acquired Restricted Subsidiary, or
(3) an Unrestricted Subsidiary.
As of the Issue Date, MCII will have no Domestic Restricted Subsidiaries,
other than the Guarantors. See "Description of the Notes--General."
LIMITATION ON CERTAIN ASSET SALES
MCII will not, and will not permit any of its Restricted Subsidiaries to,
consummate an Asset Sale unless
(1) MCII or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such sale or other disposition at least equal
to the fair market value of the assets sold or otherwise disposed of, as
determined in good faith by the board of directors of MCII, and evidenced by
a board resolution;
(2) not less than 75% of the consideration received by MCII or such
Restricted Subsidiary, as the case may be, is in the form of cash or Cash
Equivalents other than in the case where the Company or such Restricted
Subsidiary is undertaking a Permitted Asset Swap; PROVIDED that this
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clause (2) shall not apply to any Asset Sale, or series of related Asset
Sales, involving assets that accounted for less than one percent of MCII's
EBITDA during the period of the most recent four consecutive full fiscal
quarters ending prior to the date of such Asset Sale for which consolidated
financial statements of MCII are available; and PROVIDED, FURTHER, that the
amount of
(a) any liabilities, as shown on MCII's or such Restricted
Subsidiary's most recent balance sheet, of MCII or any of its Restricted
Subsidiaries, other than contingent liabilities and liabilities that are
by their terms subordinated to the Notes, that are assumed by the
transferee of any such assets shall be deemed to be cash for purposes of
this clause (2); and
(b) any promissory notes and other non-cash consideration received by
MCII or any Restricted Subsidiary of MCII from such Asset Sale that are
converted by MCII or such Restricted Subsidiary into cash within 180 days
of the applicable Asset Sale shall be deemed to be cash for purposes of
this clause (2).
(3) the Asset Sale Proceeds received by MCII or such Restricted
Subsidiary are applied:
(a) to the extent MCII or any such Restricted Subsidiary, as the case
may be, elects, or is required, to prepay, repay or purchase Indebtedness
under any then existing Senior Indebtedness of MCII or any such
Restricted Subsidiary within 365 days following the receipt of the Asset
Sale Proceeds from any Asset Sale; PROVIDED that any such repayment shall
result in a permanent reduction of the commitments thereunder in an
amount equal to the principal amount so repaid;
(b) to the extent MCII elects, to an investment in assets, including
Capital Stock or other securities purchased in connection with the
acquisition of Capital Stock or property of another Person, used or
useful in a Permitted Business; PROVIDED that such investment occurs or
MCII or any such Restricted Subsidiary enters into contractual
commitments to make such investment, subject only to customary
conditions, within 365 days following receipt of such Asset Sale
Proceeds, provided that such investment shall in any event be consummated
no later than 90 days following such 365th day; and
(c) if on such 365th day in the case of clauses (3)(a) and (3)(b), or
on such 90th day in the case of the proviso to clause (3)(b), with
respect to any Asset Sale, the Available Asset Sale Proceeds exceed $10
million, MCII shall apply an amount equal to the Available Asset Sale
Proceeds to an offer to repurchase the Notes, at a purchase price in cash
equal to 100% of the principal amount thereof plus accrued and unpaid
interest, if any, to the purchase date (an "Excess Proceeds Offer").
Notwithstanding the foregoing, in the event that a Restricted Subsidiary
that is not a Wholly Owned Restricted Subsidiary dividends or distributes to all
of its stockholders on A PRO RATA basis any proceeds of an Asset Sale to MCII or
another Restricted Subsidiary, MCII or such Restricted Subsidiary need only
apply its share of such proceeds in accordance with the preceding clauses (a),
(b) and (c).
If an Excess Proceeds Offer is not fully subscribed, MCII may retain the
portion of the Available Asset Sale Proceeds not required to repurchase Notes.
If MCII is required to make an Excess Proceeds Offer, MCII shall mail,
within 30 days following the date specified in clause (3)(c) above, a notice to
the holders stating, among other things:
(1) that such holders have the right to require MCII to apply the
Available Asset Sale Proceeds to repurchase such Notes at a purchase price
in cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest, if any, to the purchase date;
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(2) the purchase date, which shall be no earlier than 30 days and not
later than 60 days from the date such notice is mailed;
(3) the instructions that each holder must follow in order to have such
Notes purchased; and
(4) the calculations used in determining the amount of Available Asset
Sale Proceeds to be applied to the purchase of such Notes.
In the event of the transfer of substantially all of the property and assets
of MCII and its Restricted Subsidiaries as an entirety to a Person in a
transaction permitted under "--Merger, Consolidation or Sale of Assets" below,
the successor Person shall be deemed to have sold the properties and assets of
MCII and its Restricted Subsidiaries not so transferred for purposes of this
covenant, and shall comply with the provisions of this covenant with respect to
such deemed sale as if it were an Asset Sale.
MCII will comply with the requirements of Rule 14e-1 under the Exchange Act
and other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes pursuant
to an Excess Proceeds Offer. To the extent that the provisions of any securities
laws or regulations conflict with the "Asset Sale" provisions of the indenture,
MCII shall comply with the applicable securities laws and regulations and shall
not be deemed to have breached its obligations under the "Asset Sale" provisions
of the indenture by virtue thereof.
LIMITATION ON PREFERRED STOCK OF RESTRICTED SUBSIDIARIES
MCII will not permit any of its Restricted Subsidiaries to issue any
Preferred Stock, except Preferred Stock issued to MCII or a Wholly Owned
Restricted Subsidiary of MCII, or permit any Person, other than MCII or a Wholly
Owned Restricted Subsidiary of MCII, to hold any such Preferred Stock unless
such Restricted Subsidiary would be entitled to incur or assume Indebtedness
under "--Limitation on Additional Indebtedness" above, other than Permitted
Indebtedness, in the aggregate principal amount equal to the aggregate
liquidation value as of the date of issuance thereof of the Preferred Stock to
be issued.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
MCII will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any encumbrance or restriction on the ability of any Restricted
Subsidiary of MCII to
(1) pay dividends or make any other distributions to MCII or any
Restricted Subsidiary of MCII
(a) on its Capital Stock or
(b) with respect to any other interest or participation in, or
measured by, its profits or
(2) repay any Indebtedness or any other obligation owed to MCII or any
Restricted Subsidiary of MCII,
(3) make loans or advances or capital contributions to MCII or any of
its Restricted Subsidiaries or
(4) transfer any of its properties or assets to MCII or any of its
Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of
(1) encumbrances or restrictions existing on the Issue Date to the
extent and in the manner such encumbrances and restrictions are in effect on
the Issue Date,
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(2) the indenture, the Notes and the Guarantees,
(3) applicable law,
(4) contracts to which any Person who is acquired in accordance with the
terms of the indenture is a party, including any instrument governing
Acquired Indebtedness, which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, including any Subsidiary of
the Person, so acquired,
(5) customary non-assignment provisions in leases or other agreements
entered in the ordinary course of business and consistent with past
practices,
(6) Refinancing Indebtedness; PROVIDED that such restrictions are no
more restrictive than those contained in the agreements governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded,
(7) customary restrictions in Capitalized Lease Obligations, security
agreements or mortgages securing Indebtedness of MCII or a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the
property subject to such Capitalized Lease Obligations, security agreements
and mortgages,
(8) customary restrictions with respect to a Restricted Subsidiary of
MCII pursuant to an agreement that has been entered into for the sale or
disposition of any Capital Stock or assets of such Restricted Subsidiary,
but only to the extent such encumberance or restriction applies only to the
Capital Stock or assets being sold or otherwise disposed of,
(9) contracts entered into in the ordinary course of business, not
relating to any Indebtedness, and that do not, individually or in the
aggregate, detract from the value of property or assets of MCII or any
Restricted Subsidiary in any manner material to MCII or any Restricted
Subsidiary,
(10) restrictions on cash or other deposits or net worth imposed by
customers under contracts (not evidencing or relating to Indebtedness)
entered into in the ordinary course of business,
(11) customary provisions in joint venture agreements and other similar
agreements, in each case relating solely to the respective joint venture or
similar entity or the equity interests therein, entered into in the ordinary
course of business,
(12) customary provisions restricting dispositions of real property
interests set forth in any reciprocal easement agreements of MCII or any
Restricted Subsidiary, or
(13) with respect to a Receivables Subsidiary, an agreement relating to
Indebtedness of such Receivables Subsidiary which is permitted under
"Limitation on Additional Indebtedness" above or pursuant to an agreement
relating to a Permitted Receivables Financing by such Receivables
Subsidiary.
LIMITATION ON CONDUCT OF BUSINESS
MCII and its Restricted Subsidiaries will not engage in any business other
than a Permitted Business.
CHANGE OF CONTROL OFFER
Upon the occurrence of a Change of Control, MCII shall be obligated to make
an offer to purchase each holder's outstanding Notes at a purchase price equal
to 101% of the principal amount
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thereof plus accrued and unpaid interest, if any, to the Change of Control
Payment Date in accordance with the procedures set forth below.
Within 30 days of the occurrence of a Change of Control, MCII shall send by
first-class mail, postage prepaid, to the trustee and to each holder of the
Notes, at the address appearing in the register maintained by the registrar of
the Notes, a notice stating:
(1) that the Change of Control Offer is being made pursuant to this
covenant and that all Notes tendered will be accepted for payment;
(2) the Change of Control purchase price and the purchase date, which
shall be a Business Day no earlier than 30 days nor later than 60 days from
the date such notice is mailed;
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless MCII defaults in the payment of the Change of Control
purchase price, any Notes accepted for payment pursuant to the Change of
Control offer shall cease to accrue interest after the Change of Control
payment date;
(5) that holder accepting the offer to have their Notes purchased
pursuant to a Change of Control offer will be required to surrender the
Notes to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day preceding the Change of Control
payment date;
(6) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the third
Business Day preceding the Change of Control payment date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount of the Notes delivered for purchase, and a
statement that such holder is withdrawing his election to have such Notes
purchased;
(7) that holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered;
(8) any other procedures that a holder must follow to accept a Change of
Control offer or effect withdrawal of such acceptance; and
(9) the name and address of the Paying Agent.
On the Change of Control payment date, MCII shall, to the extent lawful,
(1) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control offer,
(2) deposit with the Paying Agent money sufficient to pay the purchase
price of all Notes or portions thereof so tendered and
(3) deliver or cause to be delivered to the Trustee Notes so accepted
together with an Officers' Certificate stating the Notes or portions thereof
tendered to MCII.
The Paying Agent shall promptly mail to each holder of Notes so accepted payment
in an amount equal to the purchase price for such Notes, and MCII shall execute
and issue, and the Trustee shall promptly authenticate and mail to such holder,
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered; PROVIDED that each such new Note shall be issued in an original
principal amount in denominations of $1,000 and integral multiples thereof.
The indenture requires that if the Senior Credit Facility is in effect, or
any amounts are owing thereunder or in respect thereof, at the time of the
occurrence of a Change of Control, prior to the mailing of the notice to holders
described in the second preceding paragraph, MCII covenants to
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(1) repay in full all obligations and terminate all commitments under or
in respect of the Senior Credit Facility and all other Senior Indebtedness
the terms of which require repayment upon a Change of Control or offer to
repay in full all obligations and terminate all commitments under or in
respect of the Senior Credit Facility and all such Senior Indebtedness and
repay the Indebtedness owed to each such lender who has accepted such offer
or
(2) obtain the requisite consents under the Senior Credit Facility and
all such other Senior Indebtedness to permit the repurchase of the Notes as
described above.
MCII must first comply with the covenant described in the preceding sentence
before it shall be required to purchase Notes in the event of a Change of
Control; PROVIDED that, notwithstanding the foregoing, MCII's failure to
consummate a Change of Control offer in accordance with the provisions of this
covenant due to the covenant described in the immediately preceding sentence
shall constitute an Event of Default described in clause (3) under "--Events of
Default" below if not cured within 30 days of the last date on which MCII would
have been required to consummate the Change of Control offer without giving
effect to the convenant described in the immediately preceding sentence. As a
result of the foregoing, a holder of the Notes may not be able to compel MCII to
purchase the Notes unless MCII is able at the time to refinance all of the
obligations under or in respect of the Senior Credit Facility and all such other
Senior Indebtedness or obtain requisite consents under the Senior Credit
Facility and all such other Senior Indebtedness.
The Indenture further provides that
(1) if MCII or any Restricted Subsidiary thereof has issued any
outstanding
(a) Indebtedness that is subordinated in right of payment to the
Notes or
(b) Preferred Stock, and MCII or such Restricted Subsidiary is
required to make a change of control offer or to make a distribution with
respect to such subordinated indebtedness or Preferred Stock in the event
of a change of control, MCII shall not consummate any such offer or
distribution with respect to such subordinated indebtedness or Preferred
Stock until such time as MCII shall have paid the Change of Control
purchase price in full to the holders of Notes that have accepted MCII's
change of control offer and shall otherwise have consummated the change
of control offer made to holders of the Notes and
(2) MCII will not issue Indebtedness that is subordinated in right of
payment to the Notes or Preferred Stock with change of control provisions
requiring the payment of such Indebtedness or Preferred Stock prior to the
payment of the Notes tendered pursuant to a Change of Control offer in the
event of a Change in Control under the indenture.
MCII will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of 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, MCII shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
"Change of Control" provisions of the indenture by virtue thereof.
MERGER, CONSOLIDATION OR SALE OF ASSETS
MCII will not and will not permit any of its Restricted Subsidiaries to
consolidate with, merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of the assets of MCII and its
Restricted Subsidiaries, as an entirety or substantially as an entirety in one
transaction or a series of related transactions, to any Person unless:
(1) MCII or such Restricted Subsidiary, as the case may be, shall be the
continuing Person, or the Person, if other than MCII or such Restricted
Subsidiary, formed by such consolidation or
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into which MCII or such Restricted Subsidiary, as the case may be, is merged
or to which the properties and assets of MCII or such Restricted Subsidiary,
as the case may be, are sold, assigned, transferred, leased, conveyed or
otherwise disposed of shall be a corporation organized and existing under
the laws of the United States or any State thereof or the District of
Columbia and shall expressly assume, by a supplemental indenture, executed
and delivered to the trustee, in form satisfactory to the trustee, all of
the obligations of MCII or such Restricted Subsidiary, as the case may be,
under the indenture, the Notes and the Guarantees, and the obligations
thereunder shall remain in full force and effect;
(2) immediately before and immediately after giving effect to such
transaction, no Default or Event of Default shall have occurred and be
continuing; and
(3) immediately after giving effect to such transaction on a PRO FORMA
basis MCII or such Person could incur at least $1.00 of additional
Indebtedness, other than Permitted Indebtedness, under "--Certain
Covenants--Limitation on Additional Indebtedness" above; PROVIDED that
(x) a Guarantor may merge into MCII or another Person that is a
Guarantor without complying with this clause (3) and
(y) MCII may merge with an Affiliate that has no material assets or
liabilities and that is incorporated or organized for the purpose of
reincorporating or reorganizing MCII in another jurisdiction to realize
tax benefits without complying with this clause (3) PROVIDED,in the case
of a transaction pursuant to this subclause (y), immediately after giving
effect to such transaction on A PRO FORMA basis, the Consolidated Fixed
Charge Coverage Ratio of the surviving Person is not less than the
Consolidated Fixed Charge Coverage Ratio of MCII immediately prior to
such transaction.
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, MCII shall deliver, or cause to be delivered, to
the trustee, in form and substance reasonably satisfactory to the trustee, an
Officers' Certificate, each stating that such consolidation, merger or transfer
and the supplemental indenture in respect thereto comply with this provision and
that all conditions precedent herein provided for relating to such transaction
or transactions have been complied with.
For purposes of the foregoing, the transfer, by lease, assignment, sale or
otherwise, in a single transaction or series of transactions, of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of MCII the Capital Stock of which constitutes all or substantially
all of the properties and assets of MCII, shall be deemed to be the transfer of
all or substantially all of the properties and assets of MCII.
GUARANTEES
The Guarantors will Guarantee the Notes on a senior subordinated basis. All
payments pursuant to the Guarantees by the Guarantors are subordinated in right
of payment to the prior payment in full of all Senior Indebtedness of each
respective Guarantor, to the same extent and in the same manner that all
payments pursuant to the Notes are subordinated in right of payment to the prior
payment in full of all Senior Indebtedness of MCII.
The obligations of each Guarantor are limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor, including, without limitation, any guarantees of Senior Indebtedness,
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 or pursuant to its contribution obligations under the
indenture, result in the obligations of such Guarantor under the Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
shall be entitled to a contribution from each other Guarantor in a PRO RATA
amount based on the Adjusted Net Assets of each Guarantor.
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A Guarantor shall be released from all of its obligations under its
Guarantee if all of its assets or Capital Stock is sold or the Capital Stock of
its direct or indirect parent company is sold, in each case in a transaction in
compliance with "--Certain Covenants--Limitation on Certain Asset Sales" above,
or the Guarantor merges with or into or consolidates with, or transfers all or
substantially all of its assets in compliance with "Merger, Consolidation or
Sale of Assets" above, and such Guarantor has delivered to the trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent herein provided for relating to such transaction have been
complied with.
EVENTS OF DEFAULT
The following events are defined in the indenture as "Events of Default":
(1) default in payment of any principal of, or premium, if any, on the
Notes whether at maturity, upon redemption or otherwise, whether or not such
payment shall be prohibited by the subordination provisions of the
indenture;
(2) default for 30 days in payment of any interest on the Notes;
(3) default by MCII or any Restricted Subsidiary in the observance or
performance of any other covenant in the Notes or the indenture for 30 days
after written notice from the trustee or the holders of not less than 25% in
aggregate principal amount of the Notes then outstanding, except in the case
of a default with respect to the "Change of Control" or "Merger,
Consolidation or Sale of Assets" covenants which shall constitute an Event
of Default with such notice requirement but without such passage of time
requirement;
(4) failure to pay when due principal, interest or premium with respect
to any Indebtedness of MCII or any Restricted Subsidiary thereof, which
failure to pay, other than a failure to pay principal at the final maturity
thereof, shall not be cured, waived or postponed pursuant to an agreement
with the holders of such Indebtedness within 60 days after written notice as
provided in the indenture, or the acceleration of any such Indebtedness,
which acceleration shall not be rescinded or annulled within 20 days after
written notice as provided in the indenture, if the aggregate amount of such
Indebtedness, together with the amount of any other such Indebtedness in
default for failure to pay principal, interest or premium or which has been
accelerated, aggregates $10 million or more at any time;
(5) any final judgment or judgments not covered by insurance which can
no longer be appealed for the payment of money in excess of $10 million
shall be rendered against MCII or any Restricted Subsidiary thereof, and
shall not be discharged for any period of 60 consecutive days during which a
stay of enforcement shall not be in effect;
(6) certain events involving bankruptcy, insolvency or reorganization of
MCII or any Significant Restricted Subsidiary thereof; and
(7) any of the Guarantees of a Guarantor that is a Significant
Restricted Subsidiary ceases to be in full force and effect or any of the
Guarantees of a Guarantor that is a Significant Restricted Subsidiary is
declared to be null and void and unenforceable or any of the Guarantees of a
Guarantor that is a Significant Restricted Subsidiary is found to be invalid
or any of the Guarantors that is a Significant Restricted Subsidiary denies
its liability under its Guarantee, other than by reason of release of a
Guarantor in accordance with the terms of the indenture.
The indenture provides that the trustee may withhold notice to the holders
of the Notes of any default, except in payment of principal or premium, if any,
or interest on the Notes, if the trustee considers it to be in the best interest
of the holders of the Notes to do so.
The indenture provides that if an Event of Default, other than an Event of
Default with respect to MCII of the type described in clause (6) above, shall
have occurred and be continuing, then the trustee or the holders of not less
than 25% in aggregate principal amount of the Notes then outstanding may declare
to be immediately due and payable the entire principal amount of all the Notes
then outstanding plus accrued interest to the date of acceleration
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(1) and the same shall become immediately due and payable or
(2) if there are any amounts outstanding under the Senior Credit
Facility, shall become immediately due and payable upon the first to occur
of an acceleration under the Senior Credit Facility or five business days
after receipt by MCII and the representative under the Senior Credit
Facility of a notice of acceleration;
PROVIDED, HOWEVER, that after such acceleration but before a judgment or decree
based on acceleration is obtained by the trustee, the holders of a majority in
aggregate principal amount of outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if
(1) all Events of Default, other than nonpayment of principal, premium,
if any, or interest that has become due solely because of the acceleration,
have been cured or waived as provided in the Indenture,
(2) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal, which has become due
otherwise than by such declaration of acceleration, has been paid,
(3) if MCII has paid the trustee its reasonable compensation and
reimbursed the trustee for its expenses, disbursements and advances and
(4) in the event of the cure or waiver of an Event of Default of the
type described in clause (6) of the above Events of Default, the trustee
shall have received an Officers' Certificate and an opinion of counsel that
such Event of Default has been cured or waived.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto. In case an Event of Default with respect to MCII of the type
described in clause (6) of the first paragraph above shall occur, the principal,
premium and interest amount with respect to all of the Notes shall be due and
payable immediately without any declaration or other act on the part of the
trustee or the holders of the Notes.
The holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing default or compliance with any
provision of the indenture or the Notes and to direct the time, method and place
of conducting any proceeding for any remedy available to the trustee, subject to
certain limitations provided for in the indenture and under the TIA.
No holder of any Note will have any right to institute any proceeding with
respect to the indenture or for any remedy thereunder, unless such holder shall
have previously given to the trustee written notice of a continuing Event of
Default and unless the holders of at least 25% in aggregate principal amount of
the outstanding Notes shall have made written request and offered reasonable
indemnity to the trustee to institute such proceeding as trustee, and unless the
trustee shall not have received from the holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
Notwithstanding the foregoing, such limitations do not apply to a suit
instituted on such Note on or after the respective due dates expressed in such
Note.
DEFEASANCE AND COVENANT DEFEASANCE
The indenture provides that MCII may elect either
(1) to defease and be discharged from any and all of its and any
Guarantor's obligations with respect to the Notes, except for the
obligations to register the transfer or exchange of such Notes, to replace
temporary or mutilated, destroyed, lost or stolen Notes, to maintain an
office or agency in respect of the Notes and to hold monies for payment in
trust, ("defeasance") or
(2) to be released from its obligations with respect to the Notes under
certain covenants contained in the indenture ("covenant defeasance")
upon the deposit with the Trustee, or other qualifying trustee, in trust for
such purpose, of money and/ or non-callable U.S. government obligations which
through the payment of principal and interest in
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accordance with their terms will provide money, in an amount sufficient to pay
the principal of, premium, if any, and interest on the Notes, on the scheduled
due dates therefor or on a selected date of redemption in accordance with the
terms of the indenture. Such a trust may only be established if, among other
things,
(1) MCII has delivered to the trustee an opinion of counsel, as
specified in the indenture
(a) to the effect that neither the trust nor the trustee will be
required to register as an investment company under the Investment
Company Act of 1940, as amended, and
(b) describing either a private ruling concerning the Notes or a
published ruling of the Internal Revenue Service, to the effect that
holders of the Notes or persons in their positions will not recognize
income, gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal income
tax on the same amount and in the same manner and at the same times, as
would have been the case if such deposit, defeasance and discharge had
not occurred;
(2) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or insofar as Events of Default from bankruptcy,
insolvency or reorganization events are concerned, at any time in the period
ending on the 91st day after the date of deposit;
(3) such defeasance or covenant defeasance shall not result in a breach
or violation of, or constitute a default under the indenture or any other
material agreement or instrument to which MCII or any of its Subsidiaries is
a party or by which MCII or any of its Subsidiaries is bound;
(4) MCII shall have delivered to the trustee an Officers' Certificate
stating that the deposit was not made by MCII with the intent of preferring
the holders of the Notes over any other creditors of MCII or with the intent
of defeating, hindering, delaying or defrauding any other creditors of MCII
or others;
(5) MCII shall have delivered to the trustee an Officers' Certificate
and an opinion of counsel, each stating that all conditions precedent
provided for or relating to the defeasance or the covenant defeasance have
been complied with;
(6) MCII 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) assuming no intervening bankruptcy shall occur and that no holder
is an insider of MCII, 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
(7) certain other customary conditions precedent are satisfied.
MODIFICATION OF INDENTURE
From time to time, MCII, the Guarantors and the trustee may, without the
consent of holders of the Notes, amend or supplement the indenture for certain
specified purposes, including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or making
any other change that does not, in the opinion of the trustee, materially and
adversely affect the rights of any holder. The indenture contains provisions
permitting MCII, the Guarantors and the trustee, with the consent of holders of
at least a majority in principal amount of the outstanding Notes, to modify or
supplement the indenture, except that no such modification shall, without the
consent of each holder affected thereby,
(1) reduce the amount of Notes whose holders must consent to an
amendment, supplement, or waiver to the indenture,
(2) reduce the rate of or change the time for payment of interest,
including defaulted interest, on any Note,
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(3) reduce the principal of or premium on or change the stated maturity
of any Note or change the date on which any Notes may be subject to
redemption or repurchase or reduce the redemption or repurchase price
therefor,
(4) make any Note payable in money other than that stated in the Note or
change the place of payment from New York, New York,
(5) waive a default on the payment of the principal of, interest on, or
redemption payment with respect to any Note,
(6) make any change in provisions of the indenture protecting the right
of each holder of Notes to receive payment of principal of and interest on
such Note on or after the due date thereof or to bring suit to enforce such
payment, or permitting holders of a majority in principal amount of Notes to
waive Defaults or Events of Default,
(7) amend, change or modify in any material respect the obligation of
MCII to make and consummate a Change of Control offer in the event of a
Change of Control or make and consummate an Excess Proceeds Offer with
respect to any Asset Sale that has been consummated or modify any of the
provisions or definitions with respect thereto,
(8) modify or change any provision of the indenture or the related
definitions affecting the subordination or ranking of the Notes or any
Guarantee in a manner which adversely affects the holders of Notes, or
(9) release any Guarantor from any of its obligations under its
Guarantee or the indenture otherwise than in accordance with the terms of
the indenture.
REPORTS TO HOLDERS
So long as MCII is subject to the periodic reporting requirements of the
Exchange Act, it will continue to furnish the information required thereby to
the Commission and to the holders of the Notes. The indenture provides that even
if MCII is entitled under the Exchange Act not to furnish such information to
the Commission or to the holders of the Notes, it will nonetheless continue to
furnish such information to the Commission and holders of the Notes.
COMPLIANCE CERTIFICATE
MCII will deliver to the trustee on or before 90 days after the end of
MCII's fiscal year an Officers' Certificate stating whether or not the signers
know of any Default or Event of Default that has occurred. If they do, the
certificate will describe the Default or Event of Default, its status and the
intended method of cure, if any.
THE TRUSTEE
The trustee under the indenture will be the Registrar and Paying Agent with
regard to the Notes. 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 under the
indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
TRANSFER AND EXCHANGE
Holders of the Notes may transfer or exchange Notes in accordance with the
indenture. The Registrar under such indenture may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the indenture. The registrar
is not required to transfer or exchange any Note selected for redemption and,
further, is not required to transfer or exchange any Note for a period of 15
days before selection of the Notes to be redeemed.
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The Notes will be issued in a transaction exempt from registration under the
Securities Act and will be subject to the restrictions on transfer described in
"Notice to Investors."
The registered holder of a Note may be treated as the owner of it for all
purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
indenture. Reference is made to the indenture for the full definition of all
such terms as well as any other capitalized terms used herein for which no
definition is provided.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person existing at the time
such Person becomes a Restricted Subsidiary or is merged into or consolidated
with any other Person or which is assumed in connection with the acquisition of
assets from such Person and, in each case, not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary or such merger, consolidation or acquisition.
"ADJUSTED NET ASSETS" of any Person at any date shall mean the lesser of the
amount by which
(1) the fair value of the property of such Person exceeds the total
amount of liabilities, including, without limitation, contingent
liabilities, after giving effect to all other fixed and contingent
liabilities, but excluding liabilities under the Guarantee of such Person at
such date and
(2) the present fair salable value of the assets of such Person at such
date exceeds the amount that will be required to pay the probable liability
of such Person on its debts, after giving effect to all other fixed and
contingent liabilities and after giving effect to any collection from any
Subsidiary of such Person in respect of the obligations of such Person under
the Guarantee of such Person, excluding Indebtedness in respect of the
Guarantee of such Person, as they become absolute and matured.
"AFFILIATE" means, with respect to any specific Person, any other Person
that directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control," including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with", as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise; PROVIDED that, for purposes of the covenant described under
"--Certain Covenants--Limitation on Transactions with Affiliates," beneficial
ownership of at least 10% of the voting securities of a Person, either directly
or indirectly, shall be deemed to be control.
"ASSET ACQUISITION" means
(1) an Investment by MCII or any Restricted Subsidiary of MCII in any
other Person pursuant to which such Person shall become a Restricted
Subsidiary of MCII, or shall be merged with or into MCII or any Restricted
Subsidiary of MCII or
(2) the acquisition by MCII or any Restricted Subsidiary of MCII of the
assets of any Person, other than a Restricted Subsidiary of MCII, which
constitute all or substantially all of the assets of such Person or comprise
any division or line of business of such Person or any other properties or
assets of such Person other than in the ordinary course of business.
"ASSET SALE" means any direct or indirect sale, issuance, conveyance,
assignment, transfer, lease or other disposition, including any sale and
lease-back transaction, other than to MCII or any of its Restricted
Subsidiaries, in any single transaction or series of related transactions of
(1) any Capital Stock of or other equity interest in any Restricted
Subsidiary of MCII; or
(2) any other property or assets of MCII or of any Restricted Subsidiary
thereof other than the sale of MCII's products, including, without
limitation, the sale or lease of buses, in the ordinary course of business;
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PROVIDED that Asset Sales shall not include
(1) a transaction or series of related transactions for which MCII or
its Restricted Subsidiaries receive aggregate consideration of less than $1
million;
(2) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of MCII as permitted under "--Merger,
Consolidation or Sale of Assets;"
(3) any Restricted Payment made in compliance with the "Limitation on
Restricted Payments" covenant, and any making of any Permitted Investment;
(4) surrender or waiver of contract rights or the settlement, release or
surrender of contract, tort or other claims of any kind;
(5) the licensing of intellectual property in the ordinary course of
business;
(6) transfers of Receivables and Related Assets in connection with a
Permitted Receivables Financing;
(7) sales of Cash Equivalents;
(8) granting of Liens not otherwise prohibited by the Indenture; and
(9) leases or subleases to third persons in the ordinary course of
business that do not interfere in any material respect with the business of
MCII or any of its Restricted Subsidiaries.
"ASSET SALE PROCEEDS" means, with respect to any Asset Sale,
(1) cash and Cash Equivalents received by MCII or any Restricted
Subsidiary of MCII from such Asset Sale, including cash or Cash Equivalents
received as consideration for the assumption of liabilities incurred in
connection with or in anticipation of such Asset Sale, after
(a) provision for all income or other taxes measured by or resulting
from such Asset Sale,
(b) payment of all brokerage commissions, underwriting and other fees
and expenses related to such Asset Sale,
(c) provision for minority interest holders in any Restricted
Subsidiary of MCII as a result of such Asset Sale,
(d) repayment of Indebtedness that is secured by the assets subject
to such Asset Sale or otherwise required to be repaid in connection with
such Asset Sale and
(e) deduction of appropriate amounts to be provided by MCII or a
Restricted Subsidiary of MCII as a reserve, in accordance with GAAP,
against any liabilities associated with the assets sold or disposed of in
such Asset Sale and retained by MCII or a Restricted Subsidiary after
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to
environmental matters or against any indemnification obligations
associated with the assets sold or disposed of in such Asset Sale, and
(2) promissory notes and other non-cash consideration received by MCII
or any Restricted Subsidiary of MCII from such Asset Sale or other
disposition upon the liquidation or conversion of such notes or non-cash
consideration into cash or Cash Equivalents.
"AVAILABLE ASSET SALE PROCEEDS" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sale that have not been applied in
accordance with clauses (3)(a) or (3)(b), and which have not yet been the basis
for an Excess Proceeds Offer in accordance with clause (3)(c) of the first
paragraph of "--Certain Covenants--Limitation on Certain Asset Sales."
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents, however designated and whether
or not voting, of corporate stock, partnership or limited liability company
interests or any other participation, right or other interest in the nature of
an equity interest in such Person including, without limitation, Common Stock
and Preferred Stock of such Person, or any option, warrant or other security
convertible into any of the foregoing.
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"CAPITALIZED LEASE OBLIGATIONS" means with respect to any Person,
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such Indebtedness shall be the capitalized amount of such obligations
determined in accordance with GAAP.
"CASH EQUIVALENTS" means
(1) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency or
instrumentality 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;
(2) 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 one of the two
highest ratings obtainable from either Standard & Poor's Corporation or
Moody's Investors Service, Inc.;
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any bank organized under
the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than
$250,000,000;
(5) repurchase obligations with a term of not more than 365 days for
underlying securities of the types described in clause (1) above entered
into with any bank meeting the qualifications specified in clause (4) above;
and
(6) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (1) through (5)
above.
A "CHANGE OF CONTROL" of MCII will be deemed to have occurred at such time
as
(1) (a) any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act (a "Group"), other than a Permitted Holder,
becomes the beneficial owner, as defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act, except that a Person
shall 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, of 50% or more of the total
voting or economic power of the MCII's Capital Stock, and (b) the Permitted
Holders no longer have the power to elect a majority of the directors of the
Board of Directors of MCII,
(2) the occurrence of any sale, lease, exchange or other transfer, in
one transaction or a series of related transactions, of all or substantially
all of the assets of MCII and its Restricted Subsidiaries, taken as a whole,
to any Person or Group, whether or not otherwise in compliance with the
provisions of the indenture, other than to the Permitted Holders,
(3) during any period of two consecutive years, individuals who at the
beginning of such period constituted the board of directors of MCII,
together with any new directors whose election by such board of directors or
whose nomination for election by the shareholders of MCII has been approved
by the Permitted Holders or a majority of the directors then still in office
who either were directors at the beginning of such period or whose election
or recommendation for election was previously so approved, cease to
constitute a majority of the board of directors of MCII, or
(4) the approval by the holders of Capital Stock of MCII of any plan or
proposal for the liquidation or dissolution of MCII, whether or not
otherwise in compliance with the provisions of the indenture.
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"COMMON STOCK" of any Person means all Capital Stock of such Person that is
generally entitled to
(1) vote in the election of directors of such Person or
(2) if such Person is not a corporation, vote or otherwise participate
in the selection of the governing body, partners, managers or others that
will control the management and policies of such Person.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, with respect to any
Person, the ratio of EBITDA of such Person during the four full fiscal quarters
(the "Four Quarter Period") ending on or prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for
the Four Quarter Period. In addition to and without limitation of the foregoing,
for purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a PRO FORMA basis for the
period of such calculation to
(1) the incurrence or repayment of any Indebtedness of such Person or
any of its Restricted Subsidiaries or the issuance or redemption or other
repayment of Preferred Stock of any such Restricted Subsidiary, and the
application of the proceeds thereof, giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness and, in
the case of any Restricted Subsidiary, the issuance or redemption or other
repayment of Preferred Stock, and the application of the proceeds thereof,
other than the incurrence or repayment of Indebtedness in the ordinary
course of business for working capital purposes pursuant to working capital
facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, except that, in determining the Consolidated Fixed Charge
Coverage Ratio as of any Transaction Date, any Permitted Indebtedness that
is incurred at the same time as the Indebtedness giving rise to the need to
calculate the Consolidated Fixed Charge Coverage Ratio shall not be included
for purposes of such calculation, as if such incurrence or repayment or
issuance or redemption or other repayment, as the case may be, and the
application of the proceeds thereof, occurred on the first day of the Four
Quarter Period, and
(2) any Asset Sales or Asset Acquisitions, including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its 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 and also including any EBITDA, PROVIDED
that such EBITDA shall be included only to the extent includable pursuant to
the definition of "Consolidated Net Income", including any PRO FORMA expense
and cost reductions calculated on a basis consistent with Regulation S-X of
the Exchange Act, attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Four Quarter Period, occurring
during the Four Quarter Period or at any time subsequent to the last day of
the Four Quarter Period and on or prior to the Transaction Date, as if such
Asset Sale or Asset Acquisition, including the incurrence, assumption or
liability for any such Acquired Indebtedness, occurred on the first day of
the Four Quarter Period.
If such Person or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the preceding sentence shall give
effect to the incurrence of such guaranteed Indebtedness as if such Person or
any Restricted Subsidiary of such Person had directly incurred or otherwise
assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator but not the numerator
of this "Consolidated Fixed Charge Coverage Ratio":
(1) interest on outstanding Indebtedness determined on a fluctuating
basis as of the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per annum equal
to the rate of interest on such Indebtedness in effect on the Transaction
Date;
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(2) 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 Four Quarter Period; and
(3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
one or more Hedging Obligations, shall be deemed to accrue at the rate per
annum resulting after giving effect to the operation of such agreements.
"CONSOLIDATED FIXED CHARGES" means, with respect to any Person, for any
period, the sum, without duplication, on a consolidated basis of
(1) Consolidated Interest Expense, plus
(2) the product of
(a) the amount of all dividend and distribution payments on any
series of Disqualified Capital Stock and Preferred Stock of such Person
and its Restricted Subsidiaries paid, other than dividends paid in
Capital Stock, other than Disqualified Capital Stock, accrued or
scheduled to be paid or accrued during such period, times
(b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current effective consolidated federal, state
and local tax rate of such Person, expressed as a decimal.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Restricted Subsidiaries on a
consolidated basis including, but not limited to,
(1) Redeemable Dividends, whether paid or accrued, on Subsidiary
Preferred Stock,
(2) imputed interest included in Capitalized Lease Obligations in
accordance with GAAP,
(3) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing,
(4) the net costs associated with Hedging Obligations,
(5) the interest portion of any deferred payment obligation in
accordance with GAAP,
(6) amortization of discount or premium, if any, and
(7) interest-equivalent costs associated with any Permitted Receivables
Financing, whether accounted for as interest expense or loss on the sale of
Receivables and Related Assets,
plus, without duplication,
(1) all net capitalized interest for such period, and
(2) all interest incurred or paid under any guarantee of Indebtedness,
including a guarantee of principal, interest or any combination thereof, of
any Person.
Notwithstanding the foregoing, the amortization of deferred financing fees and
expenses shall not be included in "Consolidated Interest Expense."
"CONSOLIDATED NET INCOME" means, with respect to any Person, for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED, HOWEVER, that:
(1) the Net Income of any Person, other than a Restricted Subsidiary of
the referent Person, shall be included only to the extent of the amount of
dividends or distributions paid to the referent Person or a Restricted
Subsidiary of such referent Person;
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(2) the Net Income of any Restricted Subsidiary of the Person in
question that is subject to any restriction or limitation on the payment of
dividends or the making of other distributions shall be excluded to the
extent of such restriction or limitation;
(3) solely for the purposes of determining the aggregate amount
available for Restricted Payments under clause (3)(a) of the "Limitation on
Restricted Payments" covenant, the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded;
(4) any net gain or loss resulting from an Asset Sale by the Person in
question or any of its Restricted Subsidiaries other than in the ordinary
course of business shall be excluded;
(5) all extraordinary gains and losses, non-recurring cumulative effects
of accounting changes and, without duplication, non-recurring or unusual
gains and losses and all restructuring charges shall be excluded;
(6) income or loss attributable to discontinued operations, including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued, shall be excluded;
(7) solely for the purposes of determining the aggregate amount
available for Restricted Payments under clause (3)(a) of the "Limitation on
Restricted Payments" covenant, in the case of a successor to the referent
Person by consolidation or merger or as a transferee of the referent
Person's assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets shall be excluded; and
(8) any non-cash charges attributable to applying the purchase of
accounting in accordance with GAAP shall be excluded.
"CUMULATIVE CONSOLIDATED NET INCOME" means, with respect to any Person, as
of any date of determination, Consolidated Net Income from July 1, 1999 to such
date of determination, taken as a single accounting period.
"DESIGNATED PREFERRED STOCK" means Preferred Stock, not constituting
Disqualified Capital Stock, of the Company, excluding any Preferred Stock issued
on or prior to the Issue Date and any Preferred Stock issued in exchange or
substitution therefor, that is designated as Designated Preferred Stock pursuant
to an Officers' Certificate delivered to the trustee on the issuance date
thereof, the cash proceeds of which are excluded from the calculation set forth
in the clause (3)(b) of the "Limitation on Restricted Payments" covenant.
"DESIGNATED SENIOR INDEBTEDNESS," as to MCII or any Guarantor, as the case
may be, means
(1) any Senior Indebtedness under the Senior Credit Facility, and
(2) after the Senior Credit Facility has been paid in full and
terminated, any other Senior Indebtedness which at the time of determination
exceeds $25 million in aggregate principal amount, or accreted value in the
case of Indebtedness issued at a discount, outstanding or available under a
committed facility, which is specifically designated in the instrument
evidencing such Senior Indebtedness as "Designated Senior Indebtedness" by
such Person and as to which the trustee has been given written notice of
such designation.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock of a Person or a
Restricted Subsidiary thereof which, by its terms, or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder, or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable solely at the option of the holder thereof, in whole or in part,
on or prior to the maturity date of the Notes, for cash or securities
constituting Indebtedness; PROVIDED, HOWEVER, that Preferred Stock of a Person
or any Restricted Subsidiary thereof that is issued with the benefit of
provisions requiring a change of control offer or an asset sale offer to be made
for such Preferred Stock in the event of a change of control of
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or sale of assets by such Person or Restricted Subsidiary which provisions have
substantially the same effect as the provisions of the indenture described under
"Change of Control," and "Limitation on Certain Asset Sales" shall not be deemed
to be Disqualified Capital Stock solely by virtue of such provisions; PROVIDED,
FURTHER, that if such Capital Stock is issued pursuant to any plan for the
benefit of employees of MCII or its Subsidiaries or by any such plan to such
employees, such Capital Stock shall not constitute Disqualified Capital Stock
solely because it may be required to be repurchased by MCII in order to satisfy
applicable statutory or regulatory obligations.
"DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of MCII
that is organized under the laws of the United States or any State thereof, or
the District of Columbia.
"EBITDA" means, with respect to any Person and its Restricted Subsidiaries,
for any period, an amount equal to
(1) the sum of
(a) Consolidated Net Income for such period, plus
(b) the provision for taxes for such period based on income or
profits to the extent such income or profits were included in computing
Consolidated Net Income and any provision for taxes utilized in computing
net loss under clause (a) hereof, plus
(c) Consolidated Interest Expense for such period, plus
(d) depreciation for such period on a consolidated basis, plus
(e) amortization of intangibles for such period on a consolidated
basis, plus
(f) any other non-cash items reducing Consolidated Net Income for
such period (other than any non-cash item requiring an accrual or reserve
for cash disbursements in any future period), minus
(2) all non-cash items increasing Consolidated Net Income for such
period, other than any non-cash item which represents a reversal of an
accrual or reserve initially recorded in anticipation of a cash disbursement
to be made in a future period,
all for such Person and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP; PROVIDED, HOWEVER, that, for
purposes of calculating EBITDA during any fiscal quarter, cash income from a
particular Investment, other than a Restricted Subsidiary, of such Person
shall be included only
(1) if cash income has been received by such Person with respect to such
Investment during each of the previous four fiscal quarters, or
(2) if the cash income derived from such Investment is attributable to
Cash Equivalents.
"EQUITY OFFERING" means a sale by MCII of shares of its Common Stock,
however designated and whether voting or non-voting, other than Disqualified
Capital Stock, and any and all rights, warrants or options to acquire such
Common Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"FAIR MARKET VALUE" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, between a
willing seller and a willing and able buyer, neither of whom is under undue
pressure or compulsion to complete the transaction. Fair market value shall be
determined by the board of directors of MCII acting reasonably and in good faith
and shall be evidenced by a resolution of the board of directors of MCII
delivered to the trustee.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
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"GUARANTEE" means the guarantee of the obligations of MCII with respect to
the Notes by each Guarantor.
"GUARANTOR" means the issuer at any time of a Guarantee, so long as such
Guarantee remains outstanding.
"HEDGING OBLIGATIONS" means, with respect to any Person, the net payment
obligations of such Person under
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements and
(2) other agreements or arrangements entered into in order to protect
such Person against fluctuations in commodity prices, interest rates or
currency exchange rates.
"INCUR" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur, by conversion, exchange or otherwise, assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person, and
"incurrence," "incurred," "incurable," and "incurring" shall have meanings
correlative to the foregoing; provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness.
"INDEBTEDNESS" means without duplication, with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money, whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof, or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property, excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other accrued liabilities arising in the ordinary
course of business, if and to the extent any of the foregoing indebtedness would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, and shall also include, to the extent not otherwise included,
(1) any Capitalized Lease Obligations of such Person,
(2) obligations secured by a lien to which the property or assets owned
or held by such Person is subject, whether or not the obligation or
obligations secured thereby shall have been assumed; PROVIDED that, if such
obligations have not been assumed by such Person, the amount of such
Indebtedness shall be the lesser of
(A) the fair market value of such assets at such date of
determination and
(B) the amount of such obligations,
(3) guarantees of items of other Persons which would be included within
this definition for such other Persons, whether or not such items would
appear upon the balance sheet of the guarantor,
(4) all obligations for the reimbursement of any obligor on any letter
of credit, banker's acceptance or similar credit transaction,
(5) Disqualified Capital Stock of such Person or any Restricted
Subsidiary thereof, and valued at its mandatory maximum redemption price or
liquidation preference plus accrued dividends,
(6) obligations of any such Person under any hedging obligations
applicable to any of the foregoing, if and to the extent such hedging
obligations would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP;
PROVIDED that,
(1) the amount outstanding at any time of any Indebtedness issued with
original issue discount is the principal amount of such Indebtedness less
the remaining unamortized portion of the
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original issue discount of such Indebtedness at such time as determined in
conformity with GAAP; and
(2) Indebtedness shall not include any liability for federal, state,
local or other taxes.
Guarantees of, or obligations with respect to letters of credit supporting,
Indebtedness otherwise included in the determination of such amount shall not be
included as Indebtedness.
"INDEPENDENT FINANCIAL ADVISOR" means an investment banking, financial
advisory, valuation or accounting firm of national reputation in the United
States
(1) which does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect financial interest in MCII and
(2) which, in the judgment of the Board of Directors of MCII, is
otherwise independent and qualified to perform the task for which it is to
be engaged.
"INVESTMENTS" means, with respect of any Person, directly or indirectly, any
advance, account receivable, other than an account receivable arising in the
ordinary course of business of such Person, loan or capital contribution to, by
means of transfers of property to others, payments for property or services for
the account or use of others or otherwise, the purchase of any Capital Stock,
bonds, notes, debentures, partnership or joint venture interests or other
securities of, the acquisition, by purchase or otherwise, of all or
substantially all of the business or assets or stock or other evidence of
beneficial ownership of, any Person or the making of any investment in any
Person. Investments shall exclude extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices of such Person, but
shall include the repurchase of securities of any Person by such Person.
For the purposes of the "Limitation on Restricted Payments" and "Limitation
on Investments" covenants,
(1) "Investment" shall include and be valued at the fair market value of
the net assets of any Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary,
(2) the fair market value of the net assets of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary shall be deemed a repayment of such Investment, and
(3) the amount of any Investment shall be the original cost of such
Investment plus the cost of all additional Investments by MCII or any of its
Restricted Subsidiaries, without any adjustments for increases or decreases
in value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced by the payment of cash distributions in respect thereof;
PROVIDED, FURTHER, that no such payment of distributions or receipt of any
such other amounts shall reduce the amount of any Investment if such payment
of distributions or receipt of any such amounts would be included in
Consolidated Net Income. If MCII or any Restricted Subsidiary of MCII sells
or otherwise disposes of any Common Stock of any direct or indirect
Restricted Subsidiary of MCII such that, after giving effect to any such
sale or disposition such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary of MCII, MCII shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair
market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.
"ISSUE DATE" means June 16, 1999.
"LIEN" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets, including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing.
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"MCII FINANCIAL SERVICES" means MCII Financial Services Inc., a Delaware
corporation, and any successor Person performing similar functions.
"NET INCOME" means, with respect to any Person, for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"NET PROCEEDS" means
(1) in the case of any sale of Capital Stock by or equity contribution
to any Person, the aggregate net proceeds received by such Person, after
payment of expenses, commissions and the like incurred in connection
therewith, whether such proceeds are in cash or in property, valued at the
fair market value thereof, as determined in good faith by the board of
directors of the Person, at the time of receipt,
(2) in the case of any exchange, exercise, conversion or surrender of
outstanding securities of any kind for or into shares of Capital Stock of
MCII which is not Disqualified Capital Stock, the net book value of such
outstanding securities on the date of such exchange, exercise, conversion or
surrender MCII plus any additional amount required to be paid by the holder
to such Person upon such exchange, exercise, conversion or surrender, less
any and all payments made to the holders, e.g., on account of fractional
shares and less all expenses incurred by such Person in connection
therewith, and
(3) in the case of any issuance of any Indebtedness by MCII or any
Restricted Subsidiary, the aggregate net cash proceeds received by such
Person after the payments of expenses, commissions, underwriting discounts
and the like incurred in connection therewith.
"NON-PAYMENT EVENT OF DEFAULT" means any event, other than a Payment
Default, the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate
signed by the chief executive officer, the president or any vice president and
the chief financial officer or any treasurer of such Person that shall comply
with applicable provisions of the indenture.
"PAYMENT DEFAULT" means any default, whether or not any requirement for the
giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default has occurred, in the payment of principal
of or premium, if any, or interest on or any other amount payable in connection
with Designated Senior Indebtedness.
"PERMITTED ASSET SWAP" means, with respect to any Person, the substantially
concurrent exchange of assets of such Person for assets of another Person which
are useful to the business of such aforementioned Person.
"PERMITTED BUSINESS" means any business
(i) which is the same, similar, ancillary or related to or that has
manufacturing processes and technologies similar to any of the businesses
that MCII and its Restricted Subsidiaries are engaged in on the Issue Date
and
(ii) in the transportation industry.
"PERMITTED HOLDERS" means Joseph Littlejohn & Levy, Inc. ("JLL"), investment
funds managed by JLL, partners of JLL, an entity controlled by any of the
foregoing and/or by a trust of the type described hereafter, and/or a trust for
the benefit of any of the foregoing.
"PERMITTED INDEBTEDNESS" means:
(1) Indebtedness of MCII or any Restricted Subsidiary arising under or
in connection with one or more debt facilities, including, without
limitation, the Senior Credit Facility, or commercial paper facilities or
indentures providing for revolving credit loans, term loans, receivables
financing, including through the sale of receivables to lenders or to
special purpose entities formed to borrow from lenders against receivables,
letters of credit or other long-term indebtedness, in each case, as
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amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time, in an aggregate principal amount not to
exceed at any time outstanding the sum of
(A) $333 million, plus
(B) the greater of
(x) $117 million and
(y) the amount equal to the sum of 85% of the net book value of
accounts receivable, 60% of the net book value of inventory,
determined on a first-in-first-out basis, and 50% of the book value
of bus lease and loan portfolio assets, of MCII and its Restricted
Subsidiaries on a consolidated basis at the time such Indebtedness is
incurred, as determined in accordance with GAAP, less
(C) any amounts outstanding under subclause (10) of this definition,
less
(D) in case of clauses (A) and (B), any mandatory prepayments
actually made thereunder, to the extent, in the case of payments of
revolving credit borrowings, that the corresponding commitments have been
permanently reduced, or scheduled payments actually made thereunder,
except to the extent any such prepayments or payments are made in
connection with the refinancing of such Indebtedness;
(2) Indebtedness under
(a) the Notes outstanding on the Issue Date and
(b) the Guarantees;
(3) Indebtedness not covered by any other clause of this definition
which is outstanding on the Issue Date;
(4) Indebtedness of MCII to any Restricted Subsidiary and Indebtedness
of any Restricted Subsidiary to MCII or another Restricted Subsidiary;
(5) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire property used or useful in the ordinary course of
business which Purchase Money Indebtedness and Capitalized Lease Obligations
do not in the aggregate exceed at any one time outstanding an amount equal
to the greater of
(a) $25 million and
(b) 3% of the Total Assets of MCII determined on a consolidated
basis, as shown on the balance sheet of MCII as of the end of the most
recent fiscal quarter, in accordance with GAAP;
(6) Hedging Obligations;
(7) Refinancing Indebtedness;
(8) Indebtedness of MCII or any Restricted Subsidiary arising from the
honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently, except in the case of daylight overdrafts,
drawn against insufficient funds in the ordinary course of business;
PROVIDED, that such Indebtedness is extinguished within five business days
of incurrence;
(9) Indebtedness of MCII or any Restricted Subsidiary consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments, including adjustments in the purchase price related to the
performance or results of any acquired business, in connection with the
acquisition or disposition of assets permitted under the Indenture;
(10) Indebtedness of a Receivables Subsidiary pursuant to a Permitted
Receivables Financing; PROVIDED that after giving effect to the incurrence
thereof, MCII could incur at least $1.00 of
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Indebtedness under subclauses (1)(A) or (1)(B) of this definition in
compliance with the "Limitation on Additional Indebtedness" covenant;
(11) Indebtedness of MCII or any of its Restricted Subsidiaries
represented by letters of credit for the account of MCII or such Restricted
Subsidiary, as the case may be, issued in the ordinary course of business of
MCII or such Restricted Subsidiary, including, without limitation, in order
to provide security for worker's compensation claims or payment obligations
in connection with self-insurance or similar requirements in the ordinary
course of business and other Indebtedness with respect to workers'
compensation claims, self-insurance obligations, performance, surety and
similar bonds and completion guarantees provided by MCII or any Restricted
Subsidiary in the ordinary course of business;
(12) guarantees of Indebtedness otherwise permitted under the indenture;
and
(13) additional Indebtedness of MCII and its Restricted Subsidiaries not
to exceed $65 million in aggregate principal amount at any one time
outstanding.
"PERMITTED INVESTMENTS" means Investments made on or after the Issue Date
consisting of:
(1) Investments by MCII, or by a Restricted Subsidiary thereof, in MCII
or a Restricted Subsidiary;
(2) Investments by MCII, or by a Restricted Subsidiary thereof, in a
Person, if as a result of such Investment
(a) such Person becomes a Restricted Subsidiary of MCII, or
(b) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is
liquidated into, MCII or a Restricted Subsidiary thereof;
(3) Investments in cash and Cash Equivalents;
(4) loans and advances made to officers and employees of MCII and its
Restricted Subsidiaries in the ordinary course of business not to exceed $5
million in the aggregate at any one time outstanding;
(5) an Investment that is made by MCII or a Restricted Subsidiary
thereof in the form of any Capital Stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to MCII or such Restricted Subsidiary solely as partial
consideration for the consummation of an Asset Sale that is otherwise
permitted under "--Certain Covenants--Limitation on Certain Asset Sales"
above;
(6) Hedging Obligations entered into in the ordinary course of MCII's or
its Restricted Subsidiaries' business and not for speculative purposes;
(7) notes or chattel paper received by MCII or a Restricted Subsidiary
as consideration for the ordinary course of business sale or lease of buses;
(8) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and workers compensation, performance and
similar deposits entered into as a result of the operations of the business
in the ordinary course of business;
(9) Investments in any of the Notes;
(10) receivables owing to MCII or any Restricted Subsidiary created in
the ordinary course of business;
(11) Investments in connection with a Permitted Receivables Financing by
or to any Receivables Subsidiary, including Investments of funds held in
accounts permitted or required by the arrangements governing such Permitted
Receivables Financing or any related Indebtedness;
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(12) Investments in securities of trade debtors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers or in good
faith settlement of delinquent obligations of such trade debtors or
customers;
(13) obligations of one or more officers or other employees of MCII or
any of its Restricted Subsidiaries in connection with such officer's or
employee's acquisition of shares of Common Stock of MCII so long as no cash
is paid by MCII or any of its Restricted Subsidiaries to such officers or
employees in connection with the acquisition of any such obligations;
(14) Investments acquired in exchange for, or out of the Net Proceeds,
which have not, and will not, be included pursuant to clause (3)(b) of the
"Limitation on Restricted Payments" covenant, of a substantially concurrent
offering of, shares of Capital Stock, other than Disqualified Capital Stock,
of MCII, or options, warrants or other rights to acquire such Capital Stock;
(15) Investments in Unrestricted Subsidiaries not to exceed an amount
equal to $20 million in the aggregate at any one time outstanding; and
(16) additional Investments the amount of which when made, when taken
together with the then outstanding amount of other Investments made under
this clause (16), shall not exceed the greater of
(a) $30 million, or
(b) 4% of Total Assets of MCII determined on a consolidated basis, as
shown on the balance sheet of MCII as of the end of the most recent
fiscal quarter, in accordance with GAAP.
"PERMITTED RECEIVABLES FINANCING" means a transaction or series of
transactions, including amendments, supplements, extensions, renewals,
replacements, refinancings or modifications thereof, pursuant to which a
Receivables Subsidiary purchases Receivables and Related Assets from MCII or any
Subsidiary and finances such Receivables and Related Assets through the issuance
of indebtedness or equity interests or through the sale of the Receivables and
Related Assets or a fractional undivided interest in the Receivables and Related
Assets; provided that:
(1) the board of directors shall have determined in good faith that such
Permitted Receivables Financing is economically fair and reasonable to MCII
and the Receivables Subsidiary;
(2) all sales of Receivables and Related Assets to or by the Receivables
Subsidiary are made at fair market value, as determined in good faith by the
board of directors of MCII;
(3) the financing terms, covenants, termination events and other
provisions thereof shall be market terms, as determined in good faith by the
board of directors of MCII;
(4) no portion of the Indebtedness of a Receivables Subsidiary is
guaranteed by or is recourse to MCII or any Restricted Subsidiary, other
than recourse for customary representations, warranties, covenants and
indemnities, none of which shall relate to the collectibility of the
Receivables and Related Assets; and
(5) neither MCII nor any Subsidiary has any obligation to maintain or
preserve the Receivables Subsidiary's financial condition.
"PERMITTED TAX SHARING AGREEMENT" means any agreement between or among MCII
and/or any of its Restricted Subsidiaries and any other Person or Persons which
provides for consolidated federal tax return reporting by the parties thereto;
PROVIDED that any such agreement shall not result in any direct or indirect
payments by MCII and its Restricted Subsidiaries in respect of federal tax
obligations in excess of payments that would have been made in the absence of
such agreement.
"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government, including any agency or political subdivision
thereof.
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"PREFERRED STOCK" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"PROPERTY" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of any Person incurred for
the purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement of, any Property.
"RECEIVABLES AND RELATED ASSETS" means accounts receivable and instruments,
chattel paper, obligations, general intangibles and other similar assets, in
each case relating to such receivables, including interests in merchandise or
goods, the sale or lease of which gave rise to such receivable, related
contractual rights, guarantees, insurance proceeds, collections, other related
assets and proceeds of all of the foregoing.
"RECEIVABLES SUBSIDIARY" means a Wholly Owned Restricted Subsidiary which is
established for the limited purpose of acquiring and financing Receivables and
Related Assets and engaging in activities ancillary thereto.
"REDEEMABLE DIVIDEND" means, for any cash dividend or distribution with
regard to Preferred Stock, the quotient of the dividend or distribution divided
by the difference between one and the maximum statutory federal income tax rate,
expressed as a decimal number between 1 and 0, then applicable to the issuer of
such Preferred Stock.
"REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances or
extends any Indebtedness of MCII outstanding on the Issue Date or other
Indebtedness permitted to be incurred by MCII or its Restricted Subsidiaries
pursuant to the terms of the indenture, but only to the extent that
(1) the Refinancing Indebtedness is subordinated to the Notes to at
least the same extent as the Indebtedness being refunded, refinanced or
extended, if at all,
(2) the Refinancing Indebtedness is scheduled to mature either
(a) no earlier than the Indebtedness being refunded, refinanced or
extended, or
(b) after the maturity date of the Notes,
(3) the portion, if any, of the Refinancing Indebtedness that is
scheduled to mature on or prior to the maturity date of the Notes has a
Weighted Average Life to Maturity at the time such Refinancing Indebtedness
is incurred that is equal to or greater than the Weighted Average Life to
Maturity of the portion of the Indebtedness being refunded, refinanced or
extended that is scheduled to mature on or prior to the maturity date of the
Notes, and
(4) such Refinancing Indebtedness is in an aggregate principal amount
that is equal to or less than the sum of
(a) the aggregate principal amount then outstanding under the
Indebtedness being refunded, refinanced or extended,
(b) the amount of accrued and unpaid interest, if any, and premiums
owed, if any, not in excess of preexisting prepayment provisions on such
Indebtedness being refunded, refinanced or extended and
(c) the amount of customary fees, expenses and costs related to the
incurrence of such Refinancing Indebtedness.
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"RESTRICTED PAYMENT" means any of the following:
(1) the declaration or payment of any dividend or any other distribution
or payment on Capital Stock of MCII or any Restricted Subsidiary of MCII or
any payment made to the direct or indirect holders, in their capacities as
such, of Capital Stock of MCII or any Restricted Subsidiary of MCII, other
than
(a) dividends or distributions payable solely in Capital Stock, other
than Disqualified Capital Stock, or in options, warrants or other rights
to purchase such Capital Stock (other than Disqualified Capital Stock),
and
(b) in the case of Restricted Subsidiaries of MCII, dividends or
distributions payable to MCII or to a Restricted Subsidiary of MCII and
pro rata dividends or distributions payable to the other holders of
Common Stock of such Restricted Subsidiary,
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of MCII or any of its Restricted Subsidiaries,
other than Capital Stock owned by MCII or a Wholly Owned Restricted
Subsidiary of MCII, excluding Disqualified Capital Stock, or any option,
warrants or other rights to purchase such Capital Stock,
(3) the making of any principal payment on, or the purchase, defeasance,
repurchase, redemption or other acquisition or retirement for value, prior
to any scheduled maturity, scheduled repayment or scheduled sinking fund
payment, of any Indebtedness which is subordinated in right of payment to
the Notes, other than subordinated Indebtedness acquired in anticipation of
satisfying a scheduled sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition,
(4) the making of any Investment or guarantee of any Investment in any
Person other than a Permitted Investment,
(5) any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary, valued at the fair market value of the net assets of such
Restricted Subsidiary on the date of such designation, and
(6) forgiveness of any Indebtedness of an Affiliate of MCII to MCII or a
Restricted Subsidiary of MCII.
"RESTRICTED SUBSIDIARY" means a Subsidiary of MCII other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of MCII existing as
of the Issue Date. The board of directors of MCII may designate any Unrestricted
Subsidiary as a Restricted Subsidiary if immediately after giving effect to such
action, and treating any Acquired Indebtedness as having been incurred at the
time of such action,
(1) MCII could have incurred at least $1.00 of additional Indebtedness,
other than Permitted Indebtedness, pursuant to "--Certain
Covenants--Limitation on Additional Indebtedness" above and
(2) no Default or Event of Default shall have occurred and be continuing
or result therefrom.
"SENIOR CREDIT FACILITY" means the Credit Agreement dated as of June 16,
1999, among MCII, the lenders party thereto in their capacities as lenders
thereunder and the Canadian Imperial Bank of Commerce, as agent, together with
the related documents thereto, including, without limitation, any guarantee
agreements and security documents, in each case as such agreements may be
amended, including any amendment and restatement thereof, supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring, including
increasing the amount of available borrowings thereunder, PROVIDED that such
increase in borrowings is permitted by the "Limitation on Additional
Indebtedness" covenant, or adding Restricted Subsidiaries of MCII as additional
borrowers or guarantors thereunder, all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.
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"SENIOR INDEBTEDNESS" means the principal of and premium, if any, and
interest on, and any and all other fees, expense reimbursement obligations and
other amounts due pursuant to the terms of all agreements, documents and
instruments providing for, creating, securing or evidencing or otherwise entered
into in connection with
(1) all Indebtedness of MCII or any Guarantor owed to lenders under the
Senior Credit Facility,
(2) all obligations of MCII or any Guarantor with respect to any Hedging
Obligations,
(3) all obligations of MCII or any Guarantor to reimburse any bank or
other person in respect of amounts paid under letters of credit, acceptances
or other similar instruments,
(4) all other Indebtedness of MCII or any Guarantor which does not
provide that it is to rank PARI PASSU with or subordinate to the Notes or
the Guarantee of such Guarantor, as the case may be, and
(5) all deferrals, renewals, extensions and refundings of, and
amendments, modifications and supplements to, any of the Senior Indebtedness
described above.
Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness will not include
(1) Indebtedness of MCII or any Guarantor to any of its Subsidiaries, or
to any Affiliate of MCII or such Guarantor or any of such Affiliate's
Subsidiaries,
(2) Indebtedness represented by the Notes and the Guarantees,
(3) any Indebtedness which by the express terms of the agreement or
instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Senior Indebtedness,
(4) any trade payable arising from the purchase of goods or materials or
for services obtained in the ordinary course of business,
(5) Indebtedness incurred in violation of the Indenture, unless such
Indebtedness consists of Indebtedness under the Senior Credit Facility, and
the holder(s) of such Indebtedness and their agents and representatives had
no actual knowledge at the time of incurrence that the incurrence of such
Indebtedness violated the Indenture,
(6) Indebtedness represented by Disqualified Capital Stock and
(7) any Indebtedness to or guaranteed on behalf of, any shareholders,
director, officer or employee of MCII or any Subsidiary of MCII.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means, with respect to any Person, any
Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1.02 (w) of Regulation S-X under the
Securities Act, as such Rule is in effect on the Issue Date.
"SUBSIDIARY" of any specified Person means any corporation, partnership,
limited liability company, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired,
(1) in the case of a corporation, of which more than 50% of the total
voting power of the Capital Stock entitled, without regard to the occurrence
of any contingency, to vote in the election of directors, officers or
trustees thereof is held by such first-named Person or any of its
Subsidiaries; or
(2) in the case of a partnership, limited liability company, joint
venture, association or other business entity, with respect to which such
first-named Person or any of its Subsidiaries has the power to direct or
cause the direction of the management and policies of such entity by
contract or otherwise or if in accordance with GAAP such entity is
consolidated with the first-named Person for financial statement purposes.
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"TOTAL ASSETS" means the total consolidated assets of MCII and its
Restricted Subsidiaries, as set forth on MCII's most recent consolidated balance
sheet.
"TRANSACTIONS" has the meaning provided to such term under "The
Transactions."
"UNRESTRICTED SUBSIDIARY" means
(1) any Subsidiary of an Unrestricted Subsidiary and
(2) any Subsidiary of MCII which is classified after the Issue Date as
an Unrestricted Subsidiary by a resolution adopted by the board of directors
of MCII;
PROVIDED that a Subsidiary may be so classified as an Unrestricted
Subsidiary only if
(a) such classification is in compliance with the "Limitation on
Restricted Payments" covenant, and
(b) neither MCII nor any Restricted Subsidiary shall at any time
(i) provide a guarantee of, or similar credit support to, any
Indebtedness of such Subsidiary, including any undertaking, agreement
or instrument evidencing such Indebtedness,
(ii) be directly or indirectly liable for any Indebtedness of
such Subsidiary or
(iii) be directly or indirectly liable for any other 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 other
Indebtedness that is Indebtedness of such Subsidiary, including any
corresponding right to take enforcement action against such
Subsidiary,
except in the case of clause (i) or (ii) to the extent
(i) that MCII or such Restricted Subsidiary could otherwise
provide such a guarantee or incur such Indebtedness, other than as
Permitted Indebtedness, pursuant to "--Certain Covenants--Limitation
on Additional Indebtedness" above and
(ii) the provision of such guarantee and the incurrence of such
Indebtedness otherwise would be permitted under "--Certain
Covenants--Limitation on Restricted Payments" above.
The trustee shall be given prompt notice by MCII of each resolution adopted
by the board of directors of MCII under this provision, together with a copy of
each such resolution adopted.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing
(1) the then outstanding aggregate principal amount of such Indebtedness
into
(2) the sum of the total of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including payment
at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest one-twelfth) which
will elapse between such date and the making of such payment.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary, all of
the outstanding voting securities, other than directors' qualifying shares, of
which are owned, directly or indirectly, by MCII. 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.
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BOOK-ENTRY, DELIVERY AND FORM
The exchange notes will be represented by one or more notes in registered,
global form without interest coupons. The global note will be deposited upon
issuance with the trustee as custodian for The Depository Trust Company, in New
York, New York, and registered in the name of DTC or its nominee, in each case
for credit to an account of a direct or indirect participant as described below.
Except as set forth below, the global notes may be transferred, in whole but
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the global notes may not be exchanged for Notes
in certificated form except in the limited circumstances described under the
caption "--Exchange of Book-Entry Notes for Certificated Notes."
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar.
DEPOSITORY PROCEDURES
DTC has advised MCII that DTC is a limited-purpose trust company created to
hold securities for its participating organizations and to facilitate the
clearance and settlement of transactions in those securities between the
participants through electronic book-entry changes in accounts of the
participants. The participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Persons who are
not participants may beneficially own securities held by or on behalf of DTC
only through the participants or the indirect participants. The ownership
interest and transfer of ownership interest of each actual purchaser of each
security held by or on behalf of DTC are recorded on the records of the
participants and the indirect participants.
DTC has also advised MCII that pursuant to procedures established by it, (a)
upon deposit of the global note, DTC will credit the accounts of Participants
with portions of the principal amount of the global note and (b) ownership of
such interests in the global note will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by DTC, with
respect to the Participants, or by the participants and the indirect
participants with respect to other owners of beneficial interests in the global
notes.
Upon the issuance of the global note, the DTC will credit, on its book-entry
registration and transfer system, the principal amount at maturity of the notes
represented by such global note, to the accounts of participants. The accounts
to be credited shall be designated by the notes' initial purchasers. Ownership
of beneficial interests in the global note will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests in the global note will be shown on, and the transfer of those
ownership interests will be effected only through, records maintained by the
DTC, with respect to participants' interest, and such participants, with respect
to the owners of beneficial interests in the global note other than
participants. The laws of some jurisdictions may require that certain securities
purchasers take physical delivery of such securities in definitive form. Such
limits and laws may impair the ability to transfer or pledge beneficial
interests in the global note.
So long as the DTC, or its nominee, is the registered holder and owner of
the global note, the DTC or such nominee, as the case may be, will be considered
the sole legal owner and holder of the related notes for all purposes of such
notes and the indenture. Except as set forth below, owners of beneficial
interests in the global note will not be entitled to have the notes represented
by the global note registered in their names, will not receive or be entitled to
receive physical delivery of certificated notes in definitive form, and will not
be considered to be the owners or holders of any notes under the
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global note. MCII understands that under existing industry practice, in the
event an owner of a beneficial interest in the global note desires to take any
action that the DTC, as the holder of the global note, is entitled to take, the
DTC would authorize the participants to take such action, and the participants
would authorize beneficial owners, owning through such participants, to take
such actions, or would otherwise act upon the instructions of beneficial owners
owing through them.
Payments of principal of, and interest on, notes represented by the global
note registered in the name of, and held by, the DTC or its nominee will be made
to the DTC, or its nominee, as the case may be, as the registered owner and
holder of the global note.
MCII expects that the DTC, or its nominee, upon receipt of any payments of
principal of, or interest on, the global note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of the global note as shown on the records of
the DTC or its nominee. MCII also expects that payments by participants, to
owners of beneficial interests in the global note held through such
participants, will be governed by standing instructions and customary practices,
and will be the responsibility of such participants. MCII will not have any
responsibility or liability for any aspect of the records relating to, or
payments made on accounts of, beneficial ownership interest in the global note
for any Senior Note, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests, or for any other aspects of the
relationship between the DTC and its participants, or the relationship between
such participants and the owners of beneficial interests in the global note
owning through such participants.
Unless and until it is exchanged in whole or in part for certificated notes
in definitive form, the global note may not be transferred, except as a whole,
by the DTC to a nominee of such depository, or by a nominee of such depository
to such depository or another nominee of such depository.
Although the DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the global note among participants of the
DTC, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
trustee nor MCII will have any responsibility for the performance by the DTC or
its participants or indirect participants, of their respective obligations,
under the rules and procedures governing their operations.
CERTIFICATED NOTES
The notes represented by the global note are exchangeable for certificated
notes, in definite form of like tenor as such notes, in denominations of U.S.
$1,000 and integral multiples thereof if:
- the DTC notifies MCII that it is unwilling or unable to continue as
depository of the global note, or if at any time the DTC ceases to be a
clearing agency registered under the Exchange Act and a successor
depository is not appointed by MCII within 90 days;
- MCII in its discretion at any time determines not to have all of the notes
represented by the global note; or
- an event of default has occurred and is continuing. Any global note that
is exchangeable according to the terms of the preceding sentence, it is
exchangeable for certificated notes, issuable in authorized denominations
and registered in such names as the DTC shall direct. Subject to the
foregoing, the global note of the same aggregate denomination to be
registered in the name of the DTC or its nominee. In addition, such
certificates will bear the legend referred to under "Transfer
Restrictions," unless MCII determines otherwise in accordance with
applicable law, subject, with respect to such notes, to the provisions of
such legend.
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MATERIAL FEDERAL TAX CONSIDERATIONS
The following is a general discussion of certain material United States
federal income and estate tax considerations relating to the exchange by an
initial beneficial owner of the outstanding notes for exchange notes and of the
ownership and disposition of the exchange notes by an initial beneficial owner
of the exchange notes. This discussion is based upon the Internal Revenue Code
of 1986 as amended (the "Code"), existing and proposed Treasury Regulations, and
judicial decisions and administrative interpretations thereunder, as of the date
hereof, all of which are subject to change, possibly with retroactive effect, or
different interpretations. We cannot assure you that the Internal Revenue
Service will not challenge one or more of the tax considerations described
herein, and we have not obtained, nor do we intend to obtain, a ruling from the
IRS or an opinion of counsel with respect to the United States federal tax
considerations resulting from acquiring, holding or disposing of the notes.
In this discussion, we do not purport to address all tax considerations that
may be important to a particular holder in light of the holder's circumstances,
such as the alternative minimum tax provisions of the Code, or to certain
categories of investors, such as certain financial institutions, insurance
companies, tax-exempt organizations, dealers in securities, persons who hold
notes through partnerships or other pass-through entities, U.S. expatriates, or
persons who hold the notes as part of a hedge, conversion transaction, straddle
or other risk reduction transaction, that may be subject to special rules. This
discussion is limited to initial holders who purchased the outstanding notes for
cash at the original offering price and who hold the exchange notes as capital
assets. This discussion also does not address the tax considerations arising
under the laws of any foreign, state or local jurisdiction.
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSIDERATIONS TO YOU OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE
EXCHANGE NOTES, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL OR
FOREIGN TAX LAWS.
As used herein, the term "U.S. Holder" means a beneficial owner of a note
that is:
(1) a citizen or resident of the United States for United States federal
income tax purposes, including an alien individual who is a lawful permanent
resident of the United States or meets the "substantial presence" test
prescribed under the Code;
(2) a corporation created or organized in or under the laws of the United
States or of any political subdivision thereof;
(3) an estate, the income of which is subject to United States federal
income taxation regardless of its source; or
(4) a trust, the administration of which is subject to the primary
supervision of a court within the United States and which has one or more United
States persons with authority to control all substantial decisions, or if the
trust was in existence on August 20, 1996 and has elected to continue to be
treated as a United States person.
As used herein, the term "Non-U.S. Holder" means a holder of a note, within
the categories of holders addressed in this discussion, that is not a U.S.
Holder.
THE EXCHANGE OFFER
The exchange of outstanding notes for exchange notes pursuant to this
exchange offer should not constitute a taxable disposition of the outstanding
notes for United States federal income tax purposes because the exchange notes
should not be considered to differ materially in kind or extent from the
outstanding notes. Rather, any exchange notes received by you should be treated
as a continuation of your investment in the outstanding notes. As a result,
neither a U.S. Holder nor a Non-U.S. Holder
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should recognize taxable income, gain or loss on such exchange for United States
federal income tax purposes. Such holder's holding period for the exchange notes
should generally include the holding period for the outstanding notes and such
holder's adjusted tax basis in the exchange notes should generally be the same
as such holder's adjusted tax basis in the outstanding notes for United States
federal income tax purposes.
U.S. HOLDERS
INTEREST ON NOTES. Interest on the notes will be taxable to a U.S. Holder
as ordinary income at the time it is received or accrued, depending on such
holder's method of tax accounting.
SALE, EXCHANGE, RETIREMENT OR OTHER TAXABLE DISPOSITION OF THE NOTES. Upon
the sale, exchange, retirement or other taxable disposition of a note, a U.S.
Holder will recognize gain or loss equal to the difference between the amount of
money and fair market value of property received in exchange for the note
(except to the extent attributable to the payment of accrued interest that the
holder has not already included in gross income, which amount generally will be
taxable as ordinary income) and the U.S. Holder's adjusted tax basis in the
note.
A U.S. Holder's adjusted tax basis in a note will generally equal the price
paid by the U.S. Holder for the note, decreased by any repayments of principal
received and increased by the amount of accrued unpaid interest that holder has
included in gross income. Gain or loss realized on the sale, exchange or
retirement of a note generally will be capital gain or loss. For U.S. Holders
who are individuals, the gain generally is taxed at ordinary income tax rates if
the note is held for 12 months or less, and at a maximum statutory federal
income tax rate of 20% if the note is held for more than 12 months.
NON-U.S. HOLDERS
In the following discussion, we summarize the principal United States
federal income and estate tax considerations resulting from the ownership and
disposition of the notes by Non-U.S. Holders.
INTEREST ON NOTES. Subject to the discussion below of backup withholding,
interest paid on the notes to a Non-U.S. Holder generally will qualify for the
"portfolio interest exemption" and therefore generally will not be subject to
United States federal income tax if:
(1) such interest is not effectively connected with the conduct of a trade
or business within the United States by such Non-U.S. Holder;
(2) the Non-U.S. Holder does not actually or constructively own 10% or more
of the total voting power of all classes of our stock entitled to vote;
(3) the Non-U.S. Holder is not a controlled foreign corporation with respect
to which we are a "related person" within the meaning of the Code;
(4) the Non-U.S. Holder is not a bank receiving interest pursuant to a loan
agreement entered into in the ordinary course of its trade or business; and
(5) the beneficial owner, under penalty of perjury, certifies that the owner
is not a United States person and provides the owner's name and address.
If certain requirements are satisfied, the certification described in clause
(5) above may be provided by a securities clearing organization, a bank, or
other financial institution that holds customers' securities in the ordinary
course of its trade or business.
Under new Treasury Regulations, which generally are effective for payments
made after December 31, 2000, subject to certain transition rules, the
certification described in clause (5) above may also be provided by a qualified
intermediary on behalf of one or more beneficial owners (or other
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intermediaries), provided that such intermediary has entered into a withholding
agreement with the IRS and certain other conditions are met.
A Non-U.S. Holder that is not exempt from tax under these rules will be
subject to United States federal income tax withholding at a rate of 30% unless
(1) the interest is effectively connected with the conduct of a United
States trade or business, in which case the interest will be subject to the
United States federal income tax on net income that applies to United States
persons generally, and, with respect to corporate holders and under certain
circumstances, the branch profits tax; or
(2) the rate of withholding is reduced or eliminated by an applicable income
tax treaty; and
(3) in either case, the Non-U.S. Holder provides us with proper
certification as to the holder's exemption from withholding.
GAIN ON DISPOSITION OF THE NOTES. A Non-U.S. Holder generally will not be
subject to United States federal income or withholding tax on gain realized on
the sale, exchange, redemption, or other disposition of a note, unless:
(1) in the case of an individual Non-U.S. Holder, such holder is present in
the United States for 183 days or more in the year of such sale, exchange or
redemption, and either:
(A) has a "tax home" in the United States and certain other requirements are
met; or
(B) the gain from the disposition is attributable to an office or other
fixed place of business in the United States; or
(2) the gain is effectively connected with the conduct of a United States
trade or business of the Non-U.S. Holder.
U.S. FEDERAL ESTATE TAX. A note held by an individual who at the time of
death is not a citizen or resident of the United States, as specially defined
for United States federal estate tax purposes, will not be subject to United
States federal estate tax if interest on the note is exempt from withholding
under the "portfolio interest exemption" rules discussed above for "Non-U.S.
Holders," "Interest on notes", without regard to the certification requirement.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. HOLDERS. Information reporting will apply to payments of interest on
or the proceeds of the sale or other disposition of the notes made by us with
respect to certain non-corporate U.S. Holders. A U.S. Holder will further be
subject to backup withholding at the rate of 31% with respect to interest,
principal and premium, if any, we pay on a note, unless the holder (1) is an
entity (including corporations, tax-exempt organizations and certain qualified
nominees) that is exempt from withholding and, when required, demonstrates this
fact; or (2) provides us with a correct taxpayer identification number,
certifies that the taxpayer identification number is correct and that the holder
has not been notified by the IRS that it is subject to backup withholding due to
underreporting of interest or dividends, and otherwise complies with applicable
requirements of the backup withholding rules. Any amount withheld under the
backup withholding rules is allowable as a credit against the U.S. Holder's
United States federal income tax liability, provided that the required
information is furnished to IRS.
NON-U.S. HOLDERS. We will, when required, report to the IRS and to each
Non-U.S. Holder the amount of any interest paid to, and the tax withheld with
respect to, such holder, regardless of whether any tax was actually withheld on
such payments. Copies of these information returns may also be made available to
the tax authorities of the country in which the Non-U.S. Holder resides under
the provisions of a specific treaty or agreement.
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Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments of interest on or principal of the notes by
us or our agent to a Non-U.S. Holder if the Non-U.S. Holder certifies as to its
Non-U.S. Holder status under penalties of perjury or otherwise establishes an
exemption, provided that neither we nor our agent have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemptions are not
in fact satisfied. The payment of the proceeds on the disposition of notes to or
through the United States office of a United States or foreign broker will be
subject to information reporting and backup withholding unless the owner
provides the certification described above or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not in
fact satisfied. The proceeds of the disposition by a Non-U.S. Holder of notes to
or through a foreign office of a broker generally will not be subject to backup
withholding or information reporting. However, if such broker is a U.S. person,
a controlled foreign corporation or a foreign person deriving 50% or more of its
gross income from all sources for certain periods from activities that are
effectively connected with the conduct of a United States trade or business,
information reporting requirements will apply unless such broker has documentary
evidence in its files of the holder's status as a Non-U.S. Holder and has no
actual knowledge to the contrary or unless the holder otherwise establishes an
exemption.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-U.S.
Holder's United States federal income tax liability provided that the required
information is furnished to the IRS.
New Treasury Regulations relating to withholding tax on income paid to
Non-U.S. Holders will generally be effective for payments made after December
31, 2000, subject to certain transition rules. In general, these new regulations
do not significantly alter the substantive withholding and information reporting
requirements, but rather unify current certification procedures and forms, and
clarify reliance standards. The new regulations also alter the procedures for
claiming benefits of an income tax treaty and permit the shifting of primary
responsibility for withholding to certain financial intermediaries acting on
behalf of beneficial owners under some circumstances. On January 15, 1999, the
IRS issued Notice 99-8, proposing certain changes to these new withholding
regulations for non-resident aliens and foreign corporations and providing a
model "qualified intermediary" withholding agreement to be entered into with the
IRS to allow certain institutions to certify on behalf of their non-U.S.
customers or account holders who invest in U.S. securities. We strongly urge
prospective Non-U.S. Holders to consult their own tax advisors for information
on the impact, if any, of these new withholding regulations.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account 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 broker-dealer in
connection with resales of exchange notes received in exchange for outstanding
exchange notes where such outstanding exchange notes were acquired as a result
of market-making activities or other trading activities.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by 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 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
broker-dealer or the purchasers of any such exchange notes. Any broker-dealer
that resells
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exchange notes that were received by it for its own account pursuant to the
exchange offer and 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
commissions or concessions received by 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 broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
We will promptly send additional copies of this prospectus and any amendment
or supplement to this prospectus to any broker-dealer that requests such
documents in the letter of transmittal. We have agreed to pay all expenses
incident to the exchange offer other than commissions or concessions of any
brokers or dealers and will indemnify original holders of the outstanding
exchange notes, including any broker-dealers, against certain liabilities,
including certain liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Notes offered in this prospectus will be passed upon for
us by Winston & Strawn, Chicago, Illinois.
EXPERTS
The consolidated financial statements of Motor Coach Industries
International, Inc. as of December 31, 1997 and 1998, and for each of the two
years then ended, included in this prospectus have been audited by Arthur
Andersen, LLP independent public accountants, 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. The
consolidated statements of income, stockholder's equity and cash flows of Motor
Coach Industries International, Inc. for the year ended December 31, 1996
included in this prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
120
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
UNAUDITED CONSOLIDATED STATEMENTS
Unaudited Consolidated Statements of Income for the three months ended March 31, 1999
and 1998........................................................................... F-2
Consolidated Balance Sheets as of March 31, 1999 (Unaudited) and December 31, 1998... F-3
Unaudited Consolidated Statements of Cash Flows for the three months ended March 31,
1999 and 1998...................................................................... F-4
Notes to Consolidated Financial Statements (Unaudited)............................... F-5
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Public Accountants............................................. F-18
Report of Independent Accountants.................................................... F-19
Consolidated Income Statements for the three years ended December 31, 1998........... F-20
Consolidated Balance Sheets as of December 31, 1998 and 1997......................... F-21
Consolidated Statement of Stockholder's Equity for the three years ended December 31,
1998............................................................................... F-22
Consolidated Statements of Cash Flows for the three years ended December 31, 1998.... F-23
Notes to Consolidated Financial Statements........................................... F-24
</TABLE>
F-1
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
<S> <C> <C>
1999 1998
---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Revenues:
Sales................................................................................... $ 242,505 $ 222,327
Finance income.......................................................................... 708 1,225
---------- ----------
243,213 223,552
---------- ----------
Operating costs and expenses:
Cost of sales (exclusive of items shown separately below)............................... 184,899 174,289
Interest expense, finance operations.................................................... 690 677
Depreciation and amortization........................................................... 6,376 5,813
Research and development expenses....................................................... 2,406 1,863
Selling, general and administrative expenses............................................ 24,962 17,639
---------- ----------
219,333 200,281
---------- ----------
Operating income.......................................................................... 23,880 23,271
---------- ----------
Other income and (expense):
Interest (expense)...................................................................... (5,647) (4,692)
Interest (expense) pushed down from related party....................................... (6,373) (5,829)
Foreign currency translation gain (loss)................................................ (1,003) 1,782
Other income (expense).................................................................. (1,916) 376
---------- ----------
(14,939) (8,363)
---------- ----------
Income before income taxes................................................................ 8,941 14,908
Income taxes.............................................................................. 8,499 7,765
---------- ----------
Net income................................................................................ $ 442 $ 7,143
---------- ----------
---------- ----------
</TABLE>
The accompanying footnotes are an integral part of the statements.
F-2
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
<S> <C> <C>
(UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................................................... $ 32,885 $ 24,038
Trade and other accounts receivable................................................. 150,498 121,966
Current portion of notes receivable................................................. 11,428 10,548
Inventories......................................................................... 229,280 225,865
Deferred income taxes............................................................... 19,684 21,488
Other current assets................................................................ 6,595 6,086
----------- ------------
Total Current Assets.............................................................. 450,370 409,991
Property, plant, and equipment........................................................ 91,966 102,796
Notes receivable...................................................................... 29,627 35,400
Investments in affiliates............................................................. 23,238 23,116
Intangible assets..................................................................... 215,023 215,589
Other assets.......................................................................... 17,311 14,863
----------- ------------
Total Assets...................................................................... $ 827,535 $ 801,755
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable.................................................................... $ 90,583 $ 81,890
Accrued compensation and other benefits............................................. 12,586 13,343
Accrued warranties.................................................................. 13,094 13,960
Accrued income taxes................................................................ 29,215 32,320
Self insurance reserves............................................................. 6,240 6,365
Net liabilities of discontinued operations.......................................... 5,082 4,416
Other current liabilities........................................................... 48,702 30,239
----------- ------------
Total Current Liabilities......................................................... 205,502 182,533
Long-term debt........................................................................ 271,019 267,965
Long-term debt pushed down from related party......................................... 206,500 206,500
Pensions and other benefits........................................................... 19,900 15,787
Other deferred items and self insurance reserves...................................... 18,564 19,059
Deferred income taxes................................................................. 6,391 6,990
----------- ------------
Total Liabilities................................................................. 727,876 698,834
----------- ------------
Commitments and contingent liabilities
Stockholder's Equity:
Common stock and additional capital................................................. 238,876 241,275
Accumulated deficit................................................................. (108,652) (109,094)
Accumulated other comprehensive income.............................................. (30,565) (29,260)
----------- ------------
Total Stockholder's Equity........................................................ 99,659 102,921
----------- ------------
Total Liabilities and Stockholder's Equity........................................ $ 827,535 $ 801,755
----------- ------------
----------- ------------
</TABLE>
The accompanying footnotes are an integral part of the statements.
F-3
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1999 1998
---------- ----------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Cash Flows Provided By (Used In) Operating Activities:
Net Income.............................................................................. $ 442 $ 7,143
Adjustments to reconcile net income to net cash provided by (used in) operations:
Depreciation and amortization......................................................... 6,376 5,813
Deferred income taxes................................................................. 916 5,192
Non cash interest expense pushed down from related party.............................. 6,373 5,829
(Gain)/loss on sale of property and notes receivable.................................. 423 (3)
Other noncash items, net.............................................................. 5,365 991
Change in operating assets and liabilities, net....................................... (18,146) 5,542
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES................................................. 1,749 30,507
---------- ----------
Cash Flows Provided By (Used In) Investing Activities:
Capital expenditures.................................................................... (2,959) (6,506)
Proceeds from sale of property and investments.......................................... 8,677 603
Investment in notes receivable.......................................................... (7,674) (15,119)
Collections of notes receivable......................................................... 1,058 14,594
Proceeds from sale of notes receivable.................................................. 8,749 --
Discontinued operations, net changes.................................................... 666 1,289
---------- ----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES....................................... 8,517 (5,139)
---------- ----------
Cash Flows Provided By (Used In) Financing Activities:
Net change in long-term borrowings...................................................... 1,581 20,157
Related party receivables/payables...................................................... -- (33,545)
Dividends paid to parent company........................................................ (3,000) --
---------- ----------
NET CASH USED IN FINANCING ACTIVITIES..................................................... (1,419) (13,388)
---------- ----------
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS.................................................. -- (331)
---------- ----------
NET INCREASE IN CASH...................................................................... 8,847 11,649
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.......................................... 24,038 13,997
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................................................ $ 32,885 $ 25,646
---------- ----------
---------- ----------
</TABLE>
The accompanying footnotes are an integral part of the statements.
F-4
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements are unaudited, but have
been prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments) considered necessary for a
fair presentation have been included. The interim combined consolidated
financial statements contained herein do not include all of the footnotes and
other information required by generally accepted accounting principles for
complete financial statements, as provided at year end. The financial statement
should be read in conjunction with the audited financial statements and notes
thereto appearing in this document. The 1999 interim results may not necessarily
be indicative of the results for the completed fiscal year.
NOTE 2--PRINCIPLES OF CONSOLIDATION AND PRESENTATION
In conjunction with the financial restructuring discussed in Note 3,
Transportation Manufacturing Operations, Inc. changed its corporate name to
Motor Coach Industries International, Inc. ("MCII"), and MCII Holdings (USA),
Inc. ("MCII Holdings") contributed its Dina Autobuses S.A. de C.V. subsidiary
("Autobuses") to MCII at historical cost. The accompanying unaudited financial
statements for MCII and its subsidiaries ("the Company") include Autobuses for
all periods presented, as this is a reorganization of entities under common
control. All significant intercompany balances have been eliminated.
NOTE 3--FINANCIAL RESTRUCTURING
As of December 31, 1998, MCII had a $170 million U.S. senior revolving
credit facility ("the Senior Credit Facility") with a nine-bank syndicate to
finance working capital and other general corporate needs. This facility was due
to expire on October 1, 1999, and the lenders indicated that they were not
willing to extend its maturity. In addition, during 1998, the Company was
required to reduce existing long-term debt obligations by $50 million,
consisting of a $25 million principal payment on MCII's Senior Term Notes due
2002, a $12 million reduction in its Canadian bank credit facility, and a $13
million principal payment on the Pre-Export Notes due 1999.
As a result of the debt reductions during 1998 and the additional debt
obligations and working capital requirements for 1999, the Company did not
expect to generate sufficient cash flow from operations to fund both short term
requirements and meet the required expiration of the Senior Credit Facility.
On March 18, 1999, the Company engaged CIBC World Markets Corp. (formerly
CIBC Oppenheimer Corp.) and its affiliates (collectively "CIBC") to act as the
Company's lead bank agent, financial advisor, placement agent, and/or
underwriter to undertake a financial restructuring of the debt obligations of
the Company and Grupo Dina.
On April 19, 1999, MCII executed an agreement with CIBC for the issuance of
$40 million of Senior Subordinated Increasing Rate Notes ("IRNs"), due December
31, 1999, (subject to extension to March 31, 2000). This bridge financing was
used by MCII to meet its short-term working capital requirements during the
financial restructuring process.
F-5
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--FINANCIAL RESTRUCTURING (CONTINUED)
In addition to the bridge financing, the Company, in association with CIBC,
developed and executed a financial restructuring plan to refinance substantially
all of the indebtedness of Consorcio G. Grupo Dina S.A. de C.V. ("Grupo Dina"),
the Company, and their respective subsidiaries.
On May 14, 1999, Grupo Dina commenced a tender offer and consent
solicitation relating to all of the approximately $206.5 million aggregate
principal amount of outstanding Senior Secured Discount Notes due 2002 (the
"Discount Notes") issued by Grupo Dina and MCII Holdings. Grupo Dina also
commenced a tender offer and consent solicitation relating to all of the $35.0
million aggregate principal amount of outstanding Senior Secured Guaranteed
Notes due 2000 (the "Guaranteed Notes") issued by its wholly-owned subsidiary,
Dina Trucks (USA), L.L.C., and guaranteed by Grupo Dina and Dina Camiones, S.A.
de C.V.
The consideration for each Discount Note and Guaranteed Note tendered and
accepted for payment was (a) $980 per $1,000 of Notes, plus (b) a consent
payment of $20 per $1,000 of Notes, plus (c) accrued interest through the
settlement date.
On June 16, 1999, holders of approximately 99.97% of the outstanding
Discount Notes tendered their notes for payment pursuant to the tender offer.
The remaining Discount Notes were redeemed by the Company. On June 16, 1999, all
Guaranteed Notes were tendered for payment pursuant to the tender offer.
On June 16, 1999, the Company also completed a series of transactions to
re-capitalize and restructure substantially all of the indebtedness of the
Company and Grupo Dina and their subsidiaries, including:
(a) MCII Holdings redeemed a portion of its outstanding common stock from Grupo
Dina for total proceeds of $328 million. Grupo Dina used $256.6 million of
the proceeds to conclude the above tender offers and retained $71.4 million
in cash;
(b) An investment group led by Joseph Littlejohn & Levy Fund III L.P., ("JLL") a
private equity partnership, made an equity contribution of $125 million in
MCII Holdings. MCII Holdings also issued Senior Notes with warrants due 2010
in an amount of $50 million to the new equity investors. MCII Holdings
subsequently made a capital contribution of the total proceeds of $175
million to MCII. As a result of the equity investment and redemption, the
investment group led by JLL became the 61% majority owner of MCII Holdings
and Grupo Dina became a 39% minority stockholder;
(c) MCII issued $152.3 million of Senior Subordinated Notes due 2009 at a
discount of 98.5755% to yield total cash proceeds of $150.1 million. The
notes are not secured by any collateral and rank junior to any of the
Company's other senior debt but equal to any future senior subordinated debt
issuance. The Company has a right to buy back some or all of the notes prior
to their due date subject to certain limitations and premium provisions as
specified in the agreement; and
(d) MCII entered into a new Senior Secured Credit Facility in the total amount
of $445 million, consisting of $333 million in Term B loans due 2006 drawn
on the June 16, 1999 closing date, and additional availability in the form
of a $112 million revolving credit facility due 2005. The agreement contains
financial covenants that the Company will not exceed certain leverage ratios
or fall below certain interest coverage ratios as specified in the
agreement. The agreement also contains a mandatory prepayment provision
based upon a free cash flow formula as specified in
F-6
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--FINANCIAL RESTRUCTURING (CONTINUED)
the agreement. The prepayment provision calls for any prepayment made to be
first applied to the term loans and then to the loans made under the
revolving credit agreement. The facility provides for variable rates of
interest based upon certain specified formulas that include a base rate of
interest and an applicable margin based upon a calculation of the Company's
Consolidated Total Leverage ratio. The Company also pays a 0.5% annualized
facility fee on the daily unused portion of the revolving credit agreement.
The Credit Facility calls for interest payments and payment of the facility
fee to be paid at the end of each calendar quarter. The term loan agreement
also calls for a principal payment of $832,500 due at the end of each
calendar quarter commencing on September 30, 1999 and ending on March 31,
2006 and a final principal payment of $310,522,500 plus accrued interest on
June 16, 2006. It is the Company's intention to fund its quarterly term loan
principal obligations through the Senior Secured Credit Facility. Therefore,
the current portion of this term loan is classified as long term.
In addition to the debt repurchased pursuant to the tender offers, MCII
repaid substantially all of its outstanding indebtedness including:
(a) The $40 million of IRN's along with $0.2 million of accrued interest and
$0.2 million of redemption premiums;
(b) The existing U.S. revolving credit facility in a total amount of $165.5
million (including outstanding letters of credit) due to mature on October
1, 1999; along with $0.5 million of accrued interest and $0.2 million of
redemption premiums;
(c) The $100 million of 9.02% Senior Notes due 2002, along with $0.4 million of
accrued interest and a prepayment premium of approximately $5.3 million.
In connection with the debt refinancings, the following restructuring
transactions and agreements were also consummated:
(a) MCII Holdings, transferred Autobuses to MCII, and a portion of the proceeds
of the refinancing were used to repay Autobuses' outstanding credit
facilities of $14.2 million;
(b) MCII Holdings and certain of its subsidiaries transferred certain indirect
subsidiaries, including Autopartes Hidalguenses, S.A. de C.V.; Carroceria
Sahagun, S.A. de C.V.; Mexicana de Manufacturas Especiales, S.A. de C.V.,
and Universal Coach Parts Mexico, S.A. de C.V. (UCP Mexico), to certain
subsidiaries of Grupo Dino and MCII canceled a $7.3 million receivable from
UCP Mexico;
(c) One of our Canadian subsidiaries entered into a sale-leaseback transaction
with Grupo Dina for tooling and equipment located at the facility at St.
Matthews Street in Winnipeg, Manitoba. The market value of the tooling and
equipment at the facility was between $2 million and $4 million and the
transfer price and lease payments were for nominal amounts.
(d) Autobuses transferred to Grupo Dina a group of transit buses that are leased
to a company affiliated with Grupo Dina, together with the related lease
rights;
(e) Autobuses agreed to transfer certain undeveloped land to a subsidiary of
Grupo Dina in exchange for land and buildings required for ongoing
operations;
(f) MCII acquired certain royalty-free rights to use the Dina name and
trademarks in marketing intercity coaches;
F-7
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 3--FINANCIAL RESTRUCTURING (CONTINUED)
(g) Grupo Dina, through its subsidiaries, acquired rights, subject to certain
conditions, to supply various manufactured parts and components to the
operating subsidiaries of MCII; and
(h) Grupo Dina agreed to perform certain transitional services for MCII and its
operating subsidiaries.
NOTE 4--DEBT
Debt consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
United States bank credit facility (Note 3)........................................... $ 153,000 $ 137,000
Bancomext export loan facility (Note 3)............................................... 16,303 8,594
Pre-export notes due 1999............................................................. -- 22,000
9.02% Senior Notes due 2002 (Note 3).................................................. 100,000 100,000
Notes payable......................................................................... 1,716 371
----------- ------------
Long-term debt, excluding debt push down.............................................. 271,019 267,965
Push down debt - Senior Secured Discount Notes, due 2002 (Note 3)..................... 206,500 206,500
----------- ------------
Long-term debt, including debt push down.............................................. $ 477,519 $ 474,465
----------- ------------
----------- ------------
</TABLE>
On April 19, 1999, MCII executed an agreement with CIBC for the issuance of
$40 million of IRNs, due December 31, 1999, (subject to extension to March 31,
2000). The IRNs had an increasing rate of interest, commencing with a rate that
was the greater of i) LIBOR plus 6.50% or ii) 11.625%, and increasing by 25
basis points (0.25%) every 30 days that the IRNs were outstanding to a maximum
rate of 18%. As a condition to the consent of the existing lenders, interest
above 15% must be paid in kind.
On April 19, 1999, MCII obtained the necessary consent and related
amendments required from the existing lenders to permit the bridge financing and
remain in compliance with certain financial covenants. As consideration for the
consent of the existing lenders, MCII agreed to certain changes in the terms of
the existing debt agreements.
On June 16, 1999 all borrowings under the United States bank credit
facilities, the IRNs, the Bancornext export loan facility and the 9.02% Senior
Notes were repaid as part of the financial restructuring more fully discussed in
Note 3 to the Unaudited Consolidated Financial Statements. The debt existing at
March 31, 1999 and December 31, 1998 has been classified in accordance with the
terms and provisions of the new debt.
F-8
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 5--REVENUES, GROSS PROFIT AND OPERATING INCOME, SUPPLEMENTARY INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31,
-------------------------
1999 1998
------------- ----------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Revenues:
Coach and Support............................................................... $ 193,969 $ 172,519
Replacement Parts............................................................... 47,600 48,722
Finance......................................................................... 1,644 2,311
------------- ----------
$ 243,213 $ 223,552
------------- ----------
------------- ----------
Operating Income:
Coach and Support............................................................... $ 18,235 $ 17,301
Replacement Parts............................................................... 5,804 5,471
Finance......................................................................... (159) 499
------------- ----------
$ 23,880 $ 23,271
------------- ----------
------------- ----------
Assets:
Coach and Support............................................................... $ 571,453
Replacement Parts............................................................... 190,857
Finance......................................................................... 65,225
-------------
$ 827,535
-------------
-------------
</TABLE>
NOTE 6--COMPREHENSIVE INCOME
For the quarters ended March 31, 1999 and 1998, the Company's comprehensive
income included net income, foreign currency translation losses and minimum
pension liability adjustments. The foreign currency translation loss totaled
$1,305 and $331 for the quarters ended March 31, 1999 and 1998, respectively.
The minimum pension liability expenses totaled $0 and $126 for the quarters
ended March 31, 1999 and 1998, respectively. Therefore, total comprehensive
income/(loss) was ($863) for the quarter ended March 31, 1999, compared with
$6,686 for the same quarter of 1998.
NOTE 7--INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
---------- ------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Raw material........................................................................ $ 38,677 $ 38,287
Work in process..................................................................... 39,713 42,487
Finished goods...................................................................... 174,581 171,501
---------- ------------
252,971 252,275
Inventory reserves.................................................................. (23,691) (26,410)
---------- ------------
$ 229,280 $ 225,865
---------- ------------
---------- ------------
</TABLE>
F-9
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 8--CASH FLOW EFFECT OF CHANGE IN OPERATING ASSETS AND LIABILITIES
Change in operating assets and liabilities consisted of:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
<S> <C> <C>
MARCH 31, MARCH 31,
1999 1998
---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Decrease (Increase) in Operating Assets:
Receivables............................................................................. $ (31,314) $ (19,883)
Inventories............................................................................. 7,324 6,508
Other operating assets.................................................................. 932 (50)
---------- ----------
(23,058) (13,425)
---------- ----------
Increase (Decrease) in Operating Liabilities:
Accounts payable........................................................................ (711) 12,271
Accrued income taxes.................................................................... (3,225) 533
Other operating liabilities............................................................. 8,848 6,163
---------- ----------
4,912 18,967
---------- ----------
Net Cash Flow Effect...................................................................... $ (18,146) $ 5,542
---------- ----------
---------- ----------
</TABLE>
NOTE 9--RELATED PARTY TRANSACTIONS
Related party transactions for the three months ended March 31 were as
follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Purchases from affiliated companies:
Goods........................................................................................ $ 936 $ 2,852
Services..................................................................................... 2,763 4,487
--------- ---------
$ 3,699 $ 7,339
--------- ---------
--------- ---------
Sales to affiliated companies:
Goods........................................................................................ $ 753 $ 1,391
Services..................................................................................... -- 2,052
--------- ---------
$ 753 $ 3,443
--------- ---------
--------- ---------
Charges for Grupo Dina management services..................................................... $ 250 $ 250
--------- ---------
--------- ---------
</TABLE>
NOTE 10--COMMITMENTS AND CONTINGENT LIABILITIES
The Company's Canadian income tax returns for 1982 through 1992 are
currently under review by Revenue Canada. Authorities have proposed imputing
additional income related to transactions with a U.S. based subsidiary of the
Company. A formal reassessment has been issued by Revenue Canada on the 1985
return. A notice of objection has been filed by the Company for 1985. In the
event of an adverse judgment, the additional income taxes for 1982 through 1992
could amount to $23,000,000 plus interest of approximately $49,000,000 through
March 31, 1999 and, in addition, the Company may be
F-10
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 10--COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
subject to potential reassessments for the years subsequent to 1992 on the same
basis which could result in additional income taxes and interest. These amounts
are all before recoveries of U.S. federal income taxes which may be available to
offset a portion of any additional taxes paid to Canada as these years are still
open for U.S. federal income tax purposes. In accordance with SFAS No. 109,
"Accounting for Income Taxes," a portion of any ultimate liability owed as a
result of this issue would be treated as an adjustment of Grupo Dina's purchase
price on acquiring MCII Holdings, resulting in an increase of purchase goodwill.
(If the ultimate liability was $72,000,000, then approximately $47,000,000 would
be a purchase accounting adjustment.) Based on its review of current relevant
information, including the advice of outside counsel, the Company is of the
opinion that Revenue Canada's arguments are without merit and that any liability
from this matter will not be material to its financial condition or results of
operations.
NOTE 11--GUARANTOR CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
In connection with the issuance of the Senior Subordinated Notes due 2009
(the "Notes") (See note 3), the Company's U.S. subsidiaries became Guarantors to
these Notes. The following tables present condensed consolidating financial
information for: MCII; Guarantors (U.S. entities); and Non Guarantors (Non-U.S.
entities including Autobuses and MCI, Ltd.). Each of the Guarantors are a direct
or indirect wholly owned subsidiary of MCII. The Guarantors jointly and
severally and fully and unconditionally guarantee the Notes of the Company. The
following condensed consolidating financial information presents the results of
operations, financial position and cash flows of MCII, Guarantors, and Non
Guarantors, and the eliminations necessary to arrive at the information for the
Company on a condensed consolidated basis.
F-11
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 11--GUARANTOR CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
CONDENSED CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
---------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue.......................................... $ -- $ 209,257 $ 98,508 $ (64,552) $ 243,213
Cost of sales (exclusive of items shown
separately below).............................. -- 161,138 84,064 (60,303) 184,899
Interest expense, finance operations............. -- 640 50 -- 690
Depreciation and amortization.................... 61 2,603 3,712 -- 6,376
Research and development expenses................ -- 1,557 849 2,406
Selling, general and administrative expenses..... (32) 26,942 (2,053) 105 24,962
--------- ----------- ----------- ------------ ------------
Operating income (loss).......................... (29) 16,377 11,886 (4,354) 23,880
--------- ----------- ----------- ------------ ------------
Interest (expense) income........................ (1,090) (3,465) 212 (1,304) (5,647)
Interest expense pushed down from related
party.......................................... (6,373) -- -- -- (6,373)
Foreign currency translation loss................ -- -- (1,003) -- (1,003)
Other income (expense)........................... 100 (1,161) (855) -- (1,916)
--------- ----------- ----------- ------------ ------------
(7,363) (4,626) (1,646) (1,304) (14,939)
--------- ----------- ----------- ------------ ------------
Income (loss) before income taxes................ (7,392) 11,751 10,240 (5,658) 8,941
Income taxes..................................... (565) 5,076 3,988 -- 8,499
--------- ----------- ----------- ------------ ------------
Net income (loss)................................ $ (6,827) $ 6,675 $ 6,252 $ (5,658) $ 442
--------- ----------- ----------- ------------ ------------
--------- ----------- ----------- ------------ ------------
</TABLE>
F-12
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 11--GUARANTOR CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
CONDENSED CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
---------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue.......................................... $ -- $ 185,511 $ 87,972 $ (49,931) $ 223,552
Cost of sales (exclusive of items shown
separately below).............................. -- 145,610 77,730 (49,051) 174,289
Interest expense, finance operations............. -- 617 60 -- 677
Depreciation and amortization.................... 98 2,578 3,137 -- 5,813
Research and development expenses................ -- 1,117 746 -- 1,863
Selling, general and administrative expenses..... 1,366 18,177 (1,904) -- 17,639
--------- ----------- ----------- ------------ ------------
Operating income (loss).......................... (1,464) 17,412 8,203 (880) 23,271
--------- ----------- ----------- ------------ ------------
Interest (expense) income........................ (843) (3,926) 77 -- (4,692)
Interest expense pushed down from related
party.......................................... (5,829) -- -- -- (5,829)
Foreign currency translation gain................ -- -- 1,782 -- 1,782
Other income..................................... 29 92 255 -- 376
--------- ----------- ----------- ------------ ------------
(6,643) (3,834) 2,114 -- (8,363)
--------- ----------- ----------- ------------ ------------
Income (loss) before income taxes................ (8,107) 13,578 10,317 (880) 14,908
Income taxes..................................... (1,078) 5,377 3,466 -- 7,765
--------- ----------- ----------- ------------ ------------
Net income (loss)................................ $ (7,029) $ 8,201 $ 6,851 $ (880) $ 7,143
--------- ----------- ----------- ------------ ------------
--------- ----------- ----------- ------------ ------------
</TABLE>
F-13
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 11--GUARANTOR CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 1999
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................... $ 15,000 $ (2,457) $ 20,342 $ -- $ 32,885
Trade and other accounts receivable.......... 2,517 119,835 26,627 1,519 150,498
Intercompany receivables (payables).......... 516,020 (547,500) 114,742 (83,262) --
Current portion of notes receivable.......... -- 10,879 549 -- 11,428
Inventories.................................. -- 171,916 63,221 (5,857) 229,280
Deferred income taxes........................ 3,148 16,778 (242) -- 19,684
Other current assets......................... 1,417 3,625 1,553 -- 6,595
---------- ----------- ----------- ------------ ------------
Total Current Assets........................... 538,102 (226,924) 226,792 (87,600) 450,370
Property, plant and equipment................ 604 44,113 47,280 (31) 91,966
Notes receivable............................. -- 26,436 3,191 -- 29,627
Investments in affiliates.................... 19,600 3,632 6 -- 23,238
Intangible assets............................ 2,458 144,476 68,089 -- 215,023
Other assets................................. 2,228 10,519 4,564 -- 17,311
---------- ----------- ----------- ------------ ------------
Total Assets................................... $ 562,992 $ 2,252 $ 349,922 $ (87,631) $ 827,535
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-14
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 11--GUARANTOR CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 1999
-------------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- -------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable.......................... $ 1,049 $ 51,703 $ 37,831 $ -- $ 90,583
Accrued compensation and other benefits... 1,006 6,291 5,289 -- 12,586
Accrued warranties........................ -- 9,913 3,181 -- 13,094
Accrued income taxes...................... (7,078) 16,125 20,168 -- 29,215
Self insurance reserves................... 5,115 1,324 (199) -- 6,240
Net liabilities of discontinued
operations.............................. -- 5,082 -- -- 5,082
Other current liabilities................. 15,674 7,125 25,903 -- 48,702
---------- ----------- -------------- ------------ ------------
Total Current Liabilities................... 15,766 97,563 92,173 -- 205,502
Long-term debt............................ 254,345 371 16,303 -- 271,019
Long-term debt pushed down from related
party................................... 206,500 -- -- -- 206,500
Pensions and other benefits............... 15,640 (181) 4,441 -- 19,900
Other deferred items and self insurance
reserves................................ 12,095 6,469 -- -- 18,564
Deferred income tax....................... (1,915) 2,106 6,200 -- 6,391
---------- ----------- -------------- ------------ ------------
Total Liabilities........................... 502,431 106,328 119,117 -- 727,876
---------- ----------- -------------- ------------ ------------
Stockholder's Equity:
Common stock and additional capital....... 153,909 (49,776) 301,481 (166,738) 238,876
Accumulated deficit....................... (92,803) (54,031) (41,304) 79,486 (108,652)
Accumulated other comprehensive income.... (545) (269) (29,372) (379) (30,565)
---------- ----------- -------------- ------------ ------------
Total Stockholder's Equity.................. 60,561 (104,076) 230,805 (87,631) 99,659
---------- ----------- -------------- ------------ ------------
Total Liabilities and Stockholder's
Equity.................................... $ 562,992 $ 2,252 $ 349,922 $ (87,631) $ 827,535
---------- ----------- -------------- ------------ ------------
---------- ----------- -------------- ------------ ------------
</TABLE>
F-15
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 11--GUARANTOR CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
CONDENSED CONSOLIDATED CASH FLOW
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
---------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net Income............................................ $ (6,827) $ 6,675 $ 6,252 $ (5,658) $ 442
Adjustments in reconcile net income to net cash
provided by (used in) operations:
Depreciation and amortization....................... 61 2,603 3,712 -- 6,376
Deferred income taxes............................... 1,035 182 (301) -- 916
Non cash interest expense pushed down from related
party............................................. 6,373 -- -- -- 6,373
Gain on sale of property and notes receivable....... -- 125 298 -- 423
Other noncash items, net............................ 3,717 (7,935) 9,583 5,365
Change in operating amounts and liabilities, net.... (5,694) (28,723) 10,613 5,658 (18,146)
--------- ----------- ----------- ------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES..... (1,335) (27,073) 30,157 -- 1,749
--------- ----------- ----------- ------------ ------------
Cash Flows Provided By (Used In) Investing Activities:
Capital expenditures.................................. (118) (1,580) (1,261) -- (2,959)
Proceeds from sale of property and investments........ -- 2,490 6,187 -- 8,677
Investment in notes receivable........................ -- (7,674) -- -- (7,674)
Collections of notes receivable....................... -- 937 121 -- 1,058
Proceeds from sale of notes receivable................ -- 8,749 -- -- 8,749
Discontinued operations, net changes.................. -- 666 -- -- 666
--------- ----------- ----------- ------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES..... (118) 3,588 5,047 -- 8,517
--------- ----------- ----------- ------------ ------------
Cash Flows Provided By (Used In) Financing Activities:
Net change in long-term borrowings.................... 16,000 -- (14,419) -- 1,581
Related party receivables/payables.................... (1,962) 1,060 902 -- --
Dividends paid to parent company...................... (3,000) -- -- -- (3,000)
--------- ----------- ----------- ------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES..... 11,038 1,060 (13,517) -- (1,419)
--------- ----------- ----------- ------------ ------------
NET INCREASE (DECREASE) IN CASH......................... 9,585 (22,425) 21,687 -- 8,847
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........ 5,415 17,951 672 -- 24,038
--------- ----------- ----------- ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD................................................. $ 15,000 $ (4,474) $ 22,359 $ -- $ 32,885
--------- ----------- ----------- ------------ ------------
--------- ----------- ----------- ------------ ------------
</TABLE>
F-16
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 11--GUARANTOR CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
CONDENSED CONSOLIDATED CASH FLOW
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ----------- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash Flows Provided By (Used In) Operating Activities:
Net Income............................................ $ (7,029) $ 8,201 $ 6,851 $ (880) $ 7,143
Adjustments to reconcile net income to net cash
provided by (used in) operations:
Depreciation and amortization....................... 98 2,578 3,137 -- 5,813
Deferred income taxes............................... 684 4,418 90 -- 5,192
Non cash interest expense pushed down from related
party............................................. 5,829 -- -- -- 5,829
Gain on sale of property and notes receivable....... -- (3) -- -- (3)
Other noncash items, net............................ (800) (2,482) 4,273 -- 991
Change in operating assets and liabilities, net..... 827 (6,802) 10,637 880 5,542
--------- ----------- ----------- ----- ------------
Net Cash Provided By (Used In) Operating Activities..... (391) 5,910 24,988 -- 30,507
--------- ----------- ----------- ----- ------------
Cash Flows Provided By (Used In) Investing Activities:
Capital expenditures.................................. (8) (282) (6,216) -- (6,506)
Proceeds from sale of property and investments........ -- 603 -- -- 603
Investment in notes receivable........................ -- (15,119) -- -- (15,119)
Collections of notes receivable....................... -- 14,286 308 -- 14,594
Discontinued operations, net changes.................. -- 1,289 -- -- 1,289
--------- ----------- ----------- ----- ------------
Net Cash Provided By (Used In) Investing Activities..... (8) 777 (5,908) -- (5,139)
--------- ----------- ----------- ----- ------------
Cash Flows Provided By (Used In) Financing Activities:
Net change in long-term borrowings.................... 5,216 -- 14,941 -- 20,157
Related party receivables/payables.................... 7,045 (48) (40,542) -- (33,545)
Dividends paid to parent company...................... -- -- -- -- --
--------- ----------- ----------- ----- ------------
Net Cash Provided By (Used In) Financing Activities..... 12,261 (48) (25,601) -- (13,388)
--------- ----------- ----------- ----- ------------
Foreign Currency Translation Adjustments................ (331) -- -- -- (331)
--------- ----------- ----------- ----- ------------
Net Increases (Decreases) in Cash....................... 11,531 6,639 (6,521) -- 11,649
Cash and Cash Equivalents at Beginning of Period........ 9,018 5,306 (327) -- 13,997
--------- ----------- ----------- ----- ------------
Cash and Cash Equivalents at End of Period.............. $ 20,549 $ 11,945 $ (6,848) $ -- $ 25,646
--------- ----------- ----------- ----- ------------
--------- ----------- ----------- ----- ------------
</TABLE>
NOTE 12--SUBSEQUENT EVENT
On April 28, 1999, the Company's Universal Coach Parts subsidiary sold and
leased back its primary parts distribution facility. Additionally, it entered
into an agreement with the same party to build a new parts distribution
facility.
F-17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholder of Motor Coach Industries International, Inc.:
We have audited the accompanying consolidated balance sheets of Motor Coach
Industries International, Inc., and its subsidiaries (the "Company") as of
December 31, 1998 and December 31, 1997 and the related consolidated statements
of income, changes in stockholder's equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
the Company as of December 31, 1998 and December 31, 1997, and the consolidated
results of its operations and cash flows for the years then ended in conformity
with generally accepted accounting principles.
Arthur Andersen LLP
Chicago, Illinois
July 22, 1999
F-18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholder of Motor Coach Industries International, Inc.:
In our opinion, the accompanying consolidated statements of income, changes
in stockholder's equity and cash flows for the year ended December 31, 1996
present fairly, in all material respects, the results of operations and cash
flows of Motor Coach Industries International, Inc. and its subsidiaries (the
Company) for the year ended December 31, 1996 in conformity with generally
accepted accounting principles. 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 audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above. We have not audited the
consolidated financial statements of the Company for any period subsequent to
December 31, 1996.
PricewaterhouseCoopers LLP
Chicago, Illinois
February 28, 1997 (except with respect to the information in Notes 1, 2 and 14
related to the
June 16, 1999 reorganization, as to which the date is June 16, 1999.)
F-19
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------------------
<S> <C> <C> <C>
1998 1997 1996
---------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Sales...................................................................... $ 925,889 $ 735,210 $ 658,823
Finance income............................................................. 5,838 4,573 8,261
---------- ---------- ----------
931,727 739,783 667,084
---------- ---------- ----------
Operating costs and expenses:
Cost of sales (exclusive of items shown separately below).................. 728,189 546,607 506,199
Depreciation and amortization.............................................. 24,815 22,035 17,618
Interest expense, finance operations....................................... 2,765 2,394 3,605
Research and development expenses.......................................... 8,741 6,655 7,346
New product start-up costs................................................. 981 7,333 --
Business insurance recoveries.............................................. (8,462) (500) --
Provision for relocation of corporate office............................... -- 886 3,000
Selling, general and administrative expenses............................... 90,894 75,920 69,483
---------- ---------- ----------
847,923 661,330 607,251
---------- ---------- ----------
Operating income............................................................. 83,804 78,453 59,833
---------- ---------- ----------
Other income and (expense):
Interest (expense)--net.................................................... (19,985) (21,859) (16,029)
Interest (expense) pushed down from related party.......................... (25,194) (21,635) (19,550)
Other income (expense)..................................................... (511) 2,920 2,197
Gain (loss) on equity investments.......................................... 5,000 -- (1,200)
Foreign currency translation gain (loss)................................... 3,325 (85) 1,347
---------- ---------- ----------
(37,365) (40,659) (33,235)
---------- ---------- ----------
Income before income taxes, discontinued operations and extraordinary item... 46,439 37,794 26,598
Income taxes................................................................. 31,790 21,268 18,474
---------- ---------- ----------
Income from continuing operations............................................ $ 14,649 $ 16,526 $ 8,124
---------- ---------- ----------
Discontinued operations
(Loss) on disposal of transit manufacturing, net of tax benefit of
$3,130................................................................... -- -- (5,000)
---------- ---------- ----------
Income before extraordinary item............................................. 14,649 16,526 3,124
Extraordinary (charge) for early retirement of debt, net of tax benefit of
$550....................................................................... -- -- (851)
---------- ---------- ----------
Net income................................................................... $ 14,649 $ 16,526 $ 2,273
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-20
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
EXCEPT PER SHARE INFO
ASSETS
Current Assets:
Cash and cash equivalents.......................................................... $ 24,038 $ 13,997
Trade and other accounts receivable, less allowance of $10,316 and $3,244.......... 121,966 88,543
Receivables from affiliates (Note 3)............................................... -- 16,293
Current portion of notes receivable................................................ 10,548 6,625
Inventories........................................................................ 225,865 257,795
Deferred income taxes.............................................................. 21,488 14,430
Other current assets............................................................... 6,086 7,591
------------ ------------
Total Current Assets............................................................. 409,991 405,274
Property, plant, and equipment, net.................................................. 102,796 106,845
Notes receivable..................................................................... 35,400 42,465
Investments in affiliates............................................................ 23,116 15,253
Intangible assets.................................................................... 215,589 227,367
Other assets......................................................................... 14,863 23,469
------------ ------------
Total Assets..................................................................... $ 801,755 $ 820,673
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable................................................................... $ 81,890 $ 67,580
Accrued compensation and other benefits............................................ 13,343 12,380
Accrued warranties................................................................. 13,960 10,020
Accrued income taxes............................................................... 32,320 7,251
Self insurance reserves............................................................ 6,365 5,610
Net liabilities of discontinued operations......................................... 4,416 2,229
Other current liabilities.......................................................... 30,239 25,111
Current portion of long-term debt.................................................. -- 44,418
------------ ------------
Total Current Liabilities........................................................ 182,533 174,599
Long-term debt....................................................................... 267,965 268,833
Long-term debt pushed down from related party........................................ 206,500 184,225
Pensions and other benefits.......................................................... 15,787 14,037
Other deferred items and self insurance reserves..................................... 19,059 24,370
Deferred income taxes................................................................ 6,990 6,916
------------ ------------
Total Liabilities................................................................ 698,834 672,980
------------ ------------
Commitments and contingent liabilities (Note 23)
Stockholder's Equity:
Common stock, $.01 par value, 1,000 shares authorized, issued, and outstanding and
additional capital............................................................... 241,275 288,509
Accumulated deficit................................................................ (109,094) (119,800)
Accumulated other comprehensive income............................................. (29,260) (21,016)
------------ ------------
Total Stockholder's Equity....................................................... 102,921 147,693
------------ ------------
Total Liabilities and Stockholder's Equity....................................... $ 801,755 $ 820,673
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-21
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
ACCUMULATED OTHER
COMPREHENSIVE INCOME
------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMON STOCK AND ACCUMULATED UNFUNDED CUMULATIVE TOTAL
COMPREHENSIVE ADDITIONAL EARNINGS/ PENSION TRANSLATION STOCKHOLDER'S
INCOME CAPITAL (DEFICIT) LOSS ADJUSTMENT EQUITY
-------------- ----------------- ------------ ----------- ----------- -------------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE DECEMBER 31, 1995......... $ 296,161 $ (96,151) $ -- $ (14,572) $ 185,438
Comprehensive income 1996:
Net income 1996................. 2,273 -- 2,273 -- -- 2,273
Other comprehensive income:
Unfunded pension loss......... (423) -- -- (423) -- (423)
Unrealized translation loss... (1,061) -- -- -- (1,061) (1,061)
--------------
Comprehensive income.............. 789
--------------
--------------
Dividends on Common Stock......... (30,000) -- -- (30,000)
Return of capital to Parent Co.... (13,030) -- -- -- (13,030)
Capital Contribution.............. 1,342 -- -- -- 1,342
-------- ------------ ----- ----------- -------------
BALANCE, DECEMBER 31, 1996........ $ 284,473 $ (123,878) $ (423) $ (15,633) $ 144,539
Comprehensive income 1997:
Net income 1997................. $ 16,526 -- 16,526 -- -- 16,526
Other comprehensive income:
Unfunded pension loss......... (154) -- -- (154) -- (154)
Unrealized translation loss... (4,806) -- -- (4,806) (4,806)
--------------
Comprehensive income.............. $ 11,566
--------------
--------------
Dividends on common stock......... -- (12,448) -- -- (12,448)
Capital contribution.............. 4,036 -- -- -- 4,036
-------- ------------ ----- ----------- -------------
BALANCE, DECEMBER 31, 1997........ 288,509 (119,800) (577) (20,439) 147,693
Comprehensive income 1998:
Net income 1998................. $ 14,649 -- 14,649 -- -- 14,649
Other comprehensive income:
Unfunded pension loss......... 61 -- -- 61 -- 61
Unrealized translation loss... (10,161) -- -- -- (10,161) (10,161)
--------------
Comprehensive income.............. $ 4,549
--------------
--------------
Net Receivable from affiliate
(Note 3)........................ (42,907) -- -- -- (42,907)
Adjustment (Note 5)............... (4,327) (443) -- 1,856 (2,914)
Dividends on common stock......... -- (3,500) -- -- (3,500)
-------- ------------ ----- ----------- -------------
BALANCE, DECEMBER 31, 1998........ $ 241,275 $ (109,094) $ (516) $ (28,744) $ 102,921
-------- ------------ ----- ----------- -------------
-------- ------------ ----- ----------- -------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-22
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------------------------
<S> <C> <C> <C>
1998 1997 1996
---------- ----------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash Flows Provided By (Used In) Operating Activities:
Net Income................................................................. $ 14,649 $ 16,526 $ 2,273
Adjustments to reconcile net income to net cash provided by (used in)
operations:
Depreciation and amortization............................................ 24,815 22,035 17,618
Deferred income taxes.................................................... (4,754) 1,373 (4,812)
Non cash interest expense related to debt push down...................... 25,194 21,635 19,550
Provision for relocating corporate office................................ -- 886 3,000
Gain on sale of property and notes receivable............................ (1,188) (92) (1,664)
Gain/(loss) on equity investment......................................... (5,000) -- 1,200
Loss from discontinued operations........................................ -- -- 5,000
Loss from early retirement of debt....................................... -- -- 851
Other non cash items, net................................................ 8,608 2,378 5,403
Change in operating assets and liabilities............................... 11,408 (117,326) (4,099)
---------- ----------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.......................... 73,732 (52,585) 44,320
---------- ----------- ----------
Cash Flows Provided By (Used In) Investing Activities:
Capital expenditures....................................................... (11,740) (32,096) (25,609)
Investments in assets held for lease....................................... (4,279) (56,375) (54,538)
Proceeds from sale of property and assets held for lease................... 1,247 57,372 50,880
Notes receivable from customers............................................ (59,644) (49,580) (40,344)
Collections of notes receivable............................................ 57,656 15,696 18,844
Proceeds from sale of notes receivable..................................... 2,750 17,381 24,934
Purchase of, investment in, businesses..................................... (7,860) -- (12,200)
Proceeds from sale of business............................................. -- -- 1,295
Investment in affiliates................................................... 5,000 (25,708) --
Discontinued operations, net changes....................................... 2,187 2,140 6,400
---------- ----------- ----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES.......................... (14,683) (71,170) (30,338)
---------- ----------- ----------
Cash Flows Provided By (Used In) Financing Activities:
Net long-term borrowings (payments)........................................ (37,573) (149) (148)
Net change in bank credit facilities....................................... (7,935) 136,910 (7,000)
Termination of interest rate swap position................................. -- -- 4,733
Payment of debt issuance costs............................................. -- -- (3,330)
Early retirement of debt................................................... -- -- (851)
Increasing capital......................................................... -- 4,036 1,342
Dividends paid to parent company........................................... (3,500) (12,448) (30,000)
---------- ----------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES.......................... (49,008) 128,349 (35,254)
---------- ----------- ----------
NET INCREASE IN CASH......................................................... 10,041 4,594 (21,272)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR............................... 13,997 9,403 30,675
---------- ----------- ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR..................................... $ 24,038 $ 13,997 $ 9,403
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-23
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
On June 16, 1999, in conjunction with the financial restructuring discussed
in Note 2 to the Consolidated Financial Statements, Transportation Manufacturing
Operations Inc. changed its corporate name to Motor Coach Industires
International, Inc. ("MCII"). The accompanying consolidated financial statements
include the accounts of MCII and Subsidiaries ("the Company"), which is an
indirect wholly owned subsidiary of MCII Holdings (USA), Inc. ("MCII Holdings"),
which, as a result of the financial restructuring completed on June 16, 1999 and
more fully discussed in Note 2 to the Consolidated Financial Statements, is 61%
owned by a group of investors controlled by Joseph Littlejohn & Levy Fund III
L.P. ("JLL Fund III") an affiliate of Joseph Littlejohn & Levy, Inc. ("JLL") and
39% owned by Consorcio G. Grupo Dina S.A. de C.V. ("Grupo Dina"), a Mexican
corporation. The Company is a manufacturer of motor coaches, and a manufacturer
and distributor of motor coach and transit bus replacement parts, with
manufacturing facilities in the United States, Canada, and Mexico. Sales are
made predominately to a diversified customer base, including independent
operators, national fleet operators, government agencies, and others.
As a result of the financial restructuring discussed in Note 2 to the
Consolidated Financial Statements, MCII Holdings contributed its Dina Autobuses,
S.A. de C.V. subsidiary ("Autobuses") to the Company at historical cost. The
Company's Consolidated Financial Statements include Autobuses for all periods
presented as this is a reorganization of entities under common control. All
significant intercompany transactions have been eliminated.
Certain reclassifications have been made to the financial statements of
prior periods to conform to 1998 classifications. Described below are those
accounting policies that are particularly significant to the Company.
MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues,
and expenses, as well as contingent assets and liabilities disclosed in the
financial statements. Actual results could differ from those amounts reported or
disclosed.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less, when purchased, to be cash equivalents.
FOREIGN CURRENCY TRANSACTIONS
As a means of reducing exposure to fluctuations in foreign currency exchange
rates, the Company may enter into foreign exchange forward contracts to hedge
certain firm and anticipated purchase commitments settled in foreign currencies
(principally the Canadian dollar). The Company does not engage in foreign
currency speculation. The contracts do not subject the Company to risk due to
exchange rate movements as gains and losses on the contracts offset gains and
losses on the transactions being hedged. Foreign currency transactions, which
are not hedged, are converted at the exchange rates in effect at the date of the
transaction. Any gain or loss resulting from the translation of such
transactions is included in the income statement and were not material in any
year. The Company did not enter into any such hedge transactions during 1998.
F-24
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The assets and liabilities of the Company's Canadian operations are
translated into U.S. dollars at current exchange rates, and revenues and
expenses are translated at average exchange rates for the years 1998, 1997, and
1996. Resulting translation adjustments are reflected as other comprehensive
income. This same approach has been applied to the Company's Mexican operations
for the year 1996. The application of Statement of Financial Accounting
Standards ("SFAS") No. 52 "Foreign Currency Translation" requires that the
Mexican economy be judged a highly inflationary economy for 1998 and 1997 and
that the Company's Mexican operations be remeasured as if the U.S. dollar was
the functional currency during 1998 and 1997. This treatment caused a resulting
translation gain for the 1998 period of $3,325,000 and a translation loss for
the 1997 period of $85,000 to be included in the income statement rather than as
other comprehensive income.
INTANGIBLES
Intangibles, which consist primarily of goodwill, are carried at cost less
accumulated amortization of $26,925,000 at December 31, 1998 and $21,288,000 at
December 31, 1997. Intangibles are amortized primarily on the straight-line
method over the periods of expected benefit, generally, but not in excess of 40
years. The Company evaluates the carrying value of goodwill and other long-
lived assets at each reporting period for possible impairment in accordance with
the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of."
INVENTORIES
Inventories are generally stated at the lower of cost or market. Cost is
generally determined on a first-in, first-out basis.
NOTES RECEIVABLE
Notes receivables are collateralized by coaches. Substantially all notes
carry market floating rates of interest based on the creditworthiness of each
individual purchaser. The allowance for uncollectible contracts is adjusted
periodically based on an evaluation of individual contract collectibility.
PENSIONS AND OTHER BENEFITS
Trusteed, noncontributory pension plans cover substantially all employees in
the United States and Canada. Benefits for the noncontributory plans are based
primarily on final average salary and years of service. Net periodic pension
cost for the Company is based on the provisions of SFAS No. 87, "Employers'
Accounting for Pensions." Funding policies provide that payments to pension
trusts shall be at least equal to the minimum funding required by applicable
regulations.
Under Mexican Labor Law, Companies are liable for severance payments for all
indemnities and seniority premiums to employees terminated under certain
circumstances. Additionally, there is a liability for voluntary retirements as
agreed in the union contract and a pension plan for the personnel. Indemnity
payments are expensed as incurred. The liability for seniority premiums,
pensions and severance payments is recorded as incurred, based on actuarial
computations determined by using the projected unit credit method.
Certain employees in the U.S. and Canada are covered under defined benefit
post retirement plans that provide medical and life insurance for eligible
retirees and dependents. The net periodic
F-25
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
postretirement benefit cost for the Company is based on the provisions of SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions."
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. Depreciation is provided
principally by use of the straight-line method at annual rates as follows:
<TABLE>
<S> <C>
Buildings and leasehold improvements.......................... 3% to 25%
Assets held for lease......................................... 10% to 20%
Machinery and equipment....................................... 8% to 33%
</TABLE>
RESEARCH AND DEVELOPMENT
Research and development expenses, net of contributions, are charged to
income as incurred.
Autobuses has a trust arrangement to earmark deductible funds for research
and development of technology. Autobuses is authorized to make use of these
funds for specific purposes and the fund may be increased by future
contributions or by fund earnings. The fund was established in 1990 and no
subsequent cash contributions were made. The balance of the fund at December 31,
1998 and 1997 was $1,543,000 and $1,723,000, respectively, and was included in
other assets.
REVENUE RECOGNITION
Sales are generally recognized on shipment of product to customers. Price
allowances are recorded at the time of sale. An allowance for losses on
receivables is maintained at an amount that management considers appropriate in
relation to the outstanding receivable portfolio. Allowances for losses on
receivables are charged to expense as appropriate. In 1997, the Company
delivered coaches with related revenues of $6,918,000 and earnings before taxes
of $1,187,000 that were omitted from revenues and income because they involved
guaranteed residual values of approximately $3,700,000. In accordance with the
Emerging Issues Task Force Issue ("EITF") 95-1, these coaches are being
accounted for on a lease basis and will be recognized in revenues and income
over periods ranging from 2 to 15 years. During 1998, the Company did not enter
into any transactions that require deferral under EITF 95-1.
START-UP COSTS
Start-up costs on major projects are charged to expense as incurred.
WARRANTY
In the United States and Canada, an accrual for warranty claims is made at
the time of sale. This accrual is based on management's estimate of future
warranty liabilities and is charged to operations. Actual warranty expenditures
are charged to the accrual as incurred. The accrual is reviewed periodically for
adequacy in light of actual experience and adjustments are recorded if
necessary.
In Mexico the suppliers of components pay most warranty costs. Accordingly,
the exposure for warranty is not material.
F-26
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. FINANCIAL RESTRUCTURING
As of December 31, 1998, MCII had a $170 million U.S. senior revolving
credit facility ("the Senior Credit Facility") with a nine-bank syndicate to
finance working capital and other general corporate needs. This facility was due
to expire on October 1, 1999, and the lenders indicated that they were not
willing to extend its maturity. In addition, during 1998, the Company was
required to reduce existing long-term debt obligations by $50 million,
consisting of a $25 million principal payment on MCII's Senior Term Notes due
2002, a $12 million reduction in its Canadian bank credit facility, and a $13
million principal payment on the Pre-Export Notes due 1999.
As a result of the debt reductions during 1998 and the additional debt
obligations and working capital requirements for 1999, the Company did not
expect to generate sufficient cash flow from operations to fund both short term
requirements and meet the required expiration of the Senior Credit Facility.
On March 18, 1999, the Company engaged CIBC World Markets Corp. (formerly
CIBC Oppenheimer Corp.) and its affiliates (collectively "CIBC") to act as the
Company's lead bank agent, financial advisor, placement agent, and/or
underwriter to undertake a financial restructuring of the debt obligations of
the Company and Grupo Dina.
On April 19, 1999, MCII executed an agreement with CIBC for the issuance of
$40 million of Senior Subordinated Increasing Rate Notes ("IRNs"), due December
31, 1999, (subject to extension to March 31, 2000). This bridge financing was
used by MCII to meet its short-term working capital requirements during the
financial restructuring process.
In addition to the bridge financing, the Company, in association with CIBC,
developed and executed a financial restructuring plan to refinance substantially
all of the indebtedness of Grupo Dina, the Company, and their respective
subsidiaries.
On May 14, 1999, Grupo Dina commenced a tender offer and consent
solicitation relating to all of the approximately $206.5 million aggregate
principal amount of outstanding Senior Secured Discount Notes due 2002 (the
"Discount Notes") issued by Grupo Dina and MCII Holdings. Grupo Dina also
commenced a tender offer and consent solicitation relating to all of the $35.0
million aggregate principal amount of outstanding Senior Secured Guaranteed
Notes due 2000 (the "Guaranteed Notes") issued by its wholly-owned subsidiary,
Dina Trucks (USA), L.L.C., and guaranteed by Grupo Dina and Dina Camiones, S.A.
de C.V.
The consideration for each Discount Note and Guaranteed Note tendered and
accepted for payment was (a) $980 per $1,000 of Notes, plus (b) a consent
payment of $20 per $1,000 of Notes, plus (c) accrued interest through the
settlement date.
On June 16, 1999, holders of approximately 99.97% of the outstanding
Discount Notes tendered their notes for payment pursuant to the tender offer.
The remaining Discount Notes were redeemed by the Company. On June 16, 1999, all
Guaranteed Notes were tendered for payment pursuant to the tender offer.
On June 16, 1999, the Company also completed a series of transactions to
re-capitalize and restructure substantially all of the indebtedness of the
Company and Grupo Dina and their subsidiaries, including:
F-27
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. FINANCIAL RESTRUCTURING (CONTINUED)
(a) MCII Holdings redeemed a portion of its outstanding common stock from Grupo
Dina for total proceeds of $328 million. Grupo Dina used $256.6 million of
the proceeds to conclude the above tender offers and retained $71.4 million
in cash;
(b) An investment group led by Joseph Littlejohn & Levy Fund III L.P., ("JLL") a
private equity partnership, made an equity contribution of $125 million in
MCII Holdings. MCII Holdings also issued Senior Notes with warrants due 2010
in an amount of $50 million to the new equity investors. MCII Holdings
subsequently made a capital contribution of the total proceeds of $175
million to MCII. As a result of the equity investment and redemption, the
investment group led by JLL became the 61% majority owner of MCII Holdings
and Grupo Dina became a 39% minority stockholder;
(c) MCII issued $152.3 million of Senior Subordinated Notes due 2009 at a
discount of 98.5755% to yield total cash proceeds of $150.1 million. The
notes are not secured by any collateral and rank junior to any of the
Company's other senior debt but equal to any future senior subordinated debt
issuance. The Company has a right to buy back some or all of the notes prior
to their due date subject to certain limitations and premium provisions as
specified in the agreement; and
(d) MCII entered into a new Senior Secured Credit Facility in the total amount
of $445 million, consisting of $333 million in Term B loans due 2006 drawn
on the June 16, 1999 closing date, and additional availability in the form
of a $112 million revolving credit facility due 2005. The agreement contains
financial covenants that the Company will not exceed certain leverage ratios
or fall below certain interest coverage ratios as specified in the
agreement. The agreement also contains a mandatory prepayment provision
based upon a free cash flow formula as specified in the agreement. The
prepayment provision calls for any prepayment made to be first applied to
the term loans and then to the loans made under the revolving credit
agreement. The facility provides for variable rates of interest based upon
certain specified formulas that include a base rate of interest and an
applicable margin based upon a calculation of the Company's Consolidated
Total Leverage ratio. The Company also pays a 0.5% annualized facility fee
on the daily unused portion of the revolving credit agreement. The Credit
Facility calls for interest payments and payment of the facility fee to be
paid at the end of each calendar quarter. The term loan agreement also calls
for a principal payment of $832,500 due at the end of each calendar quarter
commencing on September 30, 1999 and ending on March 31, 2006 and a final
principal payment of $310,522,500 plus accrued interest on June 16, 2006. It
is the Company's intention to fund its quarterly term loan principal
obligations through the Senior Secured Credit Facility. Therefore, the
current portion of this term loan is classified as long term.
In addition to the debt repurchased pursuant to the tender offers, MCII
repaid substantially all of its outstanding indebtedness including:
(a) The $40 million of IRN's along with $0.2 million of accrued interest and
$0.2 million of redemption premiums;
(b) The existing U.S. revolving credit facility in a total amount of $165.5
million (including outstanding letters of credit) due to mature on October
1, 1999; along with $0.5 million of accrued interest and $0.2 million of
redemption premiums;
(c) The $100 million of 9.02% Senior Notes due 2002, along with $0.4 million of
accrued interest and a prepayment premium of approximately $5.3 million.
F-28
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. FINANCIAL RESTRUCTURING (CONTINUED)
In connection with the debt refinancings, the following restructuring
transactions and agreements were also consummated:
(a) MCII Holdings, transferred Autobuses to MCII, and a portion of the proceeds
of the refinancing were used to repay Autobuses' outstanding credit
facilities of $14.2 million;
(b) MCII Holdings and certain of its subsidiaries transferred certain indirect
subsidiaries, including Autopartes Hidalguenses, S.A. de C.V.; Carroceria
Sahagun, S.A. de C.V.; Mexicana de Manufacturas Especiales, S.A. de C.V.,
and Universal Coach Parts Mexico, S.A. de C.V. (UCP Mexico), to certain
subsidiaries of Grupo Dino and MCII canceled a $7.3 million receivable from
UCP Mexico;
(c) One of our Canadian subsidiaries entered into a sale-leaseback transaction
with Grupo Dina for tooling and equipment located at the facility at St.
Matthews Street in Winnipeg, Manitoba. The market value of the tooling and
equipment at the facility was between $2 million and $4 million and the
transfer price and lease payments were for nominal amounts.
(d) Autobuses transferred to Grupo Dina a group of transit buses that are leased
to a company affiliated with Grupo Dina, together with the related lease
rights;
(e) Autobuses agreed to transfer certain undeveloped land to a subsidiary of
Grupo Dina in exchange for land and buildings required for ongoing
operations;
(f) MCII acquired certain royalty-free rights to use the Dina name and
trademarks in marketing intercity coaches;
(g) Grupo Dina, through its subsidiaries, acquired rights, subject to certain
conditions, to supply various manufactured parts and components to the
operating subsidiaries of MCII; and
(h) Grupo Dina agreed to perform certain transitional services for MCII and its
operating subsidiaries.
3. NET RECEIVABLE FROM AFFILIATES
During the second quarter of 1998, Grupo Dina forgave, in the Company's
favor, a receivable from Autobuses in the amount of $35,038,000. In addition,
due to the uncertainty of the financial position of its parent company, the
Company has made a provision for the uncollectability of the December 31, 1998
net receivable balance from Grupo Dina in the amount of $77,945,000. These two
transactions have resulted in a $42,907,000 net charge against Additional
Capital in Stockholder's Equity.
4. BUSINESS INTERRUPTION INSURANCE RECOVERIES
During 1997, flooding along the Red River caused significant operating
disruptions at the Company's Pembina, North Dakota and Winnipeg, Manitoba
facilities. As a result, the Company filed insurance claims seeking recovery of
various out-of-pocket costs and business interruption losses. Partial recoveries
of $500,000 and $500,000 were received in 1998 and 1997, respectively. In early
1999, the Company reached a settlement of its claim for business interruption
for a total of $8,962,000.
F-29
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. EQUITY CONSOLIDATION ADJUSTMENT
In 1998, the Company made a $2,914,000 Stockholder's Equity adjustment that
corrected an immaterial prior period accounting error occurring in a
consolidation adjustment of a subsidiary company.
6. GAIN ON EQUITY INVESTMENT
In 1993, the Company purchased a 10% ownership interest in Mexicana de
Autobuses, S.A. de C.V. ("MASA"), a Mexican coach manufacturing company, for
$6,000,000. In December 1994, the Company distributed the MASA shares to Grupo
Dina as a dividend. In December 1995, the Company repurchased the MASA shares
directly from Grupo Dina for $1,200,000. In 1996, the Company evaluated the
realizability of its investment in MASA, and, due to the continuing operating
losses of MASA and prolonged weakness in the Mexican economy, wrote off the
investment, resulting in a pre-tax loss of $1,200,000.
In 1998, the Company sold its interest in MASA for $7,000,000 less
reimbursement of fees and expenses of $2,000,000 paid to Grupo Dina.
7. DISCONTINUED OPERATIONS
In 1993, the Board of Directors approved a plan of disposition for the
transit bus manufacturing segment of the Company. This decision was based on
management's review of market activities, business prospects, competitive
bidding, evaluation of backlogs, economic value analysis, and opportunities for
cost reduction, which indicated that the transit bus manufacturing business
might not achieve acceptable profitability in the foreseeable future. As a
result of this decision, a charge to discontinued operations of $53,629,000
($87,202,000 before taxes) was recorded in 1993 to reflect the estimated loss on
disposal of the transit-manufacturing segment.
In November 1994, the Company sold the fixed assets and certain of the
inventory of the transit bus manufacturing business, as well as the right to
manufacture, remanufacture, and distribute transit buses previously made by the
Company, for aggregate consideration of $14,947,000, of which $4,877,000 was in
the form of a note receivable and the remainder was in cash. Additionally, the
purchaser, for a period of five years from the sale date, has agreed not to
distribute parts to transit buses previously made by the Company. The Company
retained all other assets and all of the remaining liabilities of the transit
manufacturing business.
Based upon further analysis of the estimated loss to be incurred on the
disposal, additional provisions were made in 1994 and 1996 of $3,500,000
($5,385,000 before taxes) and $5,000,000 ($8,130,000 before taxes),
respectively.
F-30
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. DISCONTINUED OPERATIONS (CONTINUED)
The summarized balance sheet of the discontinued transit bus manufacturing
segment at December 31 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Assets:
Notes receivable...................................................... $ 1,496 $ 3,953
Other current assets.................................................. 79 82
Deferred taxes and other assets....................................... 2,063 2,314
--------- ---------
3,638 6,349
--------- ---------
Liabilities:
Other current liabilities............................................. 7,150 7,582
Other liabilities..................................................... 904 996
--------- ---------
8,054 8,578
--------- ---------
Net liabilities......................................................... $ 4,416 $ 2,229
--------- ---------
--------- ---------
</TABLE>
8. PROVISION FOR THE RELOCATION OF CORPORATE HEADQUARTERS
In December 1996, the Company provided $3,000,000 for the costs associated
with the decision to relocate the Company's corporate headquarters from Phoenix,
Arizona to Des Plaines, Illinois. An additional $886,000 was provided in 1997
based on a revised estimate of the likelihood that the Phoenix office would be
subleased. At December 31, 1998, the remaining $2,063,000 of reserves are
included in the Consolidated Balance Sheet under the captions, "other current
liabilities" ($644,000) and "other deferred items and insurance reserves"
($1,419,000). Substantially all of the severance and other relocation costs were
paid in 1997 and the lease costs will be paid through 2003.
9. ACQUISITON
In October 1996, the Company purchased certain assets of the Flxible
Corporation ("Flxible") that were being sold through bankruptcy proceedings.
Flxible was a manufacturer of transit buses and a distributor of related
replacement parts. The purpose of the purchase was to utilize the assets to
become the OEM parts distributor for the existing fleet of Flxible transit
buses. The transaction was accounted for as a purchase of assets. The total
purchase price was $12,200,000.
F-31
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. CASH FLOW EFFECT OF CHANGES IN OPERATING ASSETS AND LIABILITIES
Change in operating assets and liabilities for the years ended December 31
consisted of:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ----------- ----------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Decrease (Increase) in operating assets:
Receivables............................................ $ (44,121) $ (25,839) $ (21,894)
Inventories............................................ 28,263 (69,006) (4,414)
Other operating assets................................. 11,022 (2,854) 3,525
---------- ----------- ----------
(4,836) (97,699) (22,783)
---------- ----------- ----------
Increase (Decrease) in operating liabilities:
Accounts payable....................................... 13,819 26,525 12,724
Accrued income taxes................................... 25,245 2,916 (4,549)
Other operating liabilities............................ (22,820) (49,068) 10,509
---------- ----------- ----------
16,244 (19,627) 18,684
---------- ----------- ----------
Net cash flow effect..................................... $ 11,408 $ (117,326) $ (4,099)
---------- ----------- ----------
---------- ----------- ----------
</TABLE>
11. INVENTORIES
Inventories at December 31 consisted of the following:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Raw materials......................................................... $ 38,287 $ 48,938
Work in process....................................................... 42,487 61,230
Finished goods........................................................ 171,501 170,879
---------- ----------
252,275 281,047
Excess quantity and obsolescence reserve.............................. (26,410) (23,252)
---------- ----------
$ 225,865 $ 257,795
---------- ----------
---------- ----------
</TABLE>
12. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment at December 31 consisted of the following:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
Land.................................................................. $ 5,183 $ 5,309
Buildings and leasehold improvements.................................. 45,831 43,261
Assets held for lease................................................. 31,132 28,386
Machinery and equipment............................................... 60,657 58,218
---------- ----------
142,803 135,174
Less accumulated depreciation and amortization........................ (40,007) (28,329)
---------- ----------
$ 102,796 $ 106,845
---------- ----------
---------- ----------
</TABLE>
F-32
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. PROPERTY, PLANT, AND EQUIPMENT (CONTINUED)
Depreciation and amortization expense for property, plant, and equipment was
$17,001,000, $14,072,000 and $9,964,000, respectively, for the years ended
December 31, 1998, 1997 and 1996 respectively.
13. NOTES RECEIVABLE
Notes receivable at December 31 consisted of the following:
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
(DOLLARS IN
THOUSANDS)
Notes receivable, at contract amount................................... $ 47,693 $ 50,359
Less allowance for uncollectible contracts............................. (1,745) (1,269)
---------- ---------
Notes receivable, net.................................................. 45,948 49,090
Less current portion................................................... (10,548) (6,625)
---------- ---------
Long-term notes receivable............................................. $ 35,400 $ 42,465
---------- ---------
---------- ---------
</TABLE>
Scheduled annual maturities of note receivables at December 31, 1998, were:
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THEREAFTER
- ------------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
$ 10,548,000 $ 4,618,000 $ 4,541,000 $ 4,238,000 $ 4,061,000 $ 19,687,000
</TABLE>
14. LONG-TERM DEBT
Long-term debt at December 31 was as follows:
<TABLE>
<CAPTION>
1998 1997
----------- ----------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
United States bank credit facility (Note 2).......................... $ 137,000 $ 135,000
Canadian bank credit facility........................................ -- 12,033
Bancomext export loan facility (Note 2).............................. 8,594 6,496
Pre-Export Notes, due to 1999 (Note 2)............................... 22,000 34,203
9.02% of Senior Notes, due 2002 (Note 2)............................. 100,000 125,000
Note payable at 7%, due 2001......................................... 371 519
----------- ----------
267,965 313,251
Less current portion................................................. -- (44,418)
----------- ----------
Long-term debt, excluding debt push down............................. 267,965 268,833
Push down of debt Senior Secured Discount Notes, due 2002 (Note 2)... 206,500 184,225
----------- ----------
Long-term debt, including debt push down............................. $ 474,465 $ 453,058
----------- ----------
----------- ----------
</TABLE>
The United States bank credit facility was increased in September 1997 to
provide up to $170,000,000 for borrowing purposes, of which up to $35,000,000
was available for issuance of standby letters of credit. The facility previously
provided $125,000,000 for borrowing purposes. Borrowings were due to be
available under the bank credit facility on a revolving basis through October 1,
1999. At
F-33
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. LONG-TERM DEBT (CONTINUED)
December 31, 1998, the Company was contingently liable under standby letters of
credit in the amount of $10,980,000. The interest rates applicable to borrowings
under this agreement were, at the Company's option, indexed to the bank prime
rate or the 30-day London Interbank Offered Rate ("LIBOR"), plus appropriate
spreads over such indices during the period of each borrowing agreement. The
average 30-day LIBOR rate was 6.3% for 1998 and 6.2% at December 31, 1998. The
average base rate applicable to borrowings of less than 30 days was 8.25% for
1998 and was 7.75% at December 31, 1998. The agreements also provided for
commitment fees. Such spreads and fees can change based on changes in the
Company's financial ratios. On June 16, 1999 all outstanding borrowings under
this facility were repaid as part of the financial restructuring discussed in
Note 2 and the facility terminated.
The Canadian bank credit facility was increased in July 1997 to provide up
to Cdn$30,000,000 (equivalent to $19,605,000 at December 31, 1998 exchange
rates) for borrowing purposes, of which Cdn$4,000,000 was reserved for certain
specific purposes. Borrowings were scheduled to be available under the bank
credit facility on a revolving basis through October 1, 1999. The interest rates
applicable to borrowings under this agreement were, at the Company's option,
indexed to the bank prime rate or the 30-day London Interbank Offered Rate
("LIBOR"), plus appropriate spreads over such indices during the period of each
borrowing agreement. The average interest rate was 6.6% for 1998 and 6.75% at
December 31, 1998. The agreements also provided for commitment fees. Such
spreads and fees could change based on changes in the Company's financial
ratios. No additional borrowings can be made against this credit facility as a
result of the refinancing (see Note 2).
On December 4, 1997, an indirect subsidiary of the Company completed the
placement of $35,000,000 of Guaranteed Pre-Export Notes with international
investors. The securities were issued in two Series: Series 1 Notes, of which
$13,000,000 were issued, carry a 10.0% coupon and had a maturity date of
December 3, 1998; and Series 2 Notes, of which $22,000,000 were issued, carry a
10.5% coupon and have a maturity date of March 31, 1999. This note was fully
paid on March 31, 1999.
The Company had $125,000,000 of term notes payable which were due in annual
installments of $25,000,000 beginning in November 1998 and extending through
November 2002. Interest on the notes was at a fixed rate of 9.02%. However, the
Company entered into an interest rate swap agreement in November 1994, which
effectively changed the interest rate on the notes to LIBOR plus 1.14%. The
Company terminated $62,500,000 of the swap in 1995 and the remainder of the swap
in 1996 in exchange for an aggregate cash consideration of $9,683,000, which is
being amortized as a reduction of interest expense over the remaining life of
the notes. As a result, the effective interest rate on the $125,000,000
borrowing was at a fixed rate of 7.3% for 1997 and 1998. As a result of
amendments to the term notes payable agreement, effective April 15, 1999,
interest on the Notes became payable monthly. Additionally, these amendments,
contained changes to certain financial covenants for which the Company would
have been in violation had they not been changed. On June 16, 1999, all
outstanding borrowings were repaid as part of the financial restructuring
discussed in Note 2 to the Consolidated Financial Statements.
In September 1996, The National Bank Foreign Trade S.N.C. ("Bancomext")
provided a $20,000,000 credit facility to Autobuses for the purpose of financing
export sales. This agreement terminated on March 29, 1998. A new one year
agreement, effective May 25, 1998, was entered into which provided a $30,000,000
credit facility at the Mexican Interbank rate. On June 16, 1999, all outstanding
borrowings were repaid as part of financial restructuring discussed in Note 2 to
the Consolidated Financial Statements.
F-34
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. LONG-TERM DEBT (CONTINUED)
The Senior Secured Discount Notes due 2002 ("Discount Notes") were
co-obligations of Grupo Dina and MCII Holdings, with the specific intention that
Grupo Dina would service and repay the obligation. MCII Holdings' stock was
pledged as collateral for the Discount Notes. The Company was not legally
obligated for the note, or any of its assets pledged as collateral. As of the
acquisition of the Company by Grupo Dina (August 1, 1994) the Company has
recognized the Discount Notes and the predecessor debt to the Discount Notes and
related interest expense in the Company's historical financial statements
because the proceeds from the planned restructuring would repay certain
indebtedness of Grupo Dina (see Note 2). The Discount Notes bear interest at an
annual rate of 12% through maturity, on a zero coupon basis through November 15,
1998 and, thereafter, payable in cash. On June 16, 1999, all outstanding
borrowings were repaid as part of the financial restructuring discussed in Note
2 to the Consolidated Financial Statements.
The debt existing at December 31, 1998 has been classified in accordance
with the terms and provisions of the new debt outstanding as of June 16, 1999
(see Note 2).
Interest paid in the years ended December 31, 1998, 1997 and 1996 was
$24,858,000, $26,067,000 and $21,362,000, respectively.
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of the estimated fair value of financial
instruments have been determined by the Company using available market
information and valuation methodologies described below. However, considerable
judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein may not be indicative of
the amounts that the Company could realize in a current market exchange. The use
of different market assumptions or valuation methodology may have a material
affect on the estimated fair value amounts.
The carrying values of cash and cash equivalents, receivables, and accounts
payable approximate fair values due to the short-term maturities of these
instruments. The carrying value of the Notes Receivable approximates fair value
because a significant portion of the note receivable are variable rate notes
rather than fixed rate notes. The carrying amounts and estimated fair values of
the Company's other financial instruments at December 31 were as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
CARRYING AMOUNT FAIR VALUE CARRYING AMOUNT FAIR VALUE
---------------- ---------- ---------------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Debt............................. $ 474,465 $ 445,284 $ 497,476 $ 492,704
Foreign exchange forward
contracts...................... -- -- -- $ 306
</TABLE>
The methods and assumptions used to estimate the fair values of the
financial instrument are summarized as follows:
Debt estimated by discounting the future cash flows using rates currently
available for debt of similar terms and maturity.
Foreign exchange forward contracts (used for hedging purposes) estimated
using quoted exchange rates.
F-35
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. INCOME TAXES
The U.S. operations of the Company are included in the consolidated and
other applicable U.S. income tax returns of the Company. Tax returns for the
Canadian and Mexican entities are filed separately in Canada and Mexico.
United States, Canadian, and Mexican income before income taxes was as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
United States................................................ $ 33,163 $ 21,753 21,874
Canada....................................................... 41,145 23,671 19,477
Mexico....................................................... (2,675) 14,005 4,797
Non deductible interest from push down of debt............... (25,194) (21,635) (19,550)
--------- --------- ---------
$ 46,439 $ 37,794 $ 26,598
--------- --------- ---------
--------- --------- ---------
</TABLE>
Income tax expense (benefit) for the years ended December 31 was comprised
of the following:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Current:
United States:
Federal.................................................. $ 14,661 $ 8,435 $ 11,098
State.................................................... 3,665 1,806 1,685
Foreign.................................................... 18,288 9,654 10,503
--------- --------- ---------
36,614 19,895 23,286
--------- --------- ---------
Deferred:
United States:
Federal.................................................. (3,812) (351) (2,812)
State.................................................... (706) (195) (236)
Foreign.................................................... (306) 1,919 (1,764)
--------- --------- ---------
(4,824) 1,373 (4,812)
--------- --------- ---------
Total income tax expense..................................... $ 31,790 $ 21,268 $ 18,474
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-36
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. INCOME TAXES (CONTINUED)
A reconciliation of the provision for income taxes and the amount that would
be computed using statutory federal income tax rates on income before income
taxes is set forth below:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Computed income tax provision at Statutory rate of 35%....... $ 16,254 $ 13,228 $ 9,310
Non deductible interest expense from push down of debt....... 8,818 7,572 6,842
State income taxes........................................... 1,923 1,057 942
Canadian tax differences..................................... 2,601 1,126 1,258
Mexican tax differences...................................... 690 (3,970) (1,772)
Foreign dividend received.................................... -- 1,160 --
Intangible amortization...................................... 1,778 1,425 1,367
Other, net................................................... (274) (330) 527
--------- --------- ---------
Total income tax expense..................................... $ 31,790 $ 21,268 $ 18,474
--------- --------- ---------
--------- --------- ---------
</TABLE>
Deferred income tax assets and liabilities included in the Consolidated
Balance Sheet at December 31 consisted of the following:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Property, plant, and equipment...................................... $ 6,767 $ 8,315
Pension and other benefits.......................................... 7,650 6,228
Allowances and reserves for losses.................................. 21,500 13,920
Net operating loss carryforward..................................... 15,040 15,554
Alternative minimum tax carryforward................................ 7,901 8,065
Deferred state income taxes......................................... 1,876 1,431
Inventories......................................................... 4,062 929
Other............................................................... 4,938 3,295
---------- ----------
Total gross deferred tax assets....................................... 69,734 57,737
Valuation allowance................................................. (37,711) (33,707)
---------- ----------
Total gross deferred tax assets....................................... 32,023 24,030
---------- ----------
Deferred tax liabilities:
Property, plant, and equipment...................................... (6,996) (8,615)
Intangibles......................................................... (5,964) (4,608)
Installment sales................................................... (309) (489)
Other............................................................... (4,256) (2,804)
---------- ----------
Total gross deferred tax liabilities.................................. (17,525) (16,516)
---------- ----------
Net deferred tax asset................................................ $ 14,498 $ 7,514
---------- ----------
---------- ----------
</TABLE>
F-37
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. INCOME TAXES (CONTINUED)
SFAS No. 109, "Accounting for Income Taxes," requires that deferred tax
assets be reduced by a valuation allowance if it is more likely than not that
some portion or the entire deferred tax asset will not be realized. A valuation
reserve was established against the deferred tax assets in Mexico, primarily
loss carryforwards, that might not be realized. The Mexican net operating losses
expire between 1999 and 2007.
Income taxes paid in the years ended December 31, 1998, 1997 and 1996 were
$12,907,000, $10,814,000 and $13,093,000, respectively.
The Company's Canadian income tax returns for 1982 through 1992 are
currently under review by Revenue Canada. Authorities have proposed imputing
additional income related to transactions with a U.S. based subsidiary of the
Company. Revenue Canada has issued a formal reassessment on the 1985 return. The
Company has filed a notice of objection for 1985. In the event of an adverse
judgment, the additional income taxes for 1982 through 1992 could amount to
$23,000,000 plus interest of approximately $47,000,000 through December 31, 1998
and, in addition, the Company may be subject to potential reassessments for the
years subsequent to 1992 on the same basis which could result in additional
income taxes and interest. These amounts are all before recoveries of U.S.
federal income taxes which may be available to offset a portion of any
additional taxes paid to Canada as these years are still open for U.S. federal
income tax purposes. In accordance with SFAS No. 109, "Accounting for Income
Taxes," a portion of any ultimate liability owed as a result of this issue would
be treated as an adjustment of Grupo Dina's purchase price on acquiring MCII
Holdings, resulting in an increase of purchase goodwill. (If the ultimate
liability were $70,000,000, then approximately $45,000,000 would be a purchase
accounting adjustment.) Based on its review of current relevant information,
including the advice of outside counsel, the Company is of the opinion that
Revenue Canada's arguments are without merit and that any liability from this
matter will not be material to its financial condition or results of operations.
The Company has not provided for U.S. federal income taxes and foreign
withholding taxes on the undistributed earnings of non-U.S. subsidiaries. The
undistributed earnings are intended to be reinvested indefinitely and were
approximately $81,000,000. If these earnings were distributed, foreign
withholding taxes would be imposed; however, foreign tax credits would become
available to substantially reduce any resulting U.S. income tax liability.
17. PENSION BENEFITS
The Company sponsors various retirement plans for most full-time employees.
Benefits of the plans are generally based on years of service and employees'
compensation during the final years of employment. In 1998, the Financial
Accounting Standards Board issued SFAS 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which the Company adopted as of
December 31, 1998.
F-38
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. PENSION BENEFITS (CONTINUED)
The components of net periodic pension costs are summarized in the following
table:
<TABLE>
<CAPTION>
UNITED STATES CANADA
------------------------------- -------------------------------
1998 1997 1996 1998 1997 1996
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Service cost benefits earned during the period.......... $ 1,214 $ 1,028 $ 996 $ 485 $ 475 $ 452
Interest cost on projected benefit obligation........... 1,494 1,262 1,072 427 435 415
Expected return on plan assets.......................... (1,289) (1,154) (1,002) (621) (597) (559)
Amortization of prior service cost...................... 510 510 512 3 4 3
Amortization of transition obligation................... (9) (9) (9) (2) (2) (2)
Recognized net actuarial loss........................... 100 26 30 -- 17 2
FAS 88 settlement....................................... -- -- (165) -- -- --
--------- --------- --------- --------- --------- ---------
Net pension cost........................................ $ 2,020 $ 1,663 $ 1,434 $ 292 $ 332 $ 311
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
The following tables summarize pension benefit obligations, plan assets and
funded status as of December 31:
<TABLE>
<CAPTION>
UNITED STATES CANADA
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CHANGE IN PENSION BENEFIT OBLIGATION
Benefit obligation as of January 1...................................... $ 19,559 $ 15,943 $ 6,407 $ 6,361
Service cost............................................................ 1,214 1,028 485 475
Interest cost........................................................... 1,494 1,262 427 435
Actuarial loss.......................................................... 1,933 1,646 495 35
Benefits paid........................................................... (360) (320) (280) (623)
Foreign currency rate change............................................ -- -- (453) (276)
--------- --------- --------- ---------
Benefit obligation as of December 31.................................... $ 23,840 $ 19,559 $ 7,081 $ 6,407
--------- --------- --------- ---------
--------- --------- --------- ---------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year.......................... $ 15,412 $ 12,863 $ 7,205 $ 6,713
Actual return on plan assets............................................ 3,938 2,820 831 969
Employer contribution................................................... 241 49 510 451
Benefits paid........................................................... (360) (320) (280) (623)
Foreign currency rate change............................................ -- -- (503) (305)
--------- --------- --------- ---------
Fair value of plan assets at end of year................................ $ 19,231 $ 15,412 $ 7,763 $ 7,205
--------- --------- --------- ---------
--------- --------- --------- ---------
FUNDED STATUS:
Funded status at end of year............................................ $ (4,609) $ (4,147) $ 682 $ 798
Unrecognized transition obligation...................................... (36) (45) 9 8
Unrecognized net actuarial (gain)/loss.................................. (812) 4 256 (31)
Unrecognized prior service cost......................................... 691 1,201 32 38
--------- --------- --------- ---------
Prepaid (accrued) benefit cost.......................................... $ (4,766) $ (2,987) $ 979 $ 813
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
F-39
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
17. PENSION BENEFITS (CONTINUED)
The Company has one pension plan for which the employer must recognize an
additional minimum liability in accordance with the provisions of paragraph 36
of Statement 87.
<TABLE>
<CAPTION>
UNITED STATES CANADA
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION CONSIST OF:
Prepaid benefit cost...................................................... $ 39 $ 9 N/A N/A
Accrued benefit liability................................................. (6,290) (5,044) N/A N/A
Intangible asset.......................................................... 691 1,203 N/A N/A
Accumulated other comprehensive income (pretax)........................... 794 845 N/A N/A
--------- --------- --------- ---
Net amount recognized..................................................... $ (4,766) $ (2,987) N/A N/A
--------- --------- --------- ---
--------- --------- --------- ---
</TABLE>
Weighted average assumptions used were:
<TABLE>
<CAPTION>
UNITED STATES CANADA
------------------------------- -------------------------------
1998 1997 1996 1998 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Discount rate for obligation............................. 6.8% 7.0% 7.5% 6.8% 7.0% 7.5%
Rate of increase in compensation......................... 4.0% 4.0% 5.0% 4.0% 4.0% 4.5%
Long-term rate of return on assets....................... 9.5% 9.5% 9.5% 9.5% 9.5% 9.5%
</TABLE>
The Company also has defined contribution plans for certain employees.
Company contributions in the years ended December 31, 1998, 1997 and 1996 were
$1,307,000, $623,000 and $783,000 in the U.S. and $1,147,000, $950,000 and
$846,000 in Canada, respectively.
18. MEXICAN EMPLOYEE BENEFITS
Net periodic pension cost for the two years ended December 31 included the
following components:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Service cost benefits earned during the period...................... $ 57 $ 96 $ 123
Interest cost on projected benefit obligation....................... 456 574 474
Expected return on plan assets...................................... (666) (808) (644)
Net amortization and deferral....................................... (51) (66) 1
--------- --------- ---------
Net pension cost.................................................... $ (204) $ (204) $ (46)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-40
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18. MEXICAN EMPLOYEE BENEFITS (CONTINUED)
The following tables summarize pension benefit obligations, plan assets and
funded status as of December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
CHANGE IN PENSION BENEFIT OBLIGATION:
Benefit obligation as of January 1......................................... $ 2,845 $ 2,264
Service cost............................................................... 57 96
Interest cost.............................................................. 456 574
Plan participants' contributions........................................... -- --
Amendments................................................................. -- --
Actuarial gain............................................................. (612) --
Benefits paid.............................................................. (17) (22)
Foreign currency rate change............................................... (517) (67)
--------- ---------
Benefit obligation as of December 31....................................... $ 2,212 $ 2,845
--------- ---------
--------- ---------
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year............................. $ 3,700 $ 3,001
Actuarial gain in rate..................................................... (668) --
Actual return on plan assets............................................... 666 809
Employer contribution...................................................... -- --
Plan participants' contributions........................................... -- --
Benefits paid.............................................................. (17) (22)
Foreign currency rate change............................................... (682) (88)
--------- ---------
Fair value of plan assets at end of year................................... $ 2,999 $ 3,700
--------- ---------
--------- ---------
FUNDED STATUS:
Funded status at end of year............................................... $ 787 $ 855
Unrecognized net actuarial gain............................................ (802) (1,041)
Unrecognized prior service cost............................................ 52 --
--------- ---------
Prepaid (accrued) benefit cost............................................. $ 37 $ (186)
--------- ---------
--------- ---------
Weighted average assumptions used were:
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Discount rate for obligation............................................... 24.0% 25.4%
Rate of increase in compensation........................................... 18.6% 20.0%
Long-term rate of return on assets......................................... 25.7% 27.2%
</TABLE>
19. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company has defined benefit postretirement plans that provide medical
and life insurance benefits for eligible retirees and dependents. In 1998, the
Financial Accounting Standards Board issued SFAS 132, "Employers' Disclosures
about Pensions and other Postretirement Benefits," which the company adopted as
of December 31, 1998.
F-41
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
The net periodic postretirement benefit cost for the years ended December 31
included the following components:
<TABLE>
<CAPTION>
UNITED STATES CANADA
------------------------------- -------------------------------
1998 1997 1996 1998 1997 1996
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Service cost.................................. $ 563 $ 531 $ 494 $ 21 $ 24 $ 21
Interest cost................................. 475 453 425 18 25 24
Amortization of prior service cost............ (3) (3) (3) -- -- --
Recognized net actuarial (gain)/loss.......... (69) (5) (68) -- 2 2
Curtailment (gain)/loss....................... (665)
--------- --------- --------- --------- --------- ---------
Net periodic benefit cost..................... $ 966 $ 976 $ 183 $ 39 $ 51 $ 47
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
The following tables summarize postretirement benefit obligations and funded
status as of December 31:
<TABLE>
<CAPTION>
UNITED STATES CANADA
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CHANGE IN POSTRETIREMENT BENEFIT UNITED STATES AND CANADA OBLIGATIONS:
Benefit obligation as of January 1......................................... $ 7,574 $ 6,066 $ 278 $ 289
Service cost............................................................... 563 531 21 24
Interest cost.............................................................. 475 453 18 25
Amendments................................................................. (3) (3) -- --
Actuarial (gain)/loss...................................................... (457) 583 -- (37)
Benefits paid.............................................................. (69) (56) (25) (11)
Foreign currency rate change............................................... -- -- (18) (12)
--------- --------- --------- ---------
Benefit obligation as of December 31....................................... $ 8,083 $ 7,574 $ 274 $ 278
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
UNITED STATES CANADA
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
FUNDED STATUS:
Funded status at end of year............................................... $ (8,083) $ (7,574) $ (274) $ (278)
Unrecognized net actuarial (gain)/loss..................................... (368) 23 (21) (25)
Unrecognized prior service cost............................................ (15) (18) -- --
--------- --------- --------- ---------
Accrued benefit cost....................................................... $ (8,466) $ (7,569) $ (295) $ (303)
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation ("APBO") for the Company's U.S. operations was
9.0% as of December 1998, declining by 1.0% per year to 5.0% by the year 2002
and remaining at that level thereafter for retirees below the age 65, and 6.5%
as of December 31, 1998, declining by 0.5% per year to 5.0% by the year 2002 and
F-42
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
remaining at that level thereafter for retirees above age 65. A one
percentage-point change in the assumed health-care-cost trend rate would have
the following effects:
<TABLE>
<CAPTION>
ONE PERCENTAGE ONE PERCENTAGE
POINT INCREASE POINT DECREASE
--------------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Effect on total of service and interest cost components.......................... $ 261 $ (199)
Effect on postretirement benefit obligation...................................... $ 1,945 $ (1,530)
</TABLE>
The postretirement benefit obligation of the Company's Canadian operations
does not contain a health care component.
20. LEASE OBLIGATIONS
Certain warehouses, offices, and equipment are leased under leases expiring
through the year 2014 with some of the leases providing for renewal options.
Leases, which expire, are generally renewed or replaced by similar leases.
At December 31, 1998, future minimum rental payments with respect to
noncancellable operating leases with terms in excess of one year were as
follows:
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THEREAFTER
- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 2,551,686 $ 2,340,937 $ 1,809,653 $ 1,451,543 $ 1,303,316 $ 5,439,363
</TABLE>
Total rental expenses for the years ended December 31, 1998, 1997 and 1996
were $4,068,000, $3,384,000 and $3,440,000, respectively.
21. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company enters into foreign exchange forward contracts to hedge certain
firm and anticipated purchase commitments, which are settled in Canadian
dollars. These contracts are purchased to reduce the impact of Canadian dollar
currency fluctuations on operating results. The Company does not engage in
Canadian dollar currency speculation. The contracts do not subject the Company
to risk due to exchange rate movements because gains and losses on the materials
being purchased offset gains and losses on the contracts. At December 31, 1998
the Company had no Canadian dollar exchange forward contracts outstanding. At
December 31, 1997 the Company had approximately $7,558,000 of Canadian dollar
exchange forward contracts outstanding. The Company's theoretical risk in these
transactions is the cost of replacing, at current rates, these contracts in the
event of default by the other party to the contract. Management believes the
risk of incurring such losses is remote because the contracts are entered into
with major financial institutions.
As an adjunct to its coach business, the Company has entered into repurchase
and first loss agreements with certain companies which provide financing for
coaches sold by the Company, pursuant to which the Company agrees to either
repurchase coaches from such companies or guarantee the payment of certain
obligations of coach owners or operators. The amounts of such repurchase
agreements as of December 31, 1998 and 1997 were approximately $21,000,000 and
$23,000,000, respectively. Additionally, as a result of certain sales of notes
receivable and leases, the Company is
F-43
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
21. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (CONTINUED)
obligated to reimburse the purchaser of such notes and leases for any losses as
a result of defaults up to $6,700,000 and $6,600,000 as of December 31, 1998 and
1997, respectively. The Company has experienced no material losses in respect to
such obligations and losses under existing agreements are not expected to have a
material affect on the Company's financial position or results of operations.
22. LITIGATION
The Company and certain of its subsidiaries are plaintiffs or defendants to
various actions, proceedings and pending claims. Some of the foregoing involve
or may involve claims for compensatory, punitive, or other damages in material
amounts. Litigation is subject to many uncertainties and it is possible that
some of these legal actions, proceedings and pending claims could be decided
against the Company. Although the amount of liability at December 31, 1998 with
respect to these matters is not ascertainable, the Company believes that any
resulting liability would not materially affect the Company's financial
condition or results of operations.
23. COMMITMENTS AND CONTINGENCIES
As a part of the Company's marketing strategy for the 1997 introduction of
the new E-Series model inter-city coach, the "Renaissance", it has entered into
trade-in agreements, in 1996, whereby certain customers may trade-in, at
predetermined values, their recently purchased D-Series model coaches when
purchasing a new E-Series model. Under the terms of the agreements, the Company
has committed to trade-in values ranging from 73% to 82% of the original invoice
price for a 36-month-old coach; such trade-in values being estimated by
management to approximate fair market value for such coaches at the time of the
trade-in. At December 31, 1998 the Company's commitment under this program was
$14,525,000. The Company has reserved $600,000 for the estimated net cost to the
Company.
During 1996, the Company completed a research and development project in
connection with the development of the E-Series coach, which had been
undertaken, with the cooperation of the Government of Canada and the Province of
Manitoba. Agreements entered into between the parties for this project provided
for payment of matching contributions and specified that the contributions may
be repayable if, during the first five years following project completion, the
ratio of Canadian employees to total employees of the Company falls below 40%.
As of December 31, 1998, the total amount of such contributions was $6,891,000
and the Company had met the employee ratio commitment ($1,479,000 was recorded
as income in the 1996 Consolidated Income Statement).
24. NONCONSOLIDATED AFFILIATE
In 1997 a new company was formed, MCII Financial Services ("MFS"). The
Company acquired 250,000 shares, or 25%, of voting common stock of MFS and
15,000,000 shares of non-voting preferred stock of MFS for $250,000 and
$15,000,000 respectively. The remaining 750,000 shares, or 75%, of the voting
common stock were acquired by the indirect controlling shareholders of the
Company. In 1998, the Company increased its investment by $7,650,000. The
Company also recognized its share of equity income of $210,000 for 1998. MFS
will operate independently from the Company and will provide conditional sales
contracts and operating leases to the Company's customers. MFS is expected to
have better access to funding on competitive terms.
F-44
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
24. NONCONSOLIDATED AFFILIATE (CONTINUED)
MFS's initial transaction was the purchase of $19,406,000 of loans and
$12,742,000 of leases from certain subsidiaries of the Company. The Company has
guaranteed the full and prompt collection of the loans sold to MFS. The Company
received a fairness opinion from an independent third party as to the basis for
the selling price of these assets. No gain was recognized on the transaction.
MFS will in the future engage in loan and leasing activities involving the
Company and others in the motor coach and other industries. During 1998, MFS
purchased additional loans of $35,519,000 and leases of $3,216,000 from the
Company.
25. RELATED PARTY TRANSACTIONS
Related party transactions for the years ended December 31 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Purchases from affiliated companies:
Goods...................................................... $ 4,146 $ 15,044 $ 4,815
Services................................................... 7,681 21,587 8,229
Allocated interest expense................................. 3,234 6,978 3,172
--------- --------- ---------
$ 15,061 $ 43,609 $ 16,216
--------- --------- ---------
--------- --------- ---------
Sales to affiliated companies:
Goods...................................................... $ -- $ 2,973 $ 968
Services................................................... 2,640 7,384 4,443
Allocated interest income.................................. 11,989 8,376 1,720
--------- --------- ---------
$ 14,629 $ 18,733 $ 7,131
--------- --------- ---------
--------- --------- ---------
Charges for MFS Management Services.......................... $ 931 N/A N/A
--------- --------- ---------
--------- --------- ---------
Charges for Grupo Dina management services................... $ 1,000 $ 1,000 $ 1,000
--------- --------- ---------
--------- --------- ---------
</TABLE>
Related party balances included in the December 31 balance sheet were:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Affiliated companies receivables, net................................... $ -- $ 16,293
</TABLE>
Grupo Dina's interest income and expense is allocated to its subsidiaries
based on relative monthly intercompany balances.
During 1997, Autobuses put 240 transit bus units, with a sales value of
$9,340,000, out on lease to Transportes y Services Terrestres G S.A. de C.V.
("TSTG"). TSTG is controlled by members of the group consisting of the indirect
controlling shareholders of the Company.
F-45
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. BUSINESS SEGMENT AND GEOGRAPHIC DATA
BUSINESS SEGMENT DATA
The Company has three reporting segments, Coach and Support, Replacements
Parts, and Finance. The Coach and Support segment manufactures motor coaches and
buys and sells used motor coaches. The Replacement Parts segment distributes
replacement parts for motor coaches, transit buses and school buses. The Finance
segment provides financing options for the sale of new and used coaches. The
reportable segments are managed separately because each business has differing
customer selling requirements. The accounting policies of the segments are the
same as those described in the summary of significant accounting policies.
Intangible assets are included in each segment's reportable assets, and the
corresponding amortization of these intangible assets is included in the
determination of a segment's operating profit or loss. The Company evaluates
performance based on profit or loss from operations before income taxes,
interest, and other non-operating income (expenses).
Data for these three segments of the years ending December 31 are as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Coach and Support...................................... $ 736,216 $ 537,184 $ 496,078
Replacement Parts...................................... 186,072 193,358 159,201
Finance................................................ 9,439 9,241 11,805
---------- ---------- ----------
$ 931,727 $ 739,783 $ 667,084
---------- ---------- ----------
---------- ---------- ----------
Operating income:
Coach and Support...................................... $ 59,276 $ 60,501 $ 41,474
Replacement Parts...................................... 22,098 15,923 14,158
Finance................................................ 2,430 2,029 4,201
---------- ---------- ----------
$ 83,804 $ 78,453 $ 59,833
---------- ---------- ----------
---------- ---------- ----------
Depreciation and amortization:
Coach and Support...................................... $ 18,627 $ 15,053 $ 11,435
Replacement Parts...................................... 4,021 4,739 4,014
Finance................................................ 2,167 2,243 2,169
---------- ---------- ----------
$ 24,815 $ 22,035 $ 17,618
---------- ---------- ----------
---------- ---------- ----------
Capital expenditures:
Coach and Support...................................... $ 8,847 $ 29,399 $ 24,271
Replacement Parts...................................... 2,889 2,697 1,338
Finance................................................ 4 -- --
---------- ---------- ----------
$ 11,740 $ 32,096 $ 25,609
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
F-46
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
26. BUSINESS SEGMENT AND GEOGRAPHIC DATA (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Assets:
Coach and Support................................................... $ 536,659 $ 567,699
Replacement Parts................................................... 184,325 189,415
Finance............................................................. 80,771 63,559
---------- ----------
$ 801,755 $ 820,673
---------- ----------
---------- ----------
</TABLE>
There are no material intersegment transactions.
Major customers are generally defined as those which individually account
for more that 10% of the Company's revenue. For the years ended 1998, 1997 and
1996, Greyhound Lines, Inc. ("GLI") accounted for 8.0%, 9.5% and 11.1%,
respectively, of the Company's consolidated revenues. In January 1998, GLI and
MCII Holdings signed a 10-year long-term supply agreement until the year 2007.
For the years-ended 1998, 1997 and 1996, sales to Coach USA, Inc. ("CUI")
accounted for 9.2%, 8.6% and 0.9%, respectively, of the Company's consolidated
revenues. Effective June 9th, 1997, CUI and MCII Holdings signed an agreement
pursuant to which CUI agreed that MCII Holdings would be the primary supplier of
CUI's annual new coach requirements through 1999.
The company also has a long-term agreement to purchase Coach part "kits"
from Marcopolo for its Viaggio coaches manufactured in Mexico. The agreement
requires the company to pay a royalty fee based on the value of certain "kit"
parts and components purchased from suppliers other than Marcopolo. The royalty
fee ranges from 2.7% to 3.5% of the "kit" value. Royalty fees paid in 1998 and
1997 were $291,000 and $1,114,000 respectively.
GEOGRAPHICAL DATA
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
United States.......................................... $ 770,709 $ 610,915 579,136
Canada................................................. 79,767 82,898 82,157
Mexico................................................. 81,251 45,970 5,791
---------- ---------- ----------
$ 931,727 $ 739,783 $ 667,084
---------- ---------- ----------
---------- ---------- ----------
Long-Lived Assets:
United States.......................................... $ 229,758 $ 222,501
Canada................................................. 101,669 110,965
Mexico................................................. 24,937 39,468
---------- ----------
$ 356,364 $ 372,934
---------- ----------
---------- ----------
</TABLE>
F-47
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
27. GUARANTOR CONDENSED FINANCIAL STATEMENTS
In connection with the issuance of the Senior Subordinated Notes due 2009
(the "Notes") (See note 2), the Company's U.S. subsidiaries became guarantors to
these Notes. The following tables present condensed consolidating financial
information for MCII Guarantors (U.S. entities); and Non Guarantors (Non-U.S.
entities including Autobuses and MCI, Ltd.). Each of the Guarantors are a direct
or indirect wholly owned subsidiary of MCII. The Guarantors will jointly and
severally and fully and unconditionally guarantee the Notes of the Company. The
following condensed consolidating financial information presents the results of
operations, financial position and cash flows of MCII, Guarantors, and Non
Guarantors, and the eliminations necessary to arrive at the information for the
Company on a condensed consolidated basis.
CONDENSED CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales........................................... $ -- $ 772,022 $ 347,742 $ (188,037) $ 931,727
Cost of sales (exclusive of items shown
separately below)............................. -- 615,043 303,179 (190,033) 728,189
Depreciation and amorization.................... 339 10,805 13,671 -- 24,815
Interest expense, financing operations.......... -- 2,545 220 -- 2,765
Research and development expenses............... -- 4,253 4,488 -- 8,741
New product start-up costs...................... -- 981 -- -- 981
Business insurance recoveries................... -- (7,366) (1,096) -- (8,462)
Selling, general and administrative expenses.... 8,540 86,758 (4,674) 270 90,894
---------- ----------- ----------- ------------ ------------
Operating income................................ (8,879) 59,003 31,954 1,726 83,804
---------- ----------- ----------- ------------ ------------
Interest expense, net........................... (2,498) (18,919) 1,432 -- (19,985)
Interest expense pushed down from related
party......................................... (25,194) -- -- -- (25,194)
Other (income) expense.......................... (340) (204) 33 -- (511)
Gain on equity investments...................... 5,000 -- -- -- 5,000
Foreign currency translation gain............... -- -- 3,325 -- 3,325
---------- ----------- ----------- ------------ ------------
(23,032) (19,123) 4,790 -- (37,365)
Income (loss) before income taxes............... (31,911) 39,880 36,744 1,726 46,439
Income taxes.................................... (3,264) 17,072 17,982 -- 31,790
---------- ----------- ----------- ------------ ------------
Net income (loss)............................... $ (28,647) $ 22,808 $ 18,762 $ 1,726 $ 14,649
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-48
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
27. GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue......................................... $ -- $ 613,426 $ 303,960 $ (177,603) $ 739,783
Cost of sales (exclusive of items shown
separately below)............................. -- 481,923 248,280 (183,596) 546,607
Depreciation and amorization.................... 436 11,494 10,105 -- 22,035
Interest expense, financing operations.......... -- 2,184 210 -- 2,394
Research and development expenses............... -- 2,882 3,773 -- 6,655
New product start-up costs...................... -- -- 7,333 -- 7,333
Business insurance recoveries................... (500) (500)
Provision for relocation of corporate office.... 886 -- -- -- 886
Selling, general and administrative expenses.... 5,846 68,788 2,981 (1,695) 75,920
---------- ----------- ----------- ------------ ------------
Operating income................................ (7,168) 46,155 31,778 7,688 78,453
---------- ----------- ----------- ------------ ------------
Interest expense, net........................... (3,225) (13,613) (5,021) -- (21,859)
Interest expense pushed down from related
party......................................... (21,635) -- -- -- (21,635)
Other (income) expense.......................... 69 (465) 10,704 (7,388) 2,920
Foreign currency translation gain............... -- -- (85) -- (85)
---------- ----------- ----------- ------------ ------------
(24,791) (14,078) 5,598 (7,388) (40,659)
Income (loss) before income taxes............... (31,959) 32,077 37,376 300 37,794
Income taxes.................................... (3,630) 14,012 10,886 -- 21,268
---------- ----------- ----------- ------------ ------------
Net income (loss)............................... $ (28,329) $ 18,065 $ 26,490 $ 300 $ 16,526
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-49
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 27--GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED INCOME STATEMENT
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue......................................... $ -- $ 580,538 $ 267,832 $ (181,286) $ 667,084
Cost of sales (exclusive of items shown
separately below)............................. -- 478,193 206,425 (178,419) 506,199
Depreciation and amortization................... 335 10,523 6,760 -- 17,618
Interest expense, finance operations............ -- 3,123 482 -- 3,605
Research and development expenses............... -- 1,660 5,686 -- 7,346
Provision for relocation of corporate office.... 3,000 -- -- -- 3,000
Selling, general and administrative expenses.... (852) 48,959 21,376 -- 69,483
---------- ----------- ----------- ------------ ------------
Operating income (loss)......................... (2,483) 38,080 27,103 (2,867) 59,833
---------- ----------- ----------- ------------ ------------
Interest expense, net........................... (3,906) (9,843) (2,280) (16,029)
Interest expense pushed down from related
party......................................... (19,550) -- -- -- (19,550)
Loss on sale of equity investments.............. (1,200) -- -- -- (1,200)
Other income.................................... 116 1,102 979 -- 2,197
Foreign currency translation gain............... -- -- 1,347 -- 1,347
---------- ----------- ----------- ------------ ------------
(24,540) (8,741) 46 -- (33,235)
---------- ----------- ----------- ------------ ------------
Income (loss) before income taxes, discontinued
operations and extraordinary item............. (27,023) 29,339 27,149 (2,867) 26,598
Income tax expense (benefit).................... (1,986) 11,721 8,739 -- 18,474
---------- ----------- ----------- ------------ ------------
Income (loss) from continuing operations........ $ (25,037) $ 17,618 $ 18,410 $ (2,867) $ 8,124
---------- ----------- ----------- ------------ ------------
Discontinued operations (net of tax benefit of
$3,130)....................................... -- (5,000) -- -- (5,000)
---------- ----------- ----------- ------------ ------------
Income before extraordinary item................ (25,037) 12,618 18,410 (2,867) 3,124
Extraordinary charge on early retirement of debt
(net of tax benefit of $550).................. (851) -- -- -- (851)
---------- ----------- ----------- ------------ ------------
Net income (loss)............................... $ (25,888) $ 12,618 $ 18,410 $ (2,867) $ 2,273
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-50
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 27--GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1998
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................... $ 5,415 $ 17,951 $ 672 $ -- $ 24,038
Trade and other accounts receivable.......... 2,313 98,593 19,365 1,695 121,966
Intercompany receivables/(payables).......... 506,792 (544,249) 117,361 (79,904) --
Current portion of notes receivable.......... -- 10,016 532 -- 10,548
Inventories.................................. -- 165,928 61,545 (1,608) 225,865
Deferred income taxes........................ 4,098 17,006 384 -- 21,488
Other current assets......................... 40 4,134 1,912 -- 6,086
---------- ----------- ----------- ------------ ------------
Total Current Assets........................... 518,658 (230,621) 201,771 (79,817) 409,991
Property, plant, and equipment, net.......... 533 46,320 55,974 (31) 102,796
Notes receivable............................. -- 32,126 3,274 -- 35,400
Investments in affiliates.................... 19,478 3,632 6 -- 23,116
Intangible assets............................ 2,470 145,509 67,610 -- 215,589
Other assets................................. 2,520 8,696 3,647 -- 14,863
---------- ----------- ----------- ------------ ------------
Total Assets................................... $ 543,659 $ 5,662 $ 332,282 $ (79,848) $ 801,755
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-51
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 27--GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable............................. $ 1,191 $ 53,145 $ 27,554 $ -- $ 81,890
Accrued compensation and other benefits...... 3,635 5,267 4,441 -- 13,343
Accrued warranties........................... -- 10,618 3,342 -- 13,960
Accrued income taxes......................... 3,021 9,867 19,432 -- 32,320
Self insurance reserves...................... 5,067 1,322 (24) -- 6,365
Net liabilities of discontinued operations... -- 4,416 -- -- 4,416
Other current liabilities.................... 7,089 6,739 16,411 -- 30,239
----------- ----------- ----------- ------------ ------------
Total Current Liabilities...................... 20,003 91,374 71,156 -- 182,533
Long-term debt............................... 237,000 371 30,594 -- 267,965
Long-term debt--pushed down from related
party...................................... 206,500 -- -- -- 206,500
Pensions and other benefits.................. 15,233 38 516 -- 15,787
Other deferred items and self insurance
reserves................................... 12,435 6,624 -- -- 19,059
Deferred income taxes........................ (2,000) 2,152 6,838 -- 6,990
----------- ----------- ----------- ------------ ------------
Total Liabilities.............................. 489,171 100,559 109,104 -- 698,834
----------- ----------- ----------- ------------ ------------
Stockholder's Equity:
Common Stock and additional capital.......... 155,065 (48,640) 212,789 (77,939) 241,275
Accumulated deficit.......................... (100,032) (45,988) 38,835 (1,909) (109,094)
Accumulated other comprehensive income....... (545) (269) (28,446) -- (29,260)
----------- ----------- ----------- ------------ ------------
Total Stockholder's Equity..................... 54,488 (94,897) 223,178 (79,848) 102,921
----------- ----------- ----------- ------------ ------------
Total Liabilities & Stockholder's Equity....... $ 543,659 $ 5,662 $ 332,282 $ (79,848) $ 801,755
----------- ----------- ----------- ------------ ------------
----------- ----------- ----------- ------------ ------------
</TABLE>
F-52
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 27--GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................... $ 9,018 $ 5,306 $ (327) $ -- $ 13,997
Accounts receivable, net..................... 92 60,770 27,681 -- 88,543
Intercompany receivables/(payables).......... 512,257 (517,749) 21,785 -- 16,293
Current portion of notes receivable.......... -- 5,973 652 -- 6,625
Inventories.................................. -- 181,642 79,757 (3,604) 257,795
Deferred income taxes........................ 2,735 12,305 (610) -- 14,430
Other current assets......................... 1,773 3,135 2,683 -- 7,591
---------- ----------- ----------- ------------ ------------
Total Current Assets........................... 525,875 (248,618) 131,621 (3,604) 405,274
Property, plant, and equipment............... 748 40,693 65,435 (31) 106,845
Notes receivable............................. -- 38,085 4,380 -- 42,465
Deferred taxes............................... 3,278 (3,739) 461 -- --
Investments in affiliates.................... 15,083 170 -- -- 15,253
Intangible assets, net....................... 3,545 150,448 73,374 -- 227,367
Other assets................................. 3,360 7,211 12,898 -- 23,469
---------- ----------- ----------- ------------ ------------
Total Assets................................... $ 551,889 $ (15,750) $ 288,169 $ (3,635) $ 820,673
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-53
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 27--GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
---------- ----------- ----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable............................. $ 3,145 $ 40,182 $ 24,253 $ -- $ 67,580
Accrued compensation and other benefits...... 813 7,079 4,488 -- 12,380
Accrued warranties........................... -- 7,124 2,896 -- 10,020
Accrued income taxes......................... 835 5,021 1,395 -- 7,251
Self insurance reserves...................... 4,667 808 135 -- 5,610
Net liabilities of discontinued operations... -- 2,229 -- -- 2,229
Other current liabilities.................... 3,984 6,875 14,252 -- 25,111
Current portion of long-term debt............ 25,000 148 19,270 -- 44,418
---------- ----------- ----------- ------------ ------------
Total Current Liabilities...................... 38,444 69,466 66,689 -- 174,599
Long-term debt............................... 235,000 371 33,462 -- 268,833
Long-term debt--pushed down from related
party...................................... 184,225 -- -- -- 184,225
Pensions and other benefits.................. 13,083 7,272 (6,318) -- 14,037
Other deferred items and self insurance
reserves................................... 14,624 2,459 7,287 -- 24,370
Deferred income taxes........................ -- -- 6,916 -- 6,916
---------- ----------- ----------- ------------ ------------
Total Liabilities.............................. 485,376 79,568 108,036 -- 672,980
---------- ----------- ----------- ------------ ------------
Stockholder's Equity
Common stock and additional capital.......... 153,973 (50,956) 185,492 -- 288,509
Accumulated deficit.......................... (87,037) (45,010) 15,882 (3,635) (119,800)
Accumulated other comprehensive income....... (423) 648 (21,241) -- (21,016)
---------- ----------- ----------- ------------ ------------
Total Stockholder's Equity..................... 66,513 (95,318) 180,133 (3,635) 147,693
---------- ----------- ----------- ------------ ------------
Total Liabilities & Stockholder's Equity....... $ 551,889 $ (15,750) $ 288,169 $ (3,635) $ 820,673
---------- ----------- ----------- ------------ ------------
---------- ----------- ----------- ------------ ------------
</TABLE>
F-54
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 27--GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED CASH FLOW
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ----------- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash Flows Provided By (Used In) Operating
Activities:
Net Income..................................... $ (28,647) $ 22,808 $ 18,762 $ 1,726 $ 14,649
Adjustments to reconcile net income to net cash
provided by (used in) operations:
Depreciation and amortization................ 339 10,805 13,671 -- 24,815
Deferred income taxes........................ (85) (6,288) 1,619 -- (4,754)
Non cash interest expense pushed down from
related party.............................. 25,194 -- -- -- 25,194
Gain on sale of property and notes
receivable................................. -- (1,188) -- -- (1,188)
Gain on equity investment.................... (5,000) -- -- -- (5,000)
Other noncash items, net..................... 1,826 6,541 241 -- 8,608
Change in operating assets and liabilities,
net........................................ 3,152 (40,939) 50,921 (1,726) 11,408
--------- ----------- ----------- ------------- ------------
Net Cash Provided By (Used In) Operating
Activities..................................... (3,221) (8,261) 85,214 -- 73,732
--------- ----------- ----------- ------------- ------------
Cash Flows Provided By (Used In) Investing
Activities:
Capital expenditures........................... (75) (7,270) (4,395) -- (11,740)
Investment in assets held for lease............ -- (4,279) -- -- (4,279)
Proceeds from sale of property and
investments.................................. -- 906 341 -- 1,247
Investment in notes receivable................. -- (57,598) (2,046) -- (59,644)
Collections of notes receivable................ -- 54,653 3,003 -- 57,656
Proceeds from sale of notes receivable......... -- 2,750 -- -- 2,750
Investment in business......................... (7,860) -- -- -- (7,860)
Investment in affiliate........................ 5,000 -- -- -- 5,000
Discontinued operations, net changes........... -- 2,187 -- -- 2,187
--------- ----------- ----------- ------------- ------------
Net Cash Used In Investing Activities............ (2,935) (8,651) (3,097) -- (14,683)
--------- ----------- ----------- ------------- ------------
Cash Flows Provided By (Used In) Financing
Activities:
Net change in long-term borrowings............. (25,000) (148) (12,425) -- (37,573)
Net change in credit facility.................. 2,000 -- (9,935) -- (7,935)
Related party receivables/payables............. 29,053 29,705 (58,758) -- --
Dividends paid to parent company............... (3,500) -- -- -- (3,500)
--------- ----------- ----------- ------------- ------------
Net Cash Provided By (Used In) Financing
Activities..................................... 2,553 29,557 (81,118) -- (49,008)
--------- ----------- ----------- ------------- ------------
Net Increase (Decrease) in Cash.................. (3,603) 12,645 999 -- 10,041
Cash and Cash Equivalents at Beginning of Year... 9,018 5,306 (327) -- 13,997
--------- ----------- ----------- ------------- ------------
Cash and Cash Equivalents at End of Year......... $ 5,415 $ 17,951 $ 672 $ -- $ 24,038
--------- ----------- ----------- ------------- ------------
--------- ----------- ----------- ------------- ------------
</TABLE>
F-55
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 27--GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED CASH FLOW
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ----------- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash Flows Provided By (Used In) Operating
Activities:
Net Income....................................... $ (28,329) $ 18,065 $ 26,490 $ 300 $ 16,526
Adjustments to reconcile net income to net cash
provided by operations
Depreciation and amortization.................. 436 11,494 10,105 -- 22,035
Deferred income taxes.......................... 716 5,137 (4,480) -- 1,373
Non cash interest expense pushed down from
related party................................ 21,635 -- -- -- 21,635
Provision for relocating corporate office...... 886 -- -- -- 886
Gain on sale of property and notes receivable.. -- (92) -- -- (92)
Other noncash items, net....................... 4,961 5,926 (8,509) -- 2,378
Change in operating assets and liabilities,
net.......................................... (24,852) (58,787) (33,387) (300) (117,326)
--------- ----------- ----------- ----- ------------
Net Cash Used In Operating Activities............ (24,547) (18,257) (9,781) -- (52,585)
--------- ----------- ----------- ----- ------------
Cash Flows Provided (Used) By Investing
Activities:
Capital expenditures........................... (176) (4,567) (27,353) -- (32,096)
Investment in assets held for sale............. -- (56,375) -- -- (56,375)
Proceeds from sale of property and
investments.................................. -- 57,372 -- -- 57,372
Investment in notes receivable................. -- (43,675) (5,905) -- (49,580)
Collections of notes receivable................ -- 12,233 3,463 -- 15,696
Proceeds from sale of notes receivable......... -- 17,381 -- -- 17,381
Investment in affiliate........................ (25,708) -- -- -- (25,708)
Discontinued operations, net changes........... -- 2,140 -- -- 2,140
--------- ----------- ----------- ----- ------------
Net Cash Used In Investing Activities............ (25,884) (15,491) (29,795) -- (71,170)
--------- ----------- ----------- ----- ------------
Cash Flows Provided By (Used In) Financing
Activities:
Net change in long-term borrowings............. -- (149) -- -- (149)
Net change in bank credit facilities........... 50,000 -- 86,910 -- 136,910
Increase in capital............................ 4,036 -- -- -- 4,036
Related party receivables/payables............. 11,677 38,213 (49,890) -- --
Dividends paid to parent company............... (12,448) -- -- -- (12,448)
--------- ----------- ----------- ----- ------------
Net Cash Provided By Financing Activities........ 53,265 38,064 37,020 -- 128,349
--------- ----------- ----------- ----- ------------
Net Increase (Decrease) in Cash.................. 2,834 4,316 (2,556) -- 4,594
Cash and Cash Equivalents at Beginning of Year... 6,184 990 2,229 -- 9,403
Cash and Cash Equivalents at End of Year......... $ 9,018 $ 5,306 $ (327) -- $ 13,997
--------- ----------- ----------- ----- ------------
--------- ----------- ----------- ----- ------------
</TABLE>
F-56
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 27--GUARANTOR CONDENSED FINANCIAL STATEMENTS (CONTINUED)
CONDENSED CONSOLIDATED CASH FLOW
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------
NON
MCII GUARANTORS GUARANTORS ELIMINATIONS CONSOLIDATED
--------- ----------- ----------- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Cash Flows Provided By (Used In) Operating
Activities:
Net Income...................................... $ (25,888) $ 12,618 $ 18,410 $ (2,867) $ 2,273
Adjustments to reconcile net income to net cash
provided by operations
Depreciation and amortization................. 335 10,523 6,760 -- 17,618
Deferred income taxes......................... (2,252) 5,751 (8,311) -- (4,812)
Loss from discontinued operations............. 5,000 5,000
Loss from early retirement of debt............ 851 851
Non-cash interest expense
related to debt push down................... 19,550 -- -- -- 19,550
Provision for relocating corporate office..... 3,000 -- -- -- 3,000
Gain on sale of property and notes
receivable.................................. -- (1,664) -- -- (1,664)
Loss on sale of equity investment............. 1,200 -- -- -- 1,200
Other non-cash items, net..................... 12,858 (5,401) (2,054) -- 5,403
Change in operating assets and liabilities,
net......................................... 4,826 (24,291) 12,499 2,867 (4,099)
--------- ----------- ----------- ------------- ------------
Net Cash Provided By Operating Activities......... 14,480 2,536 27,304 -- 44,320
--------- ----------- ----------- ------------- ------------
Cash Flows Provided By (Used In) Investing
Activities:
Capital expenditures............................ (660) (2,547) (22,402) -- (25,609)
Investment in assets held for lease............. -- (54,538) -- -- (54,538)
Proceeds from sale of property and assets held
for lease..................................... -- 50,880 -- -- 50,880
Investment in notes receivable.................. -- (34,087) (6,257) -- (40,344)
Collection of notes receivable.................. -- 4,751 14,093 -- 18,844
Proceeds from sale of notes receivable.......... -- 24,934 -- -- 24,934
Proceeds from sale of business.................. 1,295 1,295
Purchase of business............................ (12,200) -- -- (12,200)
Discontinued operations, net changes............ -- 6,400 -- -- 6,400
--------- ----------- ----------- ------------- ------------
Net Cash Provided By (Used In) Investing
Activities...................................... 635 (16,407) (14,566) -- (30,338)
--------- ----------- ----------- ------------- ------------
Cash Flows Provided By (Used In) Financing
Activities:
Net change in long-term borrowings.............. -- (148) -- -- (148)
Net change in bank credit facilities............ (7,000) -- -- -- (7,000)
Termination of interest rate swap position...... 4,733 -- -- -- 4,733
Payment of debt issuance costs.................. (3,330) -- -- -- (3,330)
Early retirement of debt........................ (851) -- -- -- (851)
Increase in capital............................. -- -- 1,342 -- 1,342
Related party receivables/payables.............. 25,996 13,345 (39,341) -- --
Dividends paid to parent company................ (30,000) -- -- -- (30,000)
--------- ----------- ----------- ------------- ------------
Net Cash Provided By (Used In) Financing
Activities...................................... (10,452) 13,197 (37,999) -- (35,254)
--------- ----------- ----------- ------------- ------------
Net Increase (Decrease) in Cash................... 4,663 (674) (25,261) -- (21,272)
Cash and Cash Equivalents at Beginning of Year.... 1,521 1,664 27,490 -- 30,675
--------- ----------- ----------- ------------- ------------
Cash and Cash Equivalents at End of Year.......... $ 6,184 $ 990 $ 2,229 -- $ 9,403
--------- ----------- ----------- ------------- ------------
--------- ----------- ----------- ------------- ------------
</TABLE>
28. SUBSEQUENT EVENT
On April 28, 1999, the Company entered into an agreement to sell and
leaseback its primary parts distribution facility. Additionally, it entered into
an agreement with the same party to build a new parts distribution facility.
F-57
<PAGE>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
OFFER TO EXCHANGE ALL OUTSTANDING 11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
($152,250,000 PRINCIPAL AMOUNT)
FOR
REGISTERED 11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
($152,250,000 PRINCIPAL AMOUNT)
PROSPECTUS
WE HAVE NOT AUTHORIZED ANY PERSON TO GIVE YOU ANY INFORMATION OR REPRESENT
ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY ON UNAUTHORIZED
INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SECURITIES IN ANY
JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT
AS OF JULY , 1999. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS ACCURATE AS OF ANY OTHER DATE.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers a corporation
subject to certain limitations, to indemnify its directors and officers against
expenses, including attorneys' fees, judgments, fines and certain settlements,
actually and reasonably incurred by them in connection with any suit or
proceeding to which they are a party so long as they acted in good faith and in
a manner reasonably to be in or not opposed to the best interests of the
corporation, and, with respect to a criminal action or proceeding, so long as
they had no reasonable cause to believe their conduct to have been unlawful. The
registrant's certificate of incorporation and by-laws provide that the
registrant shall indemnify its directs and such of its officers, employees and
agents as the board of directs may determine from time to time, to the fullest
extent permitted by Section 145 of the Delaware corporate laws:
Section 102 of the Delaware corporate laws permits a Delaware corporation to
include in its certificate of incorporation a provision eliminating or limiting
a director's liability to a corporation or its stockholders for monetary damages
for breaches of fiduciary duty. The enabling statute provides, however, that
liability for breaches of the duty of loyalty, acts or omissions not in good
faith or involving intentional misconduct, or knowing violation of the law, and
the unlawful purchase or redemption of stock or payment of unlawful dividends or
the receipt of improper personal benefits cannot be eliminated or limited in
this manner. The registrant's certificate of incorporation and By-laws include a
provision which eliminates, to the fullest extent permitted, director liability
for monetary damages for breaches of fiduciary duty.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1* Purchase Agreement dated June 14, 1999 among Transportation Manufacturing Operations, Inc., the
subsidiary guarantors, CIBC World Market Corp. and Merrill Lynch, Pierce, Fenner & Smith Incorporated
2.1* Investment Agreement dated June 11, 1999 among Joseph Littlejohn & Levy Fund III L.P., CIBC WG Argosy
Merchant Fund 2, L.L.C., Co-Investment Merchant Fund 3, L.L.C., Grupo Dina and MCII Holdings
2.2* First Amendment to Investment Agreement dated June 16, 1999 among JLL Fund III, CIBC Argosy,
Co-Investment Fund 3, Grupo Dina and MCII Holdings
3.1* Certificate of Incorporation of Transportation Manufacturing Operations, Inc.
3.2* Bylaws of Transportation Manufacturing Operations, Inc.
3.3* Certificate of Incorporation of TMO Acquisition Corporation
3.4* Bylaws of BusLease, Inc.
3.5* Certificate of Incorporation of Transit Bus International, Inc.
3.6* Bylaws of Transit Bus International, Inc.
3.7* Certificate of Incorporation of New Hausman Bus Sales, Inc.
3.8* Bylaws of Hausman Bus Sales, Inc.
3.9* Certificate of Incorporation of Motor Coach Industries, Inc.
3.10* Bylaws of Motor Coach Industries, Inc.
3.11* Certificate of Incorporation of Universal Coach Parts, Inc.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
3.12* Bylaws of Universal Coach Parts, Inc.
4.1* Indenture dated June 16, 1999 among TMO, the subsidiary guarantors and IBJ Whitehall Bank & Trust
Company
4.2* Registration Rights Agreement dated June 16, 1999 among TMO, the subsidiary guarantors, of CIBC and
Merrill Lynch
5.1* Opinion of Winston & Strawn
10.1* Credit Agreement dated June 16, 1999 among MCII, TMO, The Bank of Nova Scotia, as syndication agent,
General Electric Capital Corporation, as documentation agent, and CIBC, as administrative agent, and
the lenders party thereto
10.2* Stockholders Agreement dated June 16, 1999 among MCII Holdings, JLL Fund III, CIBC Argosy, Co-Investment
Fund 3, Grupo Dina and Rafael Gomez Flores
10.3* License Agreement dated June 16, 1999 between Grupo Dina and MCII Holdings
10.4* MCII Holdings (USA), Inc. Management Stock Option Plan
10.5* Non-qualified Stock Option Agreement dated June 16, 1999 between MCII Holdings and Mr. Gomez Flores
10.6* Omnibus Agreement dated June 16, 1999 among MCII Holdings, Grupo Dina, JLL Fund III, CIBC Argosy and
Co-Investment Fund 3
10.7* Employment Agreement dated June 16, 1999 between MCII and Mr. Gomez Flores
12.1* Ratio of Earnings to Fixed Charges
21.1* Subsidiaries of MCII
23.1* Consent of Arthur Andersen LLP
23.2* Consent of PricewaterhouseCoopers LLP
24.1* Powers of Attorney for directors of MCII
24.2* Powers of Attorney for directors of BusLease
24.3* Powers of Attorney for directors of Transit Bus
24.4* Powers of Attorney for directors of Hausman
24.5* Powers of Attorney for directors of Motor Coach Industries
24.6* Powers of Attorney of UCP
25.1* Statement of Eligibility and Qualification on Form T-1 of IBJ Whitehall
99.1* Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Letter to Registered Holders
</TABLE>
- ------------------------
* Filed herewith.
+ To be filed by amendment.
(b) Financial Statement Schedules
None.
All schedules are omitted because the required information is not present in
amounts sufficient to require submission of the schedule or because the
information required is included in the financial statements or notes thereto.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS
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 registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities, other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
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 registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to
the securities offered therein and this offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) For the purpose of determining any liability under the Securities
Act of 1933, as amended, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in this registration statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 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.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired therein, that was not the subject of and included in the
registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Chicago, State of
Illinois, on July 27, 1999.
<TABLE>
<S> <C> <C>
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
By: /s/ JAMES P. BERNACCHI
-----------------------------------------
James P. Bernacchi,
Chief Executive Officer and Director
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant, its general partner or managing member, as the case may be, and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Chairman of the Board and July 27, 1999
Rafael Gomez Flores Director
*
- ------------------------------ Director July 27, 1999
Gamaliel Garcia Cortes
/s/ JAMES P. BERNACCHI
- ------------------------------ Chief Executive Officer July 27, 1999
James P. Bernacchi and Director
*
- ------------------------------ Director July 27, 1999
Paul S. Levy
*
- ------------------------------ Director July 27, 1999
Jeffrey Lightcap
*
- ------------------------------ Director July 27, 1999
David Ying
*
- ------------------------------ Director July 27, 1999
Frank Rodriguez
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ JAMES P. BERNACCHI
-------------------------
James P. Bernacchi,
Attorney-in-fact
</TABLE>
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Chicago, State of
Illinois, on July 27, 1999.
<TABLE>
<S> <C> <C>
BUSLEASE, INC.
By: /s/ JAMES P. BERNACCHI
-----------------------------------------
James P. Bernacchi,
Chief Executive Officer and Director
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant, its general partner or managing member, as the case may be, and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Chairman of the Board and July 27, 1999
Rafael Gomez Flores Director
*
- ------------------------------ Director July 27, 1999
Gamaliel Garcia Cortes
/s/ JAMES P. BERNACCHI
- ------------------------------ Chief Executive Officer July 27, 1999
James P. Bernacchi and Director
*
- ------------------------------ Director July 27, 1999
Paul S. Levy
*
- ------------------------------ Director July 27, 1999
Jeffrey Lightcap
*
- ------------------------------ Director July 27, 1999
David Ying
*
- ------------------------------ Director July 27, 1999
Frank Rodriguez
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ JAMES P. BERNACCHI
-------------------------
James P. Bernacchi,
Attorney-in-fact
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Chicago, State of
Illinois, on July 27, 1999.
<TABLE>
<S> <C> <C>
TRANSIT BUS INTERNATIONAL, INC.
By: /s/ JAMES P. BERNACCHI
-----------------------------------------
James P. Bernacchi,
Chief Executive Officer and Director
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant, its general partner or managing member, as the case may be, and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Chairman of the Board and July 27, 1999
Rafael Gomez Flores Director
*
- ------------------------------ Director July 27, 1999
Gamaliel Garcia Cortes
/s/ JAMES P. BERNACCHI
- ------------------------------ Chief Executive Officer July 27, 1999
James P. Bernacchi and Director
*
- ------------------------------ Director July 27, 1999
Paul S. Levy
*
- ------------------------------ Director July 27, 1999
Jeffrey Lightcap
*
- ------------------------------ Director July 27, 1999
David Ying
*
- ------------------------------ Director July 27, 1999
Frank Rodriguez
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ JAMES P. BERNACCHI
-------------------------
James P. Bernacchi,
Attorney-in-fact
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Chicago, State of
Illinois, on July 27, 1999.
<TABLE>
<S> <C> <C>
HAUSMAN BUS SALES, INC.
By: /s/ JAMES P. BERNACCHI
-----------------------------------------
James P. Bernacchi,
Chief Executive Officer and Director
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant, its general partner or managing member, as the case may be, and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Chairman of the Board and July 27, 1999
Rafael Gomez Flores Director
*
- ------------------------------ Director July 27, 1999
Gamaliel Garcia Cortes
/s/ JAMES P. BERNACCHI
- ------------------------------ Chief Executive Officer July 27, 1999
James P. Bernacchi and Director
*
- ------------------------------ Director July 27, 1999
Paul S. Levy
*
- ------------------------------ Director July 27, 1999
Jeffrey Lightcap
*
- ------------------------------ Director July 27, 1999
David Ying
*
- ------------------------------ Director July 27, 1999
Frank Rodriguez
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ JAMES P. BERNACCHI
-------------------------
James P. Bernacchi,
Attorney-in-fact
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Chicago, State of
Illinois, on July 27, 1999.
<TABLE>
<S> <C> <C>
MOTOR COACH INDUSTRIES, INC.
By: /s/ JAMES P. BERNACCHI
-----------------------------------------
James P. Bernacchi,
Chief Executive Officer and Director
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant, its general partner or managing member, as the case may be, and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Chairman of the Board and July 27, 1999
Rafael Gomez Flores Director
*
- ------------------------------ Director July 27, 1999
Gamaliel Garcia Cortes
/s/ JAMES P. BERNACCHI
- ------------------------------ Chief Executive Officer July 27, 1999
James P. Bernacchi and Director
*
- ------------------------------ Director July 27, 1999
Paul S. Levy
*
- ------------------------------ Director July 27, 1999
Jeffrey Lightcap
*
- ------------------------------ Director July 27, 1999
David Ying
*
- ------------------------------ Director July 27, 1999
Frank Rodriguez
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ JAMES P. BERNACCHI
-------------------------
James P. Bernacchi,
Attorney-in-fact
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Chicago, State of
Illinois, on July 27, 1999.
<TABLE>
<S> <C> <C>
UNIVERSAL COACH PARTS, INC.
By: /s/ JAMES P. BERNACCHI
-----------------------------------------
James P. Bernacchi,
Chief Executive Officer and Director
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on behalf of the
registrant, its general partner or managing member, as the case may be, and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Chairman of the Board and July 27, 1999
Rafael Gomez Flores Director
*
- ------------------------------ Director July 27, 1999
Gamaliel Garcia Cortes
/s/ JAMES P. BERNACCHI
- ------------------------------ Chief Executive Officer July 27, 1999
James P. Bernacchi and Director
*
- ------------------------------ Director July 27, 1999
Paul S. Levy
*
- ------------------------------ Director July 27, 1999
Jeffrey Lightcap
*
- ------------------------------ Director July 27, 1999
David Ying
*
- ------------------------------ Director July 27, 1999
Frank Rodriguez
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ JAMES P. BERNACCHI
-------------------------
James P. Bernacchi,
Attorney-in-fact
</TABLE>
II-9
<PAGE>
Exhibit 1.1
TRANSPORTATION MANUFACTURING OPERATIONS, INC.
(to be renamed Motor Coach Industries International, Inc.)
$152,250,000
11 1/4% Senior Subordinated Notes due 2009
PURCHASE AGREEMENT
June 14, 1999
CIBC WORLD MARKETS CORP.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
c/o CIBC World Markets Corp.
425 Lexington Avenue
3rd Floor
New York, New York 10017
Ladies and Gentlemen:
Transportation Manufacturing Operations, Inc., a Delaware corporation
(the "Company"), and each of the Company's subsidiaries listed in EXHIBIT A-1
hereto (each, a "Guarantor" and, collectively, the "Guarantors" and, together
with the Company, the "Issuers") hereby confirm their agreement with you (the
"Initial Purchasers"), as set forth below.
1. THE SECURITIES. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
$152,250,000 aggregate principal amount of its 11 1/4% Senior Subordinated Notes
due 2009 (the "Notes"). The obligations of the Company under the Indenture (as
hereinafter defined) and the Notes will be unconditionally guaranteed on a
senior subordinated basis (the "Guarantees") and on a joint and several basis,
by each Guarantor. The Notes and the Guarantees are to be issued pursuant to
the Indenture (the "Indenture"), dated as of June 16, 1999, among the Company,
the Guarantors and IBJ Whitehall Bank & Trust Company, as trustee (the
"Trustee"). The Notes and the Guarantees are hereinafter referred to
collectively as the "Securities."
The Notes will be offered and sold to the Initial Purchasers without
such offers and sales being registered under the Securities Act of 1933, as
amended (together with the rules and regulations of the Securities and Exchange
Commission (the "Commission") promulgated thereunder, the "Securities Act"), in
reliance on exemptions therefrom.
<PAGE>
-2-
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum dated May 26, 1999 (the "Preliminary
Memorandum") and a final offering memorandum dated June 14, 1999 (the "Final
Memorandum"; the Preliminary Memorandum and the Final Memorandum each herein
being referred to as a "Memorandum"), each setting forth or including a
description of the terms of the Securities, the terms of the offering of the
Notes, a description of the Company and its subsidiaries and any material
developments relating to the Company and its subsidiaries occurring after the
date of the most recent historical financial statements included therein.
The Issuers understand that the Initial Purchasers propose to make an
offering of the Notes only on the terms and in the manner set forth in the
Memorandum and Section 9 hereof as soon as the Initial Purchasers deem advisable
after this Agreement has been executed and delivered, to persons in the United
States whom the Initial Purchasers reasonably believe to be qualified
institutional buyers ("QIBs") as defined in Rule 144A under the Securities Act,
as such rule may be amended from time to time ("Rule 144A"), in transactions
under Rule 144A, and to a limited number of institutional "accredited investors"
("Accredited Investors"), as defined in Rule 501(a)(1), (2), (3) and (7) under
Regulation D of the Securities Act, in private sales exempt from registration
under the Securities Act, and outside the United States to certain persons in
reliance on Regulation S under the Securities Act.
The Initial Purchasers and their direct and indirect transferees of
the Notes will be entitled to the benefits of the Registration Rights Agreement
dated as of June 16, 1999 among the parties hereto (the "Registration Rights
Agreement") pursuant to which the Issuers have agreed, among other things, to
file (i) a registration statement (the "Registration Statement") with the
Commission registering the Notes or the Exchange Notes (as defined in the
Registration Rights Agreement) under the Securities Act or (ii) a shelf
registration statement pursuant to Rule 415 under the Securities Act relating to
the resale of the Notes by holders thereof or, if applicable, relating to the
resale of Private Exchange Notes (as defined in the Registration Rights
Agreement) by the Initial Purchasers pursuant to an exchange of the Notes for
Private Exchange Notes.
The Securities, the Exchange Notes, the Private Exchange Notes (as
defined in the Registration Rights Agreement), the Indenture, the Registration
Rights Agreement and this Agreement are herein collectively referred to as the
"Basic
<PAGE>
-3-
Documents". The Issuers propose to issue the Securities in connection with
an overall plan to recapitalize and restructure certain of the indebtedness
of Consorcio G Grupo Dina, S.A. de C.V. ("Grupo Dina") and its subsidiaries,
including the Issuers. The recapitalization and restructuring will include
the following transactions (collectively, the "Transactions"):
(a) a $175 million investment in MCII Holdings (USA) Inc. ("MCII
Holdings") comprised of a $125 million common equity investment and a $50
million investment in the form of senior notes and warrants, by Joseph
Littlejohn & Levy Fund III L.P., along with affiliates of CIBC
(collectively, the "MCII Investors") pursuant to an investment agreement
dated June 11, 1999, among the MCII Investors and Grupo Dina (the
"Investment Agreement");
(b) certain asset transfers pursuant to the Investment Agreement,
including, among others, (i) MCII Holdings' transfer of its Dina Autobuses,
S.A. de C.V. ("Autobuses") subsidiary to the Company, (ii) Autobuses'
transfer of certain immaterial subsidiaries to Grupo Dina, (iii) Autobuses'
transfer to Grupo Dina of a group of transit buses that are leased to a
company affiliated with Grupo Dina, together with related lease rights,
(iv) Autobuses' cancellation of certain receivables due from Grupo Dina and
its subsidiaries, and (v) the Company's transfer of its Universal Coach
Parts Mexico, S.A. de C.V. subsidiary to Grupo Dina;
(c) entry into a new senior credit facility among the Company, the
Guarantors and certain other subsidiaries of the Company, and a syndicate
of lenders including the Canadian Imperial Bank of Commerce, as agent,
providing for up to $333 million in term loans and $117 million in
revolving loans (the "New Senior Credit Facility");
(d) the repayment or redemption of (i) the Company's existing senior
credit facilities, (ii) the Company's approximately $100 million of
outstanding 9.02% senior notes, (iii) the Company's approximately $40
million of outstanding senior subordinated increasing rate notes due 1999
and (iv) approximately $16.3 million outstanding under Autobuses' existing
credit facility;
(e) tenders and consent solicitations by Grupo Dina, dated May 14,
1999, (collectively, the "Tender Offers") for its $206.5 million aggregate
principal amount of senior secured discount notes due 2002 and the $35
million
<PAGE>
-4-
outstanding senior secured guaranteed notes, due 2000, of Dina Trucks
(USA), L.L.C.; and
(f) a final distribution to Grupo Dina pursuant to a partial
redemption distribution for MCII Holdings common stock, in an amount and
manner consistent with the Final Memorandum.
The foregoing Transactions are to be effected pursuant to the Investment
Agreement, the New Senior Credit Facility, the Tender Offers and each other
agreement entered into in connection with any of the foregoing Transactions (the
"Transaction Documents"). Grupo Dina, MCII Holdings and Motor Coach Industries
International, Inc., are collectively referred to below as "Issuer Parents".
2. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS. The Issuers,
jointly and severally, represent and warrant to and agree with each Initial
Purchaser that:
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date (as
defined in Section 3 below) contained or contains any 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, except that the representations and
warranties set forth in this Section 2 do not apply to statements or
omissions made in reliance upon and in conformity with information relating
to the Initial Purchasers furnished to the Company in writing by the
Initial Purchasers expressly for use in the Preliminary Memorandum, the
Final Memorandum or any amendment or supplement thereto. The Preliminary
Memorandum, the Final Memorandum and any amendment or supplement thereto
complied or will comply in all material respects with the provisions of the
Securities Act that would apply to such Memorandum if it were a Prospectus
under the Securities Act (except that (i) no representation is made
regarding compliance with the "plain English" rules of the Commission,
(ii) audited financial statements of the Company for the fiscal year ending
1996 are not included, (iii) four years of Selected Combined Consolidated
Historical Financial Data are included instead of five years).
<PAGE>
-5-
(b) Each of the Company and its subsidiaries set forth in EXHIBIT
A-2 hereto (the "Subsidiaries") has been duly incorporated and each of
the Company and the Subsidiaries is validly existing in good standing as
a corporation under the laws of its jurisdiction of incorporation, with
the requisite corporate power and authority to own its properties and
conduct its business as now conducted as described in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum) and is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions where
the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a material
adverse effect on the business, condition (financial or other),
properties, prospects or results of operations of the Company and the
Subsidiaries, taken as a whole (any such event, a "Material Adverse
Effect"); as of the Closing Date, the Company will have the authorized,
issued and outstanding capitalization set forth in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent
Preliminary Memorandum); except as set forth in EXHIBIT A-2 hereto, the
Company does not have any subsidiaries or own directly or indirectly any
of the capital stock or other equity or long-term debt securities of or
have any equity interest in any other person; all of the outstanding
shares of capital stock of the Company and the Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights and are
owned free and clear of all liens, encumbrances, equities and
restrictions on transferability (other than those imposed by the
Securities Act and the state securities or "Blue Sky" laws) or voting;
except as set forth in the Final Memorandum (or, if the Final Memorandum
is not in existence, the most recent Preliminary Memorandum) and in
EXHIBIT A-2 hereto, all of the outstanding shares of capital stock of
the Subsidiaries are owned, directly or indirectly, by the Company;
except as set forth in the Final Memorandum (or, if the Final Memorandum
is not in existence, the most recent Preliminary Memorandum), no
options, warrants or other rights to purchase from the Company or any
Subsidiary, agreements or other obligations of the Company or any
Subsidiary to issue or other rights to convert any obligation into, or
exchange any securities for, shares of capital stock of or ownership
interests in the Company or any Subsidiary are outstanding and no
<PAGE>
-6-
holder of securities of the Company or any Subsidiary is entitled to
have such securities registered under the Registration Statement; and
except as set forth in the Final Memorandum (or, if the Final Memorandum
is not in existence, the most recent Preliminary Memorandum), there is
no agreement, understanding or arrangement among the Company or any
Subsidiary and each of their respective stockholders or any other person
relating to the ownership or disposition of any capital stock of the
Company or any Subsidiary or the election of directors of the Company or
any Subsidiary or the governance of the Company's or any Subsidiary's
affairs, and, if any, such agreements, understandings and arrangements
will not be breached or violated as a result of the execution and
delivery of, or the consummation of the transactions contemplated by,
this Agreement, the other Basic Documents and the Transaction Documents.
(c) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Securities, the Exchange Notes (as defined in the Registration Rights
Agreement) and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Notes, the Exchange Notes and the Private Exchange
Notes have each been duly and validly authorized by the Company for
issuance and, when executed by the Company and authenticated by the Trustee
in accordance with the provisions of the Indenture, and, in the case of the
Notes, delivered to and paid for by the Initial Purchasers in accordance
with the terms hereof, will have been duly executed, issued and delivered
and will constitute valid and legally binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms except that the enforcement thereof
may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally or (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding at
law or in equity) (collectively, the "Enforceability Exceptions"); the
Guarantees endorsed on the Notes and the guarantees to be endorsed on the
Exchange Notes and the Private Exchange Notes have each been duly and
validly authorized by each of the Guarantors and, when the Notes are
executed by the Company and authenticated by the Trustee in accordance with
the provisions of the Indenture,
<PAGE>
-7-
and delivered to and paid for by the Initial Purchasers in accordance
with the terms hereof, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of
the Guarantors, entitled to the benefits of the Indenture and
enforceable against the Guarantors in accordance with their terms except
that the enforcement thereof may be limited by the Enforceability
Exceptions; the Securities are in the form contemplated by the Indenture.
(d) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture. The Indenture has been duly and validly authorized by the
Issuers and meets the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and, when
executed and delivered in accordance with its terms (assuming the due
authorization, execution and delivery by the Trustee), will constitute a
valid and legally binding agreement of the Issuers, enforceable against the
Issuers in accordance with its terms except that the enforcement thereof
may be limited by the Enforceability Exceptions.
(e) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly and validly authorized by the
Issuers and, when executed and delivered by the Issuers, will constitute a
valid and legally binding agreement of the Issuers, enforceable against the
Issuers in accordance with its terms except that the enforcement thereof
may be limited by the Enforceability Exceptions and except as any rights to
indemnity or contribution hereunder may be limited by federal and state
securities laws and public policy considerations.
(f) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Registration Rights Agreement. The Registration Rights Agreement has been
duly and validly authorized by the Issuers and, when executed and delivered
by the Issuers, will constitute a valid and legally binding agreement of
the Issuers, enforceable against the Issuers in accordance with its terms
except that the enforcement thereof may be limited by the Enforceability
Exceptions and except as any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy
considerations. The
<PAGE>
-8-
Securities, the Indenture and the Registration Rights Agreement conform
in all material respects to the descriptions thereof in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum).
(g) Each of the Issuers has the requisite corporate power and
authority to execute and deliver (to the extent a party) and perform its
direct and indirect obligations under the Transaction Documents. The
Transaction Documents have been duly and validly authorized by the Issuers
and Issuer Parents (to the extent a party thereto) and, when executed and
delivered by the Issuers and Issuer Parents party thereto, will constitute
valid and legally binding agreements of such Issuers and Issuer Parents,
enforceable against such Issuers and Issuer Parents in accordance with
their terms except that the enforcement thereof may be limited by the
Enforceability Exceptions and except as any rights to indemnity or
contribution thereunder may be limited by federal and state securities laws
and public policy considerations. The descriptions of the Transaction
Documents in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Preliminary Memorandum) are accurate in all
respects material to the affairs of the Issuers.
(h) (i) The Issuers have delivered to the Initial Purchasers a true
and correct copy of each of the Transaction Documents that have been
executed and delivered prior to the date of this Agreement and each other
Transaction Document in the form substantially as it will be executed and
delivered on or prior to the Closing Date, together with all related
agreements and all schedules and exhibits thereto, and as of the date
hereof there have been no amendments, alterations, modifications or waivers
of any of the provisions of any of the Transaction Documents since their
date of execution except as have been delivered to the Initial Purchasers
or such amendments, alterations, modifications or waivers are not material;
and (ii) there exists as of the date hereof (after giving effect to the
transactions contemplated by each of the Transaction Documents) no event or
condition that would constitute a default or an event of default (in each
case as defined in each of the Transaction Documents) under any of the
Transaction Documents that would result in a Material Adverse Effect or
materially adversely affect the ability of the Company to consummate the
Transactions.
<PAGE>
-9-
(i) Except as set forth in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum), no
consent, approval, authorization, license, qualification, exemption or
order of any court or governmental agency or body or third party is
required for the performance of this Agreement, the Registration Rights
Agreement, the Securities, the Indenture or any Transaction Document by the
Issuers or Issuer Parents or for the consummation of any of the
transactions contemplated hereby and thereby, or the application of the
proceeds of the issuance of the Securities as described in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum), except (i) as has already been acquired,
(ii) as may be required under state securities or "Blue Sky" laws in
connection with the purchase and distribution of the Securities by the
Initial Purchasers, (iii) as may be required in connection with the
registration of the Securities, Exchange Notes and Private Exchange Notes,
as the case may be, pursuant to the Registration Rights Agreement and the
qualification of the Indenture under the TIA and (iv) the failure of which
to obtain would not reasonably be expected to result in a Material Adverse
Effect; all such consents, approvals, authorizations, licenses,
qualifications, exemptions and orders set forth in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent
Preliminary Memorandum) which are required to be obtained by the Closing
Date have been obtained or made, as the case may be, and are in full force
and effect, except as could not reasonably be expected to result in a
Material Adverse Effect, and not the subject of any pending or, to the best
knowledge of the Issuers, threatened attack by appeal or direct proceeding
or otherwise.
(j) None of the Company or the Subsidiaries is (i) in violation of
its certificate of incorporation or bylaws (or similar organizational
document), (ii) in breach or violation of any statute, judgment, decree,
order, rule or regulation applicable to it or any of its properties or
assets, which breach or violation would, individually or in the aggregate,
have a Material Adverse Effect, or (iii) in default (nor has any event
occurred which with notice or passage of time, or both, would constitute a
default) in the performance or observance of any obligation, agreement,
covenant or condition contained in this Agreement, the Registration Rights
Agreement, the Securities, the Indenture or any Transaction Document or any
other contract, indenture, mortgage, deed of trust, loan agreement, note,
<PAGE>
-10-
lease, license, franchise agreement, permit, certificate or agreement or
instrument to which it is a party or to which it is subject, which default
would, individually or in the aggregate, have a Material Adverse Effect.
(k) The execution, delivery and performance by the Issuers of this
Agreement, the Registration Rights Agreement, the Securities, the Indenture
and the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby and by the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Preliminary
Memorandum) and the fulfillment of the terms hereof and thereof will not,
except as set forth in the Final Memorandum (or if the Final Memorandum is
not in existence, the most recent Preliminary Memorandum) (a) violate,
conflict with or constitute or result in a breach of or a default under (or
an event that, with notice or lapse of time, or both, would constitute a
breach of or a default under) any of (i) the terms or provisions of any
contract, indenture, mortgage, deed of trust, loan agreement, note, lease,
license, franchise agreement, permit, certificate or agreement or
instrument to which any of the Company or the Subsidiaries is a party or to
which any of their respective properties or assets are subject, (ii) the
certificate of incorporation or bylaws of any of the Company or the
Subsidiaries (or similar organizational document) or (iii) (assuming
compliance with all applicable state securities or "Blue Sky" laws) any
statute, judgment, decree, order, rule or regulation of any court or
governmental agency or other body applicable to the Company or the
Subsidiaries or any of their respective properties or assets or (b) result
in the imposition of any lien upon or with respect to any of the properties
or assets now owned or hereafter acquired by the Company or any of the
Subsidiaries, which violation, conflict, breach, default or lien would,
individually or in the aggregate, have a Material Adverse Effect.
(l) The audited and unaudited consolidated financial statements
included in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Preliminary Memorandum) present fairly, in all
material respects, the consolidated financial position, results of
operations and cash flows of such entities at the dates and for the periods
to which they relate and have been prepared, in all material respects, in
accordance with generally accepted accounting principles applied on a
consistent basis; the interim unaudited consolidated
<PAGE>
-11-
financial statements included in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum)
present fairly, in all material respects, the consolidated financial
position, results of operations and cash flows of such entities at the
dates and for the periods to which they relate subject to year-end audit
adjustments and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis with the audited
consolidated financial statements included therein; the summary and
selected financial and statistical data included in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent
Preliminary Memorandum) present fairly the information shown therein and
have been prepared and compiled on a basis consistent with the audited
and unaudited financial statements included therein, except as otherwise
stated therein; and Arthur Andersen, LLP, which has examined certain of
such financial statements as set forth in its reports included in the
Final Memorandum (or, if the Final Memorandum is not in existence, the
most recent Preliminary Memorandum), is an independent public accounting
firm as required by the Securities Act.
(m) The pro forma financial statements and other pro forma financial
information (including the notes thereto) included in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent
Preliminary Memorandum) have been properly computed on the bases described
therein; and the assumptions used in the preparation of the pro forma
financial statements and other pro forma financial information included in
the Final Memorandum (or, if the Final Memorandum is not in existence, the
most recent Preliminary Memorandum) are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or circumstances
referred to therein.
(n) Except as described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum),
there is not pending or, to the best knowledge of the Issuers, threatened
any action, suit, proceeding, inquiry or investigation, governmental or
otherwise, to which any of the Company or the Subsidiaries is a party, or
to which their respective properties or assets are subject, before or
brought by any court, arbitrator or governmental agency or body, that, if
determined adversely to the Company or any such Subsidiary would,
individually or in the aggregate, have a Material Adverse Effect or that
seeks to restrain, enjoin, prevent
<PAGE>
-12-
the consummation of or otherwise challenge the Transactions or the
issuance or sale of the Securities to be sold hereunder or the
application of the proceeds therefrom or the other transactions
described in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Preliminary Memorandum).
(o) None of the Company or the Subsidiaries has, and, after giving
effect to the Transactions and the issuance and sale of the Securities,
will not have, any liability for any prohibited transaction or funding
deficiency or any complete or partial withdrawal liability with respect to
any pension, profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which any
of the Company or the Subsidiaries makes or ever has made a contribution
and in which any employee of any of the Company or the Subsidiaries is or
has ever been a participant. With respect to such plans, the Company and
the Subsidiaries are, and, after giving effect to the Transactions and the
issuance and sale of the Securities, will be, in compliance in all material
respects with all provisions of ERISA.
(p) The Company and the Subsidiaries own or possess adequate licenses
or other rights to use all patents, trademarks, service marks, trade names,
copyrights and know-how that are necessary to conduct their business as
described in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Preliminary Memorandum), except for such license
or rights the failure of which to own or possess would not, individually or
in the aggregate, have a Material Adverse Effect. None of the Company or
the Subsidiaries has received any notice of infringement of or conflict
with (or knows of any such infringement of or conflict with) asserted
rights of others with respect to any patents, trademarks, service marks,
trade names, copyrights or know-how that, if such assertion of infringement
or conflict were sustained, would, individually or in the aggregate, have a
Material Adverse Effect.
(q) Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all United States and
foreign federal, state, provincial, local and other governmental
authorities, all self-regulatory
<PAGE>
-13-
organizations and all courts and other tribunals presently required or
necessary to own or lease, as the case may be, and to operate its
respective properties and to carry on its respective businesses as now
or proposed to be conducted as set forth in the Final Memorandum (or, if
the Final Memorandum is not in existence, the most recent Preliminary
Memorandum) ("Permits"), except where the failure to obtain such Permits
would not, individually or in the aggregate, have a Material Adverse
Effect; each of the Company and the Subsidiaries has fulfilled and
performed in all material respects all of its obligations with respect
to such Permits and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or
result in any other material impairment of the rights of the holder of
any such Permit; and none of the Company or the Subsidiaries has
received any notice of any proceeding relating to revocation or
modification of any such Permit, except as described in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most
recent Preliminary Memorandum) and except where such revocation or
modification would not, individually or in the aggregate, have a
Material Adverse Effect.
(r) Subsequent to the respective dates as of which information is
given in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Preliminary Memorandum) and except as described
therein, or contemplated thereby, (i) the Company and the Subsidiaries have
not incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions, in either case whether or not in
the ordinary course of business, (ii) the Company and the Subsidiaries have
not purchased any of their respective outstanding capital stock, or
declared, paid or otherwise made any dividend or distribution of any kind
on any of their respective capital stock or otherwise (other than, with
respect to any of such Subsidiaries, the purchase of, or dividend or
distribution on, capital stock owned by the Company) and (iii) there shall
not have been any material change in the capital stock or long-term
indebtedness of the Company or any of the Subsidiaries.
(s) There are no legal or governmental proceedings, nor are there any
contracts or other documents required by the Securities Act to be described
in a prospectus that are not described in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent
<PAGE>
-14-
Preliminary Memorandum). Except as described in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent
Preliminary Memorandum), none of the Company or the Subsidiaries is in
default under any of the contracts described in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent
Preliminary Memorandum), has received a notice or claim of any such
default or has knowledge of any breach of such contracts by the other
party or parties thereto, except such defaults or breaches as would not,
individually or in the aggregate, have a Material Adverse Effect.
(t) None of the Company or the Subsidiaries has taken or will take
any action that would cause this Agreement or the issuance or sale of the
Securities to violate Regulation T, U or X of the Board of Governors of the
Federal Reserve System, in each case as in effect, or as the same may
hereafter be in effect, on the Closing Date.
(u) Each of the Company and the Subsidiaries has good and marketable
title to all real property described in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Preliminary
Memorandum) as being owned by it and good and marketable title to the
leasehold estate in the real property described therein as being leased by
it, free and clear of all liens, charges, encumbrances or restrictions,
except, in each case, as described in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Preliminary
Memorandum) or such as would not, individually or in the aggregate, have a
Material Adverse Effect. All leases, contracts and agreements, including
those referred to in the Final Memorandum (or, if the Final Memorandum is
not in existence, the most recent Preliminary Memorandum) to which the
Company or any of the Subsidiaries is a party or by which any of them is
bound are valid and enforceable against the Company or any such Subsidiary,
are, to the knowledge of the Issuers, valid and enforceable against the
other party or parties thereto and are in full force and effect with only
such exceptions as would not, individually or in the aggregate, have a
Material Adverse Effect.
(v) Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where
the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and have paid all taxes
<PAGE>
-15-
shown as due thereon; except as disclosed in the Final Memorandum and
other than tax deficiencies which the Company or any Subsidiary is
contesting in good faith and for which adequate reserves have been
provided in accordance with generally accepted accounting principles,
there is no tax deficiency that has been asserted against the Company or
any Subsidiary that would, individually or in the aggregate, have a
Material Adverse Effect.
(w) (i) Immediately after the consummation of the Transactions and
the other transactions contemplated by this Agreement, the other Basic
Documents and the Transaction Documents, the fair value and present fair
saleable value of the assets of the Company and the Subsidiaries taken as a
whole will exceed the sum of its stated liabilities and identified
contingent liabilities; and (ii) the Company and the Subsidiaries taken as
a whole is not, nor will it be, after giving effect to the execution,
delivery and performance of this Agreement, the other Basic Documents and
the Transaction Documents, and the consummation of the Transactions and the
other transactions contemplated hereby and thereby, (a) left with
unreasonably small capital with which to carry on its business as it is
proposed to be conducted, (b) unable to pay its debts (contingent or
otherwise) as they mature or (c) otherwise insolvent.
(x) Except as disclosed in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum) and
except as would not, individually or in the aggregate, have a Material
Adverse Effect, (A) each of the Company and the Subsidiaries is in
compliance with all applicable Environmental Laws, (B) each of the Company
and the Subsidiaries has made all filings and provided all notices required
under any applicable Environmental Law, and has all permits, authorizations
and approvals required under any applicable Environmental Laws and is in
compliance with their requirements, (C) there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter or request for
information pending or, to the best knowledge of the Issuers, threatened
against the Company or any of the Subsidiaries under any Environmental Law,
(D) no lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property owned,
operated, leased or controlled by the Company or any of the Subsidiaries,
(E) neither the
<PAGE>
-16-
Company nor any of the Subsidiaries has received notice that it has been
identified as a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA") or any comparable state law, and (F) no property or
facility of the Company or any of the Subsidiaries is (i) listed or
proposed for listing on the National Priorities List under CERCLA or
(ii) listed in the Comprehensive Environmental Response, Compensation,
Liability Information System List promulgated pursuant to CERCLA, or on
any comparable list maintained by any state or local governmental
authority.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States or
applicable foreign, state, provincial, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any
judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment binding on any of the
Company or the Subsidiaries, relating to pollution or protection of the
environment or health or safety or any chemical, material or substance,
that is subject to regulation thereunder. "Environmental Claims" means any
and all administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, notices of responsibility, information requests,
liens, notices of noncompliance or violation, investigations or proceedings
relating in any way to any Environmental Law.
(y) None of the Company or the Subsidiaries is, or immediately after
the Closing Date will be, required to register as an "investment company"
or a company "controlled by" an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(z) None of the Company or the Subsidiaries or any of such entities'
directors, officers, employees, agents or controlling persons has taken,
directly or indirectly, any action designed, or that might reasonably be
expected, to cause or result, under the Securities Act or otherwise, in, or
that has constituted, stabilization or manipulation of the price of the
Securities.
(aa) None of the Company, the Subsidiaries or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities
Act) directly, or through any agent, (i) sold, offered for sale, solicited
<PAGE>
-17-
offers to buy or otherwise negotiated in respect of any "security" (as
defined in the Securities Act) which is or could be integrated with the
sale of the Securities in a manner that would require the registration
under the Securities Act of the Securities or (ii) engaged in any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) in connection with the offering of
the Securities or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act. Assuming (i) the accuracy
of the representations and warranties of the Initial Purchasers in
Section 9 hereof, it is not necessary in connection with the offer, sale
and delivery of the Securities to the Initial Purchasers in the manner
contemplated by this Agreement to register any of the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture Act.
(bb) No securities of any Issuer are of the same class (within the
meaning of Rule 144A under the Securities Act) as the Securities and 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.
(cc) Except as set forth in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum),
there is no strike, slowdown, work stoppage or material labor dispute with
the employees of the Company or any of the Subsidiaries which is pending
or, to the best knowledge of the Company or any of the Subsidiaries,
threatened.
(dd) No holder of securities of the Company or any Subsidiary will be
entitled to have such securities registered under the registration
statements required to be filed by the Company pursuant to the Registration
Rights Agreement other than as expressly permitted thereby.
(ee) The statistical and market and industry-related data included in
the Final Memorandum (or, if the Final Memorandum is not in existence, the
most recent Preliminary Memorandum) are based on or derived from sources
which the Issuers believe to be reliable and accurate or represent the
Issuers' good faith estimates that are made on the basis of data derived
from such sources.
<PAGE>
-18-
(ff) Except (i) as stated in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Preliminary Memorandum) or
(ii) as payable by means of agreement to which CIBC is a party or (iii) for
fees disclosed in the disclosure schedules to the Investment Agreement as
delivered to CIBC, the Company does not know of any claims for services,
either in the nature of a finder's fee or financial advisory fee, with
respect to the offering of the Securities and the transactions contemplated
by the Final Memorandum.
(gg) None of the Company, the Subsidiaries, any of their respective
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers) has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Securities Act ("Regulation S"))
with respect to the Securities and the Company, the Subsidiaries and their
respective Affiliates and any person acting on its or their behalf have
acted in accordance with the offering restrictions requirement of
Regulation S.
Any certificate signed by any officer of the Company or any Subsidiary
and delivered to any Initial Purchaser or to counsel for the Initial Purchasers
shall be deemed a joint and several representation and warranty by the Issuers
to each Initial Purchaser as to the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Initial Purchasers, and each Initial Purchaser acting
severally and not jointly agrees to purchase from the Company, the Notes in the
respective amounts set forth on SCHEDULE 1 hereto, at 95.618% of their principal
amount.
One or more certificates in definitive form for the Notes and the
related Guarantees that the Initial Purchasers have agreed to purchase
hereunder, and in such denomination or denominations and registered in such name
or names as the Initial Purchasers request upon notice to the Company at least
48 hours prior to the Closing Date (as defined) shall be delivered by or on
behalf of the Company, against payment by or on behalf of the Initial
Purchasers, of the purchase price therefor by wire transfer of immediately
available funds to the account of the Company previously designated by it in
writing. Such delivery of and payment for the Notes and the related Guarantees
<PAGE>
-19-
shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York 10022, at 10:00 a.m., New York time, on June 16,
1999, or at such date as the Initial Purchasers and the Company may agree upon,
such time and date of delivery against payment being herein referred to as the
"Closing Date." The Company will make such certificate or certificates for the
Notes and the related Guarantees available for checking by the Initial
Purchasers in New York, New York at least 24 hours prior to the Closing Date.
4. OFFERING BY THE INITIAL PURCHASERS. The Initial Purchasers
propose to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchasers is advisable.
5. CERTAIN COVENANTS. The Issuers jointly and severally covenant
and agree with the Initial Purchasers that:
(i) The Issuers will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchasers shall
not have been advised and furnished a copy for a reasonable period of time
prior to the proposed amendment or supplement and as to which the Initial
Purchasers shall not have given their consent (which consent shall not be
unreasonably withheld). The Issuers will promptly, upon the reasonable
request of the Initial Purchasers or counsel for the Initial Purchasers,
make any amendments or supplements to the Preliminary Memorandum or the
Final Memorandum that may be legally necessary in connection with the
resale of the Securities by the Initial Purchasers.
(ii) The Issuers will cooperate with the Initial Purchasers in
arranging for the qualification of the Securities for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such qualifications in
effect for as long as may be necessary to complete the resale of the
Securities by the Initial Purchasers; PROVIDED, HOWEVER, that in connection
therewith none of the Issuers shall be required to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or to take any other action that would subject it to general
service of process or to taxation in excess of a nominal amount in respect
of doing business in any jurisdiction in which it is not otherwise subject.
<PAGE>
-20-
(iii) If, at any time prior to the completion of the resale by the
Initial Purchasers of the Notes or the Private Exchange Notes, any event
shall occur as a result of which it is necessary, in the reasonable opinion
of counsel for the Initial Purchasers, to amend or supplement the Final
Memorandum in order to make such Final Memorandum not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if for any other reason it shall be necessary to amend or
supplement the Final Memorandum in order to comply with applicable laws,
rules or regulations, the Issuers shall (subject to Section 5(i)) forthwith
amend or supplement such Final Memorandum at their own expense so that, as
so amended or supplemented, such Final 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 and will comply with all applicable laws, rules or regulations.
(iv) The Issuers will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of each
Preliminary Memorandum or Final Memorandum or any amendment or supplement
thereto as the Initial Purchasers may reasonably request.
(v) None of the Issuers or any of their respective Affiliates will
sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Securities Act) which could be
integrated with the sale of the Securities in a manner which would require
the registration under the Securities Act of the Securities.
(vi) For so long as any of the Securities remain outstanding, the
Company will furnish to the Initial Purchasers (a) as soon as available, a
copy of each report or other communication (financial or otherwise) of the
Company mailed to the Trustee or holders of the Securities or stockholders
or filed with the Commission or any national securities exchange on which
any class of securities of the Company may be listed, and (b) from time to
time such other information concerning the Issuers as the Initial
Purchasers may reasonably request.
<PAGE>
-21-
(vii) The Company will apply the net proceeds from the sale of the
Securities substantially as set forth under "Use of Proceeds" in the Final
Memorandum.
(viii) Prior to the Closing Date, the Company will furnish to the
Initial Purchasers, as soon as they have been prepared by or are available
to the Company in the ordinary course of business, a copy of any unaudited
interim consolidated financial statements of the Company and the
Subsidiaries, if any, for any period subsequent to the period covered by
the most recent financial statements appearing in the Final Memorandum.
(ix) The Company will not, and will not permit any of the
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) in connection with the offering of the Securities or in
any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act.
(x) For so long as any of the Securities remain outstanding,
the Company will make available at its expense, upon request, to any
holder of Securities and any prospective purchasers thereof the
information specified in Rule 144A(d)(4) under the Securities Act,
unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.
(xi) The Issuers will use their best efforts to (i) permit the
Securities to be designated PORTAL securities in accordance with the
rules and regulations adopted by the National Association of Securities
Dealers, Inc. (the "NASD") relating to trading in the Private Offerings,
Resales and Trading through Automated Linkages market (the "Portal
Market") and (ii) permit the Securities to be eligible for clearance and
settlement through The Depository Trust Company.
(xii) In connection with Securities offered and sold in an
offshore transaction (as defined in Regulation S), the Issuers will not
register any transfer of such Securities not made in accordance with the
provisions of Regulation S and will not, except in accordance with the
provisions of Regulation S, if applicable, issue any such Securities in the
form of definitive securities.
<PAGE>
-22-
(xiii) If this Agreement shall terminate or shall be terminated
after execution pursuant to any provision hereof (other than by reason of a
default or omission by the Initial Purchasers of their obligations
hereunder) or if this Agreement shall be terminated by the Initial
Purchasers because of any failure or refusal on the part of the Issuers to
comply with the terms or fulfill any of the conditions of this Agreement,
the Company agrees to reimburse the Initial Purchasers for all reasonable
out-of-pocket expenses (including fees and expenses of counsel for the
Initial Purchasers) incurred by the Initial Purchasers in connection
herewith, but in no event will the Company be liable to the Initial
Purchasers for damages on account of loss of anticipated profits from the
sale of the Securities.
6. EXPENSES. Notwithstanding any termination of this Agreement
(pursuant to Section 11 or otherwise), the Issuers jointly and severally agree
to pay the following costs and expenses and all other costs and expenses
incident to the performance by the Issuers of their obligations hereunder:
(i) the negotiation, preparation, printing, typing, reproduction, execution and
delivery of this Agreement and of the other Basic Documents, any amendment or
supplement to or modification of any of the foregoing and any and all other
documents furnished pursuant hereto or thereto or in connection herewith or
therewith; (ii) the preparation, printing or reproduction of each Preliminary
Memorandum, the Final Memorandum and each amendment or supplement to any of them
(including, without limitation, the travel, lodging and related expenses of the
Initial Purchasers incurred in connection therewith); (iii) the delivery
(including postage, air freight charges and charges for counting and packaging)
of such copies of each Preliminary Memorandum, the Final Memorandum and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Securities; (iv) the
preparation, printing, authentication, issuance and delivery of certificates for
the Notes and the related Guarantees, including any stamp taxes in connection
with the original issuance and sale of the Securities and trustees' fees;
(v) the reproduction and delivery of this Agreement and the other Basic
Documents, the preliminary and supplemental "Blue Sky" memoranda and all other
agreements or documents reproduced and delivered in connection with the offering
of the Securities; (vi) the registration or qualification of the Securities for
offer and sale under the securities or Blue Sky laws of the several states
(including filing fees and the reasonable fees, expenses and disbursements of
Cahill Gordon & Reindel, counsel
<PAGE>
-23-
to the Initial Purchasers, relating to such registration and qualification);
(vii) the transportation and other expenses incurred by or on behalf of
Company representatives (including, without limitation, those expenses
incurred by the Initial Purchasers) in connection with presentations to and
related communications with prospective purchasers of the Securities; (viii)
the fees and expenses of the Company's accountants and the fees and expenses
of counsel (including local and special counsel) for the Issuers; (ix) fees
and expenses of the Trustee including fees and expenses of its counsel; (x)
fees and expenses of counsel to the Initial Purchasers; (xi) all expenses and
listing fees incurred in connection with the application for quotation of the
Securities on the PORTAL Market; and (xii) any fees charged by investment
rating agencies for the rating of the Securities.
7. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligation of each Initial Purchaser to purchase and pay for the Securities is
subject to the accuracy of the representations and warranties contained herein,
to the performance by the Issuers of their respective covenants and agreements
hereunder and to the following additional conditions unless waived in writing by
the Initial Purchasers:
(i) The Initial Purchasers shall have received an opinion of Winston
& Strawn, special counsel to the Issuers and Timothy J. Nalepka, Esq.,
general counsel of the Issuers, in form and substance satisfactory to the
Initial Purchasers and Cahill Gordon & Reindel, counsel to the Initial
Purchasers, dated the Closing Date, substantially in the forms of
EXHIBITS B AND C hereto (with customary qualifications and assumptions), as
well as letters authorizing the Initial Purchasers to rely on the opinions
delivered by counsel to the Issuers in respect of the Transaction
Documents. In rendering such opinion, Winston & Strawn shall have received
and may rely upon such certificates and other documents and information,
including one or more opinions of local counsel reasonably acceptable to
the Initial Purchasers and Cahill Gordon & Reindel, counsel to the Initial
Purchasers, as they may reasonably request to pass upon such matters. Such
counsel may also state that they express no opinion as to the laws of any
jurisdiction other than the federal laws of the United States and the laws
of the States of Illinois and New York and the corporate laws of the State
of Delaware.
(ii) The Initial Purchasers shall have received an opinion, dated the
Closing Date, of Cahill Gordon & Rein-
<PAGE>
-24-
del, counsel to the Initial Purchasers, with respect to the sufficiency
of certain legal matters relating to this Agreement and such other
related matters as the Initial Purchasers may require. In rendering
such opinion, Cahill Gordon & Reindel shall have received and may rely
upon such certificates and other documents and information as they may
reasonably request to pass upon such matters. In addition, in rendering
their opinion, Cahill Gordon & Reindel may state that their opinion is
limited to matters of New York, Delaware corporate and federal law.
(iii) The Initial Purchasers shall have received from Arthur
Andersen, LLP, independent public accountants for the Issuers, "comfort"
letters dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers and Cahill Gordon &
Reindel, counsel to the Initial Purchasers.
(iv) The representations and warranties of the Issuers
contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date; the Issuers shall have complied
in all material respects with all agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or
prior to the Closing Date.
(v) There shall not have been any change in the capital stock
of the Company or the Subsidiaries or any material increase in the
consolidated short-term or long-term debt of the Company from that set
forth or contemplated in the Final Memorandum and (b) the Company and
the Subsidiaries shall not have any liabilities or obligations,
contingent or otherwise (whether or not in the ordinary course of
business), that are material to the Company and the Subsidiaries, taken
as a whole, other than those reflected in the Final Memorandum.
(vi) None of the issuance and sale of the Securities pursuant
to this Agreement or any of the transactions contemplated by any of the
other Basic Documents or the Transaction Documents shall be enjoined
(temporarily or permanently) and no restraining order or other
injunctive order shall have been issued; and there shall not have been
any legal action, order, decree or other administrative proceeding
instituted or threatened against any of the Issuers or against the
Initial Purchasers relating to the issuance of the Securities or the
Initial Purchasers' activities in connection therewith or any other
transac-
<PAGE>
-25-
tions contemplated by this Agreement or the Final Memorandum, the other
Basic Documents or the Transaction Documents.
(vii) Subsequent to the date of this Agreement and since the date
of the most recent financial statements in the Final Memorandum (exclusive
of any amendment or supplement thereto after the date hereof), there shall
not have occurred (i) any change, or any development involving a
prospective change, in or affecting the business, condition (financial or
other), properties, prospects or results of operations of the Company and
the Subsidiaries, taken as a whole, not contemplated by the Final
Memorandum that, in the opinion of the Initial Purchasers, would materially
adversely affect the market for the Securities, or (ii) any event or
development relating to or involving any of the Company or the Subsidiaries
or any of the officers or directors of the Company or the Subsidiaries that
makes any statement made in the Final Memorandum untrue or that, in the
opinion of the Issuers and their counsel or the Initial Purchasers and
their counsel, requires the making of any addition to or change in the
Final Memorandum in order to state a material fact required by any
applicable law, rule or regulation to be stated therein or necessary in
order to make the statements made therein not misleading.
(viii) The Initial Purchasers shall have received certificates,
dated the Closing Date and signed by the chief executive officer and the
chief accounting officer of the Company, to the effect that:
a. All of the representations and warranties of the Issuers set
forth in this Agreement are true and correct in all material
respects as if made on and as of the Closing Date and the Issuers
have complied in all material respects with all agreements and
satisfied all conditions on their part to be performed or
satisfied at or prior to the Closing Date.
b. The issuance and sale of the Securities pursuant to this
Agreement or the Final Memorandum and the consummation of the
transactions contemplated by the Transaction Documents have not
been enjoined (temporarily or permanently) and no restraining
order or other injunctive order has been issued and there has not
been any legal
<PAGE>
-26-
action, order, decree or other administrative proceeding
instituted or threatened against any of the Issuers
relating to the issuance of the Securities or to their knowledge,
relating to the Initial Purchasers' activities in connection
therewith or in connection with any other transactions
contemplated by this Agreement or the Final Memorandum, the other
Basic Documents or the Transaction Documents.
c. Subsequent to the date of this Agreement and since the date of
the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), there has not occurred (i) any change, or any
development involving a prospective change, in or affecting the
business, condition (financial or other), properties, prospects
or results of operations of the Company and the Subsidiaries,
taken as a whole, not contemplated by the Final Memorandum that
would materially adversely affect the market for the Securities,
or (ii) any event or development relating to or involving any of
the Company or the Subsidiaries that makes any statement made in
the Final Memorandum untrue or that requires the making of any
addition to or change in the Final Memorandum in order to state a
material fact required by any applicable law, rule or regulation
to be stated therein or necessary in order to make the statements
made therein not misleading.
d. There has not been any change in the capital stock of the Company
or the Subsidiaries nor any material increase in the consolidated
short-term or long-term debt of the Company from that set forth
or contemplated in the Final Memorandum and (b) the Company and
the Subsidiaries have no liabilities or obligations, contingent
or otherwise (whether or not in the ordinary course of business),
that are material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Final Memorandum.
e. At the Closing Date and after giving effect to the consummation
of the transactions contemplated by this Agreement, the other
Basic Documents and the Transaction Documents, there ex-
<PAGE>
-27-
ists no Default or Event of Default (as defined in the
Indenture).
(ix) Each of the Transaction Documents and each other
agreement or instrument executed in connection with the Transactions
shall be reasonably satisfactory in form and substance to the Initial
Purchasers and shall have been executed and delivered by all the
respective parties thereto and shall be in full force and effect, and
there shall have been no material amendments, alterations, modifications
or waivers of any provision thereof since the date of this Agreement.
On the Closing Date, the New Senior Credit Facility shall provide for
(i) revolving credit borrowings of not less than $117 million and (ii)
term loan borrowings of not less than $333 million, which $333 million
shall be borrowed by the Company on the Closing Date.
(x) All proceedings taken in connection with the issuance of
the Securities and the transactions contemplated by this Agreement, the
other Basic Documents and the Transaction Documents and all documents
and papers relating thereto shall be reasonably satisfactory to the
Initial Purchasers and counsel to the Initial Purchasers. The Initial
Purchasers and counsel to the Initial Purchasers shall have received
copies of such papers and documents as they may reasonably request in
connection therewith, all in form and substance reasonably satisfactory
to them.
(xi) The Company shall apply the proceeds necessary from the
issuance and sale of the Notes and from initial borrowings under the New
Senior Credit Facility substantially as described under "Use of
Proceeds" in the Final Memorandum.
(xii) [Intentionally omitted].
(xiii) There shall not have been any announcement by any
"nationally recognized statistical rating organization," as defined for
purposes of Rule 436(g) under the Securities Act, that (A) it is
downgrading its rating assigned to any debt securities of the Company, or
(B) it is reviewing its rating assigned to any debt securities of the
Company with a view to possible downgrading, or with negative implications.
<PAGE>
-28-
(xiv) On or before the Closing Date, the Initial Purchasers shall
have received the Registration Rights Agreement executed by the Company and
such agreement shall be in full force and effect at all times from and
after the Closing Date.
(xv) The Issuers shall have furnished or caused to be
furnished to the Initial Purchasers such further certificates and
documents as the Initial Purchasers shall have reasonably requested.
All such opinions, certificates, letters, schedules, documents or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel to the Initial Purchasers. The Issuers shall
furnish to the Initial Purchasers such conformed copies of such opinions,
certificates, letters, schedules, documents and instruments in such quantities
as the Initial Purchasers shall reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION. (a) Each Issuer jointly and
severally agrees to indemnify and hold harmless the Initial Purchasers, each
director, officer, employee or agent of any Initial Purchaser and each person,
if any, who controls any Initial Purchaser within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages, liabilities or expenses to which such Initial Purchaser or such
director, officer, employee, agent or controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as any such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in (A) any Preliminary Memorandum or the Final Memorandum or
any amendment or supplement thereto or (B) any of the Basic Documents or
any application or other document, or any amendment or supplement thereto,
executed by any Issuer or based upon written information furnished by or on
behalf of any Issuer filed in any jurisdiction in order to qualify the
Securities under the securities or "Blue Sky" laws thereof or filed with
the Commission or any securities association or securities exchange
(collectively, the "Documents"); or
(ii) the omission or alleged omission to state, in any Preliminary
Memorandum or the Final Memorandum or any
<PAGE>
-29-
amendment or supplement thereto, or any of the Documents, a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, and will reimburse, as incurred, the Initial Purchasers
and each such director, officer, employee, agent or controlling person
for any legal or other expenses reasonably incurred by the Initial
Purchasers or such director, officer, employee, agent or controlling
person in connection with investigating, defending against or appearing
as a third-party witness in connection with any such loss, claim,
damage, liability, expense or action; PROVIDED, HOWEVER, that none of
the Issuers will be liable in any such case to an Initial Purchaser or
any director, officer, employee, agent or controlling person of such
Initial Purchaser to the extent that any such loss, claim, damages,
liability expense or action arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Memorandum or the Final Memorandum or any
amendment or supplement thereto, or any Document, in reliance upon and
in conformity with written information furnished to the Issuers by or on
behalf of such Initial Purchaser specifically for use therein; and
PROVIDED, FURTHER, that none of the Issuers will be liable to any
Initial Purchaser or any director, officer, employee, agent or any
person controlling any Initial Purchaser with respect to any such untrue
statement or omission made in any Preliminary Memorandum that is
corrected in the Final Memorandum (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage, expense
or liability purchased Securities from an Initial Purchaser in reliance
upon the Preliminary Memorandum but was not sent or given a copy of the
Final Memorandum (as amended or supplemented) that was made available by
the Issuers to such Initial Purchaser at or prior to the written
confirmation of the sale of the Securities to such person unless such
failure to deliver such Final Memorandum (as amended or supplemented)
was a result of noncompliance by the Issuers with Section 5(iv) of this
Agreement. This indemnity agreement will be in addition to any
liability that the Issuers may otherwise have to the indemnified
parties. The Issuers further agree that the indemnification,
contribution and reimbursement commitments set forth in this Section 8
shall apply whether or not any Initial Purchaser is a formal party to
any such lawsuits, claims or other proceedings. None of the Issuers
will without the prior written consent (which shall not be unreasonably
withheld)
<PAGE>
-30-
of the Initial Purchasers, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification by the Initial Purchasers
may be sought hereunder (whether or not the Initial Purchasers or any
person who controls any Initial Purchaser within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act is a party to
such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of the Initial
Purchasers and each such director, officer, employee, agent or
controlling person from all liability arising out of such claim, action,
suit or proceeding.
(b) The Initial Purchasers severally and not jointly will indemnify and hold
harmless the Issuers, their respective directors, officers, employees and agents
and each person, if any, who controls any of the Issuers within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act against any
losses, claims, damages, liabilities or expenses to which any of the Issuers or
any such director, officer, employee, agent or controlling person may become
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Preliminary Memorandum or the Final Memorandum or
any amendment or supplement thereto or any Document, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue statement
was made in reliance upon and in conformity with written information furnished
to any of the Issuers by or on behalf of such Initial Purchaser specifically for
use therein; and, subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses reasonably
incurred by any of the Issuers or any such director, officer, employee, agent or
controlling person in connection with investigating or defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will
be in addition to any liability that the Initial Purchasers may otherwise have
to the indemnified parties. None of the Initial Purchasers will without the
prior written consent (which shall not be unreasonably withheld) of the Issuers,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
by the Issuers may be sought hereunder (whether or not the Issuers or any person
who controls any Issuer within the
<PAGE>
-31-
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of the
Issuers and each such director, officer, employee, agent or controlling
person from all liability arising out of such claim, action, suit or
proceeding.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve it from
any liability that it may have to any indemnified party except to the extent
that such omission results in the forfeiture by the indemnifying party of
substantial rights and defenses. In case any such action is brought against any
indemnified party, and such indemnified party notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that if the named
parties in any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties that are different from or additional to
those available to any such indemnifying party, then the indemnifying parties
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election to so assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable out-of-pocket
costs of investigation, incurred by such indemnified party in connection with
the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local
<PAGE>
-32-
counsel) in any one action or separate but substantially similar actions in
the same jurisdiction arising out of the same general allegations or
circumstances, representing the indemnified parties under such paragraph (a)
or paragraph (b), as the case may be, who are parties to such action or
actions); (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying parties; or (iii) the indemnifying party shall have failed to
assume the defense or retain counsel reasonably satisfactory to the
indemnified party. After such notice from the indemnifying parties to such
indemnified party (so long as the indemnified party shall have informed the
indemnifying parties of such action in accordance with this Section 8 on a
timely basis prior to the indemnified party seeking indemnification
hereunder), the indemnifying parties will not be liable under this Section 8
for the costs and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party, unless such
indemnified party waived its rights under this Section 8, in which case the
indemnified party may effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 8 is unavailable or insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages,
expenses or liabilities (or actions in respect thereof), each indemnifying
party, in order to provide for just and equitable contribution, shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect (i) the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages, expenses or
liabilities (or actions in respect thereof). The relative benefits received by
the Issuers on the one hand and the Initial Purchasers on the other shall be
deemed to be in the same proportion as the total proceeds from the offering of
the Securities (before deducting expenses) received by the Issuers bear to the
total discounts and commissions received by the Initial Purchasers. The
relative fault of the parties shall be determined by reference to,
<PAGE>
-33-
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 on the one hand or the Initial
Purchasers on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances. The
amount paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or
other fees or expenses incurred by such party in connection with
investigating or defending any such claim. The Issuers and the Initial
Purchasers agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if
the Issuers on the one hand and the Initial Purchasers on the other hand were
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to in
the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), the Initial Purchasers shall not be
obligated to make contributions hereunder that in the aggregate exceed the
total discounts and commissions received by the Initial Purchasers under this
Agreement, less the aggregate amount of any damages that the Initial
Purchasers have otherwise been required to pay by reason of the untrue or
alleged untrue statements, and 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 who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each
director, officer, employee or agent of and each person, if any, who controls
any Initial Purchaser 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 Initial Purchaser, and each director, officer, employee and agent of
any of the Issuers and each person, if any, who controls any 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.
(e) Notwithstanding anything to the contrary in this Section 8, the
indemnification and contribution provisions of the Registration Rights Agreement
shall govern any claim with respect thereto.
9. OFFERING OF SECURITIES; RESTRICTIONS ON TRANSFER. (a) Each
Initial Purchaser represents and warrants to the Issuers as to itself only that
it is a QIB. Each Initial
<PAGE>
-34-
Purchaser agrees with the Issuers as to itself only that (i) it has not and
will not solicit offers for, or offer or sell, the Securities by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act; and (ii)
it has and will solicit offers for the Securities only from, and will offer
the Securities only to, (A) in the case of offers inside the United States,
persons whom such Initial Purchaser reasonably believes to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented
to such Initial Purchaser that each such account is a QIB, to whom notice has
been given that such sale or delivery is being made in reliance on Rule 144A
and, in each case, in transactions under Rule 144A and (B) in the case of
offers outside the United States, to persons other than U.S. persons
("foreign purchasers," which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners other than an estate or trust), who is purchasing
Securities in an "offshore transaction" (as defined in Regulation S under the
Securities Act).
(b) Each of the Initial Purchasers represents and warrants to the
Issuers (as to itself only) with respect to offers and sales outside the United
States that (i) it has and will comply with all applicable laws and regulations
in each jurisdiction in which it acquires, offers, sells or delivers Securities
or has in its possession or distributes any Memorandum or any such other
material, in all cases at its own expense; (ii) the Securities have not been and
will not be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons except in accordance with Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act; (iii) it has offered the Securities and will offer and sell
the Securities (A) as part of its distribution at any time and (B) otherwise
until 40 days after the later of the commencement of the offering and the
Closing Date, only in accordance with Rule 903 of Regulation S and, accordingly,
neither it nor any persons acting on its behalf have engaged or will engage in
any directed selling efforts (within the meaning of Regulation S) with respect
to the Securities, and any such persons have complied and will comply with the
offering restrictions requirement of Regulation S; and (iv) it agrees that, at
or prior to confirmation of sales of the Securities, it will have sent to each
distributor, dealer or person receiving a selling conces-
<PAGE>
-35-
sion, fee or other remuneration that purchases Securities from it during the
restricted period a confirmation or notice to substantially the following
effect:
"The securities covered hereby have not been registered under the United
States Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of the distribution of the securities at any time
or (ii) otherwise until 40 days after the later of the commencement of the
offering and the closing date of the offering, except in either case in
accordance with Regulation S (or Rule 144A if available) under the
Securities Act. Terms used above have the meaning given to them in
Regulation S."
Terms used in this Section 9 and not defined in this Agreement have the meanings
given to them in Regulation S.
10. SURVIVAL CLAUSE. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Issuers, their
respective officers and the Initial Purchasers set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Issuers, any of their respective officers or directors, the
Initial Purchasers or any controlling person referred to in Section 8 hereof and
(ii) delivery of, payment for or disposition of the Securities, and shall be
binding upon and shall inure to the benefit of any successors, assigns, heirs or
personal representatives of the Issuers, the Initial Purchasers and indemnified
parties referred to in Section 8 hereof. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6 and 8 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
11. TERMINATION. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Issuers given in the event
that the Issuers shall have failed, refused or been unable to satisfy all
conditions on their part to be performed or satisfied hereunder on or prior to
the Closing Date or if at or prior to the Closing Date:
(i) any of the Company or the Subsidiaries shall have sustained any
loss or interference with respect to
<PAGE>
-36-
their respective businesses or properties from fire, flood, hurricane,
earthquake, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding, which loss or interference, in the sole judgment of the
Initial Purchasers, has had or has a Material Adverse Effect, or there
shall have been any material adverse change, or any development
involving a prospective material adverse change (including without
limitation a change in control of the Company or any Subsidiary), in the
business, condition (financial or other), properties, prospects or
results of operations of the Company and the Subsidiaries, taken as a
whole, except as described in or contemplated by the Final Memorandum
(exclusive of any amendment or supplement thereto);
(ii) trading in securities of the Company or any Subsidiary or
in securities generally on the New York Stock Exchange, the American
Stock Exchange or the NASDAQ National Market shall have been suspended
or minimum or maximum prices shall have been established on any such
exchange;
(iii) a banking moratorium shall have been declared by New York
state, United States or Canadian authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States or Canada and any foreign power,
(B) an outbreak or escalation of any other insurrection or armed conflict
involving the United States or Canada or (C) any material change in the
financial markets of the United States or Canada that, in the case of (A),
(B) or (C) above, in the sole judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the delivery of the Securities
as contemplated by the Final Memorandum, as amended as of the date hereof;
or
(v) any securities of the Company or any of the Subsidiaries
shall have been downgraded or placed on any "watch list" for possible
downgrading by any nationally recognized statistical rating organization.
(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
<PAGE>
-37-
12. NOTICES. All communications hereunder shall be in writing
and, if sent to the Initial Purchasers, shall be hand delivered, mailed by
first-class mail, by next-day air courier or telecopied and confirmed in
writing to CIBC World Markets Corp., 425 Lexington Avenue, 3rd Floor, New
York, New York 10017, Attention: Corporate Finance Department, and with a
copy to Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005,
Attention: Roger Meltzer, Esq. If sent to any of the Issuers, such
communications shall be mailed, delivered or telecopied and confirmed in
writing, to Transportation Manufacturing Operations, Inc. (to be renamed
Motor Coach Industries International, Inc.), 10 East Golf Road, Des Plaines,
Illinois 60016, Attention: Timothy J. Nalepka, and with a copy to Winston &
Strawn, 35 West Wacker Drive, Chicago, Illinois 60601 Attention: R. Cabell
Morris, Jr., Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
13. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers and each of the Issuers and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that
(i) the indemnities by the Issuers contained in Section 8 of this Agreement
shall also be for the benefit of the directors, officers, employees and agents
and any person or persons who control the Initial Purchasers within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act and
(ii) the indemnities by the Initial Purchasers contained in Section 8 of this
Agreement shall also be for the benefit of the directors, officers, employees
and agents of the Issuers and any person or persons who control any Issuer
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act. No purchaser of Securities from any Initial Purchaser will be
deemed a successor because of such purchase.
<PAGE>
-38-
14. NO WAIVER; MODIFICATIONS IN WRITING. No failure or delay on the
part of any Issuer or the Initial Purchasers in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any Issuer or the Initial Purchasers at law or
in equity or otherwise. No waiver of or consent to any departure by any Issuer
or the Initial Purchasers from any provision of this Agreement shall be
effective unless signed in writing by the party entitled to the benefit thereof,
PROVIDED that notice of any such waiver shall be given to each party hereto as
set forth below. Except as otherwise provided herein, no amendment,
modification or termination of any provision of this Agreement shall be
effective unless signed in writing by or on behalf of each of the Issuers and
the Initial Purchasers. Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Issuers or the Initial Purchasers from the
terms of any provision of this Agreement shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where
notice is specifically required by this Agreement, no notice to or demand on the
Issuers in any case shall entitle the Issuers to any other or further notice or
demand in similar or other circumstances.
15. INFORMATION SUPPLIED BY THE INITIAL PURCHASER. The statements
set forth in the fifth paragraph under the heading "Plan of Distribution" in the
Final Memorandum (to the extent such statements relate to the Initial
Purchasers) constitute the only information furnished by the Initial Purchasers
to the Issuers for purposes of Section 8 hereof.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties hereto and supersedes all prior agreements,
understandings and arrangements, oral or written, among the parties hereto with
respect to the subject matter hereof.
17. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN 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 LAW.
<PAGE>
-39-
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. JOINT AND SEVERAL OBLIGATIONS. All of the obligations of the
Issuers hereunder shall be joint and several obligations of each of them.
<PAGE>
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this Agreement shall constitute a binding agreement among the Issuers
and the Initial Purchasers.
Very truly yours,
TRANSPORTATION MANUFACTURING
OPERATIONS, INC.
(to be renamed Motor Coach Industries
International, Inc.)
By:
----------------------------------
Name:
Title:
BUSLEASE, INC.
By:
----------------------------------
Name:
Title:
HAUSMAN BUS SALES, INC.
By:
----------------------------------
Name:
Title:
<PAGE>
MOTOR COACH INDUSTRIES, INC.
By:
----------------------------------
Name:
Title:
TRANSIT BUS INTERNATIONAL, INC.
By:
----------------------------------
Name:
Title:
UNIVERSAL COACH PARTS, INC.
By:
----------------------------------
Name:
Title:
<PAGE>
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
CIBC WORLD MARKETS CORP.
By:
----------------------------------
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
By:
----------------------------------
Name:
Title:
<PAGE>
EXHIBIT A-1
GUARANTORS
1. BusLease, Inc.
2. Hausman Bus Sales, Inc.
3. Motor Coach Industries, Inc.
4. Transit Bus International, Inc.
5. Universal Coach Parts, Inc.
<PAGE>
EXHIBIT A-2
SUBSIDIARIES
100% OWNED SUBSIDIARIES
1. BusLease, Inc.
2. MCIL Holdings, Ltd.
3. Hausman Bus Sales, Inc.
4. Motor Coach Industries, Inc.
5. Transit Bus International, Inc.
6. TMO Holdings of Canada, Ltd.
7. Motor Coach Industries-China, Inc.
8. Universal Coach Parts, Inc.
9. Motor Coach Industries Limited
10. Frank Fair Industries Ltd.
11. Custom Assets Corp.
12. Greyhound Overseas Services, Inc.
13. Transport Technology Corporation
14. Universal Coach Parts Mexico, S.A. de C.V.*
15. Dina Autobuses, S.A. de C.V.
OTHER SUBSIDIARY
16. MCII Financial Services, Inc., 25% ownership by the Company.
<PAGE>
SCHEDULE 1
<TABLE>
<S> <C>
CIBC World Markets Corp. $121,800,000
Merrill Lynch, Pierce, Fenner 30,450,000
& Smith Incorporated
------------
Total..................................................... $152,250,000
------------
------------
</TABLE>
<PAGE>
EXHIBIT B
FORM OF OPINION OF WINSTON & STRAWN
Opinion, dated the Closing Date and addressed to the Initial
Purchasers, of Winston & Strawn, counsel to the Issuers, to the effect that:
(i) Each of the Company and its Subsidiaries is validly
existing in good standing as a corporation under the laws of its
jurisdiction of incorporation, with the requisite corporate power and
authority to own its properties and conduct its business as now
conducted as described in the Final Memorandum.
(ii) The Company has the authorized, issued and outstanding
capitalization set forth in the Final Memorandum.
(iii) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Securities, the Exchange Notes (as defined in the Registration Rights
Agreement) and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Notes, the Exchange Notes and the Private Exchange
Notes have each been duly and validly authorized by the Company for
issuance and, when executed by the Company and authenticated by the Trustee
in accordance with the provisions of the Indenture, and, in the case the
Notes, delivered to and paid for by the Initial Purchasers in accordance
with the terms of the Purchase Agreement, will have been duly executed,
issued and delivered by the Company and will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their
terms except that the enforcement thereof may be limited by the
Enforceability Exceptions; the Guarantees endorsed on the Notes and the
guarantees to be endorsed on the Exchange Notes and the Private Exchange
Notes have each been duly and validly authorized by each of the
Guarantors and, when the Notes are executed by the Company and
authenticated by the Trustee in accordance with the provisions of the
Indenture, and delivered to and paid for by the Initial Purchasers in
accordance with the terms of the Purchase Agreement, will have been duly
executed, issued and delivered by the Guarantors and will constitute
valid and legally binding obligations of the
<PAGE>
-2-
Guarantors, entitled to the benefits of the Indenture and enforceable
against the Guarantors in accordance with their terms except that the
enforcement thereof may be limited by the Enforceability Exceptions; the
Securities are in the form contemplated by the Indenture.
(iv) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture. The Indenture has been duly and validly authorized by the
Issuers and meets the requirements for qualification under the Trust
Indenture Act, and, when executed and delivered by the Issuers (assuming
the due authorization, execution and delivery by the Trustee), will
constitute a valid and legally binding agreement of the Issuers,
enforceable against the Issuers in accordance with its terms except that
the enforcement thereof may be limited by the Enforceability Exceptions.
(v) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Purchase Agreement. The Purchase Agreement has been duly and validly
authorized by the Issuers and, when executed and delivered by the
Issuers, will constitute a valid and legally binding agreement of the
Issuers (assuming it is a legal valid and binding agreement of the
Initial Purchasers), enforceable against the Issuers in accordance with
its terms except that the enforcement thereof may be limited by the
Enforceability Exceptions and except as any rights to indemnity or
contribution thereunder may be limited by federal and state securities
laws and public policy considerations.
(vi) Each of the Issuers has the requisite corporate power and
authority to execute, deliver and perform its obligations under the
Registration Rights Agreement. The Registration Rights Agreement has been
duly and validly authorized by the Issuers and, when executed and delivered
by the Issuers, will constitute a valid and legally binding agreement of
the Issuers (assuming it is a legal valid and binding agreement of the
Initial Purchasers), enforceable against the Issuers in accordance with
its terms except that the enforcement thereof may be limited by the
Enforceability Exceptions and except as any rights to indemnity or
contribution thereunder may be limited by federal and state securities
laws and public policy considerations. The Securities, the Indenture
and the Registration Rights Agreement conform in all material respects
to the descriptions thereof in the Final Memorandum.
<PAGE>
-3-
(vii) No consent, approval, authorization, license, qualification,
exemption or order of any court or U.S. federal or state governmental
agency or body or third party, to the best knowledge of such counsel, is
required for the performance of this Agreement, the Registration Rights
Agreement, the Securities or the Indenture by the Issuers or for the
consummation of any of the transactions contemplated hereby and thereby, or
the application of the proceeds of the issuance of the Securities as
described in the Final Memorandum, except (A) as has already been acquired,
(B) as may be required under state securities or "Blue Sky" laws in
connection with the purchase and distribution of the Securities by the
Initial Purchasers or (C) where the failure to obtain such consent,
approval, authorization, license, qualification, exemption or order would
not, individually or in the aggregate have a Material Adverse Effect; all
such consents, approvals, authorizations, licenses, qualifications,
exemptions and orders set forth in the Final Memorandum which are required
to be obtained by the Closing Date have been obtained or made, as the case
may be, and, to the best knowledge of such counsel, are in full force and
effect and not the subject of any pending or threatened attack by appeal or
direct proceeding or otherwise.
(viii) The execution, delivery and performance by the Issuers of
the Purchase Agreement, the Registration Rights Agreement, the Securities
and the Indenture and the consummation of the transactions contemplated
thereby and by the Final Memorandum and the fulfillment of the terms
thereof will not (a) violate, conflict with or constitute or result in a
breach of or a default under (or an event that, with notice or lapse of
time, or both, would constitute a breach of or a default under) any of (i)
the terms or provisions of any Applicable Contract (being contracts
listed on a schedule to such counsel's opinion), (ii) the certificate of
incorporation or bylaws of any of the Company or the Guarantors (or
similar organizational document) or (iii) (assuming compliance with all
applicable state securities or "Blue Sky" laws) any statute, judgment,
decree, order, rule or regulation of any court or governmental agency or
other body applicable to the Company or the Subsidiaries or any of their
respective properties or assets or (b) result in the imposition of any
lien upon or with respect to any of the properties or assets now owned
or hereafter acquired by the Company or any of the Subsidiaries, which
violation, conflict, breach,
<PAGE>
-4-
default or lien would, individually or in the aggregate, have a Material
Adverse Effect.
(ix) To the best knowledge of such counsel, there are no legal
or governmental proceedings, nor any contracts or other documents
required by the Securities Act to be described in a prospectus that have
not been described in the Final Memorandum.
(x) None of the Company or the Subsidiaries is, or
immediately after the Closing Date will be, required to register as an
"investment company" or a company "controlled by" an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(xi) No securities of any Issuer are of the same class (within
the meaning of Rule 144A under the Securities Act) as the Securities and
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.
(xii) The statements set forth under the captions "Description of
New Senior Credit Facility," "Description of the Notes" and "Exchange
Offer; Registration Rights" in the Final Memorandum, insofar as such
statements purport to summarize legal documents, are fair summaries of the
documents so summarized and, insofar as such statements are summaries of
matters of law or legal conclusions, are accurate summaries in all material
respects.
(xiii) Assuming the accuracy of the representations of the Initial
Purchasers contained in the Agreement, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Initial
Purchasers under the Purchase Agreement or in connection with the
initial resale of the Securities by the Initial Purchasers in accordance
with Section 9 of the Purchase Agreement (i) to register the Securities
under the Securities Act or (ii) to qualify the Indenture under the
Trust Indenture Act, it being understood that no opinion is expressed as
to any subsequent resale of any of the Securities.
Such counsel shall additionally state that in its capacity as counsel
to the Issuers, it has participated in conferences with officers and other
representatives of the Issuers, representatives of the independent public
accountants for the Issuers and representatives of the Initial Purchasers at
<PAGE>
-5-
which the contents of the Final Memorandum and related matters were discussed
and, although it is not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the Final
Memorandum (except as indicated in clause (xx) above) and has not made any
independent check or verification thereof, on the basis of the foregoing
(relying as to materiality to a large extent upon the statements of officers and
other representatives of the Issuers) no facts have come to its attention that
have caused it to believe that the Final Memorandum as of its date and as of the
date hereof, or any amendment or supplement thereto as of its date and as of the
date hereof, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (it being understood that such counsel need express no opinion on
the financial statements or other financial and statistical data included in the
Final Memorandum).
<PAGE>
EXHIBIT C
FORM OF OPINION OF GENERAL COUNSEL OF THE ISSUERS
Opinion, dated the Closing Date and addressed to the Initial
Purchasers, of Timothy J. Nalepka, General Counsel of the Issuers, to the
effect that:
(i) Each of the Company and its Subsidiaries has been duly
incorporated and is validly existing in good standing as a corporation
under the laws of its jurisdiction of incorporation, with the requisite
corporate power and authority to own its properties and conduct its
business as now conducted as described in the Final Memorandum and is
duly qualified to do business as a foreign corporation in good standing
in all other jurisdictions where the ownership or leasing of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified would not have a Material
Adverse Effect.
(ii) Except as set forth in EXHIBIT A-2 to the Purchase
Agreement, the Company does not have any subsidiaries or own directly or
indirectly any of the capital stock or other equity or long-term debt
securities of or have any equity interest in any other person; all of
the outstanding shares of capital stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and, in
the case of Subsidiary capital stock, are owned, to the best knowledge
of such counsel, free and clear of all liens, encumbrances, equities and
restrictions on transferability (other than those imposed by the
Securities Act and the state securities or "Blue Sky" laws) or voting;
except as set forth in the Final Memorandum, all of the outstanding
shares of capital stock of the Subsidiaries are owned, directly or
indirectly, by the Company.
(iii) Except as set forth in the Final Memorandum, no options,
warrants or other rights to purchase from the Company or any Subsidiary,
agreements or other obligations of the Company or any Subsidiary to issue
or other rights to convert any obligation into, or exchange any securities
for, shares of capital stock of or ownership interests in the Company or
any Subsidiary are outstanding and no holder of securities of the Company
or any Subsidiary is
<PAGE>
-2-
entitled to have such securities registered under the Registration
Statement; and except as set forth in the Final Memorandum, to the best
knowledge of such counsel there is no agreement, understanding or
arrangement among the Company or any Subsidiary and each of their
respective stockholders or any other person relating to the ownership or
disposition of any capital stock of the Company or any Subsidiary or the
election of directors of the Company or any Subsidiary or the governance
of the Company's or any Subsidiary's affairs, and, if any, such
agreements, understandings and arrangements will not be breached or
violated as a result of the execution and delivery of, or the
consummation of the transactions contemplated by, the Purchase
Agreement, the other Basic Documents and the Transaction Documents.
(iv) To the best knowledge of such counsel after due inquiry,
none of the Company or the Subsidiaries is (i) in violation of its
certificate of incorporation or bylaws (or similar organizational
document), (ii) in breach or violation of any statute, judgment, decree,
order, rule or regulation applicable to it or any of its properties or
assets, which breach or violation would, individually or in the
aggregate, have a Material Adverse Effect, or (iii) in default (nor has
any event occurred which with notice or passage of time, or both, would
constitute a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in the Purchase
Agreement, the Registration Rights Agreement, the Securities, the
Indenture or any other contract, indenture, mortgage, deed of trust,
loan agreement, note, lease, license, franchise agreement, permit,
certificate or agreement or instrument to which it is a party or to
which it is subject, which default would, individually or in the
aggregate, have a Material Adverse Effect.
(v) The execution, delivery and performance by the Issuers of
the Purchase Agreement, the Registration Rights Agreement, the
Securities, the Indenture and the Transaction Documents and the
consummation of the transactions contemplated thereby and by the Final
Memorandum and the fulfillment of the terms thereof will not (a)
violate, conflict with or constitute or result in a breach of or a
default under (or an event that, with notice or lapse of time, or both,
would constitute a breach of or a default under) any of (i) the terms or
provisions of any contract, indenture, mortgage, deed of trust, loan
agreement, note, lease, license, franchise agreement, permit,
certificate
<PAGE>
-3-
or agreement or instrument to which any of the Company or the
Subsidiaries is a party or to which any of their respective properties
or assets are subject, or (ii) (assuming compliance with all applicable
state securities or "Blue Sky" laws) any statute, judgment, decree,
order, rule or regulation of any court or governmental agency or other
body applicable to the Company or the Subsidiaries or any of their
respective properties or assets or (b) result in the imposition of any
lien upon or with respect to any of the properties or assets now owned
or hereafter acquired by the Company or any of the Subsidiaries, which
violation, conflict, breach, default or lien would, individually or in
the aggregate, have a Material Adverse Effect.
(vi) Except as described in the Final Memorandum, to the best
knowledge of such counsel after due inquiry, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation,
governmental or otherwise, that seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the Transactions or the issuance
or sale of the Securities or the application of the proceeds therefrom
or the other transactions described in the Final Memorandum.
(vii) To the best knowledge of such counsel, the Company and the
Subsidiaries own or possess adequate licenses or other rights to use all
patents, trademarks, service marks, trade names, copyrights and know-how
that are necessary to conduct their business as described in the Final
Memorandum. To the best knowledge of such counsel, none of the Company or
the Subsidiaries has received any notice of infringement of or conflict
with (or knows of any such infringement of or conflict with) asserted
rights of others with respect to any patents, trademarks, service marks,
trade names, copyrights or know-how that, if such assertion of infringement
or conflict were sustained, would, individually or in the aggregate, have a
Material Adverse Effect.
(viii) To the best knowledge of such counsel, each of the Company
and the Subsidiaries possesses all Permits presently required or
necessary to own or lease, as the case may be, and to operate its
respective properties and to carry on its respective businesses as now
or proposed to be conducted as set forth in the Final Memorandum, except
where the failure to obtain such Permits would not, individually or in
the aggregate, have a Material Adverse
<PAGE>
-4-
Effect; to the best knowledge of such counsel, each of the Company and
the Subsidiaries has fulfilled and performed all of its obligations with
respect to such Permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the holder
of any such Permit; and, to the best knowledge of such counsel, none of
the Company or the Subsidiaries has received any notice of any
proceeding relating to revocation or modification of any such Permit,
except as described in the Final Memorandum and except where such
revocation or modification would not, individually or in the aggregate,
have a Material Adverse Effect.
Such counsel shall additionally state that in its capacity as counsel
to the Issuers, it has participated in conferences with officers and other
representatives of the Issuers, representatives of the independent public
accountants for the Issuers and representatives of the Initial Purchasers at
which the contents of the Final Memorandum and related matters were discussed
and, although it is not passing upon and does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the Final
Memorandum and has not made any independent check or verification thereof, on
the basis of the foregoing (relying as to materiality to a large extent upon the
statements of officers and other representatives of the Issuers) no facts have
come to its attention that have caused it to believe that the Final Memorandum
as of its date and as of the date hereof, or any amendment or supplement thereto
as of its date and as of the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need express no opinion on the financial statements or other financial
and statistical data included in the Final Memorandum).
<PAGE>
Exhibit 2.1
EXECUTED COPY
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INVESTMENT AGREEMENT
BY AND AMONG
JOSEPH LITTLEJOHN & LEVY FUND III L.P.
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
CO-INVESTMENT MERCHANT FUND 3, LLC
CONSORCIO G GRUPO DINA, S.A. de C.V.
DATED AS OF JUNE 11, 1999
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<PAGE>
INVESTMENT AGREEMENT, dated as of June 11, 1999 (the "Agreement"), by
and among JOSEPH LITTLEJOHN & LEVY FUND III L.P., a Delaware limited partnership
("JLL"), CIBC WG ARGOSY MERCHANT FUND 2, L.L.C. ("CIBC Argosy"), CO-INVESTMENT
MERCHANT FUND 3, LLC ("CMF" and, together with JLL and CIBC Argosy, the
"Investors"), and CONSORCIO G GRUPO DINA, S.A. de C.V., a corporation organized
under the laws of the United Mexican States ("Dina").
BACKGROUND
1. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as hereinafter defined), Dina shall cause its wholly
owned subsidiary, MCII Holdings (USA), Inc., a Delaware corporation (the
"Company"), to issue and sell, and the Investors will purchase, (i) 610,000
shares (the "Shares") of Common Stock (as hereinafter defined), which Shares
shall equal 61% of the shares of Common Stock outstanding on the Closing Date
(as hereinafter defined), and warrants (the "Warrants") to purchase up to 10% of
the Common Stock, on a fully diluted basis, for an aggregate purchase price of
$125 million and (ii) a Senior Note due 2011 of the Company (the "Company Senior
Note"), in the principal amount of $50 million, for a purchase price of $50
million. The terms of the Company Senior Note and the Warrants are set forth on
EXHIBITS A and B hereto. Such issuance, sale and purchase are referred to herein
as the "Investment."
2. At the Closing, Transportation Manufacturing Operations,
Inc., a Delaware corporation and an indirect wholly owned subsidiary of the
Company ("TMO"), will enter into a credit agreement (the "Credit Agreement")
with Canadian Imperial Bank of Commerce, as agent ("CIBC"), and a syndicate of
lenders providing for a $383 million senior credit facility.
3. At the Closing, TMO shall issue and sell $200 million of
subordinated indebtedness pursuant to a private placement (the "Private
Placement" and, together with the transactions contemplated by the Credit
Agreement, the "Financing").
4. Dina shall cause the Company to use the proceeds of the
Financing to repay the Increasing Rate Notes (as hereinafter defined), the First
Chicago Facility (as hereinafter defined), the Prudential Senior Notes (as
hereinafter defined) and the Autobuses Credit Facility (as hereinafter defined).
5. Immediately prior to the Closing, Dina shall acquire all of
the outstanding capital stock of each of the Transferred Subsidiaries (as
hereinafter defined).
6. Prior to the Closing, Dina shall take and shall cause the
Company to take all actions necessary to effect the Charter Amendment (as
hereinafter defined), which shall, among other, things provide for the
recapitalization of the Company's 1,000 then outstanding shares of Common Stock
into 2,500,000 shares of Common Stock.
<PAGE>
7. At the Closing, Dina shall cause the Company to repurchase
from Dina a number of shares of Common Stock, such that Dina shall own 39% of
the Common Stock outstanding on the Closing Date, after giving effect to the
Investment, in exchange for (a) an amount in cash equal to the sum of (x) $690
million and (y) 100% of all Excess Cash (as hereinafter defined) up to a maximum
of $5 million and (z) 50% of all Excess Cash above $5 million less the sum of
(i) the total amount expended to repay in full the Increasing Rate Notes, the
First Chicago Facility and the Prudential Senior Notes, (ii) 50% of the total
amount expended to repay in full the Autobuses Credit Facility; PROVIDED,
HOWEVER, if the amount required to repay such facility is in excess of $16
million, the amount included pursuant to this clause (ii) shall be the total
amount required to repay such facility less $8 million, (iii) the total amount
required to repay in full all other then outstanding indebtedness of the Company
or the Company's Subsidiaries, other than (1) trade payables and (2) up to
$1,050,000 to repay the current outstanding indebtedness payable to Cananwill,
Inc., (iv) the amount of the Cash Shortfall (as hereinafter defined), if any,
and (v) all fees and expenses paid or payable by the Company in connection with
the Transactions (as hereinafter defined) (such amount shall be hereinafter
referred to as the "Cash Repurchase Amount"), (b) the indebtedness referred to
in Section 3.5(b) and (c) the Dina Notes (as hereinafter defined).
8. Dina shall use the proceeds of the Repurchase (as
hereinafter defined) to (i) repurchase and retire all of the outstanding 2002
Discount Notes (as hereinafter defined) pursuant to the terms of the 2002
Discount Notes Tender Offer (as hereinafter defined) and (ii) repurchase and
retire all of the outstanding Senior Secured Notes (as hereinafter defined)
pursuant to the terms of the Senior Secured Notes Tender Offer (as hereinafter
defined).
9. Upon consummation of the Investment, the Investors will own
61% of the outstanding Common Stock and Dina will own 39% of the outstanding
Common Stock, in each case, without giving effect to the adoption of the Stock
Option Plan (as hereinafter defined) or the issuance of the Warrants. At the
Closing, Dina shall cause the Company to, and the Investors, Dina and certain
other stockholders will, enter into the Stockholders= Agreement (as hereinafter
defined) pursuant to which such parties will agree as to certain matters
relating to the corporate governance of the Company, and the certificate of
incorporation of the Company will be amended to include, among other things,
certain provisions relating to the conduct of the business and affairs of the
Company.
10. At the Closing, Dina shall cause the Company to become a
party to this Agreement and be bound by all of the Company's obligations
hereunder.
11. Promptly following the Closing, the Company will take all
actions necessary to adopt a management stock option plan (the "Stock Option
Plan"), in form and substance to be approved by JLL, pursuant to which certain
senior executive officers of the Company and/or the Company Subsidiaries (as
hereinafter defined) would be granted options to purchase an aggregate of 20% of
the outstanding Common Stock on a fully diluted basis.
12. The Board of Directors of Dina has determined that the
Investment, the Financing, the Refinancing (as hereinafter defined), the
Subsidiary Sale (as
2
<PAGE>
hereinafter defined), the Repurchase, the Contribution (as hereinafter
defined), the Dina Refinancing (as hereinafter defined), the Charter
Amendment and the other transactions and transfers contemplated hereby or by
any of the exhibits hereto (collectively, the "Transactions") are in the best
interests of Dina, the Company and their respective stockholders and has
approved and adopted this Agreement and the Transactions.
TERMS
In consideration of the foregoing and the respective
representations, warranties, covenants and agreements of the parties set forth
in this Agreement, and intending to be legally bound, the parties hereto agree
as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS.
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act (as hereinafter defined).
"Agreement" has the meaning set forth in the Preamble.
"Amended and Restated Certificate of Incorporation" has the
meaning set forth in Section 3.8.
"Ancillary Agreements" means the Stockholders= Agreement, the
Stock Option Plan, the Credit Agreement and the Indenture (as hereinafter
defined).
"Associate" has the meaning set forth in Rule 12b-2 under the
Exchange Act.
"Audit" means any audit, assessment of Taxes (as hereinafter
defined), examination or other proceeding by the Internal Revenue Service or any
other Governmental Entity (as hereinafter defined) responsible for the
administration of any Taxes, proceeding or appeal of such proceeding relating to
Taxes.
"Autobuses" has the meaning set forth in Section 3.3.
"Autobuses Credit Facility" has the meaning set forth in
Section 3.2.
"Autopartes" has the meaning set forth in Section 3.3.
"Board" means the Board of Directors of the Company.
3
<PAGE>
"Business" shall mean the ownership or management of, or
investment in, any business or Person engaged in (a) the designing,
manufacturing, assembling or marketing of coaches of monocoque or unitized
construction configuration or (b) the distribution of replacement parts to the
intercity coach and transit bus markets.
"Business Day" means any day other than a day on which banks
in the State of New York are authorized or obligated to be closed.
"Carrocera" has the meaning set forth in Section 3.3.
"Cash Repurchase Amount" has the meaning set forth in the
"Background" section.
"Cash Shortfall" means $40 million, less cash and cash
equivalents of the Company and its Subsidiaries at 11:59 p.m. on the day next
preceding the Closing Date, (less all then outstanding bank drafts); PROVIDED,
that if such amount is a negative number, Cash Shortfall shall be zero.
"Charter Amendment" has the meaning set forth in Section 3.8.
"CIBC" has the meaning set forth in the "Background" section.
"CIBC Argosy" has the meaning set forth in the Preamble.
"Claims" has the meaning set forth in Section 10.4.
"Cleanup" means all actions required to: (a) cleanup, remove,
treat or remediate Hazardous Materials (as hereinafter defined) in the indoor or
outdoor environment; (b) prevent the Release (as hereinafter defined) or
threatened Release of Hazardous Materials; (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care; and/or (d) respond to any
requests by Governmental Entities for information or documents in any way
relating to cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of Hazardous Materials in the indoor or
outdoor environment.
"Closing" has the meaning set forth in the Section 2.3.
"Closing Date" has the meaning set forth in Section 2.3.
"CMF" has the meaning set forth in the Preamble.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning set forth in Section 2.1.
"Company" has the meaning set forth in the "Background"
section.
4
<PAGE>
"Company Contracts" has the meaning set forth in Section
4.11(a).
"Company Senior Note" has the meaning set forth in the
"Background" section.
"Company Subsidiaries" has the meaning set forth in Section
4.1(a).
"Confidentiality Agreement" has the meaning set forth in
Section 6.4.
"Consents" has the meaning set forth in Section 4.5(b).
"Contribution" has the meaning set forth in Section 3.4.
"Credit Agreement" has the meaning set forth in the
"Background" section.
"Damages" has the meaning set forth in Section 10.2.
"Date Data" has the meaning set forth in Section 4.20(c).
"Date-Sensitive System" has the meaning set forth in Section
4.20(c).
"De Minimis Claim" has the meaning set forth in Section 10.3.
"DGCL" has the meaning set forth in Section 4.4.
"Dina" has the meaning set forth in the Preamble.
"Dina Notes" has the meaning set forth in Section 3.3.
"Dina Refinancing" has the meaning set forth in Section 3.6.
"Dina Subsidiaries" has the meaning set forth in Section 4.12.
"Disclosure Schedule" has the meaning set forth in Section
4.1(a).
"Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any person alleging
potential liability (including such liability for investigatory costs, Cleanup
costs, governmental response costs, natural resources damages, property damages,
personal injuries or administrative, civil, or criminal penalties) arising out
of, based on or resulting from (a) the presence, or Release or threat of Release
into the indoor or outdoor environment, of any Hazardous Materials at any
location, whether or not owned, leased or operated by the Company or any Company
Subsidiary or (b) circumstances forming the basis of any violation or alleged
violation of, or any other liability under, any Environmental Law (as
hereinafter defined).
5
<PAGE>
"Environmental Laws" means all federal, state, local and
foreign laws, statutes, ordinances, rules, regulations, orders, judgments and
decrees relating to (a) pollution or protection of human health, safety or the
environment, including laws relating to Releases or threatened Releases of
Hazardous Materials into the indoor or outdoor environment (including ambient
air, surface water, groundwater, and surface or subsurface strata), (b) the
manufacture, processing, distribution, use, treatment, storage, Release,
disposal, transport or handling of Hazardous Materials, (c) record keeping,
notification, disclosure or reporting requirements respecting Hazardous
Materials and (d) endangered or threatened species of fish, wildlife and plants
and the management or use of natural resources.
"ERISA" has the meaning set forth in Section 4.10(a).
"ERISA Affiliate" has the meaning set forth in Section
4.10(a).
"ERISA Plan" and "ERISA Plans" have the respective meanings
set forth in Section 4.10(a).
"Excess Cash" means, as of 11:59 p.m. on the date next
preceding the Closing Date, the amount of all cash and cash equivalents held by
the Company and its Subsidiaries (less all then outstanding bank drafts), less
$45 million; provided, that if such amount is a negative number, Excess Cash
shall be zero.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expenses" means all reasonable out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its Affiliates and all commitment
and other fees to financial institutions) incurred by a party or on its behalf
in connection with or related to the authorization, preparation, negotiation,
execution, delivery and performance of this Agreement, and all other matters
related to the consummation of the transactions contemplated hereby.
"Financial Statements" has the meaning set forth in Section
4.7(a).
"Financing" has the meaning set forth in the "Background"
section.
"First Chicago Facility" has the meaning set forth in Section
3.2.
"Foreign Plans" has the meaning set forth in Section 4.10.
"Forgiveness" has the meaning set forth in Section 3.5.
"GAAP" means United States generally accepted accounting
principles.
"Gomez Flores Family" means Mr. Rafael Gomez Flores and each
of his siblings.
6
<PAGE>
"Governmental Entity" means any nation or government, any
state or other political subdivision thereof; any entity, authority or body
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission or instrumentality of the United States,
any state of the United States or any political subdivision or territory
thereof, or any nation; or any court, or legally constituted tribunal or
arbitrator.
"Hazardous Materials" means all substances defined as
hazardous substances, oils, pollutants or contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5; all
substances defined as hazardous waste or hazardous materials in Mexico's
Framework Law of Ecological Balance and Environmental Protection, published on
February 26, 1988; and any other substance or waste, pollutant, contaminant,
chemical or material regulated under any Environmental Law.
"Holdback Amount" shall have the meaning set forth in Section
3.5.
"HSR Act" has the meaning set forth in Section 4.5(b).
"Increasing Rate Notes" has the meaning set forth in Section
3.2.
"Indenture" means the Indenture of TMO relating to the notes
issued in the Private Placement.
"Intellectual Property" has the meaning set forth in Section
4.19.
"Intercompany Agreement" has the meaning set forth in Section
7.4.
"Investment" has the meaning set forth in the "Background"
section.
"Investment Consideration" has the meaning set forth in
Section 2.2.
"Investor Claims" has the meaning set forth in Section 10.2.
"Investor Group" has the meaning set forth in Section 10.2.
"Investor Group Tax Claims" has the meaning set forth in
Section 10.4.
"Investor Representatives" has the meaning set forth in
Section 6.3.
"Investors" has the meaning set forth in the "Background"
section.
"IRS" means the Internal Revenue Service of the United States.
"JLL" has the meaning set forth in the Preamble.
7
<PAGE>
"Labor Laws" has the meaning set forth in Section 4.17.
"Laws" has the meaning set forth in Section 4.5(a).
"Leased Realty" has the meaning set forth in Section 4.15(a).
"Leases" has the meaning set forth in Section 4.15(c).
"License Agreement" has the meaning set forth in Section 7.5.
"Liens" means any and all liens, charges, security interests,
encumbrances, mortgages, pledges, claims, options or restrictions of
any kind whatsoever.
"Litigation" has the meaning set forth in Section 4.9.
"Material Adverse Effect" has the meaning set forth in Section
4.1(a).
"Material Contracts" has the meaning set forth in Section
4.11(a).
"MCII" has the meaning set forth in Section 3.4.
"MCII Finance" has the meaning set forth in Section 8.2.
"MCII Trucks" has the meaning set forth in Section 3.3.
"MME" has the meaning set forth in Section 3.3.
"1998 Balance Sheet" has the meaning set forth in Section
4.7(a).
"Non-Voting Common Stock" has the meaning set forth in Section
2.1.
"Owned Realty" has the meaning set forth in Section 4.15(a).
"PBGC" has the meaning set forth in Section 4.10(c).
"Permits" has the meaning set forth in Section 4.6(a).
"Permitted Liens" means (a) mechanics', carriers', workmen's,
repairmen's or other similar Liens arising or incurred in the ordinary
course of business with respect to liabilities that are not yet due or
delinquent, (b) Liens for taxes, assessments and other governmental
charges, which as to any thereof are not yet due and payable and (c)
other imperfections of title or encumbrances, if any, which
imperfections of title or other encumbrances do not materially impair
the use of the assets of, or the operation of the business of the
Company and the Company Subsidiaries as presently conducted.
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"Person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated
organization, other entity or group (as defined in Section 13(d) of the
Exchange Act).
"Plan" and "Plans" have the respective meanings set forth in
Section 4.10(a).
"Pre-Closing Periods" has the meaning set forth in Section
10.4.
"Pre-Closing Straddle Period" has the meaning set forth in
Section 10.4.
"Private Placement" has the meaning set forth in the
"Background" section.
"Promissory Note" has the meaning set forth in Section 10.6.
"Prudential Senior Notes" has the meaning set forth in Section
3.2.
"Real Property" has the meaning set forth in Section 4.14(c).
"Refinancing" has the meaning set forth in Section 3.2.
"Related Party Agreement" has the meaning set forth in Section
4.13.
"Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or
migration into the indoor or outdoor environment (including ambient
air, surface water, groundwater, and surface or subsurface strata) or
into or out of any property, including the movement of Hazardous
Materials through or in the air, surface water, groundwater, soil or
property.
"Repurchase" has the meaning set forth in Section 3.5.
"SEC" has the meaning set forth in Section 4.23.
"SEC Reports" has the meaning set forth in Section 4.23.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Secured Notes" has the meaning set forth in Section
3.6.
"Senior Secured Notes Tender Offer" has the meaning set forth
in Section 3.6.
"Shares" has the meaning set forth in the "Background"
section.
"Stock Option Plan" has the meaning set forth in the
"Background" Section.
"Stockholders' Agreement" has the meaning set forth in Section
3.7.
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"Straddle Period" has the meaning set forth in Section 10.4.
"Subsequent SEC Reports" has the meaning set forth in Section
4.23.
"Subsidiary" or "Subsidiaries" of any Person means any
corporation, partnership, limited liability company, joint venture or
other entity of which such Person (either alone or through or together
with any other Person pursuant to any agreement, arrangement, contract
or other commitment) owns, directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
"Subsidiary Sale" has the meaning set forth in Section 3.3.
"Tax Returns" means all federal, state, local and foreign tax
returns, declarations, estimates, statements, reports, schedules,
forms, and information returns and other documents (including any
related supporting information) and any amended Tax Return required to
be filed with respect to Taxes.
"Taxes" means all federal, state, local and foreign taxes,
assessments, charges, duties and fees or similar charges of any kind whatsoever
(whether imposed directly or through withholding), including income, excise,
property, sales, use (or any similar taxes), transfer, franchise, payroll,
withholding, social security, as well as other contributions payable to
Governmental Entities in Mexico as a consequence of employment, business license
fees, or other taxes, including any interest, penalties and additions imposed
with respect to such amounts.
"Territory" shall mean the Western Hemisphere.
"TMO" has the meaning set forth in the "Background" section.
"Transactions" has the meaning set forth in the "Background"
section.
"Transferred Subsidiaries" has the meaning set forth in
Section 3.3.
"2002 Discount Notes" has the meaning set forth in Section
3.6.
"2002 Discount Notes Tender Offer" has the meaning set forth
in Section 3.6.
"Unaudited Financial Statements" has the meaning set forth in
Section 4.7(a).
"Universal" has the meaning set forth in Section 3.3.
"Universal Mexico" has the meaning set forth in Section 3.3.
"Voting Common Stock" has the meaning set forth in Section
2.1.
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"Warrants" has the meaning set forth in the "Background"
section.
"Working Capital" has the meaning set forth in Section 6.3 of
the DISCLOSURE SCHEDULE.
"Year 2000 Compliant" has the meaning set forth in Section
4.20(c).
ARTICLE 2
THE INVESTMENT
2.1 INVESTMENT IN THE SHARES.
(1) Upon the terms and subject to the conditions of this
Agreement, at the Closing, Dina shall cause the Company to issue, sell, convey,
assign, transfer and deliver to (i) JLL the number of shares of voting common
stock, par value $0.01 per share (the "Voting Common Stock"), the principal
amount of the Company Senior Note and the number of Warrants set forth opposite
JLL's name on SCHEDULE I hereto, (ii) CIBC Argosy, the number of shares of
Voting Common Stock and Non-Voting Common Stock, the principal amount of the
Company Senior Note and the number of Warrants set forth opposite CIBC Argosy's
name on SCHEDULE I hereto and (iii) CMF, the number of shares of Voting Common
Stock and Non-Voting Common Stock, the principal amount of the Company Senior
Note and the number of Warrants set forth opposite CMF's name on SCHEDULE I
hereto, and the Investors shall purchase, acquire and accept from the Company,
all right, title and interest in and to such securities, free and clear of any
and all Liens.
(2) Notwithstanding anything to the contrary contained
herein, the maximum number of shares of Voting Common Stock issued to CIBC
Argosy and CMF, in the aggregate, shall not exceed 4.99% of the Voting Common
Stock then outstanding. In the event that the number of shares of Voting Common
Stock issuable to CIBC Argosy and CMF exceeds 4.99%, Dina shall cause the
Company to issue a share of its convertible non-voting common stock, par value
$0.01 per share (the "Non-Voting Common Stock" and, together with the Voting
Common Stock, the "Common Stock") for each share of Voting Common Stock over
4.99% otherwise issuable to CIBC Argosy and CMF.
2.2 INVESTMENT CONSIDERATION. Upon the terms and subject to the
conditions of this Agreement, in consideration of the aforesaid issuance, sale,
conveyance, assignment, transfer and delivery of the Shares, the Company Senior
Note and the Warrants, at the Closing, (a) JLL shall pay to the Company $150
million in cash, (b) CIBC Argosy shall pay to the Company $22.5 million in cash
and (c) CMF shall pay to the Company $2.5 million in cash (collectively, the
"Investment Consideration").
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2.3 CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York, at 10:00 a.m.,
Eastern Standard Time, on a date to be specified by the parties (the "Closing
Date"), which (subject to the satisfaction or, to the extent permitted by
applicable law, waiver of the conditions set forth in Article VIII hereof) shall
be no later than the second Business Day following satisfaction or, to the
extent permitted by law, waiver of the conditions set forth in Section 8.1
hereof or at such other place, date and time as shall be agreed upon in writing
by all of the parties hereto.
2.4 DELIVERIES BY THE COMPANY. Prior to or at the Closing, Dina
shall cause the Company to deliver or cause to be delivered the following:
(1) to the Investors, the Agreement duly executed by the
Company;
(2) to the Investors, certificates representing the
Shares, the Company Senior Note and the Warrants and any other documents that
are necessary to transfer good and valid title to such securities to the
Investors, free and clear of any and all Liens;
(3) to the Investors and Dina, resolutions of the Board
and stockholders, as required by applicable law, approving the Charter
Amendment, the Financing, the Refinancing, the Investment, and the execution by
the Company of the Ancillary Agreements to which it is a party;
(4) to the Investors and Dina, duplicate originals of
the Amended and Restated Certificate of Incorporation, each duly executed and
suitable for filing;
(5) to the Investors and Dina, each of the Ancillary
Agreements to which it is a party, duly executed by the Company;
(6) to the Investors, the legal opinions of counsel to
Dina and the Company; and
(7) all other documents, certificates, instruments and
writings required to be delivered by the Company at or prior to the Closing
pursuant to this Agreement or otherwise required in connection herewith.
2.5 DELIVERIES BY THE INVESTORS. Prior to or at the Closing,
the Investors shall deliver or cause to be delivered the following:
(1) to the Company, (i) JLL shall deliver $150 million
in cash, (ii) CIBC Argosy shall deliver $22.5 million in cash and (iii) CMF
shall deliver $2.5 million in cash, in each case, by wire transfer of
immediately available funds to a bank account designated in writing by the
Company at least three Business Days prior to the Closing Date;
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(2) to Dina and the Company, the Stockholders'
Agreement, duly executed by each Investor;
(3) to Dina and the Company, the certificates of a
general partner or authorized signatory of each Investor referred to in Sections
8.3 (a) and 8.3 (b); and
(4) all other documents, certificates, instruments and
writings required to be delivered by the Investors at or prior to the Closing
pursuant to this Agreement or otherwise required in connection herewith.
2.6 DELIVERIES BY DINA. Prior to or at the Closing, Dina shall
deliver or cause to be delivered the following:
(1) to the Investors and the Company, the Stockholders'
Agreement, duly executed by Dina;
(2) to the Investors, the certificates of the Chief
Executive Officer of Dina referred to in Sections 8.2 (a) and 8.2 (b); and
(3) all other documents, certificates, instruments and
writings required to be delivered by Dina at or prior to the Closing pursuant to
this Agreement or otherwise in connection herewith.
2.7 SIMULTANEOUS TRANSACTIONS. All of the Transactions are
intended by the parties to be consummated simultaneously; and if any Transaction
is not consummated as provided herein, the parties shall take all actions
necessary to dissolve and invalidate all other Transactions as if none of the
Transactions had been consummated.
ARTICLE 3
RELATED TRANSACTIONS
3.1 FINANCING. At the Closing, TMO shall enter into the Credit
Agreement with CIBC and/or other financial institutions and will consummate the
Private Placement and shall receive the funds thereunder, which shall be used to
fund, among other things, the Repurchase, the Refinancing and the payment of all
Expenses relating to the Transactions.
3.2 REFINANCING. At the Closing, TMO shall use the proceeds
under the Credit Agreement and the funds received in the Private Placement
together with the Investment Consideration to (a) repurchase and retire all of
the Outstanding Senior Subordinated Increasing Notes due December 31, 1999 (the
"Increasing Rate Notes") issued pursuant to the Note Purchase Agreement, dated
as of April 19, 1999, between TMO, the subsidiaries of TMO named therein, and
the purchasers named therein, (b) repay all of the outstanding principal and
premium, if any, together with accrued interest and fees and all amounts related
to outstanding
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letters of credit, under the Credit Agreement, dated as of September 30,
1996, by and among TMO, the lenders set forth therein and NBD Bank, as
administrative agent, as amended prior to the date hereof (the "First Chicago
Facility"), and shall take all actions necessary to terminate the First
Chicago Facility, (c) repurchase and retire all of the outstanding 9.02%
Senior Notes due November 15, 2002 (the "Prudential Senior Notes") issued
pursuant to the Note Agreement, dated as of November 15, 1994, among TMO and
the purchasers named therein, (d) repay all of the outstanding principal and
premium, if any, together with accrued interest and fees, under the Credit
Agreement, dated as of May 25, 1998, by and between Banco Nacionale de
Comercio Exterior, Sociedad Nacional de Credito and Autobuses, as amended
(the "Autobuses Credit Facility"), and shall take, or shall cause Autobuses
to take, all actions necessary to terminate the Autobuses Credit Facility,
and (e) except as set forth in Section 3.2(e) of the DISCLOSURE SCHEDULE,
repay all of the outstanding principal and premium, if any, together with
accrued interest and fees under all other indebtedness of the Company or any
Company Subsidiary (collectively, the "Refinancing"); it being understood
that notwithstanding the foregoing, only the greater of (i) 50% of the total
amount expended to repay the Autobuses Credit Facility or (ii) in the event
that the amount expended to repay the Autobuses Credit Facility exceeds $16
million, such amount less $8 million, shall be utilized for purposes of
calculating the Cash Repurchase Amount.
3.3 SUBSIDIARY SALE. Prior to the Closing, Dina or one of its
Subsidiaries (other than the Company or any Company Subsidiary) shall acquire
from (a) Dina Autobuses, S.A. de C.V., a subsidiary of the Company
("Autobuses"), (i) all of the outstanding capital stock of Autopartes
Hidalguenses, S.A. de C.V. ("Autopartes") owned by Autobuses and (ii) all of the
outstanding capital stock of Carroceria Sahagun, S.A. de C.V. ("Carrocera")
owned by Autobuses, (b) MCII Trucks, Inc., a wholly owned subsidiary of the
Company ("MCII Trucks"), all of the outstanding capital stock of Mexicana de
Manufacturas Especiales, S.A. de C.V. ("MME") owned by MCII Trucks, and (c)
Universal Coach Parts, Inc., an indirect wholly owned subsidiary of the Company
("Universal"), all of the outstanding capital stock of Universal Coach Parts
Mexico, S.A. de C.V. ("Universal Mexico" and, together with Autopartes,
Carrocera and MME, the "Transferred Subsidiaries") owned by Universal
(collectively, the "Subsidiary Sale"), in each case, in exchange for the
issuance by Dina of a promissory note in the amount set forth in Section 3.3 of
the DISCLOSURE SCHEDULE (collectively, the "Dina Notes").
3.4 CONTRIBUTION OF AUTOBUSES. Prior to the Closing, Dina shall
take, and shall cause the Company to take, all actions necessary to contribute
99.99% of the capital stock of Autobuses to TMO and .01% of the capital stock of
Autobuses to Motor Coach Industries International, Inc. ("MCII") so that
Autobuses shall become a direct subsidiary of TMO (the "Contribution").
3.5 REPURCHASE FROM DINA. At the Closing, Dina shall cause the
Company to acquire from Dina 2,110,000 shares of its Common Stock, in exchange
for (a) the Cash Repurchase Amount, (b) the indebtedness due the Company or any
Company Subsidiary by Dina or any of its Subsidiaries to the extent set forth in
Section 3.5 of the DISCLOSURE SCHEDULE and (c) the Dina Notes (the
"Repurchase"). The parties acknowledge and agree that $1.5 million of the Cash
Repurchase Amount (the "Holdback Amount") shall be retained by the Company at
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Closing and used to pay all fees and expenses payable by the Company in
connection with the Transactions and not paid at or prior to the Closing. The
Holdback Amount, less any fees and expenses paid therefrom, shall be delivered
to Dina no later than 90 days following the Closing.
3.6 DINA REFINANCING. Dina shall use the proceeds of the
Repurchase to (a) repurchase and retire all of the outstanding Senior Secured
Discount Notes due November 1, 2002 (the "2002 Discount Notes") issued pursuant
to the Indenture, dated as of April 30, 1996, among Dina, the Company and IBJ
Schroeder Bank & Trust Company, as Trustee, pursuant to the Offer to Purchase
and Consent Solicitation Statement, dated May 14, 1999, by Dina (the "2002
Discount Notes Tender Offer") or, in the case of 2002 Discount Notes not
purchased in the 2002 Discount Notes Tender Offer, through a redemption of such
notes, and (b) repurchase and retire all of the outstanding Senior Secured
Guaranteed Notes due January 15, 2000 (the "Senior Secured Notes") issued
pursuant to the Indenture, dated as of July 22, 1998, among Dina, Dina Trucks
(USA), L.L.C. and U.S. Bank Trust National Association, as Trustee, pursuant to
the Offer to Purchase and Consent Solicitation, dated May 14, 1999, by Dina (the
"Senior Secured Notes Tender Offer") or, in the case of Senior Secured Notes not
purchased in the Senior Secured Notes Tender Offer, through a redemption of such
notes (collectively, the "Dina Refinancing").
3.7 STOCKHOLDERS' AGREEMENT. At the Closing, the Company, the
Investors, Dina and certain other stockholders of the Company shall enter into a
stockholders' agreement, substantially in the form attached hereto as EXHIBIT C
(the "Stockholders' Agreement").
3.8 CHARTER AMENDMENT. Prior to the Closing, Dina shall take
and shall cause the Company to take all actions necessary to cause the Amended
and Restated Certificate of Incorporation of the Company, substantially in the
form attached hereto as EXHIBIT D (the "Amended and Restated Certificate of
Incorporation"), to be filed with the Secretary of State of the State of
Delaware (the "Charter Amendment").
3.9 STOCK OPTION PLAN. Following the Closing, Dina shall cause
the Company to take all corporate action (including any action of its Board and
stockholders) required under applicable law to approve and adopt the Stock
Option Plan substantially on the terms attached hereto as EXHIBIT E.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF DINA
Dina hereby represents and warrants to the Investors that:
4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(1) The Company and each Company Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, has all requisite
corporate power and corporate authority to own,
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lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership, lease or operation of its properties makes such qualification
necessary, other than where the failure to be so duly qualified and in good
standing would not have a Material Adverse Effect. The term "Material Adverse
Effect," as used in this Agreement, means any condition, event, circumstance,
change or effect that, individually or in the aggregate, could reasonably be
expected to result in a material adverse effect on the business, assets,
results of operations, condition (financial or otherwise) or prospects of,
the Company and the Company Subsidiaries, taken as a whole. Section 4.1(a) of
the DISCLOSURE SCHEDULE attached hereto and made a part hereof (the
"Disclosure Schedule") sets forth a true, correct and complete listing of
each current and former Subsidiary and current Affiliate of the Company. As
used herein, the term "Company Subsidiaries" shall mean all Subsidiaries of
the Company, as of the date hereof, other than the Transferred Subsidiaries.
Except as set forth in Section 4.1(a) of the DISCLOSURE SCHEDULE, neither the
Company nor any Company Subsidiary owns, directly or indirectly, any capital
stock or other equity interests in or of any Person.
(2) Dina is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and corporate authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
4.2 CERTIFICATES OF INCORPORATION AND BY-LAWS; CORPORATE
RECORDS. The Company has furnished to the Investors a true, correct and complete
copy of the certificate or articles of incorporation and the by-laws or similar
charter and organizational documents, in each case as amended or restated, of
the Company and each Company Subsidiary. Dina has furnished to the Investors a
true, correct and complete copy of its deed of incorporation and its by-laws or
other similar charter and organizational documents, in each case as amended or
restated. Neither Dina, the Company nor any Company Subsidiary is in violation
of any provision of its certificate or articles of incorporation or by-laws, or
similar charter or organizational documents. The Company has made available to
the Investors for inspection the true, correct and complete minute books, stock
record book and stock ledger of the Company and each Company Subsidiary.
4.3 CAPITALIZATION; TITLE TO SHARES.
(1) Immediately prior to the filing of the Charter
Amendment, the authorized capital stock of the Company consists of 1,000 shares
of Common Stock of which 1,000 shares are issued and outstanding and held by
Dina. No shares of Common Stock are held in the treasury of the Company. Each of
the issued and outstanding shares of capital stock of the Company has been duly
authorized and validly issued, and is fully paid and nonassessable, and free of
preemptive rights. Upon payment by the Investors of the Investment Consideration
and the issuance to the Investors of the Shares at the Closing, such Shares will
be duly authorized, validly issued, fully paid and nonassessable and free of
preemptive rights.
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(2) Except as set forth in Section 4.3(b) of the
DISCLOSURE SCHEDULE, Dina has good and valid title to all the Shares held by it,
free and clear of any and all Liens.
(3) Section 4.3(c) of the DISCLOSURE SCHEDULE sets forth
a true, correct and complete list for each Company Subsidiary; its jurisdiction
of organization; its authorized, issued and outstanding capital stock or other
equity interests; the percentage of such capital stock or other equity interests
owned by the Company or any Company Subsidiary, and the identity of such owner;
and the identity of the owners of such capital stock or other equity interests
that are not owned by the Company or any Company Subsidiary. Each issued and
outstanding share of capital stock or other equity interests of each Company
Subsidiary has been duly authorized and validly issued, and is fully paid and
nonassessable, and free of preemptive rights. Except as set forth in Section
4.3(c) of the DISCLOSURE SCHEDULE, all such shares of capital stock or other
equity interests of each Company Subsidiary as are owned by the Company or any
Company Subsidiary are owned free and clear of any and all Liens.
(4) Except pursuant to the Transactions or as set forth
in Section 4.3(d) of the DISCLOSURE SCHEDULE: (i) there are no options, warrants
or other rights (including registration rights), agreements, arrangements or
commitments to which the Company or any Company Subsidiary is a party relating
to the issued or unissued capital stock or other equity interests of the Company
or any Company Subsidiary or obligating the Company or any Company Subsidiary to
grant, issue or sell any shares of the capital stock or other equity interests
of the Company or any Company Subsidiary; (ii) there are no obligations,
contingent or otherwise, of the Company or any Company Subsidiary to (A)
repurchase, redeem or otherwise acquire any shares of the capital stock or other
equity interests of the Company or any Company Subsidiary, or (B) provide funds
to, or make any investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations of the
Company, any Company Subsidiary or any other Person; (iii) neither the Company
nor any Company Subsidiary, directly or indirectly, owns, or has agreed to
purchase or otherwise acquire, the capital stock or other equity interests of,
or any interest convertible into or exchangeable or exercisable for such capital
stock or such equity interests, of any Person (other than a Company Subsidiary);
(iv) there are no agreements, arrangements, contracts or other commitments of
any character (contingent or otherwise) pursuant to which any Person is or may
become entitled to receive any payment based on the revenues, earnings or other
performance measurements, or calculated in accordance therewith, of the Company
or any Company Subsidiary; and (v) there are no voting trusts, proxies or other
agreements or understandings to which the Company or any Company Subsidiary is a
party or by which the Company or any Company Subsidiary is bound with respect to
the voting of any shares of capital stock or other equity interests of the
Company or any Company Subsidiary.
4.4 AUTHORITY.
(a) Each of Dina and the Company has all requisite
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by Dina of this
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Agreement and each of the Ancillary Agreements to which it is a party, the
performance by Dina of this Agreement and each of the Ancillary Agreements to
which it is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action on the part of Dina and no other action or corporate proceeding, other
than the approval of its stockholders, on the part of Dina is necessary to
authorize this Agreement or any of the Ancillary Agreements or to consummate
the Transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by Dina and each of the Ancillary Agreements will be
duly executed and delivered by Dina to which it is a party. This Agreement
constitutes, and each of the Ancillary Agreements to which Dina is a party,
when duly executed and delivered by Dina, will constitute, the valid and
binding obligation of each of Dina, enforceable against each of Dina and the
Company to the extent it is a party thereto, in accordance with its terms,
subject to approval by Dina's stockholders which will be obtained on June 15,
1999. Section 203 of the Delaware General Corporation Law (the "DGCL") is
inapplicable to the Transactions, including the Investments.
(b) The execution and delivery by the Company of this
Agreement and each of the Ancillary Agreements to which it is a party, the
performance by the Company of this Agreement and each of the Ancillary
Agreements to which it is a party and the consummation of the transactions
contemplated hereby and thereby will be duly authorized by all necessary
corporate action on the part of the Company, including, to the extent required,
by its stockholders, and no other action or corporate proceeding on the part of
the Company will be necessary to authorize this Agreement or any of the
Ancillary Agreements or to consummate the Transactions contemplated hereby or
thereby. This Agreement and each of the Ancillary Agreements to which it is a
party will be duly executed and delivered by the Company. This Agreement and
each of the Ancillary Agreements to which the Company is a party, when duly
executed and delivered by the Company, will constitute the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(1) Except as set forth in Section 4.5(a) of the
DISCLOSURE SCHEDULE, the execution and delivery by Dina of this Agreement and
each of the Ancillary Agreements to which it is a party does not, and the
performance by Dina of this Agreement and each of the Ancillary Agreements to
which it is a party and the consummation of the transactions contemplated hereby
and thereby will not, (i) conflict with or violate the certificate or articles
of incorporation or by-laws or similar charter or organizational documents, in
each case as amended or restated, of Dina, (ii) conflict with or violate any
material federal, state, local or foreign law (including NAFTA and all
applicable Canadian and Mexican laws, rules and regulations), statute,
ordinance, rule, regulation, order, judgment or decree (collectively, "Laws")
applicable to Dina, or by or to which its properties or assets is bound or
subject or (iii) result in any breach of, or constitute a default (or an event
that with notice or lapse of time or both would constitute a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of a Lien
on any of the assets or properties of Dina, the Company, or any Company
Subsidiary under any Material Contract.
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(2) Except as set forth in Section 4.5(b) of the
DISCLOSURE SCHEDULE, the execution and delivery by the Company of this Agreement
and each of the Ancillary Agreements to which it is a party, the performance by
the Company of this Agreement and each of the Ancillary Agreements to which it
is a party and the consummation of the transactions contemplated hereby and
thereby will not, (i) conflict with or violate the certificate or articles of
incorporation or by-laws or similar charter or organizational documents, in each
case as amended or restated, of the Company or any Company Subsidiary, (ii)
conflict with or violate any material Laws applicable to the Company, or any
Company Subsidiary or by or to which any of their respective properties or
assets is bound or subject or (iii) result in any breach of, or constitute a
default (or an event that with notice or lapse of time or both would constitute
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or require payment under, or result in the
creation of a Lien on any of the assets or properties of the Company, or any
Company Subsidiary under any Material Contract.
(3) The execution and delivery by each of Dina and the
Company of this Agreement and each of the Ancillary Agreements to which it is a
party does not, and the performance by each of Dina and the Company of this
Agreement and each of the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not,
require the Company, any Company Subsidiary or Dina to obtain any consent,
approval, authorization or permit of, or to make any filing with or notification
to ("Consent"), any Governmental Entity, or any third party, except for (i)
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and under any applicable foreign laws
regulating competition, (ii) the filing and recording of the Amended and
Restated Certificate of Incorporation, as required by the DGCL, and (iii) the
Consents listed in Section 4.5(c) of the DISCLOSURE SCHEDULE.
4.6 PERMITS; COMPLIANCE.
(1) Except as set forth in Section 4.6(a) of the
DISCLOSURE SCHEDULE, the Company and each Company Subsidiary is in possession of
all material franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders necessary to
own, lease and operate its properties and to carry on its business as now being
conducted (other than those required under Environmental Laws, which are
governed by Section 4.14 hereof) (collectively, the "Permits"), and there is no
claim, action, suit, proceeding or investigation pending or, to the knowledge of
Dina or the Company, threatened regarding suspension or cancellation of any of
the Permits. None of the Permits will lapse, terminate or expire as a result of
the consummation of the transactions contemplated hereby.
(2) Except as set forth in Section 4.6(b) of the
DISCLOSURE SCHEDULE, the Company, each Company Subsidiary and each Transferred
Subsidiary is, and has been since August 4, 1994, in compliance in all material
respects with (i) all Laws applicable to it or to which any of its properties or
assets is bound or subject and (ii) the Permits. Since August 4, 1994, neither
the Company nor any Company Subsidiary has received from any Governmental
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Entity any written notification with respect to any possible conflict,
default or violation of any Laws or any Permit.
(3) All coaches and other products manufactured or
produced by the Company or the Company Subsidiaries meet all applicable
requirements of Law.
4.7 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES.
(1) The Company has previously delivered to the
Investors (i) the audited combined balance sheets of the Company and its
consolidated subsidiaries for each year in the three-year period ended December
31, 1998 (the audited balance sheet for the year ended December 31, 1998 being
hereinafter referred to as the "1998 Balance Sheet") and the audited combined
statements of revenues, expenses and retained earnings and audited combined
statements of cash flows of the Company and its consolidated subsidiaries for
each such year (collectively, the "Financial Statements") and (ii) the unaudited
combined balance sheets of the Company and its consolidated subsidiaries as of
March 30, 1999 and the unaudited combined statements of revenues, expenses and
retained earnings and unaudited combined statements of cash flows of the Company
and its consolidated subsidiaries for the three-month period ended March 30,
1999 (collectively, the "Unaudited Financial Statements"). Each of the Financial
Statements and the Unaudited Financial Statements (including any related notes
thereto) has been prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved and fairly presents, in all material respects,
the financial position, results of operations and cash flows of the Company and
the Company Subsidiaries as of the respective dates and for the periods
indicated therein.
(2) Neither the Company nor any Company Subsidiary has
incurred any material liability or obligation (whether direct or indirect,
fixed, contingent or otherwise) other than (i) such as have been reflected on
the 1998 Balance Sheet, (ii) such as have been incurred in the ordinary course
of business consistent with past practice since the date of the 1998 Balance
Sheet or (iii) such as have been set forth in Section 4.7(b) of the DISCLOSURE
SCHEDULE.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in Section 4.8 of the DISCLOSURE SCHEDULE since the date of the 1998 Balance
Sheet (a) the Company and each Company Subsidiary has conducted its respective
business only in the ordinary course consistent with past practice, (b) neither
the Company nor any Company Subsidiary has engaged in or taken any action which
would be prohibited by Section 6.2 if taken after the date hereof, and (c) there
has not occurred, nor has there been any change or event which would have, or
could reasonably be expected to have, a Material Adverse Effect.
4.9 ABSENCE OF LITIGATION. Except as set forth in Section 4.9
of the DISCLOSURE SCHEDULE, (a) as of May 15, 1999, there was no claim, action,
suit, proceeding or investigation of any kind, at law or in equity (including
actions or proceedings seeking injunctive relief), by or before any Governmental
Entity or by or on behalf of any third party ("Litigation") pending or, to the
knowledge of Dina or the Company, threatened against the Company, any Company
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Subsidiary or Dina or affecting any of their respective businesses, assets or
rights, or which questions the validity of this Agreement or any action taken or
to be taken by the Company or any Company Subsidiary, and, to the knowledge of
Dina or the Company, there is no valid basis for such action, proceeding or
investigation, and (b) none of the Company, any Company Subsidiary or Dina is a
party or subject to or in default under any judgment, order or decree of any
Governmental Entity. Dina shall cause the Company to update Section 4.9 of the
DISCLOSURE SCHEDULE promptly from time to time after the date hereof, and up to
and including the Closing Date, to disclose any additional Litigation then
existing. None of the claims, actions, suits, proceedings or investigations
listed in Section 4.9 of the DISCLOSURE SCHEDULE, if adversely determined, or
the judgments, orders or decrees set forth in Section 4.9 of the DISCLOSURE
SCHEDULE (or subsequently disclosed) would have a Material Adverse Effect or
materially impair the ability of Dina or the Company to consummate the
Transactions. There is no judgment, order, decree or other agreement in effect
which would limit the ability of the Company or any Company Subsidiary to
conduct its business in substantially the same manner as it is presently
conducted.
4.10 EMPLOYEE BENEFIT PLANS; ERISA.
(1) Section 4.10(a) of the DISCLOSURE SCHEDULE contains
a true, correct and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement, sponsored, maintained or contributed to or required to
be contributed to by the Company or any Company Subsidiary or by any trade or
business, whether or not incorporated (an "ERISA Affiliate"), that together with
the Company or any Company Subsidiary would be deemed a "single employer" within
the meaning of Section 4001 of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA"), for the benefit of any employee or terminated employee of the
Company, any Company Subsidiary or any ERISA Affiliate, whether formal or
informal (individually a "Plan" and collectively the "Plans"). Section 4.10(a)
of the DISCLOSURE SCHEDULE identifies each of the Plans that is an "employee
benefit plan," as that term is defined in Section 3(3) of ERISA (such plans
being hereinafter referred to individually as an "ERISA Plan" and collectively
as the "ERISA Plans"). Neither the Company nor any Company Subsidiary nor any
ERISA Affiliate has any formal plan or commitment, whether legally binding or
not, to create any additional Plan or modify or change any existing Plan in a
way that would affect any employee or terminated employee of the Company, any
Company Subsidiary or any ERISA Affiliate, nor has any intention to do any of
the foregoing been communicated to any employee or terminated employee of the
Company, any Company Subsidiary or any ERISA Affiliate.
(2) With respect to each of the Plans, the Company has
heretofore made available to the Investors true, correct and complete copies of
each of the following documents: (i) a copy of the Plan (including all
amendments thereto); (ii) a copy of the annual report, if required under ERISA
or other applicable laws, with respect to each such Plan for the last two years;
(iii) a copy of the actuarial report, if required under ERISA or other
applicable
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laws, with respect to each such Plan for the last two years; and (iv)
the most recent determination letter received from the IRS or other taxing
authority with respect to each Plan that is intended to be qualified under
Section 401 of the Code or other applicable Laws relating to Taxes.
(3) Except as set forth in Section 4.10(c) of the
DISCLOSURE SCHEDULE, no ERISA Plan is subject to Title IV of ERISA. No liability
under Title IV of ERISA has been incurred by the Company, any Company Subsidiary
or any ERISA Affiliate that has not been satisfied in full, and no condition
exists that presents a material risk to the Company, any Company Subsidiary or
any ERISA Affiliate of incurring a liability under Title IV of ERISA, other than
liability for premiums due the Pension Benefit Guaranty Corporation ("PBGC")
(which premiums have been paid when due). The PBGC has not instituted any
proceeding to terminate any ERISA Plan and, to the knowledge of the Company and
Dina, no condition exists that presents a material risk that any such proceeding
will be instituted.
(4) Except as set forth in Section 4.10(d) of the
DISCLOSURE SCHEDULE, no ERISA Plan is a "multiemployer plan," as such term is
defined in Section 3(37) of ERISA, nor is any ERISA Plan a plan described in
Section 4063(a) of ERISA. If any ERISA Plan is a "multiemployer pension plan,"
(i) neither the Company, any Company Subsidiary nor any ERISA Affiliate has made
or suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in sections 4203 and 4205 of ERISA (or any liability
resulting therefrom has been satisfied in full), (ii) no event has occurred that
presents a material risk of a partial withdrawal, (iii) neither the Company, any
Company subsidiary nor any ERISA Affiliate has any contingent liability under
section 4204 of ERISA, and (iv) no circumstances exist that must present a
material risk that any such plan will go into reorganization. If any ERISA Plan
is a "multiemployer pension plan," the aggregate withdrawal liability of the
Company, Company Subsidiaries and ERISA Affiliates, computed as if a complete
withdrawal by the Company, Company Subsidiaries and ERISA Affiliates had
occurred under each such Plan on the date hereof, would not be material to the
Company.
(5) Each Plan has been operated and administered in
accordance with its terms and applicable Law in all material respects,
including, but not limited to, ERISA, the Code and other applicable Laws
relating to Taxes.
(6) (i) Each ERISA Plan which is intended to be
"qualified" within the meaning of Section 401(a) of the Code or other applicable
Laws relating to Taxes is so qualified and the trusts maintained thereunder are
exempt from taxation under Section 501(a) of the Code or other applicable Laws
relating to Taxes; and (ii) each Plan that is intended to satisfy the
requirements of Section 501(c)(9) of the Code or other applicable Laws relating
to Taxes has so satisfied such requirements.
(7) No amounts payable under any of the Plans will fail
to be deductible for federal or other income tax purposes by virtue of Section
280G of the Code or other applicable Laws relating to Taxes.
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(8) Except as listed and described in Section 4.10(h) of
the DISCLOSURE SCHEDULE, no Plan provides benefits, including death or medical
benefits (whether or not insured), with respect to current or former employees
of the Company, any Company Subsidiary or any ERISA Affiliate beyond their
retirement or other termination of service except as required by applicable law.
(9) Except as listed and described in Section 4.10(i) of
the DISCLOSURE SCHEDULE, neither the performance by the Company or Dina of this
Agreement or any of the Ancillary Agreements nor the consummation of the
Transactions will (i) entitle any current or former director, officer or
employee of the Company or any ERISA Affiliate to severance pay, unemployment
compensation or any other payment, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such director, officer
or employee.
(10) There are no pending, threatened or anticipated
claims by or on behalf of any Plan, by any employee or beneficiary covered under
any such Plan, or otherwise involving any such Plan (other than routine claims
for benefits).
(11) Notwithstanding the foregoing provisions of this
Section 4.10, Section 4.10(k) of the DISCLOSURE SCHEDULE lists each Plan
maintained outside the United States (collectively, the "Foreign Plans"), and
the Investors hereby acknowledge that the foregoing provisions of Section 4.10
(c), (d), (e), (f) and (g) do not apply to such Foreign Plans. With respect to
each Foreign Plan, to the extent applicable: (i) such plan is, and has been,
established, registered, qualified, administered and invested in compliance with
all applicable Laws and labor agreements, and no events have occurred or
conditions exist that could jeopardize such status; (ii) such plan is in
material compliance and has been maintained in all material respects in
accordance with its terms or rules and applicable Law or any applicable labor
agreement, all documents that are required to be filed have been filed, and all
tax approvals and clearances have been obtained; (iii) all required
contributions have been made; all required premiums have been paid (each in a
timely fashion in accordance with the terms of such plan and all applicable Laws
and labor agreements); there are no going concern unfunded actuarial
liabilities, past service unfunded liabilities or solvency deficiencies
respecting any such plan; no Taxes penalties or fees are owing under any such
plan; (iv) no government audit or similar proceeding is pending nor have any
governmental assessments been issued; and (v) no event has occurred that could
reasonably be expected to cause any Governmental Entity (without the consent of
the Company) to wind-up or terminate such plan, in whole or in part, or which
could reasonably be expected to adversely affect the tax status thereof, and
there are no outstanding defaults or violations under such plan by the Company
nor does the Company have any knowledge of any default or violation by any other
party to such plan.
4.11 CONTRACTS.
(1) Section 4.11(a) of the DISCLOSURE SCHEDULE sets
forth a true, correct and complete list of any and all agreements, arrangements,
contracts, commitments and understandings, whether oral or written, to which the
Company or any Company Subsidiary is a party or by which any of their respective
assets is bound ("Company Contracts"), other than such
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Company Contracts (I) as may be terminated at any time without penalty by any
party thereto upon notice of thirty days or less or (II) as involve
obligations of the Company or the Company Subsidiaries in any twelve-month
period of $50,000 or less; PROVIDED, HOWEVER, that notwithstanding the
foregoing, for purposes of this Section 4.11, only Company Contracts of the
type described in Section 4.11(a)(ix) that provide for payments to or from
the Company in excess of $5 million are required to be disclosed. The Company
Contracts listed in Section 4.11(a) of the DISCLOSURE SCHEDULE are
collectively referred to herein as the "Material Contracts." Notwithstanding
the foregoing, each of the following Company Contracts is set forth on
Section 4.11(a) of the DISCLOSURE SCHEDULE:
(1) employment agreements, consulting agreements
and severance agreements;
(2) collective bargaining agreements and other
Company Contracts with any labor union;
(3) covenants not to compete or restrictive
covenants;
(4) Company Contracts relating to the acquisition
by the Company or any of the Company Subsidiaries of any other business
or Person, whether by merger, consolidation or other business combination
or by the acquisition of the equity securities, or a material portion of
the assets of, such business or Person;
(5) Company Contracts providing for the sale,
transfer or other disposition of any equity securities of any of the
Company Subsidiaries or any material assets of the Company or any of the
Company Subsidiaries;
(6) Company Contracts under which the Company or
any Company Subsidiary has borrowed or loaned money (to the extent
outstanding or in existence at any time since December 31, 1998), or any
mortgage, note, bond, indenture or other evidence of indebtedness or any
guarantee of indebtedness, including any lease or receivable financing
arrangements;
(7) all Leases or other Company Contracts
relating to any real property interests of the Company or any Company
Subsidiary;
(8) joint venture agreements, partnership
agreements, stockholder agreements or similar agreements;
(9) all Company Contracts with customers or
suppliers of the Company or any Company Subsidiary, in each case, with a
term extending beyond December 31, 1999 which provide for aggregate
payments in excess of $5 million;
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(10) all Company Contracts with any Governmental
Entity (other than those relating to the sale of parts or products in the
ordinary course of business); and
(11) all Company Contracts with Affiliates or
Associates of Dina, the Company or any Company Subsidiary.
(2) Neither the Company nor any Company Subsidiary or,
to the knowledge of Dina or the Company, any other party thereto is in default
under any Material Contract and, to the knowledge of Dina and the Company, no
event has occurred which, with the passage of time or the giving of notice or
both, would constitute such a default. Each Material Contract is in full force
and effect. Except as set forth in Section 4.11(b) of the DISCLOSURE SCHEDULE,
each Material Contract will remain in full force and effect (without imposition
of any material restriction, adverse condition, limitation, cost or penalty to
the Company or any Company Subsidiary), notwithstanding the consummation of the
Transactions. None of the Material Contracts is the subject of any pending or,
to the knowledge of the Company or Dina, threatened Litigation. The Company has
provided the Investors with copies of all written Material Contracts.
4.12 TAXES.
(1) The Company, each Company Subsidiary and each
Transferred Subsidiary (collectively, the "Dina Subsidiaries") has (i) duly
filed all Tax Returns required to be filed by it within the time and in the
manner prescribed by Law, and (ii) paid on a timely basis all Taxes shown to be
due on such Tax Returns. All of such Tax Returns are true, complete and correct
in all material respects.
(2) Except as set forth in Section 4.12(b) of the
DISCLOSURE SCHEDULE, no deficiencies for any Taxes have been proposed, asserted
or assessed against the Company or any Dina Subsidiary by any taxing authority
with respect to liabilities for Taxes which have not been fully paid or finally
settled.
(3) The Company and each Dina Subsidiary has established
adequate reserves in accordance with GAAP for all Taxes not yet due and payable.
(4) Except as set forth in Section 4.12(d) of the
DISCLOSURE SCHEDULE, no Tax Return of the Company or any Dina Subsidiary is
currently under Audit by the IRS or any other Taxing authority and no notice of
any such Audit has been received. There are no outstanding agreements or waivers
extending the statute of limitations applicable to any taxable year or Tax
Return of the Company or any Dina Subsidiary.
(5) Except as set forth in Section 4.12(e) of the
Disclosure Schedule, there are no Liens for Taxes on any assets of the Company
or any Dina Subsidiary (other than statutory liens for current Taxes not yet
due).
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(6) Except as set forth in Section 4.12(f) of the
DISCLOSURE SCHEDULE, neither the Company nor any Dina Subsidiary is a party to
any agreement providing for the allocation or apportionment of any liability for
Taxes, payments of Taxes or Tax benefits or refunds.
4.13 RELATED PARTY AGREEMENTS.
(1) Except as set forth in Section 4.13(a)(i) of the
DISCLOSURE SCHEDULE, since August 4, 1994, no director, officer or employee of
the Company or any Company Subsidiary, or any Affiliate or Associate of any such
director, officer or employee (including all members of the Gomez Flores Family
and all entities owned by such persons) is or has been a party to any agreement,
arrangement, contract or other commitment to which the Company or any Company
Subsidiary is or was a party or by which any of their respective assets or
properties is or was bound ("Related Party Agreement"), or has or has had a
material interest in any agreement, arrangement, contract or other commitment,
asset or property (real or personal), tangible or intangible, owned by, used in
or pertaining to the business of the Company or any Company Subsidiary. Except
as set forth in Section 4.13(a)(ii) of the DISCLOSURE SCHEDULE, each of the
Related Party Agreements (including all agreements between the Company or any
Company Subsidiary, on the one hand, and Dina, on the other hand) will terminate
at or prior to the Closing without any payment by or liability (including any
liability for Taxes) to the Company or any Company Subsidiary.
(2) Except as set forth in Section 4.13(b) of the
DISCLOSURE SCHEDULE, no Intellectual Property, proprietary technology or
know-how of the Company or any Company Subsidiary has been sold, licensed or
transferred or otherwise conveyed to Dina, any member of the Gomez Flores Family
or any of their respective Affiliates.
4.14 ENVIRONMENTAL MATTERS.
(1) Except as set forth in Section 4.14(a) of the
DISCLOSURE SCHEDULE, (i) since August 4, 1994, the Company and each Company
Subsidiary has been in compliance, and is presently in compliance, in all
material respects, with all applicable Environmental Laws (which compliance
includes the possession by each such Person of all material Permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof), and, to the knowledge of the
Company and Dina after due inquiry, there are no circumstances that may prevent
or interfere with such full compliance in the future; (ii) since August 4, 1994,
neither the Company nor any Company Subsidiary has received any communication
(written or oral), whether from a Governmental Entity, citizens group, employee
or otherwise, that alleges that any such Person is not in such compliance; and
(iii) all Permits and other governmental authorizations currently held by the
Company and any Company Subsidiary pursuant to applicable Environmental Laws are
in full force and effect and no appeal or any other proceeding is pending to
revoke any such Permit or governmental authorization.
(2) Except as set forth in Section 4.14(b) of the
DISCLOSURE SCHEDULE, there is no Environmental Claim pending or, to the
knowledge of the Company and Dina,
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threatened against the Company, any Company Subsidiary or any Person whose
liability for any Environmental Claim has been retained or assumed by the
Company or any Company Subsidiary, whether by agreement or by operation of
law.
(3) Except as set forth in Section 4.14(c) of the
DISCLOSURE SCHEDULE: (i) neither the Company nor any Company Subsidiary has nor,
to the knowledge of the Company and Dina, has any other Person, Released,
placed, deposited, discharged, stored or buried, dumped or disposed of Hazardous
Materials in, on, beneath, from or adjacent to any real property now or at any
time owned, leased or operated by the Company or any Company Subsidiary or any
of their respective predecessors in interest (as used in this Section 4.14, the
"Real Property").
(4) Except as set forth in Section 4.14(d) of the
DISCLOSURE SCHEDULE, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the Release, emission,
discharge, presence or disposal of any Hazardous Materials that could form the
basis of any claim against the Company or any Company Subsidiary, under any
Environmental Law.
(5) Except as set forth in Section 4.14(e) of the
DISCLOSURE SCHEDULE, all underground storage tanks owned, operated, or leased by
the Company and which are subject to regulation under the United States Resource
Conservation and Recovery Act (or equivalent state or local law regulating
underground storage tanks) meet the technical standards prescribed at Title 40
C.F.R. Part 280 which became effective December 22, 1998 (or any applicable
state or local law requirements which are more stringent than such technical
standards or which become effective before such date).
(6) The Company has delivered or otherwise made
available for inspection to the Investors true, correct and complete copies and
results of any reports, studies, analyses, tests monitoring, or voluntary
environmental audits possessed or initiated by the Company or any Company
Subsidiary pertaining to Hazardous Materials in, on, beneath or adjacent to the
Real Property or pertaining to compliance by any such Person with or liability
under applicable Environmental Laws.
4.15 REAL PROPERTY.
(1) Section 4.15(a) of the DISCLOSURE SCHEDULE sets
forth a true, correct and complete list of all real property to which the
Company or any Company Subsidiary has legal or equitable title (the "Owned
Realty") or in which the Company or any Company Subsidiary has a valid and
subsisting leasehold or other interest (the "Leased Realty"), and sets forth for
each such Owned Realty and Leased Realty the title or interest held by the
Company or any Company Subsidiary.
(2) The Company or one of the Company Subsidiaries has
good, valid and marketable fee title to the Owned Realty, free and clear of any
and all Liens (except (i) Permitted Liens, (ii) easements and encroachments of
record, (iii) zoning, building and other similar restrictions, and (iv)
unrecorded easements, covenants, rights of way or other restrictions,
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none of which unrecorded items, individually or in the aggregate, materially
impair the use or materially detract from the value of the property to which
they relate).
(3) The Company or one of the Company Subsidiaries
possesses a valid and subsisting leasehold interest in the Leased Realty
pursuant to the leases listed in Section 4.15(c) of the DISCLOSURE SCHEDULE (the
"Leases"), free and clear of any and all Liens (except Permitted Liens, and
easements and encroachments that do not, individually or in the aggregate,
materially impair the use or materially detract from the value of the property
to which they relate). Each Lease is valid and enforceable against each party
thereto in accordance with its terms and there is not under any Lease any
existing default by the Company or any Company Subsidiary or, to the knowledge
of the Company or Dina, any other party thereto, or any condition, event or act
which, with notice or lapse of time or both, would constitute such a default.
4.16 PERSONAL PROPERTY. Except as set forth in Section 4.16 of
the DISCLOSURE SCHEDULE, (a) the Company or one of the Company Subsidiaries has
good and valid title to, or a valid and enforceable right to use, all personal
property (whether tangible or intangible) reflected on the 1998 Balance Sheet
and all personal property acquired by the Company or any Company Subsidiary
since the date of the 1998 Balance Sheet (except such personal property as has
been disposed of in the ordinary course of business since such date), in each
case, free and clear of any and all Liens except Permitted Liens.
4.17 LABOR MATTERS. Except as set forth in Section 4.11 or 4.17
of the DISCLOSURE SCHEDULE, (a) neither the Company nor any Company Subsidiary
is a party to (i) any collective bargaining agreement or similar agreement with
any labor organization or employee association, (ii) any other written contract
concerning employment, or (iii) any binding oral contract concerning employment;
(b) no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is pending and, to the knowledge of Dina or the
Company, no such grievance or proceeding is threatened; (c) since August 4,
1994, there has not been, nor is there pending or, to the knowledge of Dina or
the Company, threatened (i) any material labor dispute between the Company or
any Company Subsidiary and any labor organization, or any strike, slowdown, work
stoppage or other similar organized disruptive labor activity involving any
employee of, or affecting the Company or any Company Subsidiary or (ii) any
union organizing or election activity involving any employee of the Company or
any Company Subsidiary; (d) neither the Company nor any Company Subsidiary is
engaged in any unfair labor practice, and there is no unfair labor practice
charge pending or, to the knowledge of the Company or Dina, threatened against
the Company or any Company Subsidiary before the National Labor Relations Board
or any other Governmental Entity; and (e) neither the Company nor any Company
Subsidiary has received notice of the intent of any Governmental Entity
responsible for the enforcement of any federal, state, local or foreign laws
regarding labor, employment and employment practices, conditions of employment,
occupational safety and health and wages and hours, including any bargaining or
other obligations under the National Labor Relations Act or the Federal Labor
Law of Mexico (collectively, "Labor Laws"), to conduct an investigation with
respect to or relating to the Company or any Company Subsidiary and no such
investigation is in progress.
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4.18 INSURANCE POLICIES.
(1) The properties, assets, directors, officers,
employees, business and operations of the Company and each Company Subsidiary
are insured by policies against such risks, casualties and contingencies and of
such types and amounts as are customary for the size and scope of their
respective businesses as now being conducted; all such policies are in full
force and effect and all premiums due and payable for such policies have been or
are being timely paid; and all such policies (or extensions, renewals or
replacements thereof on comparable terms) in such amounts will continue to be
outstanding and in full force and effect without interruption following
consummation of the Transactions.
(2) In the event that the Company self insures against
any risk, casualty or contingency set forth in paragraph (a) above, the
Financial Statements contain adequate reserves for such risk, casualty or
contingency in light of the size and scope of the business as it is now being
conducted.
4.19 INTELLECTUAL PROPERTY. The Company or the Company
Subsidiaries own or have a valid and enforceable right to use all copyrights,
trade names, trademarks, service marks, trade secrets, designs, licenses,
patents and other intellectual property rights (including pending applications
for any of the foregoing) (collectively referred to herein as "Intellectual
Property") used in or necessary to the conduct by the Company and the Company
Subsidiaries of their respective businesses as now being conducted. Section
4.19(a) of the DISCLOSURE SCHEDULE sets forth a true, correct and complete list
of the copyrights, trade names, trademarks, service marks, licenses (to and by
the Company or any Company Subsidiary) and patents included among the
Intellectual Property. There is no claim presently pending nor, since August 4,
1994, has there been any claim made or, to Dina's or the Company's knowledge,
threatened, that (a) the operations of the Company or any Company Subsidiary
infringe upon or conflict with the rights of any other person in respect of any
Intellectual Property, or (b) any of such Intellectual Property is invalid or
unenforceable. Except as set forth in Section 4.19(b) of the DISCLOSURE
SCHEDULE, to the knowledge of Dina and the Company, no other Person is
infringing upon any rights of the Company or the Company Subsidiaries in any
Intellectual Property.
4.20 YEAR 2000.
(1) As of the date of this Agreement and except as set
forth in Section 4.20(a) of the DISCLOSURE SCHEDULE, all Date Data and
Date-Sensitive Systems used by the Company and any Company Subsidiary are Year
2000 Compliant; and
(2) As used in this Agreement, (i) "Date Data" means any
data of any type that includes date information or which is otherwise derived
from, dependent on or related to date information; (ii) "Date-Sensitive System"
means any software, microcode or hardware system or component, including any
electronic or electronically controlled system or component, that uses or
processes any Date Data and that is installed, in development or on order by the
Company or any Company Subsidiary for their internal use or for the use of third
parties, or
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which the Company or any Company Subsidiary sell, lease, license, assign or
otherwise provide to any third party; and (iii) "Year 2000 Compliant" means
(A) with respect to Date Data, that such data is in proper format and
accurate for all dates, including for those before, on and after December 31,
1999, and (B) with respect to Date-Sensitive Systems, that each such system
accurately processes all Date Data, including for dates before, on and after
December 31, 1999, without loss of any functionality or performance,
including but not limited to calculating, comparing, sequencing, storing and
displaying such Date Data (including all leap year considerations), when used
as a stand-alone system or in combination with other software or hardware.
4.21 CERTAIN BUSINESS PRACTICES. None of Dina, the Company nor
any Company Subsidiary or any director, officer or, to the knowledge of Dina or
the Company, employee of Dina, the Company or any Company Subsidiary has (a)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expense relating to political activity, (b) made any unlawful payment
to foreign or domestic governmental officials or employees or to foreign or
domestic political parties or campaigns or violated any provisions of the
Foreign Corrupt Practices Act of 1977, as amended, or (c) made any other
unlawful payment.
4.22 TRANSFERRED SUBSIDIARIES. None of the Transferred
Subsidiaries had any assets or liabilities, except for the assets and
liabilities set forth in Section 4.22 of the DISCLOSURE SCHEDULE. The Subsidiary
Sale will not result in any Tax or other liability being incurred by or imposed
on the Company or any Company Subsidiary.
4.23 SEC REPORTS. Since January 1, 1996, Dina and the Company
have filed all reports, statements, prospectuses and other filings required to
be filed by it with the Securities and Exchange Commission (the "SEC") under the
rules and regulations of the SEC. As of their respective dates, such reports,
statements, prospectuses and other filings (collectively, the "SEC Reports")
filed with the SEC prior to the date of this Agreement (a) complied, and each
SEC Report filed with the SEC on or after the date of this Agreement
(collectively, the "Subsequent SEC Reports") will comply, as to form in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and, in each case, the rules and regulations promulgated thereunder
and (b) did not, and each Subsequent SEC Report will not, at the time of filing,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
the SEC Reports, the tender offer materials used in connection with the 2002
Discount Notes Tender Offer, the Senior Secured Notes Tender Offer, or the
Offering Memorandum used in connection with the Private Placement contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
the Company Subsidiaries is required to file any reports, statements,
prospectuses or other filings with the SEC.
4.24 SOLVENCY MATTERS. At the Closing Date and after giving
effect to any changes in Dina's assets and liabilities as a result of the
Transactions, (i) the fair value of Dina's assets will exceed Dina's stated
liabilities (including matured, unmatured, liquidated, unliquidated, absolute,
fixed and identified contingent liabilities); (ii) the present fair saleable
value of
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Dina's assets will be greater than the amount that would be required to
pay Dina's probable liability on its existing debts as such debts become
absolute and matured; (iii) Dina will be able to pay its debts as they mature
following the consummation of the Transactions; and (iv) the capital remaining
in Dina after the consummation of the Transactions will not be unreasonably
small for the conduct of the business in which Dina is engaged.
4.25 BROKERS. Except (a) for the fees payable to CIBC and (b) as
set forth in Section 4.25 of the DISCLOSURE SCHEDULE, no broker, finder or
investment banker, including any director, officer, employee, Affiliate or
Associate of the Company or any Company Subsidiary, is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any Company Subsidiary.
4.26 EXPENSES. Set forth in Section 4.26 of the DISCLOSURE
SCHEDULE is a true, correct and complete list of all Expenses paid or to be paid
by the Company in connection with the Transactions pursuant to Section 9.3
hereof.
4.27 FULL DISCLOSURE. Neither Dina nor the Company has failed to
disclose to the Investors any facts material to the business, results of
operations, assets, liabilities, financial condition or prospects of the Company
or the Company Subsidiaries. To the knowledge of Dina and the Company, no
representation or warranty by Dina or the Company contained in this Agreement
and no statement contained in any document (including financial statements and
the Disclosure Schedule), certificate, or other writing furnished or to be
furnished by Dina or the Company to the Investors or any of their
representatives pursuant to the provisions hereof or in connection with the
Transactions, contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors hereby severally represents and warrants to
the Company and Dina that:
5.1 ORGANIZATION. Such Investor is duly organized, validly
existing and in good standing under the laws of the state of its organization,
and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted.
5.2 AUTHORITY; ENFORCEABILITY. Such Investor has all requisite
power and authority to execute and deliver this Agreement and each of the
Ancillary Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by such Investor of this
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Agreement and each of the Ancillary Agreements to which such Investor is a
party and the performance by such Investor of this Agreement and each of the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action by such Investor and no other proceeding on the part of such
Investor is necessary to authorize this Agreement or any of the Ancillary
Agreements to which it is a party or to consummate the transactions
contemplated hereby or thereby. This Agreement has been duly executed and
delivered by such Investor and each of the Ancillary Agreements to which such
Investor is a party will be duly executed and delivered by it. This Agreement
constitutes, and each of the Ancillary Agreements to which each Investor is a
party, when duly executed and delivered by such Investor, will constitute,
the valid and binding obligation of such Investor, enforceable against such
Investor in accordance with its terms.
5.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(1) The execution and delivery of this Agreement by such
Investor does not, and the execution and delivery by such Investor of any of the
Ancillary Agreements to which such Investor is a party will not, and the
performance by each Investor of this Agreement and the Ancillary Agreements to
which it is a party, and the consummation of the transactions contemplated
hereby and thereby will not, (i) conflict with or violate the organizational
documents of such Investor, (ii) conflict with or violate any Laws applicable to
such Investor or by or to which any of its properties or assets is bound or
subject or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation of,
or require payment under, or result in the creation of a Lien on any of the
properties or assets of such Investor, pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such Investor is a party or by which it or any
of its properties or assets is bound or subject.
(2) The execution and delivery of this Agreement by such
Investor does not, and the execution and delivery by such Investor of any of the
Ancillary Agreements to which it is a party will not, and the performance by
such Investor of this Agreement and the Ancillary Agreements to which it is a
party and the consummation of the transactions contemplated hereby and thereby
will not, require such Investor to obtain any Consent of any Governmental Entity
or third party except for applicable requirements of the HSR Act, and under any
applicable foreign laws regulating competition.
5.4 AVAILABILITY OF FUNDS. At the Closing, such Investor will
have sufficient funds to consummate its portion of the Investment.
5.5 ACQUISITION OF THE SHARES FOR INVESTMENT. Such Investor is
acquiring the Shares for investment purposes only and not with any present
intention of distributing or selling the Shares in violation of federal or state
securities laws. Such Investor shall not sell, transfer, offer for sale, pledge,
hypothecate or otherwise dispose of the Shares in violation of any federal or
state securities laws.
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5.6 BROKERS. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of such Investor.
ARTICLE 6
COVENANTS
6.1 AFFIRMATIVE COVENANTS. Dina hereby covenants and agrees
that, prior to the Closing, unless otherwise expressly contemplated by this
Agreement or consented to in writing by the Investors, the Company and each of
the Company Subsidiaries will:
(1) operate its business only in the usual and ordinary
course, consistent with past practice;
(2) preserve intact its business organizations, maintain
its rights and franchises, retain the services of its respective officers and
key employees and maintain its relationships and goodwill with its respective
customers and suppliers and others with which it has business relationships;
(3) maintain and keep its properties and assets in as
good repair and condition as at present, ordinary wear and tear excepted, and
maintain inventories in quantities consistent with its customary business
practice;
(4) expend such funds, including making capital
expenditures in accordance with the annual budget of the Company and the Company
Subsidiaries, as may be necessary or desirable to operate the business of the
Company and the Company Subsidiaries in the ordinary course, consistent with
past practice; and
(5) keep in full force and effect insurance and bonds
comparable in amount and scope of coverage to that maintained on the date
hereof.
6.2 NEGATIVE COVENANTS OF THE COMPANY. Dina hereby covenants
that, except as expressly contemplated by this Agreement or consented to in
writing by the Investors, from the date of this Agreement until the Closing,
neither the Company nor any Company Subsidiary will do any of the following:
(1) (i) increase the compensation payable to or to
become payable to any of its directors, officers or employees (other than
pursuant to employment agreements or in the ordinary course of business
consistent with past practice); (ii) grant any severance or termination pay to
(other than pursuant to its normal severance policy as in effect on the date of
this Agreement), or enter into any employment or severance agreement with, any
director, officer or employee; (iii) establish, adopt, enter into or amend any
Plan, except as may be required by applicable Law; or (iv) lend, pay or
contribute any funds to any of its directors, officers,
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employees, Affiliates or Associates (other than compensation payable in the
ordinary course of business consistent with past practice);
(2) except for the Repurchase, (i) redeem, purchase or
otherwise acquire any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock, or any options, warrants or conversion or other rights to acquire any
shares of its capital stock or any such securities or obligations; (ii) effect
any reorganization or recapitalization; or (iii) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for, shares of its
capital stock;
(3) issue, deliver, award, grant or sell, or authorize
or propose the issuance, delivery, award, grant or sale of, any shares of any
class of its capital stock, any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to acquire,
any such shares;
(4) except for the Charter Amendments, propose or adopt
any amendments to its certificate or articles of incorporation or as to its
by-laws, or any similar charter or organizational documents;
(5) except for the Subsidiary Sale and the Financing,
sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose of, or
agree to sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose
of, any of its assets (other than in the ordinary course of business consistent
with past practice);
(6) release any third party from its obligations under
any existing confidentiality agreements;
(7) (i) change any of its methods of accounting in
effect at December 31, 1998, or (ii) make or rescind any express or deemed
election relating to Taxes, (iii) settle or compromise any Tax related
Litigation, Audit or controversy, or (iv) change any of its methods of reporting
income or deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ended
December 31, 1998, except as may be required by law or changes in GAAP;
(8) except for the Financing, incur any obligation for
borrowed money or purchase money indebtedness, whether or not evidenced by a
note, bond, debenture or similar instrument (other than in the ordinary course
of business);
(9) enter into any Company Contract for a term in excess
of one year and providing for aggregate payments to or from the Company in
excess of $5 million; or
(10) agree in writing or otherwise to do any of the
foregoing.
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6.3 OTHER COVENANTS. Dina hereby covenants and agrees that, at
the Closing, (a) the Company shall have Working Capital (as defined in Section
6.3 of the DISCLOSURE SCHEDULE), before giving effect to the Transactions, equal
to at least $283 million, which Working Capital shall be calculated in
accordance with Section 6.3 of the DISCLOSURE SCHEDULE, and (b) Autobuses, after
giving effect to the Transactions, shall have a net worth, calculated in
accordance with GAAP, equal to at least $1 million.
<PAGE>
6.4 ACCESS AND INFORMATION. Dina shall and shall cause the
Company and each Company Subsidiary to, provide to the Investors and their
partners, employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, the "Investor Representatives") (a) access at
reasonable times to the officers, employees, agents, properties, offices and
other facilities of the Company and each Company Subsidiary and to the books and
records thereof and furnish promptly to the Investors and the Investor
Representatives such information concerning the business, properties, contracts,
records and personnel of the Company and each Company Subsidiary (including
financial, marketing, operating and other data and information) as may be
requested, from time to time, by the Investors and (b) such cooperation as the
Investors shall reasonably request in completing its due diligence
investigation.
6.5 EXCLUSIVITY. From the date of this Agreement until the
earlier of the Closing Date and the date upon which this Agreement is terminated
pursuant to Section 9.1, Dina shall not, nor shall Dina permit the Company or
any of the Company Subsidiaries or any of their respective directors, officers,
representatives, Affiliates or Associates to, (a) initiate contact, solicit,
encourage or disclose, directly or indirectly, any information concerning the
Company's or any Company Subsidiary's business or properties to, (b) afford any
access to the Company's or any Company Subsidiary's personnel, offices,
facilities, properties, books and records to, or (c) enter into any discussions
or negotiations or agreements with, any person or entity in connection with any
possible proposal for the acquisition of all or any substantial portion of the
stock, assets or business of the Company or any Company Subsidiary.
6.6 SUPPLEMENTAL DISCLOSURE. Dina shall and shall cause the
Company from time to time prior to the Closing to supplement or amend the
DISCLOSURE SCHEDULE with respect to (a) any matter that existed as of the date
of this Agreement and should have been set forth or described in the DISCLOSURE
SCHEDULE and (b) any matter hereafter arising which, if existing as of the date
of this Agreement, would have been required to be set forth or described in the
DISCLOSURE SCHEDULE; PROVIDED, HOWEVER, that no such supplement or amendment
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this Agreement
and; PROVIDED, FURTHER, that following the Closing, any such supplement or
amendment pursuant to clause (b) above shall have been deemed to have been made
as of the date hereof.
ARTICLE 7
ADDITIONAL AGREEMENTS
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7.1 APPROPRIATE ACTION; CONSENTS; FILINGS. Dina and the
Investors shall, and Dina shall cause each of the Company and the Company
Subsidiaries to, use its reasonable efforts to (a) take, or cause to be taken,
all appropriate action, and do, or cause to be done, all things necessary,
proper or advisable under applicable Law or otherwise to consummate and make
effective the Transactions, (b) obtain from any Governmental Entities or third
parties any Consents required to be obtained or made by the Investors, Dina, the
Company or any Company Subsidiary in connection with the authorization,
execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the Transactions and (c) make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
required under the HSR Act and any other applicable Law; PROVIDED that Dina and
the Investors shall cooperate with each other in connection with the making of
all such filings, including providing copies of all such documents to the
nonfiling party and its advisors prior to filing and furnishing all information
required for any application or other filing to be made pursuant to the rules
and regulations of any applicable Law in connection with the Transactions.
7.2 PUBLIC ANNOUNCEMENTS. Dina and the Investors shall not, and
Dina shall cause the Company and each Company Subsidiary not to, issue any
public report, statement or press release or otherwise make any public statement
regarding this Agreement or the transactions contemplated hereby, from the date
hereof through the Closing, without the prior written consent of the other
parties hereto, unless otherwise required by applicable Law, in which case such
party shall advise the other parties hereto and discuss the contents before
issuing any such report, statement or press release. Notwithstanding the
foregoing, Dina acknowledges and agrees that the Investors are permitted to make
a public announcement in connection with the execution of this Agreement.
7.3 COVENANT NOT TO COMPETE; NO RAID.
(1) Dina acknowledges that the Investors and the Company
would be irreparably damaged if the knowledge of Dina concerning the business
and affairs, trade secrets or confidential information of the Company or the
Company Subsidiaries were disclosed or utilized on behalf of any Person which is
in, or contemplates entering into, competition in any respect, directly or
indirectly, with the Company or the Company Subsidiaries. In furtherance of this
Section 7.3 and to secure the interests of the Investors hereunder, Dina hereby
covenants and agrees that, from and after the Closing and until the third
anniversary of the date that Dina's ownership of the Company, directly or
indirectly, falls below 10%, without the prior written consent of the Investors,
Dina shall not, directly or indirectly, (A) participate in the ownership,
management, operation or control of, or be connected with or employed by, or act
as a consultant for, or have any financial interest in or aid or knowingly
assist any other Person in the conduct of, any business or entity which (1)
engages in any aspect of the Business, (2) is contemplating engaging in such
Business or (3) provides any services that compete with those services provided
by the Company or the Company Subsidiaries, in the case of (1), (2) and (3),
anywhere within the Territory or (B) hire any officer or other employee of the
Company or any Company Subsidiary or solicit or direct anyone else to solicit
any officer or other employee of the Company or any Company Subsidiary (1) to
terminate his or her employment or other relationship with the Company or any
Company Subsidiary; or (2) to seek or accept employment or
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other affiliation with any other entity (other than any solicitation directed
at the public in general in publications available to the public in general).
(2) From and after the Closing Date, except as set forth
in Section 7.3(b) of the DISCLOSURE SCHEDULE, neither Dina nor any Investor will
use for its benefit or disclose to any person, any proprietary information of
the Company or the Company Subsidiaries or proprietary information with respect
to customers, suppliers, employees or financial affairs of the Company or the
Company Subsidiaries, or any other confidential matter with respect to any
aspect of the Business.
(3) Dina acknowledges and agrees that if it were to
breach any provision of this Section 7.3, any remedy at law would be inadequate
and that the Investors, in addition to seeking monetary damages in connection
with any such breach, shall be entitled to specific performance, and injunctive
and other equitable relief, without the necessity of posting any bond or other
security, to prevent or restrain a breach of this Section 7.3 or to enforce the
provisions hereof.
(4) The Company hereby covenants and agrees that from
and after the Closing and until the date that Dina's ownership of the Company,
directly or indirectly, falls below 10%, without the prior written consent of
Dina, neither the Company nor any Investor shall, directly or indirectly, hire
any officer or other employee of Dina or any of its subsidiaries or solicit or
direct anyone else to solicit any officer or employee of Dina or any subsidiary
of Dina (i) to terminate his employment or other relationship with Dina or any
subsidiary of Dina or (ii) to seek or accept employment or other affiliation
with any other entity (other than any solicitation directed at the public in
general in publications available to the public in general).
(5) Dina, the Company and the Investors intend that the
provisions of this Section 7.3 be enforced to the fullest extent permissible
under the laws applied in each jurisdiction in which enforcement is sought. If
any provision of this Section 7.3, or any part hereof, shall be held by a court
of competent jurisdiction to be invalid or unenforceable, this Section 7.3 shall
be amended to revise the scope of such provision to make it enforceable, if
possible, or to delete such provision or such part.
7.4 INTERCOMPANY AGREEMENTS. At the Closing, Dina shall and
shall cause the Company to enter into the intercompany agreements, substantially
on the terms set forth in EXHIBIT F (the "Intercompany Agreements").
7.5 LICENSE AGREEMENT. At the Closing, Dina shall and shall
cause the Company to enter into a license agreement, substantially in the form
attached hereto as EXHIBIT G (the "License Agreement"), providing for the grant
by Dina to the Company of a perpetual, exclusive, royalty-free and worldwide
right and license to use the name "Dina" in connection with the Business.
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7.6 EMPLOYMENT AGREEMENT. At the Closing, Dina shall cause TMO
to enter into an employment agreement with Rafael Gomez Flores on terms
reasonably satisfactory to TMO, the Investors and Mr. Gomez Flores.
7.7 NAME CHANGES. At the Closing, Dina shall cause (a) MCII to
file an amendment to its certificate of incorporation changing its name and (b)
TMO to file an amendment to its certificate of incorporation changing its name
to "Motor Coach Industries International, Inc."
7.8 DIRECTORS' & OFFICERS' INSURANCE. From and after the
Closing, the Company will maintain directors and officers liability insurance in
such amounts as is reasonably determined by the Board.
ARTICLE 8
CLOSING CONDITIONS
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY UNDER THIS
AGREEMENT. The respective obligations of each party to consummate the
Transactions, including the Investment, shall be subject to the satisfaction at
or prior to the Closing of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by applicable Law, by each
party hereto:
(1) NO ORDER. No Governmental Entity, including any
federal or state court of competent jurisdiction, shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
judgment, decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of making the
Transactions contemplated hereby illegal or otherwise restrains consummation of
the Transactions.
(2) HSR ACT. Any applicable waiting period under the HSR
Act shall have expired or been terminated.
8.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE INVESTORS. The
obligations of the Investors to consummate the Transactions, including the
Investment, are subject to the satisfaction at or prior to the Closing of the
following conditions, any or all of which may be waived, in whole or in part, to
the extent permitted by applicable Law, by the Investors:
(1) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Dina contained in this Agreement that are not
qualified as to materiality shall be true, correct and complete in all material
respects on the date hereof and as of the Closing Date, as though made on and as
of the Closing Date (except to the extent expressly made as of a
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specific date, in which case, to such date), and each of the representations
and warranties of Dina contained in this Agreement that are qualified as to
materiality shall be true, correct and complete in all respects on the date
hereof and as of the Closing Date, as though made on and as of the Closing
Date (except to the extent expressly made as of a specific date, in which
case, to such date). The Investors shall have received a certificate of the
Chief Executive Officer of Dina to such effect.
(2) AGREEMENTS AND COVENANTS. Dina shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date. The Investors shall have received a certificate of the Chief
Executive Officer of Dina to such effect.
(3) CONSENTS AND APPROVALS; PERMITS. All material
Consents or waivers thereof, and Permits, required to consummate the
Transactions, shall have been obtained from all Governmental Entities and third
parties.
(4) CERTAIN CHANGES. There shall not have occurred since
December 31, 1998, any change or event in the business, assets, results of
operations, condition (financial or otherwise) or prospects of the Company or
any Company Subsidiary, taken as a whole, which has had or could reasonably be
expected to have a Material Adverse Effect.
(5) LEGAL OPINIONS. The Investors shall have received
the opinions of counsel to Dina and the Company, reasonably satisfactory to the
Investors, dated the Closing Date, addressed to the Investors, in form and
substance to be mutually agreed upon by the parties.
(6) STOCKHOLDERS' AGREEMENT. The Company and Dina shall
have executed and delivered to the Investors, the Stockholders' Agreement, which
Stockholders' Agreement shall be in full force and effect, and the valid and
binding obligation of each of Dina and the Company.
(7) FINANCING. (i) TMO shall have completed the
Financing on terms reasonably acceptable to the Investors and the Credit
Agreement shall be in full force and effect, and the valid and binding
obligation of each party thereto; and (ii) the Company shall have received funds
pursuant to the Financing in an amount sufficient to enable it to consummate the
Transactions, including the Refinancing, and to pay all fees and expenses of the
Company related to the Transactions.
(8) BOARD OF DIRECTORS. The Company shall have taken all
actions necessary to expand the Board to seven directors. Messrs. Paul Levy,
Jeffrey Lightcap, Frank Rodriguez and David Ying shall be elected to serve as
directors. In addition, such individuals shall have been appointed to serve as
directors on the Board of Directors of each Company Subsidiary, to the extent
permitted by applicable law.
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(9) DUE DILIGENCE. The satisfactory completion by the
Investors and the Investor Representatives of a due diligence investigation of
the Company and the Company Subsidiaries covering business, financial,
accounting, legal, regulatory and other matters; the Investors agree to promptly
notify Dina of any issues that come to its attention during such investigation
that are likely to cause the Investors not to proceed with the Investment and
the Investors further agree to notify Dina promptly upon its determination not
to proceed with the Investment.
(10) REFINANCING. TMO shall have consummated the
Refinancing on terms reasonably acceptable to the Investors.
(11) DINA REFINANCING. Dina shall have consummated the
Dina Refinancing, including the repurchase and retirement of at least 90% of the
outstanding 2002 Discount Notes pursuant to the 2002 Discount Notes Tender Offer
and shall have called for redemption and deposited in escrow sufficient funds to
redeem all of the 2002 Discount Notes remaining outstanding.
(12) CHARTER AMENDMENT. The Company shall have filed the
Amended and Restated Certificate of Incorporation with the Secretary of State of
the State of Delaware.
(13) INTERCOMPANY AGREEMENTS. The Company and Dina shall
have executed and delivered to the Investors, the Intercompany Agreements, which
Intercompany Agreements shall be in full force and effect and the valid and
binding obligation of each of Dina and the Company.
(14) AGREEMENT OF THE GOMEZ FLORES FAMILY. The members of
the Gomez Flores Family shall have delivered to the Investors an agreement
providing for, among other things, (i) their agreement to cooperate with JLL in
connection with any proposed sale or dissolution of MCII Financial Services Inc.
("MCII Finance"), including an agreement to sell all shares of capital stock of
MCII Finance owned by the Gomez Flores Family to a third party as determined by
JLL and the Gomez Flores Family or to vote all of their shares of MCII Finance
in favor of a dissolution thereof as determined by JLL and the Gomez Flores
Family, (ii) a noncompetition agreement on substantially the terms set forth in
Section 7.3 and (iii) their agreement to act in the best interests of the
Company, including with respect to the Mexican operations of the Company and all
shared service arrangements.
(a) Except as set forth in Section 4.8(b) of the
DISCLOSURE SCHEDULE, since the date of the 1998 Balance Sheet, the Company has
not declared or paid any dividend on, or made any other distribution in respect
of, outstanding shares of capital stock, except for the declaration and payment
of any dividends by a wholly owned Company Subsidiary to the Company or to
another wholly owned Company Subsidiary;
8.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF DINA. The
obligations of Dina to consummate the Transactions are subject to the
satisfaction at or prior to the Closing of the
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following conditions, any or all of which may be waived, in whole or in part,
to the extent permitted by applicable Law, by Dina:
(1) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the Investors contained in this Agreement that
are not qualified as to materiality shall be true, correct and complete in all
material respects on the date hereof and as of the Closing Date, as though made
on and as of the Closing Date (except to the extent expressly made as of a
specific date, in which case, to such date), and each of the representations and
warranties of the Investors contained in this Agreement that are qualified as to
materiality shall be true, correct and complete in all respects on the date
hereof and as of the Closing Date, as though made on and as of the Closing Date
(except to the extent expressly made as of a specific date, in which case, to
such date). Dina shall have received a certificate of (i) a general partner of
JLL and (ii) an authorized signatory of each of CIBC Argosy and CMF to such
effect.
(2) AGREEMENTS AND COVENANTS. The Investors shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by the Investors on
or prior to the Closing Date. Dina shall have received a certificate of (i) a
general partner of JLL and (ii) an authorized signatory of each of CIBC Argosy
and CMF to such effect.
(3) FINANCING. TMO shall have completed the Financing
and shall have received funds under the Credit Agreement in an amount sufficient
to enable it to consummate the Transactions.
(4) REFINANCING. TMO shall have consummated the
Refinancing.
(5) DINA REFINANCING. Dina shall have consummated the
Dina Refinancing, including the repurchase and retirement of at least 90% of the
outstanding 2002 Discount Notes pursuant to the 2002 Discount Notes Tender Offer
and shall have called for redemption and deposited in escrow sufficient funds to
redeem all of the 2002 Discount Notes remaining outstanding.
(6) STOCKHOLDERS' AGREEMENT. Each Investor shall have
executed and delivered to Dina and the Company the Stockholders' Agreement,
which Stockholders' Agreement shall be in full force and effect, and the valid
and binding obligation of each Investor. (1)
ARTICLE 9
TERMINATION
9.1 TERMINATION. This Agreement may be terminated by giving
written notice at any time prior to the Closing as follows:
(1) by mutual consent of the Investors and Dina;
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(2) by either the Investors or Dina, if there shall be
any order which is final and nonappealable preventing the consummation of the
Transactions;
(3) by the Investors or Dina, at any time after July 15,
1999; PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 9.1(c) shall not be available to (i) Dina, if Dina has breached any of
its respective representations, warranties or covenants hereunder in any
material respect and such breach has been the cause of or resulted in the
failure of the Closing to occur on or before such date or (ii) the Investors, if
the Investors have breached any of their representations, warranties or
covenants hereunder in any material respect and such breach has been the cause
of or resulted in the failure of the Closing to occur on or before such date;
(4) by the Investors, if Dina shall have breached or
violated in any material respect any of its representations, warranties or
covenants set forth in this Agreement, and such breach or violation shall not
have been cured within thirty (30) days after written notice thereof has been
given by the Investors to the party alleged to be in breach; or
(5) by Dina, if the Investors shall have breached or
violated in any material respect any of their representations, warranties or
covenants set forth in this Agreement, and such breach or violation shall not
have been cured within thirty (30) days after notice thereof has been given by
Dina to the Investors.
The right of any party hereto to terminate this Agreement
pursuant to this Section 9.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
9.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 9.1, this Agreement shall forthwith become
null and void, there shall be no liability on the part of the Investors or Dina
any of their respective partners, officers, directors, Subsidiaries, Affiliates
or Associates to any other party and all rights and the obligations of any party
hereto shall cease, except that nothing herein shall relieve any party hereto
from liability for any wilful breach of this Agreement. Notwithstanding anything
to the contrary contained herein, the obligations provided in Sections 6.4 and
9.3 and in the Confidentiality Agreement shall survive any termination of this
Agreement.
9.3 FEES, EXPENSES AND OTHER PAYMENTS. All Expenses incurred by
the parties hereto shall be borne solely and entirely by the party which has
incurred such Expenses; PROVIDED, HOWEVER, that, in the event that the
Transactions are consummated, Dina shall cause the Company to pay all of the
Expenses (including all Taxes related to the Transactions) of all parties
hereto.
ARTICLE 10
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SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS. The representations and
warranties in this Agreement and in any other document delivered in connection
herewith shall survive the Closing solely for purposes of this Article X and
shall terminate upon the second anniversary of the Closing Date, except that the
representations and warranties set forth in (a) Section 4.12 hereof shall
survive the Closing and shall terminate on the first anniversary following the
expiration of all applicable statute of limitations (including any extensions
thereof) and (b) Section 4.14 hereof shall survive the Closing and shall
terminate on the third anniversary of the Closing Date.
10.2 DINA'S AGREEMENT TO INDEMNIFY. Upon the terms and subject
to the conditions of this Article X, Dina agrees to indemnify, defend and hold
harmless the Investors, the Company and the Company Subsidiaries and their
respective directors, officers, partners, employees, agents, representatives,
Affiliates and Associates (collectively, the "Investor Group"), at any time
after consummation of the Closing, subject to the provisions of Section 10.3,
from and against all demands, claims, actions or causes of action, assessments,
losses, damages, Taxes, liabilities, costs and expenses, including, without
limitation, interest, penalties and attorneys' fees and expenses (collectively,
"Damages"), asserted against, resulting to, imposed upon or incurred by any
member of the Investor Group, directly or indirectly, (a) by reason of or
resulting from a breach of any representation or warranty of Dina contained in
or made pursuant to this Agreement (without regard to any materiality
qualification contained in any representation or warranty) or any facts or
circumstances constituting such a breach, (b) by reason of or resulting from a
breach of any covenant or agreement of Dina contained in or made pursuant to the
Agreement, (c) relating to or arising out of the Transactions or any action
taken by Dina arising out of the Transactions or relating thereto (including the
restructuring of Systemas y Services G), (d) relating to product liability
incurred by the Company prior to the Closing Date, whether or not disclosed to
the Investors, (e) relating to any and all litigation (including litigation
arising out of the Transactions or Dina's actions in connection therewith)
incurred by the Company prior to the Closing Date, whether or not disclosed to
the Investors, (f) relating to any material obligation or liability involving
the Company and based upon acts or omissions occurring prior to the Closing
Date, and not set forth in the DISCLOSURE SCHEDULE, PROVIDED, HOWEVER, that
liabilities incurred in the ordinary course of business consistent with past
practice since the date of the 1998 Balance Sheet shall be excluded, (g)
relating to the Transferred Subsidiaries and (h) relating to any Environmental
Claim that is related in any way to the Company or any Company Subsidiary or any
previous owner's or operator's management, use, control, ownership or operation
of the Company or any Company Subsidiary or of any plant, facility, or real
property, regardless of whether formerly or currently owned or leased by the
Company or any Company Subsidiary, as well as all on-site and off-site
activities involving Hazardous Materials, and that occurred, existed, arises out
of conditions or circumstances that occurred or existed, or was caused, in whole
or in part, on or before the Closing Date, whether or not such matter is
described in the Disclosure Schedule (collectively, "Investor Claims").
Notwithstanding the foregoing, Damages shall not include
any amounts expended by the Company or any Company Subsidiary to satisfy any
insurance deductible or
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self-insured retention in the nature of a deductible relating to the matter
for which Damages are claimed and, to the extent applicable, Damages shall be
determined after giving effect to any amount reserved with respect to such
matter on the 1998 Balance Sheet. For purposes of this Article X, Damages
shall be determined after giving effect to (i) all insurance proceeds
received by the Company with respect to such Claim and (ii) all Tax
deductions and credits actually realized by the time of the computation of
the indemnity amount pursuant to this Article X and resulting directly from
(a) the event giving rise to the indemnity under this Article X or (b) the
incurrence of any Tax liability indemnified under this Article X. Further,
Damages, for purposes of this Section 10.2, shall exclude any indemnity for
Taxes; it being understood that all indemnity for Taxes shall be governed
exclusively by Section 10.4 hereof.
10.3 DINA'S LIMITATION OF LIABILITY.
(1) The liability of Dina to indemnify the Investor
Group for a breach of any representation or warranty pursuant to Section 10.2(a)
shall be limited to Investor Claims as to which the Investor Group has given
Dina written notice thereof on or prior to the date upon which such
representation or warranty terminates, as set forth in Section 10.1, without
regard to whether any Damages have actually been sustained. No Investor Claim or
series of related Investor Claims for Damages for less than $50,000 shall be
brought by the Investor Group (each, a "De Minimis Claim"). The provisions for
indemnity contained in Section 10.2(a) hereof shall be effective only after the
aggregate amount of all Investor Claims pursuant to Section 10.2(a) for which
Dina is liable (excluding De Minimis Claims) exceeds $5.0 million (without
regard to any materiality qualification contained in any representation or
warranty), and then only to the extent of such excess.
(2) As directed by the Investor Group, Dina shall
promptly pay the amount of indemnification obligations set forth in Section 10.2
to the person or entity that incurs the Damage.
(3) The liability of Dina for all Investor Claims
pursuant to Section 10.2 shall not exceed an aggregate of $50 million, less all
amounts paid with respect to Investor Group Tax Claims made pursuant to Section
10.4.
10.4 DINA'S AGREEMENT TO INDEMNIFY FOR TAXES.
(1) Subject to Sections 10.6 and 10.7, Dina and the
Transferred Subsidiaries agree to indemnify, defend and hold harmless the
Investor Group, the Company and the Company Subsidiaries at any time after the
consummation of the Closing from and against all Damages asserted against,
resulting to, imposed on, sustained, incurred or suffered by, or asserted
against any member of the Investor Group, the Company or any of the Company
Subsidiaries, directly or indirectly, by reason of or resulting from any and all
Taxes of Dina, any affiliate of Dina, the Transferred Subsidiaries, the Company
and the Company Subsidiaries with respect to or pursuant to (i) the
Transactions, (ii) the breach of any representation or warranty contained in
Section 4.12 hereof and (iii) except to the extent such Tax is expressly set
forth in Schedule 10.4(a)(ii) as set forth below, (a) all taxable periods ending
on or before the Closing
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Date (such periods referred to as "Pre-Closing Periods"); (b) any taxable
period beginning before the Closing Date and ending after the Closing Date
(such periods referred to as "Straddle Periods"), but only with respect to
the portion of such Straddle Period ending on the Closing Date as determined
in the manner provided in Sections 10.4(b) and 10.4(c) hereof (such portion,
a "Pre-Closing Straddle Period"); (c) Treasury Regulation Section 1.1502-6
(or any comparable provision under state, local or foreign law or regulation
imposing several liability upon members of a consolidated, combined,
affiliated, unitary or similar group) for any Pre-Closing Period or
Pre-Closing Straddle Period (collectively, "Investor Group Tax Claims" and,
together with the Investor Claims, the "Claims"). No later than ten (10) days
prior to the Closing Date, Dina shall prepare, or cause to be prepared,
Schedule 10.4(a)(ii), which shall set forth by type of Tax specific entries
for Taxes incurred (or accrued in accordance with GAAP) in the ordinary
course of business by the Company and the Company Subsidiaries consistent
with past practice since the date of the 1998 Balance Sheet up to the Closing
Date; upon completion, Dina shall submit such Schedule to the Investor Group
for the Investor Group's review and approval, which shall not be unreasonably
withheld.
(2) In the case of any Straddle Period, except as
provided in Section 10.4(c) below, the liability for Taxes of the Company and
the Company Subsidiaries for the Pre-Closing Straddle Period shall be computed
on a "closing of the books" method, as if such taxable period ended on and
included the Closing Date; PROVIDED, HOWEVER, that items determined based on
time, such as depreciation, shall be deemed to be the amount of the Straddle
Period multiplied by a fraction the numerator of which is the number of days in
the Straddle Period ending on and including the Closing Date and the denominator
of which is the number of days in the Straddle Period.
(3) In the case of any real property, personal property
and intangible property Taxes for a Straddle Period, the liability for Taxes of
the Company and the Company Subsidiaries for the Pre-Closing Straddle Period
shall be deemed to be the amount of such Taxes for the Straddle Period
multiplied by a fraction the numerator of which is the number of days in the
Straddle Period ending on and including the Closing Date and the denominator of
which is the number of days in the Straddle Period.
(4) As directed by the Investor Group, Dina shall
promptly pay the amount of indemnification obligations set forth in Section
10.4(a), (b) and (c) to the person or entity that the Investor Group directs
Dina to pay in writing.
(5) To the extent applicable, Damages pursuant to this
Section 10.4 shall be determined after reduction for any amount reserved with
respect to the matter for which Damages are claimed on the 1998 Balance Sheet.
(6) The liability of Dina for all Investor Group Tax
Claims shall not exceed an aggregate of $70 million less all amounts paid with
respect to Investor Claims made pursuant to Section 10.2.
10.5 CONDITIONS OF INDEMNIFICATION.
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(1) In the event any member of the Investor Group has a
reasonable good faith basis for asserting a Claim for Damages, such party shall
give prompt written notice to the other parties hereto, briefly setting forth
the basis of the Claim and the amount thereof (or, if not then determinable, a
reasonable good faith estimate of the amount thereof) in reasonable detail.
(2) The obligations and liabilities of Dina with respect
to Claims made by third parties shall be subject to the following terms and
conditions:
(1) The indemnified party will give Dina prompt
notice of any such Claim as set forth in subsection (a) above, and Dina
shall have the right to undertake the defense thereof by representatives
chosen by it;
(2) If Dina, within a reasonable time after
notice of any such Claim, fails to defend the indemnified party against
which such Claim has been asserted, the indemnified party shall (upon
further notice to Dina) have the right to undertake the defense,
compromise or settlement of such Claim on behalf of and for the account
and risk of Dina subject to the right of Dina to assume the defense of
such Claim at any time prior to settlement, compromise or final
determination thereof;
(3) If, in the opinion of the indemnified party's
legal counsel (which shall be reasonably acceptable to Dina), a conflict
of interest with respect to any Claim exists between the indemnified
party against which a Claim has been asserted and Dina, then such
indemnified party shall have the right to retain its own counsel with
respect to such Claim; PROVIDED that the reasonable fees and expenses of
such counsel shall be at the expense of Dina; and
(4) Anything in this Article X to the contrary
notwithstanding, (A) if there is a reasonable probability that a Claim
may materially and adversely affect the indemnified party other than as a
result of money damages or other money payments, the indemnified party
shall have the right, at its own cost and expense, to defend, compromise
or settle such Claim; PROVIDED, HOWEVER, that if such Claim is settled
without Dina's consent, the indemnified party shall be deemed to have
waived all rights hereunder against Dina for money damages arising out of
such Claim, and (B) Dina shall not, without the written consent of the
indemnified party, settle or compromise any Claim or consent to the entry
of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the indemnified party a
release from all liability in respect to such Claim.
10.6 TRANSFER OF COMMON STOCK AS SATISFACTION OF INDEMNIFICATION
OBLIGATIONS.
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(1) In the event that Dina is unable to pay in cash the
amount of any Damages for which it is liable pursuant to this Article X, Dina
and the Investors shall cause the Company to issue to the Investors, in
proportion to the Investors' ownership interests in the Company (immediately
after the Closing), that number of shares of Common Stock having a value equal
to 61% of the amount of the Damages payable by Dina (or the Transferred
Subsidiaries), rounded to the nearest whole share. Dina shall be deemed to have
remitted the same number of shares of Common Stock to the Company for
cancellation and the Company shall cancel such number of shares
contemporaneously therewith. The value of each share of Common Stock to be
transferred pursuant to this Section 10.6 shall be equal to the then fair market
value of the Common Stock as agreed by the Investors and Dina or, if not so
agreed, by a third party valuation firm selected by JLL and reasonably
acceptable to Dina. In the event that Dina's indemnification obligations are
satisfied pursuant to this Section 10.6, the limitations on Dina's liability set
forth in Sections 10.3(c) and 10.4(f) hereof shall be determined with reference
to the then fair market value of the shares of Common Stock actually transferred
pursuant hereto. Shares of Common Stock issued to CIBC Argosy or CMF shall be
Non-Voting Common Stock to the extent necessary to comply with Section 2.1(b)
hereof.
(2) Notwithstanding the foregoing, and subject to the
terms of the Company's then outstanding agreements, in the event that Dina is
unable to pay in cash the amount of any Damages for which it is liable pursuant
to this Article X, Dina shall be permitted to satisfy up to $10 million of such
obligation by delivery of a promissory note to the Company (the "Promissory
Note"). The Promissory Note shall have a principal amount equal to the indemnity
obligation to be satisfied (but in no event more than $10 million), mature upon
the sale or transfer of more than 50% of the voting power of the then
outstanding Common Stock to any person or entity other than the Investors and
shall bear interest at the rate of 10% per annum and shall be prepayable at any
time without penalty. Interest on the Promissory Note shall be payable, in cash
or in-kind, semi-annually in arrears. The Promissory Note shall be secured by a
pledge to the Company of a number of shares of Common Stock owned by Dina equal
to the principal amount of the Promissory Note (the "Pledged Shares"). The value
of each share of Common Stock to be pledged shall be equal to the fair market
value of the Common Stock as of the issuance of such Promissory Note as agreed
by the Investors and Dina or, if not so agreed, by a third party valuation firm
selected by JLL and reasonably acceptable to Dina. In the event of a default
under the Promissory Note, the Company shall be entitled to retain all of the
Pledged Shares.
10.7 ADJUSTMENT TO INVESTMENT CONSIDERATION. Any payments by
Dina pursuant to this Article X shall be deemed an adjustment to the Investment
Consideration paid by the Investors, and not as income subject to Tax.
ARTICLE 11
GENERAL PROVISIONS
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11.1 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
on the date delivered, if delivered personally, on the third business day after
being mailed by registered or certified mail (postage prepaid, return receipt
requested) or on the next business day after being sent by reputable overnight
courier (delivery prepaid), in each case, to the parties at the following
addresses, or on the date sent and confirmed by electronic transmission to the
telecopier number specified below (or at such other address or telecopier number
for a party as shall be specified by notice given in accordance with this
Section):
(1) If to JLL:
Joseph Littlejohn & Levy Fund III L.P.
c/o Joseph Littlejohn & Levy
450 Lexington Avenue
New York, New York 10017
Attention: Mr. Jeffrey C. Lightcap
Facsimile: (212) 286-8626
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Attention: Robert B. Pincus, Esq.
Facsimile: (302) 651-3001
(2) if to CIBC Argosy or CMF:
c/o CIBC World Markets Corp.
425 Lexington Avenue; 3rd Floor
New York, New York 10017
Attention: Mr. Jay Levine
Facsimile: (212) 885-4998
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Roger Meltzer, Esq.
Facsimile: (212) 269-5420
(3) If to Dina:
Consorcio G Grupo Dina, S.A. de C.V.
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Tlacoquemecatl No. 41
Colonia Del Valle
03100, Mexico D.F., Mexico
Attention: Mr. Rafael Gomez Flores
Facsimile: 011-(525)-420-3977
with copies to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: M. Finley Maxson, Esq.
Facsimile: (312) 558-5700
and
MCII Holdings (USA), Inc.
c/o Motor Coach Industries International, Inc.
10 E. Golf Road
Des Plaines, Illinois 60016
Attention: Timothy J. Nalepka, Esq.
Facsimile: (847) 299-6773
11.2 AMENDMENT. This Agreement may be amended by the parties
hereto at any time; PROVIDED, HOWEVER, that this Agreement may not be amended
except by a written instrument signed by all parties hereto.
11.3 WAIVER. At any time prior to the Closing, the Investors, on
the one hand, and Dina, on the other hand, may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto and (c)
waive compliance by the other party with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid only if set forth
in a written instrument signed by the party or parties to be bound thereby.
11.4 HEADINGS. The headings and captions contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.5 SEVERABILITY. If any term or other provision of this
Agreement, or any portion thereof, is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other terms and provisions of
this Agreement, or remaining portion thereof, shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any such term or other provision, or any
portion thereof, is invalid,
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illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end that
the Transactions contemplated hereby are consummated to the fullest extent
possible.
11.6 ENTIRE AGREEMENT. This Agreement (together with the
Exhibits attached hereto and the DISCLOSURE Schedule) and the Confidentiality
Agreement constitute the entire agreement of the parties hereto and supersede
all prior agreements and undertakings, both written and oral, between or among
the parties, or any of them, with respect to the subject matter hereof.
11.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, directly or indirectly, by
any party hereto without the prior written consent of the other parties hereto;
PROVIDED, HOWEVER, that notwithstanding the foregoing, JLL may, without such
prior written consent, assign a portion of the Investment to one or more third
parties or entities reasonably acceptable to Dina, provided that no such
assignment shall relieve JLL from any of its obligations hereunder.
11.8 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its respective
successors and permitted assigns, and no provision of this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
11.9 FAILURE OR DELAY NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
11.10 SPECIFIC PERFORMANCE. Each party hereto acknowledges that
money damages would be both incalculable and an insufficient remedy for any
breach of this Agreement by such party and that any such breach would cause the
Investors, on the one hand, and Dina on the other hand, irreparable harm.
Accordingly, each party hereto also agrees that, in the event of any breach or
threatened breach of the provisions of this Agreement by such party, the
Investors, on the one hand, and Dina, on the other hand, shall be entitled to
equitable relief without the requirement of posting a bond or other security,
including in the form of injunctions and orders for specific performance, in
addition to all other remedies available to such other parties at law or in
equity.
11.11 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of New York, without regard to the principles of conflicts of law
thereof. Each Investor and Dina hereby agree and consent to be subject to the
jurisdiction of the United States District Court for the Southern District of
New York and the jurisdiction of the courts of the State of New York located in
the Borough of Manhattan in the City of New York (collectively, the "Courts")
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in any suit, action or proceeding seeking to enforce any provision of, or
based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby. Each Investor and Dina hereby
irrevocably consent to the service of any and all process in any such suit,
action or proceeding by the delivery of such process to such party at the
address and in the manner provided in Section 11.1. Dina has appointed The
Corporation Trust Company, 1209 S. Orange St., Wilmington, Delaware 19801, as
its authorized agent (the "Dina Authorized Agent"), upon which process may be
served in any suit, action or proceeding based on this Agreement which may be
instituted in any Court, by any Investor, and Dina expressly accept the
jurisdiction of any such Court in respect of any such suit, action or
proceeding. Such appointment shall be irrevocable. Dina represents and
warrants that the Dina Authorized Agent, has agreed to act as said agent for
service of process, and Dina agrees to take any and all action, including the
filing of any and all documents and instruments, which may be necessary to
continue such appointment in full force and effect. Service of process upon
the Dina Authorized Agent and written notice of such service to Dina shall be
deemed, in every respect, effective service of process upon Dina.
11.12 COUNTERPARTS. This Agreement may be executed in
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.13 INTERPRETATION. As used in this Agreement, (a) the term
"including" means "including, without limitation" and "including, but not
limited to," (b) the word "or" is not exclusive, unless the context otherwise
requires and (c) the words "to the knowledge of the Company" or "to the
Company's knowledge" means the actual knowledge, after due inquiry, of the
officers of the Company or any Company Subsidiary. All references in this
Agreement to "dollars" or "$" shall mean United States Dollars.
[SIGNATURE PAGE FOLLOWS]
51
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Investment Agreement to be executed as of the date first written above.
JOSEPH LITTLEJOHN & LEVY FUND III L.P.
By: JLL ASSOCIATES III, LLC,
its General Partner
By: ___________________________________
Managing Member
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
By: ___________________________________
Name:
Title:
CO-INVESTMENT MERCHANT FUND 3, LLC
By: ___________________________________
Name:
Title:
CONSORCIO G GRUPO DINA, S.A. de C.V.
By: ____________________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Investment
Agreement to be executed as of this ___ day of June, 1999.
MCII HOLDINGS (USA), INC.
By: ____________________________________
Name:
Title:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
Name of Investor Shares of Voting Shares of Nonvoting Principal Amount of Warrants
Common Stock Common Stock Company Senior Notes
<S> <C> <C> <C> <C>
JLL 522,855.4 - $42,857,000 122,448.45
CIBC Argosy 43,200 35,230.14 6,428,500 18,367.12
CMF 4,800 3,914.46 714,500 2,041.43
----- -------- ------- --------
570,855.4 39,144.6 $50,000,000 142,857
</TABLE>
<PAGE>
Exhibit 2.2
FIRST AMENDMENT
TO
INVESTMENT AGREEMENT
by and among
JOSEPH LITTLEJOHN & LEVY FUND III L.P.
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
CO-INVESTMENT MERCHANT FUND 3, L.L.C.
and
CONSORCIO G GRUPO DINA, S.A. de C.V.
dated as of
June 16, 1999
<PAGE>
FIRST AMENDMENT TO INVESTMENT AGREEMENT
FIRST AMENDMENT TO INVESTMENT AGREEMENT (hereinafter referred
to as this "First Amendment"), dated as of June 16, 1999, by and among Joseph
Littlejohn & Levy Fund III L.P., a Delaware limited partnership ("JLL"), CIBC WG
Argosy Merchant Fund 2, L.L.C. ("CIBC Argosy"), Co-Investment Merchant Fund 3,
LLC ("CMF") and Consorcio G Grupo Dina, S.A. de C.V., a corporation organized
under the laws of the United Mexican States ("Dina").
WHEREAS, JLL, CIBC Argosy, CMF and Dina entered into an
Investment Agreement dated as of June 11, 1999 (the "Agreement"); and
WHEREAS, JLL, CIBC Argosy, CMF and Dina desire to amend the
Agreement upon the terms and subject to the conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Capitalized terms used and
not otherwise defined herein shall have the respective meanings assigned to them
in the Agreement.
ARTICLE II
AMENDMENTS TO THE BACKGROUND SECTION OF THE AGREEMENT
Section 2.1 AMENDMENT TO PARAGRAPH A OF THE BACKGROUND
SECTION OF THE AGREEMENT. Paragraph A of the Background Section of the Agreement
is hereby amended and restated in its entirety to read as follows:
"A. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as hereinafter defined), Dina shall cause its wholly
owned subsidiary, MCII Holdings (USA), Inc., a Delaware corporation (the
"Company"), to
1
<PAGE>
issue and sell, and the Investors will purchase, (i) 610,000 shares (the
"Shares") of Common Stock (as hereinafter defined), which Shares shall equal
61% of the shares of Common Stock outstanding on the Closing Date (as
hereinafter defined), and warrants (the "Warrants") to purchase up to 10% of
the Common Stock, on a fully diluted basis, for an aggregate purchase price
of $125 million and (ii) Senior Notes due 2011 of the Company, in the
aggregate principal amount of $50 million (the "Company Senior Notes"), for a
purchase price of $50 million. The Shares, the Warrants and the Company
Senior Notes are hereinafter collectively referred to as the "Securities".
The terms of the Company Senior Notes and the Warrants are set forth on
EXHIBITS A and B hereto. Such issuance, sale and purchase are referred to
herein as the "Investment.""
Section 2.2 AMENDMENT TO PARAGRAPH B OF THE BACKGROUND
SECTION OF THE AGREEMENT. Paragraph B of the Background Section of the Agreement
is hereby amended and restated in its entirety to read as follows:
"B. At the Closing, Transportation Manufacturing Operations,
Inc., a Delaware corporation and an indirect wholly owned subsidiary of the
Company ("TMO"), will enter into a credit agreement (the "Credit Agreement")
with Canadian Imperial Bank of Commerce, as agent ("CIBC"), and a syndicate of
lenders providing for a $450 million senior credit facility."
Section 2.3 AMENDMENT TO PARAGRAPH C OF THE BACKGROUND
SECTION OF THE AGREEMENT. Paragraph C of the Background Section of the Agreement
is hereby amended and restated in its entirety to read as follows:
"C. At the Closing, TMO shall issue and sell $152.25 million
of subordinated indebtedness pursuant to a private placement (the "Private
Placement" and, together with the transactions contemplated by the Credit
Agreement, the "Financing")."
2
<PAGE>
ARTICLE III
AMENDMENTS TO ARTICLE I OF THE AGREEMENT
Section 3.1 AMENDMENT TO SECTION 1.1 OF THE AGREEMENT.
Section 1.1 of the Agreement is hereby amended as follows:
(a) The definition of "Carrocera" set forth in
Section 1.1 of the Agreement is hereby amended in its entirety to read as
follows:
""Carroceria" shall have the meaning set forth in
Section 3.3."
(b) A definition for "Securities" is hereby inserted
in Section 1.1 immediately following the definition for "SEC Reports" and shall
read in its entirety as follows:
""Securities" shall have the meaning set forth in the
"Background" section."
ARTICLE IV
AMENDMENTS TO ARTICLE III OF THE AGREEMENT
Section 4.1 AMENDMENT TO SECTION 3.3 OF THE AGREEMENT.
Section 3.3 of the Agreement is hereby amended and restated in its entirety to
read as follows:
"3.3 SUBSIDIARY SALE. Prior to the Closing, Dina or one
of its Subsidiaries (other than the Company or any Company Subsidiary) shall
acquire from (a) Dina Autobuses, S.A. de C.V., a subsidiary of the Company
("Autobuses"), (i) all of the outstanding capital stock of Autopartes
Hidalguenses, S.A. de C.V. ("Autopartes") owned by Autobuses and (ii) all of the
outstanding capital stock of Carroceria Sahagun, S.A. de C.V. ("Carroceria")
owned by Autobuses, (b) MCII Trucks, Inc., a wholly owned subsidiary of the
Company ("MCII Trucks"), all of the outstanding capital stock of Mexicana de
Manufacturas Especiales, S.A. de C.V. ("MME") owned by MCII Trucks, and (c)
Universal Coach Parts, Inc., an indirect wholly owned subsidiary of the Company
("Universal"), all of the outstanding capital stock of Universal Coach Parts
Mexico, S.A. de C.V. ("Universal Mexico" and, together with Autopartes,
Carroceria and MME, the "Transferred Subsidiaries")
3
<PAGE>
owned by Universal (collectively, the "Subsidiary Sale"), in each case, in
exchange for the issuance by Dina of a promissory note in the amount set
forth in Section 3.3 of the DISCLOSURE SCHEDULE (collectively, the "Dina
Notes")."
ARTICLE V
AMENDMENTS TO ARTICLE IV OF THE AGREEMENT
Section 5.1 AMENDMENT TO SECTION 4.3 OF THE AGREEMENT. The
heading and subsections (a) and (b) of Section 4.1 of the Agreement are hereby
amended and restated in their entirety to read as follows:
"4.3 CAPITALIZATION; TITLE TO SECURITIES.
(a) Immediately prior to the filing of the Charter Amendment,
the authorized capital stock of the Company consists of 1,000 shares of Common
Stock of which 1,000 shares are issued and outstanding and held by Dina. No
shares of Common Stock are held in the treasury of the Company. Each of the
issued and outstanding shares of capital stock of the Company has been duly
authorized and validly issued, and is fully paid and nonassessable, and free of
preemptive rights. Upon payment by the Investors of the Investment Consideration
and the issuance to the Investors of the Securities at the Closing, (i) the
Shares will be duly authorized, validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) the Company Senior Notes will be validly
authorized and issued and constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms and (iii)
the Warrants will be validly authorized and issued and upon payment of the
exercise price therefor, the shares of Common Stock issued thereunder will be
validly issued, fully paid and nonassessable.
(b) Except as set forth in Section 4.3(b) of the DISCLOSURE
SCHEDULE, Dina has good and valid title to all the shares of Common Stock held
by it, free and clear of any and all Liens."
4
<PAGE>
ARTICLE VI
AMENDMENTS TO ARTICLE V OF THE AGREEMENT
Section 6.1 AMENDMENT TO SECTION 5.5 OF THE AGREEMENT.
Section 5.5 of the Agreement is hereby amended and restated to read in its
entirety as follows:
"5.5 ACQUISITION OF SECURITIES FOR INVESTMENT. Such Investor
is acquiring the Securities for investment purposes only and not with any
present intention of distributing or selling the Securities in violation of
federal or state securities laws. Such Investor shall not sell, transfer, offer
for sale, pledge, hypothecate or otherwise dispose of such Securities in
violation of any federal or state securities laws."
ARTICLE VII
AMENDMENT TO ARTICLE VII OF THE AGREEMENT
Section 7.1 AMENDMENT TO SECTION 7.5 OF THE AGREEMENT.
Section 7.5 of the Agreement is hereby amended and restated in its entirety as
follows:
"7.5 LICENSE AGREEMENT. At the Closing, Dina shall and shall
cause the Company to enter into a license agreement, substantially in the form
attached hereto as EXHIBIT G (the "License Agreement"), providing for, among
other things, the grant by Dina to the Company of a perpetual, exclusive and
royalty-free right and license to use the name "Dina" and certain patents in
connection with the Business."
Section 7.2 ADDITION OF SECTION 7.9 TO THE AGREEMENT. A
new Section 7.9 is hereby added to Article VII to read in its entirety as
follows:
"Section 7.9 DINA NAME CHANGES. Within thirty days after the
Closing, Dina shall cause each of its subsidiaries, to the extent necessary, to
file an amendment to its organizational document changing such subsidiary's name
so as not to include "Motor Coach", "MCI", "MCII", or "Universal Coach Parts" or
any derivative thereof or any name bearing any resemblance thereto."
5
<PAGE>
ARTICLE VIII
MISCELLANEOUS
Section 8.1 AMENDMENT. All references in the Agreement (and
in the other agreements, documents and instruments entered into in connection
therewith) to the "Agreement" shall be deemed for all purposes to refer to the
Agreement, as amended by this First Amendment.
Section 8.2 LIMITED EFFECT. Except as expressly modified
herein, the Agreement shall continue to be, and shall remain, in full force and
effect and the valid and binding obligation of the parties thereto in accordance
with its terms.
Section 8.3 COUNTERPARTS. This First Amendment may be
executed in two or more counterparts, each of which shall be considered one and
the same agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties.
Section 8.4 GOVERNING LAW. This First Amendment shall be
governed by and construed in accordance with the laws of the State of New York
without regard to the principles of conflicts of law thereof.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed as of the date first written above.
JOSEPH LITTLEJOHN & LEVY
FUND III L.P.
By: JLL ASSOCIATES III, LLC
By:
------------------------------
Managing Member
CIBC WG ARGOSY MERCHANT
FUND 2, L.L.C.
By:
------------------------------
Jay Levine, authorized signatory
CO-INVESTMENT MERCHANT
FUND 3, LLC
By:
------------------------------
Jay Levine, authorized signatory
CONSORCIO G GRUPO DINA, S.A. de C.V.
By:
------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the Company has caused this First
Amendment to be executed as of this 16th day of June, 1999.
MCII HOLDINGS (USA), INC.
By:
------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed as of the date first written above.
JOSEPH LITTLEJOHN & LEVY
FUND III L.P.
By: JLL ASSOCIATES III, LLC
By:
------------------------------
Managing Member
CIBC WG ARGOSY MERCHANT
FUND 2, L.L.C.
By:
------------------------------
Jay Levine, authorized signatory
CO-INVESTMENT MERCHANT
FUND 3, LLC
By:
------------------------------
Jay Levine, authorized signatory
CONSORCIO G GRUPO DINA, S.A. de C.V.
By:
------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed as of the date first written above.
JOSEPH LITTLEJOHN & LEVY
FUND III L.P.
By: JLL ASSOCIATES III, LLC
By:
------------------------------
Managing Member
CIBC WG ARGOSY MERCHANT
FUND 2, L.L.C.
By:
------------------------------
Jay Levine, authorized signatory
CO-INVESTMENT MERCHANT
FUND 3, LLC
By:
------------------------------
Jay Levine, authorized signatory
CONSORCIO G GRUPO DINA, S.A. de C.V.
By:
------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the Company has caused this First
Amendment to be executed as of this 16th day of June, 1999.
MCII HOLDINGS (USA), INC.
By:
------------------------------
Name:
Title:
<PAGE>
Exhibit 3.1
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "TRANSPORTATION MANUFACTURING OPERATIONS, INC.", FILED IN
THIS OFFICE ON THE EIGHTH DAY OF MAY, A.D. 1992, AT 4:30 O'CLOCK P.M.
/s/ Edward J. Freel
[SEAL] -----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
2297116 8100 AUTHENTICATION: 9802058
991237952 DATE: 06-14-99
<PAGE>
* * * * * *
CERTIFICATE OF INCORPORATION
OF
TRANSPORTATION MANUFACTURING OPERATIONS, INC.
* * * * * *
1. The name of the corporation is TRANSPORTATION MANUFACTURING
OPERATIONS, INC.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) and the par value of each of such
shares is One Dollar ($1.00) amounting in the aggregate to One Thousand
Dollars ($1,000.00).
<PAGE>
5. The name and mailing address of each incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
M. C. Kinnamon Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
T. L. Ford Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
J. L. Austin Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
</TABLE>
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter or
repeal the by-laws of the corporation.
8. Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the board of directors or in the by-laws of the corporation.
9. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
<PAGE>
10. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are
true, and accordingly have hereunto set our hands this 8th day of May, 1992.
/s/ M. C. Kinnamon
----------------------------
M. C. Kinnamon
/s/ T. L. Ford
----------------------------
T. L. Ford
/s/ J. L. Austin
----------------------------
J. L. Austin
<PAGE>
Exhibit 3.2
BY-LAWS
OF
TRANSPORTATION MANUFACTURING OPERATIONS, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the Stockholders for the
election of directors of for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. The Annual Meeting of Stockholders for the
election of directors shall be held on such date and at such time as shall
be designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
<PAGE>
SECTION 3. SPECIAL MEETINGS. Unless otherwise required by law or by the
certificate of incorporation of the Corporation, as amended and restated from
time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President, or (iii) any Vice
President, if there be one, or (iv) the Secretary, or (v) any Assistant
Secretary, if there be one, and shall be called by any such office at the
request in writing of (i) the Board of Directors, or (ii) a committee of the
Board of Directors that has been duly designated by the Board of Directors
and whose powers and authority include the power to call such meetings, or
(iii) the stockholders owning a majority of the capital stock of the
Corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting. At a Special Meeting
of Stockholders, only such business shall be conducted as shall be specified
in the notice of meeting or any supplement thereto.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date, and hour of the meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of
the meeting to each stockholder entitled to vote at such meeting.
SECTION 5. ADJOURNMENTS. Any meeting of the stockholders may be
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the Corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for
2
<PAGE>
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 6. QUORUM. Unless otherwise required by law or the Certificate
of Incorporation, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. A quorum, once established, shall not be broken by
the withdrawal of enough votes to leave less than a quorum. If, however, such
quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to
time, in the manner provided in Section 5, until a quorum shall be present or
represented.
SECTION 7. VOTING. Unless otherwise required by law, the Certificate of
Incorporation, or these By-Laws, any question brought before any meeting of
stockholders, other than the election of directors, shall be decided by the
vote of the holders of a majority of the total number of votes of the capital
stock represented and entitled to vote thereat, voting as a single class.
Unless otherwise provided in the Certificate of Incorporation, and subject to
Section 5 of Article 5 hereof, each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for each share of the
capital stock entitled to vote thereat held by such stockholder. Such votes
may be cast in person or by proxy, but no proxy shall be voted on or after
three years from its date, unless such proxy provides for a longer period.
The Board of Directors, in its discretion, or the officer of the Corporation
3
<PAGE>
presiding at a meeting of stockholders, in such officer's discretion, may
require that any votes cast at such meeting be cast by written ballot.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless
otherwise provided in the Certificate of Incorporation, any action required
or permitted to be taken at any Annual or Special Meeting of Stockholders of
the Corporation may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action
so taken, shall be signed by the holders of the issued and outstanding
capital stock having not less than the minimum number to votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, and shall be delivered to
the Corporation by delivery to its registered office in the State of
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty days of
the earliest dated consent delivered in the manner required by this Section 8
to the Corporation, written consents signed by a sufficient number of holders
to take action are delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented
in writing and who, if the action had been taken
4
<PAGE>
at a meeting, would have been entitled to notice of the meeting if the record
date for such meeting had been the date that written consents signed by a
sufficient number of holders to take the action were delivered to the
Corporation as provided above in this section.
SECTION 9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of the each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane
to the meeting, during ordinary business hours, for a period of at least ten
days prior to the meeting either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any
stockholder of the Corporation who is present.
SECTION 10. STOCK LEDGER. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 9 of this Article II or the books
of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 11. CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the
conduct of the meeting of the stockholders as it shall deem appropriate.
Except to the extent inconsistent with such rules and regulations as adopted
by the Board of Directors, the chairman of any meeting of the
5
<PAGE>
stockholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of
such chairman, are appropriate for the proper conduct of the meeting. Such
rules, regulations or procedures, whether adopted by the Board of Directors
or prescribed by the chairman of the meeting, may include, without
limitation, the following: (i) the establishment of an agenda or order of
business for the meeting; (ii) the determination of when the polls shall open
and close for any given matter to be voted on at the meeting; (iii) the
establishment and enforcement of rules and procedures for maintaining order
at the meeting and the safety of those present; (iv) the establishment and
enforcement of limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies, or such other persons as the chairman of the meeting
shall determine; (v) the establishment and enforcement of restrictions on
entry to the meeting after the time fixed for the commencement thereof; and
(vi) the establishment and enforcement of limitations on the time allotted to
questions or comments by participants.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. The Board of Directors
shall consist of not less than one nor more than fifteen members, the exact
number of which shall initially be fixed by the Incorporator and thereafter
from time to time by the Board of Directors. Except as provided in Section 2
of this Article III, directors shall be elected by a plurality of the votes
cast at the Annual Meeting of Stockholders and each director so elected shall
hold office until the next Annual Meeting of Stockholders and until such
director's successor is duly elected and qualified, or until such director's
earlier death, resignation, or
6
<PAGE>
removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
SECTION 2. VACANCIES. Unless otherwise required by law or the
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors, or otherwise may be filled
only by a majority of the directors then in office, through less than a
quorum, or by a sole remaining director, and the directors so chosen shall
hold office until the next annual election and until their successors are
duly elected and qualified, or until their earlier death, resignation or
removal.
SECTION 3. DUTIES AND POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws required to be exercised or done by the
stockholders.
SECTION 4. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time
and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Chairman, if there be one, the President, or by any director. Notice thereof
stating the place, date, and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date
of the meeting, by telephone or telegram on twenty-four (24) hours' notice,
or on such shorter notice as the person or persons calling such meeting may
deem necessary or appropriate in the circumstances.
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SECTION 5. QUORUM. Except as otherwise required by law or the
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting of the time and
place of the adjourned meeting, until a quorum shall be present.
SECTION 6. ACTIONS BY WRITTEN CONSENT. Unless otherwise provided in
the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless otherwise
provided in the Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section 7 shall constitute presence in person at
such meeting.
SECTION 8. COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation.
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The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of any such committee. In the event of an absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent permitted by law and
provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it.
Each committee shall keep regular minutes and report to the Board of
Directors when required.
SECTION 9. COMPENSATION. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a
stated salary as director, payable in cash or securities. No such payment
shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
SECTION 10. INTERESTED DIRECTORS. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors
or officers or have a financial interest, shall be void or
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voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because the director's or officer's vote is counted for such purpose if (i)
the material facts as to the director's or officer's relationship or interest
and as to the contract or transaction are disclosed or are known to the Board
of Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to the
director's or officer's relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good
faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified by the Board of Directors, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or of a committee which
authorized the contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary, and one or more
Treasurers. The Board of Directors, in its discretion, also may elect a
Chairman of the Board of Directors (who must be a director) and one or more
Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other
officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law or the Certificate of Incorporation. The officers
of the
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Corporation need not be stockholders of the Corporation or, except in the case
of the Chairman of the Board of Directors, need such officers be directors of
the Corporation.
SECTION 2. ELECTION. The Board of Directors, at its first meeting held
after each Annual Meeting of Stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of Stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors; and all officers of the Corporation
shall hold office until their successors are chosen and qualified, or until
their earlier death, resignation or removal. Any officer elected by the Board
of Directors may be removed at any time by the affirmative vote of the Board
of Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name of and on behalf of the Corporation by the President or any Vice
President or any other officer authorized to do so by the Board of Directors,
and any such officer may, in the name of and on behalf of the Corporation,
take all such action as any such officer may deem advisable to vote in person
or by proxy at any meeting of security holders of any corporation in which the
Corporation may own securities and at any such meeting shall possess and may
exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors may, by resolution,
from time to time confer like powers upon any other person or persons.
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SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors, if there be one, shall preside at all meetings of the stockholders
and of the Board of Directors. Except where by law the signature of the
President is required, the Chairman of the Board of Directors shall possess the
same power as the President to sign all contracts, certificates, and other
instruments of the Corporation which may be authorized by the Board of
Directors. During the absence or disability of the President, the Chairman of
the Board of Directors (if not the same person as the President) shall exercise
all the powers and discharge all the duties of the President. The Chairman of
the Board of Directors shall also perform such other duties and may exercise
such other powers as may from time to time be assigned by these By-Laws or by
the Board of Directors.
SECTION 5. PRESIDENT. The President shall, subject to the control
of the Board of Directors and, if there be one who is not also the President,
the Chairman of the Board of Directors, have general supervision of the
business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. The President shall execute
all bonds, mortgages, contracts and other instruments of the Corporation
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except that the
other officers of the Corporation may sign and execute documents when so
authorized by these By-Laws, the Board of Directors or the President. In the
absence or disability of the Chairman of the Board of Directors, or if there
be none, the President shall preside at all meetings of the stockholders and
the Board of Directors. The President shall also perform such other duties
and may exercise such other powers as may from time to time be assigned to
such officer by these By-Laws or by the Board of Directors. If there be no
Chairman of the Board of Directors, or if the Chairman of
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the Board of Directors is also the President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President
or in the event of the inability or refusal of the President to act, shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
SECTION 6. VICE PRESIDENTS. The Vice President (if there be one) or
the Vice Presidents, if there is more than one (in the order designated by
the Board of Directors), shall perform the duties of the President, and when
so acting, shall perform such duties and have such powers as the Board of
Directors from time to time may prescribe.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of
the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose. The
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors, the Chairman of the Board of Directors or the President,
under whose supervision the Secretary shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there be
no Assistant Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the
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Corporation and to attest to the affixing by such officer's signature. The
Secretary shall see that all books, reports, statements, certificates, and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
SECTION 8. TREASURER. The Treasurer (or if there be more than one,
the Treasurers jointly) shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an
account of all transactions as Treasurer and of the financial condition of
the Corporation. If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance
of the duties of the office of the Treasurer and for the restoration to the
Corporation, in case of the Treasurer's death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money and other property
of whatever kind in the Treasurer's possession or under the Treasurer's
control belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Assistant Secretaries, if there
be any, shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to
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act, shall perform the duties of the Secretary, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if there
be any, shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or any Treasurer, and in the absence of any such
Treasurer or in the event of any such Treasurer's inability or refusal to
act, shall perform the duties of such Treasurer, and when so acting, shall
have all the powers of and be subject to all the restrictions upon such
Treasurer. If required by the Board of Directors, an Assistant Treasurer
shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of the office of Assistant Treasurer and for the
restoration to the Corporation, in case of the Assistant Treasurer's death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging
to the Corporation.
SECTION 11. OTHER OFFICERS. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and powers.
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ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President, or a
Vice President, and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by such stockholder in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person were such officer, transfer agent or registrar at the date of
issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued
by the Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or the owner's legal representative, to advertise the
same in such manner as the Board of Directors shall require and/or to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the
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Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed or the issuance of such new certificate.
SECTION 4. TRANSFERS. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws. Transfers
of stock shall be made on the books of the Corporation only by the person
named in the certificate or by such person's attorney lawfully constituted in
writing and upon the surrender of the certificate therefor, which shall be
cancelled before a new certificate shall be issued. No transfer of stock
shall be valid as against the Corporation for any purpose until it shall have
been entered in the stock records of the Corporation by an entry showing from
and to whom transferred.
SECTION 5. RECORD DATE.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such
meeting. If no record is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; providing, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the
Board of Directors may fix a
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record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required
by law, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its principal
place of business, or an officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be
at the close of business on the day on which the Board of Directors adopts
the resolutions taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion, or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted, and which record date shall be not more than sixty days
prior to such action. If no record date is fixed, the record date for
determining stockholders for any such
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purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
SECTION 6. RECORD OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise required by law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation, or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Written notice may also
be given personally or by telegram, telex or cable.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by
law, the Certificate of Incorporation, or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting, present in person or represented by
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proxy, shall constitute a waiver of notice of such meeting, except where the
person attends the meeting for the express purpose of objecting at the beginning
of the meeting to the transaction of any business because the meeting is not
lawfully called or convened.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the requirements of the Delaware General Corporation Law
("DGCL") and the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting of the
Board of Directors (or any action by written consent in lieu thereof in
accordance with Section 6 of Article III hereof), and may be paid in cash, in
property, or in shares of the Corporation's capital stock. Before payment of any
dividend, there may be set aside out of any funds of the Corporation available
for dividends such sum or sums as the Board of Directors from time to time, in
its absolute discretion, deems proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
SECTION 2. DISBURSEMENTS All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall
be fixed by resolution of the Board of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization, and the
words, "Corporate Seal,
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Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS
OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3
of this Article VIII, the Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a director
or officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director or
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith and
in a manner which such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any
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criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY
OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article
VIII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that such person is or was a director or officer
of the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the Corporation; except that no indemnification
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Corporation unless and
only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification
under this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is
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proper in the circumstances because such person has met the applicable
standard of conduct set forth in Section 1 or Section 2 of this Article VIII,
as the case may be. Such determination shall be made (i) by a majority vote
of the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (ii) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or
(iii) by the stockholders. To the extent, however, that a director or officer
of the Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith, without the necessity of authorization in the
specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any determination
under Section 3 of this Article VIII, a person shall be deemed to have acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interest of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe
such person's conduct was unlawful, if such person's action is based on the
records or books of account of the Corporation or another enterprise, or on
information supplied to such person by the officers of the Corporation or
another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or
records given or reports made to the Corporation or another enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Corporation or another enterprise. The
term "another enterprise" as used in this Section 4 shall mean any other
corporation or any partnership, joint venture,
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trust, employee benefit plan or other enterprise of which such person is or
was serving at the request of the Corporation as a director, officer, employee
or agent. The provisions of this Section 4 shall not be deemed to be exclusive
or to limit in any way the circumstances in which a person may be deemed to
have met the applicable standard of conduct set forth in Section 1 or 2 of
this Article VII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer
is proper in the circumstances because such person has met the applicable
standards of conduct set forth in Section 1 or 2 of this Article VIII, as the
case may be. Neither a contrary determination in the specific case under
Section 3 of this Article VIII nor the absence of any determination thereunder
shall be a defense to such application or create a presumption that the
director or officer seeking indemnification has not met any applicable
standard of conduct. Notice of any application for indemnification pursuant
to this Section 5 shall be given to the Corporation promptly upon the filing
of such application. If successful, in whole or in part, the director or
officer seeking indemnification shall also be entitled to be paid the expense
of prosecuting such application.
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit, or proceeding shall be paid by the Corporation in
advance of the final disposition of such action,
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suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the Corporation as
authorized in this Article VIII.
SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by or granted
pursuant to this Article VIII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under the Certificate of Incorporation, any By-Law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power or the
obligation to indemnify such person against such liability under the
provisions of this Article VIII.
25
<PAGE>
SECTION 9. CERTAIN DEFINITIONS. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer
of such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
shall stand in the same position under the provisions of this Article VIII
with respect to the resulting or surviving corporation as such person would
have with respect to such constituent corporation if its separate existence
had continued. For purposes of this Article VIII, references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director
or officer with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to
in this Article VIII.
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a
26
<PAGE>
person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors, and administrators of such a person.
SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5
hereof), the Corporation shall not be obligated to indemnify any director or
officer in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented
to by the Board of Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be altered, amended or
repealed, in whole or in part, or new By-Laws may be adopted by the
stockholders or by the Board of Directors, provided, however, that notice of
such alteration, amendment, repeal or adoption of new By-Laws be contained in
the notice of such meeting of stockholders or Board of Directors as the case
may be. All such amendments must be approved by either the holders of a
majority of the outstanding capital stock entitled to vote thereon or by a
majority of the entire Board of Directors then in office.
27
<PAGE>
SECTION 2. ENTIRE BOARD OF DIRECTORS. As used in this Article IX
and in these By-Laws generally, the term "entire Board of Directors" means
the total number of directors which the Corporation would have if there were
no vacancies.
* * *
Adopted as of: May 20, 1997
----------------------------
Last Amended as of:
-----------------------
28
<PAGE>
Exhibit 3.3
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
__________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "TMO ACQUISITION CORPORATION", FILED IN THIS OFFICE ON THE
FOURTH DAY OF AUGUST, A.D. 1992, AT 4:21 O'CLOCK P.M.
[SEAL] /s/ Edward J. Freel
____________________________________
EDWARD J. FREEL, SECRETARY OF STATE
2305873 8100 AUTHENTICATION: 9802023
991237915 DATE: 06-14-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04.21 PM 08/04/1992
922175410 - 2305873
* * * * *
CERTIFICATE OF INCORPORATION
OF
TMO ACQUISITION CORPORATION
* * * * *
1. The name of the corporation is TMO Acquisition Corporation.
2. The address of its registered office in the state of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is the
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) and the par value of each of such
shares is One Dollar ($1.00) amounting in the aggregate to One Thousand
Dollars ($1,000.00).
5. The name and mailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
David L. Helsten 1850 N. Central Ave.
Phoenix, AZ 85004
<PAGE>
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized to make, alter or repeal the
by-laws of the corporation.
8. Elections of directors need not be by written ballot unless the by-laws
of the corporation shall so provide.
Meetings of the stockholders may be held within or without the state of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the state of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
9. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
10. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit.
<PAGE>
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, does make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 31st day of July, 1992.
/s/ David L. Helsten
--------------------------------------
David L. Helsten
<PAGE>
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "TMO ACQUISITION CORPORATION", CHANGING ITS NAMED FROM "TMO
ACQUISITION CORPORATION" TO "BUSLEASE, INC.", FILED IN THIS OFFICE ON THE
SIXTEENTH DAY OF NOVEMBER, A.D. 1992, AT 4:30 O'CLOCK P.M.
[SEAL] /s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
2305873 8100 AUTHENTICATION: 9B02024
991237915 DATE: 06-14-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 04:30 PM 11/16/1992
923225072 - 2305873
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
- -------------------------------------------------------------------------------
TMO ACQUISITION CORPORATION
a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of TMO Acquisition
Corporation resolutions were duly adopted setting forth a proposed amendment
of the Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation
be amended by changing the Article thereof number "1" so that, as
amended, said Article shall be and read as follows:
"The name of the corporation is BusLease, Inc."
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the sole stockholder of said corporation, in accordance with Section 228 of
the General Corporation Law of the State of Delaware, voted in favor of the
amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said TMO Acquisition Corporation has caused this
certificate to be signed by F. G. Emerson, its Vice President, and Carol
Kotek, its Assistant Secretary, this 16th day of November, 1992.
BY: /s/ F. G. Emerson
--------------------------------
Vice President
ATTEST: /s/ Carol Kotek
--------------------------------
Assistant Secretary
<PAGE>
Exhibit 3.4
BY-LAWS
OF
BUS LEASE, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the Stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. The Annual Meeting of Stockholders for the
election of directors shall be held on such date and at such time as shall be
designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
<PAGE>
SECTION 3. SPECIAL MEETINGS. Unless otherwise required by law or by the
certificate of incorporation of the Corporation, as amended and restated
from time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President, or (iii) any Vice
President, if there be one, or (iv) the Secretary, or (v) any Assistant
Secretary, if there be one, and shall be called by any such officer at the
request in writing of (i) the Board of Directors, or (ii) a committee of the
Board of Directors that has been duly designated by the Board of Directors
and whose powers and authority include the power to call such meetings, or
(iii) the stockholders owning a majority of the capital stock of the
Corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting. At a Special Meeting of
Stockholders, only such business shall be conducted as shall be specified in
the notice of meeting or any supplement thereto.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date, and hour of the meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of
the meeting to each stockholder entitled to vote at such meeting.
SECTION 5. ADJOURNMENTS. Any meeting of the stockholders may be
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the Corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for
2
<PAGE>
more than thirty days, or if after the adjournment a new record is fixed for
the adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 6. QUORUM. Unless otherwise required by law or the Certificate
of Incorporation, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. A quorum, once established, shall not be broken by
the withdrawal of enough votes to leave less than a quorum. If, however, such
quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to
time, in the manner provided in Section 5, until a quorum shall be present or
represented.
SECTION 7. VOTING. Unless otherwise required by law, the Certificate of
Incorporation, or these By-Laws, any question brought before any meeting of
stockholders, other than the election of directors, shall be decided by the
vote of the holders of a majority of the total number of votes of the capital
stock represented and entitled to vote thereat, voting as a single class.
Unless otherwise provided in the Certificate of Incorporation, and subject to
Section 5 of Article V hereof, each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for each share of the capital
stock entitled to vote thereat held by such stockholder. Such votes may be
cast in person or by proxy, but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. The
Board of Directors, in its discretion, or the officer of the Corporation
3
<PAGE>
presiding at a meeting of stockholders, in such officer's discretion, may
required that any votes cast at such meeting be cast by written ballot.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless otherwise
provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of
the Corporation may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action
so taken, shall be signed by the holders of the issued and outstanding
capital stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, and shall be delivered to
the Corporation by delivery to its registered office in the State of
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty days
of the earliest dated consent delivered in the manner required by this Section
8 to the Corporation, written consents signed by a sufficient number of
holders to take action are delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented
in writing and who, if the action had been taken
4
<PAGE>
at a meeting, would have been entitled to notice of the meeting if the record
date for such meeting had been the date that written consents signed by a
sufficient number of holders to take the action were delivered to the
Corporation as provided above in this section.
SECTION 9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder of the Corporation who
is present.
SECTION 10. STOCK LEDGER. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 9 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
SECTION 11. CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of the stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the
5
<PAGE>
stockholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of such
chairman, are appropriate for the proper conduct of the meeting. Such rules,
regulations or procedures, whether adopted by the Board of Directors or
prescribed by the chairman of the meeting, may include, without limitation,
the following: (i) the establishment of an agenda or order of business for the
meeting; (ii) the determination of when the polls shall open and close for any
given matter to be voted on at the meeting; (iii) the establishment and
enforcement of rules and procedures for maintaining order at the meeting and
the safety of those present; (iv) the establishment and enforcement of
limitations on attendance at or participation in the meeting to stockholders
of record of the corporation, their duly authorized and constituted proxies, or
such other persons as the chairman of the meeting shall determine; (v) the
establishment and enforcement of restrictions on entry to the meeting after
the time fixed for the commencement thereof; and (vi) the establishment and
enforcement of limitations on the time allotted to questions or comments by
participants.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. The Board of Directors
shall consist of not less than one nor more than fifteen members, the exact
number of which shall initially be fixed by the Incorporator and thereafter
from time to time by the Board of Directors. Except as provided in Section 2 of
this Article III, directors shall be elected by a plurality of the votes cast
at the Annual Meeting of Stockholders and each director so elected shall hold
office until the next Annual Meeting of Stockholders and until such director's
successor is duly elected and qualified, or until such director's earlier
death, resignation, or
6
<PAGE>
removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
SECTION 2. VACANCIES. Unless otherwise required by law or the
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors, or otherwise may be filled
only by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall
hold office until the next annual election and until their successors are duly
elected and qualified, or until their earlier death, resignation or removal.
SECTION 3. DUTIES AND POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws required to be exercised or done by the
stockholders.
SECTION 4. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time
and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Chairman, if there be one, the President, or by any director. Notice thereof
stating the place, date, and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date
of the meeting, by telephone or telegram on twenty-four (24) hours' notice,
or on such shorter notice as the person or persons calling such meeting may
deem necessary or appropriate in the circumstances.
7
<PAGE>
SECTION 5. QUORUM. Except as otherwise required by law or the
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting of the time and
place of the adjourned meeting, until a quorum shall be present.
SECTION 6. ACTIONS BY WRITTEN CONSENT. Unless otherwise provided in the
Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless otherwise
provided in the Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section 7 shall constitute presence in person at
such meeting.
SECTION 8. COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors or the
Corporation.
8
<PAGE>
The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of any such committee. In the event of an absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent permitted by law and
provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it.
Each committee shall keep regular minutes and report to the Board of Directors
when required.
SECTION 9. COMPENSATION. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director, payable in cash or securities. No such payment shall
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
SECTION 10. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers or have a
financial interest, shall be void or
9
<PAGE>
voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because the director's or officer's vote is counted for such purpose if (i) the
material facts as to the director's or officer's relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to the
director's or officer's relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good
faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified by the Board of Directors, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which
authorized the contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary, and one or more
Treasurers. The Board of Directors, in its discretion, also may elect a
Chairman of the Board of Directors (who must be a director) and one or more
Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other
officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law or the Certificate of Incorporation. The officers
of the
10
<PAGE>
Corporation need not be stockholders of the Corporation or, except in the
case of the Chairman of the Board of Directors, need such officers be
directors of the Corporation.
SECTION 2. ELECTION. The Board of Directors, at its first meeting held
after each Annual Meeting of Stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of Stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors; and all officers of the
Corporation shall hold office until their successors are chosen and
qualified, or until their earlier death, resignation or removal. Any officer
elected by the Board of Directors may be removed at any time by the
affirmative vote of the Board of Directors. Any vacancy occurring in any
office of the Corporation shall be filled by the Board of Directors. The
salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed in
the name of and on behalf of the Corporation by the President or any Vice
President or any other officer authorized to do so by the Board of Directors,
and any such officer may, in the name of and on behalf of the Corporation,
take all such action as any such officer may deem advisable to vote in person
or by proxy at any meeting of security holders of any corporation in which the
Corporation may own securities and at any such meeting shall possess and may
exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any other person or
persons.
11
<PAGE>
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the
signature of the President is required, the Chairman of the Board of
Directors shall possess the same power as the President to sign all contracts,
certificates, and other instruments of the Corporation which may be authorized
by the Board of Directors. During the absence or disability of the
President, the Chairman of the Board of Directors (if not the same person as
the President) shall exercise all the powers and discharge all the duties of
the President. The Chairman of the Board of Directors shall also perform
such other duties and may exercise such other powers as may from time to time
be assigned by these By-Laws or by the Board of Directors.
SECTION 5. PRESIDENT. The President shall, subject to the control of
the Board of Directors and, if there be one who is not also the President,
the Chairman of the Board of Directors, have general supervision of the
business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. The President shall execute
all bonds, mortgages, contracts and other instruments of the Corporation
requiring a seal, under the seal of the Corporation, except where required
or permitted by law to be otherwise signed and executed and except that the
other officers of the Corporation may sign and execute documents when so
authorized by these By-Laws, the Board of Directors or the President. In the
absence or disability of the Chairman of the Board of Directors, or if there
be none, the President shall preside at all meetings of the stockholders and
the Board of Directors. The President shall also perform such other duties
and may exercise such other powers as may from time to time be assigned to
such officer by these By-Laws or by the Board of Directors. If there be no
Chairman of the Board of Directors, or if the Chairman of
12
<PAGE>
the Board of Directors is also the President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President
or in the event of the inability or refusal of the President to act, shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
SECTION 6. VICE PRESIDENTS. The Vice President (if there be one) or
the Vice Presidents, if there is more than one (in the order designated by
the Board of Directors), shall perform the duties of the President, and when
so acting, shall perform such duties and have such powers as the Board of
Directors from time to time may prescribe.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose. The
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors, the Chairman of the Board of Directors or the President,
under whose supervision the Secretary shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there be
no Assistant Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of such Assistant Secretary.
The Board of Directors may give general authority to any other officer to
affix the seal of the
13
<PAGE>
Corporation and to attest to the affixing by such officer's signature. The
Secretary shall see that all books, reports, statements, certificates, and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
SECTION 8. TREASURER. The Treasurer (or if there be more than one, the
Treasurers jointly) shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an
account of all transactions as Treasurer and of the financial condition of
the Corporation. If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance
of the duties of the office of the Treasurer and for the restoration to the
Corporation, in case of the Treasurer's death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money and other property
of whatever kind in the Treasurer's possession or under the Treasurer's
control belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Assistant Secretaries, if there be
any, shall perform such duties and have such powers as from time to time may
be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to
14
<PAGE>
act, shall perform the duties of the Secretary, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may
be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or any Treasurer, and in the absence of any such
Treasurer or in the event of any such Treasurer's inability or refusal to
act, shall perform the duties of such Treasurer, and when so acting, shall
have all the powers of and be subject to all the restrictions upon such
Treasurer. If required by the Board of Directors, an Assistant Treasurer
shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of the office of Assistant Treasurer and for the
restoration to the Corporation, in case of the Assistant Treasurer's death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging
to the Corporation.
SECTION 11. OTHER OFFICERS. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and
powers.
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ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President, or
a Vice President, and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number
of shares owned by such stockholder in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent, or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same
effect as if such person were such officer, transfer agent or registrar at
the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or the owner's legal representative, to advertise the
same in such manner as the Board of Directors shall require and/or to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the
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<PAGE>
Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed or the issuance of such new certificate.
SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be cancelled before
a new certificate shall be issued. No transfer of stock shall be valid as
against the Corporation for any purpose until it shall have been entered in
the stock records of the Corporation by an entry showing from and to whom
transferred.
SECTION 5. RECORD DATE.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such
meeting. If no record is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; providing, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the
Board of Directors may fix a
17
<PAGE>
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If
no record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required
by law, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its principal
place of business, or an officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be
at the close of business on the day on which the Board of Directors adopts
the resolutions taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion, or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more
than sixty days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such
18
<PAGE>
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
SECTION 6. RECORD OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise required by law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation, or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with
postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written
notice may also be given personally or by telegram, telex or cable.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by law,
the Certificate of Incorporation, or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting, present in person or represented by
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proxy, shall constitute a waiver of notice of such meeting, except where the
person attends the meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the requirements of the Delaware General Corporation
Law ("DGCL") and the provisions of the Certificate of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting
of the Board of Directors (or any action by written consent in lieu thereof
in accordance with Section 6 of Article III hereof), and may be paid in cash,
in property, or in shares of the Corporation's capital stock. Before payment
of any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time
to time, in its absolute discretion, deems proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for any proper purpose, and
the Board of Directors may modify or abolish any such reserve.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by the resolution of the Board of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the
words "Corporate Seal,
20
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Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER
THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of
this Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a director
or officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director or
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith and
in a manner which such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any
21
<PAGE>
criminal action or proceeding, had reasonable cause to believe that such
persons's conduct was unlawful.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN
THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is
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proper in the circumstances because such person has met the applicable
standard of conduct set forth in Section 1 or Section 2 of this Article VIII,
as the case may be. Such determination shall be made (i) by a majority vote
of the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (ii) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or
(iii) by the stockholders. To the extent, however, that a director or
officer of the Corporation has been successful on the merits or otherwise in
defense on any action, suit or proceeding described above, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection therewith, without the necessity of authorization
in the specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interest of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe
such person's conduct was unlawful, if such person's action is based on the
records or books of account of the Corporation or another enterprise, or on
information supplied to such person by the officers of the Corporation or
another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or
records given or reports made to the Corporation or another enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Corporation or another enterprise. The
term "another enterprise" as used in this Section 4 shall mean any other
corporation or any partnership, joint venture,
23
<PAGE>
trust, employee benefit plan or other enterprise of which such person is or
was serving at the request of the Corporation as a director, officer,
employee or agent. The provisions of this Section 4 shall not be deemed to
be exclusive or to limit in any way the circumstances in which a person may
be deemed to have met the applicable standard of conduct set forth in Section
1 or 2 of this Article VIII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer
is proper in the circumstances because such person has met the applicable
standards of conduct set forth in Section 1 or 2 of this Article VIII, as
the case may be. Neither a contrary determination in the specific case under
Section 3 of this Article VIII nor the absence of any determination
thereunder shall be a defense to such application or create a presumption that
the director or officer seeking indemnification has not met any applicable
standard of conduct. Notice of any application for indemnification pursuant to
this Section 5 shall be given to the Corporation promptly upon the filing of
such application. If successful, in whole or in part, the director or
officer seeking indemnification shall also be entitled to be paid the expense
of prosecuting such application.
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director
or officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action,
24
<PAGE>
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the Corporation as
authorized in this Article VIII.
SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under the Certificate of Incorporation, any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in such person's official capacity and as to action in another
capacity while holding such office, it being the policy of the Corporation
that indemnification of the persons specified in Sections 1 and 2 of this
Article VIII shall be made to the fullest extent permitted by law. The
provisions of this Article VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Section 1 or 2 of this
Article VIII but whom the Corporation has the power or obligation to
indemnify under the provisions of the General Corporation Law of the State of
Delaware, or otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power or the
obligation to indemnify such person against such liability under the
provisions of this Article VIII.
25
<PAGE>
SECTION 9. CERTAIN DEFINITIONS. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer
of such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
shall stand in the same position under the provisions of this Article VIII
with respect to the resulting or surviving corporation as such person would
have with respect to such constituent corporation if its separate existence
had continued. For purposes of this Article VIII, references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director
or officer with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to
in this Article VIII.
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a
26
<PAGE>
person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5
hereof), the Corporation shall not be obligated to indemnify any director or
officer in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented
to by the Board of Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be altered, amended or
repealed, in whole or in part, or new By-Laws may be adopted by the
stockholders or by the Board of Directors, provided, however, that notice of
such alteration, amendment, repeal or adoption of new By-Laws be contained in
the notice of such meeting of stockholders or Board of Directors as the case
may be. All such amendments must be approved by either the holders of a
majority of the outstanding capital stock entitled to vote thereon or by a
majority of the entire Board of Directors then in office.
27
<PAGE>
SECTION 2. ENTIRE BOARD OF DIRECTORS. As used in this Article IX and
in these By-Laws generally, the term "entire Board of Directors" means the
total number of directors which the Corporation would have if there were no
vacancies.
***
Adopted as of: May 20, 1997
-------------
Last Amended as of:
-------------
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<PAGE>
Exhibit 3.5
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
-------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF INCORPORATION OF "TRANSPORTATION
MANUFACTURING CORPORATION", FILED IN THIS OFFICE ON THE TENTH
DAY OF MAY, A.D. 1974, AT 10 O'CLOCK A.M.
[SEAL] /s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
0801542 8100 AUTHENTICATION: 9802048
991237945 DATE: 06/14/99
<PAGE>
CERTIFICATE OF INCORPORATION
OF
TRANSPORTATION MANUFACTURING CORPORATION
* * * * *
1. The name of the corporation is
TRANSPORTATION MANUFACTURING CORPORATION
2. The address of its registered office in the State of Delaware
is No. 100 West Tenth Street, in the City of Wilmington, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
3. The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall
have authority to issue is one thousand (1,000) and the par value of each of
such shares is One ($1.00) Dollar amounting in the aggregate to One Thousand
($1,000.00) Dollars.
5. The name and mailing address of each incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
B. A. Pennington 100 West Tenth Street
Wilmington, Delaware 19801
W. J. Reif 100 West Tenth Street
Wilmington, Delaware 19801
R. F. Andrews 100 West Tenth Street
Wilmington, Delaware 19801
</TABLE>
<PAGE>
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation.
To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee. The by-laws may provide that in the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board
of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the by-laws of
<PAGE>
the corporation, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to
all papers which may require it; but no such committee shall have the power
or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or
amending the by-laws of the corporation; and, unless the resolution or
by-laws, expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with
statute, to sell, lease or exchange all or substantially all of the property
and assets of the corporation, including its good will and its corporate
franchises, upon such terms and conditions and for such consideration, which
may consist in whole or in part of money or property including shares of
stock in, and/or other securities of, any other corporation or corporations,
as its board of directors shall deem expedient and for the best interests of
the corporation.
8. Meetings of stockholders may be held within or without the
State of Delaware, as the by-laws may provide. The books of the corporation
may be kept (subject
<PAGE>
to any provision contained in the statutes outside the State of Delaware at
such place or places as may be designated from time to time by the board of
directors or in the by-laws of the corporation. Elections of directors need
not be by written ballot unless the by-laws of the corporation shall so provide.
9. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, hereby
declaring and certifying that this is our act and deed and the facts herein
stated are true, and accordingly have hereunto set our hands this 10th day of
May , 1974.
B. A. Pennington
----------------------------------------------
W. J. Reif
----------------------------------------------
R. F. Andrews
----------------------------------------------
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF MERGER, WHICH MERGES:
"ROMEX, INC.", A DELAWARE CORPORATION,
WITH AND INTO "TRANSPORTATION MANUFACTURING CORPORATION"
UNDER THE NAME OF "TRANSPORTATION MANUFACTURING CORPORATION", A
CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE
OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE
TWENTY-EIGHTH DAY OF JUNE, A.D. 1984, AT 9 O'CLOCK A.M.
[SEAL] /s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
0801542 8100M AUTHENTICATION: 9802049
991237945 DATE: 06/14/99
<PAGE>
CERTIFICATE OF MERGER
OF
ROMEX, INC.
INTO
TRANSPORTATION MANUFACTURING CORPORATION
---------------------
THE UNDERSIGNED corporation, organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
<TABLE>
<CAPTION>
STATE OF
NAME INCORPORATION
---- -------------
<S> <C>
Romex, Inc. Delaware
Transportation Manufacturing Corporation Delaware
</TABLE>
SECOND: That an Agreement and Plan of Merger has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with the requirements of Section 251(c) of the
General Corporation Law of the State of Delaware.
THIRD: That the name of the surviving corporation of the merger
is TRANSPORTATION MANUFACTURING CORPORATION.
<PAGE>
FOURTH: That the Certificate of Incorporation of TRANSPORTATION
MANUFACTURING CORPORATION, a Delaware corporation, shall be the Certificate
of Incorporation of the surviving corporation.
FIFTH: That the executed Agreement and Plan of Merger is on
file at the principal place of business of the surviving corporation. The
address of the principal place of business of the surviving corporation is
Cummings Drive, Roswell, New Mexico 88201.
SIXTH: That a copy of the Agreement and Plan of Merger will be
furnished by the surviving corporation, on request and without cost, to any
stockholder of any constituent corporation.
DATED this 18th day of June, 1984.
---- ----
TRANSPORTATION MANUFACTURING
CORPORATION
By /s/ John R. Nasi
----------------------------------------
John R. Nasi
President and Chief Executive Officer
ATTEST:
/s/ Carol Kotek
- --------------------------------
Carol Kotek, Assistant Secretary
2
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Transportation Manufacturing Corporation, a corporation organized
and existing under and by virtue of the General Corporation Law of the State
of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of Transportation Manufacturing
Corporation, by the unanimous written consent of its members, filed with the
minutes of the board, adopted resolutions proposing and declaring advisable
the following amendment of the Certificate of Incorporation of said
corporation:
RESOLVED, that the Certificate of Incorporation of this Company be
amended by changing the Article thereof numbered 1 so that, as amended, such
article shall be and read as follows:
"The name of the corporation is Transit Bus International, Inc."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the sole stockholder of said corporation, in accordance with
Section 228 of the General Corporation Law of the State of Delaware, voted in
favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with
the provisions of Section 242 and 228 of the General Corporation Law of the
State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, said Transportation Manufacturing Corporation
has caused this certificate to be signed by John R. Nasi, its President and
Chief Executive Officer, and Kristin S. Schloemer, its Secretary, this 29th
day of November, 1994.
TRANSPORTATION MANUFACTURING
CORPORATION
ATTEST:
By: /s/ John R. Nasi
-----------------------------------
John R. Nasi
/s/ Kristin S. Schloemer President and Chief Executive Officer
- -----------------------------------
Kristin S. Schloemer, Secretary
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
------------------------
I EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT
COPY OF THE CERTIFICATE OF AMENDMENT OF "TRANSPORTATION
MANUFACTURING CORPORATION", CHANGING ITS NAME FROM
"TRANSPORTATION MANUFACTURING CORPORATION" TO "TRANSIT BUS
INTERNATIONAL, INC.", FILED IN THIS OFFICE ON THE TWENTY-NINTH
DAY OF NOVEMBER, A.D. 1994, AT 2 O'CLOCK P.M.
[SEAL] /s/ Edward J. Freel
-----------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
0801542 8100 AUTHENTICATION: 9802050
991237945 DATE: 06/14/99
<PAGE>
CERTIFICATE OF MERGER
OF
ROMEX, INC.
INTO
TRANSPORTATION MANUFACTURING CORPORATION
---------------------
THE UNDERSIGNED corporation, organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the name and state of incorporation of each of the
constituent corporations of the merger is as follows:
<TABLE>
<CAPTION>
STATE OF
NAME INCORPORATION
---- -------------
<S> <C>
Romex, Inc. Delaware
Transportation Manufacturing Corporation Delaware
</TABLE>
SECOND: That an Agreement and Plan of Merger has been approved,
adopted, certified, executed and acknowledged by each of the constituent
corporations in accordance with the requirements of Section 251(c) of the
General Corporation Law of the State of Delaware.
THIRD: That the name of the surviving corporation of the merger
is TRANSPORTATION MANUFACTURING CORPORATION.
<PAGE>
FOURTH: That the Certificate of Incorporation of TRANSPORTATION
MANUFACTURING CORPORATION, a Delaware corporation, shall be the Certificate
of Incorporation of the surviving corporation.
FIFTH: That the executed Agreement and Plan of Merger is on
file at the principal place of business of the surviving corporation. The
address of the principal place of business of the surviving corporation is
Cummings Drive, Roswell, New Mexico 88201.
SIXTH: That a copy of the Agreement and Plan of Merger will be
furnished by the surviving corporation, on request and without cost, to any
stockholder of any constituent corporation.
DATED this 18th day of June, 1984.
---- ----
TRANSPORTATION MANUFACTURING
CORPORATION
By /s/ John R. Nasi
----------------------------------------
John R. Nasi
President and Chief Executive Officer
ATTEST:
/s/ Carol Kotek
- --------------------------------
Carol Kotek, Assistant Secretary
2
<PAGE>
Exhibit 3.6
BY-LAWS
OF
TRANSIT BUS INTERNATIONAL, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the Stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. The Annual Meeting of Stockholders for the
election of directors shall be held on such date and at such time as shall be
designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
<PAGE>
SECTION 3. SPECIAL MEETINGS. Unless otherwise required by law or by the
certificate of incorporation of the Corporation, as amended and restated from
time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President, or (iii) any Vice President
if there be one, or (iv) the Secretary, or (v) any Assistant Secretary, if
there be one, and shall be called by any such officer at the request in
writing of (i) the Board of Directors, or (ii) a committee of the Board of
Directors that has been duly designated by the Board of Directors and whose
powers and authority include the power to call such meetings, or (iii) the
stockholders owning a majority of the capital stock of the Corporation issued
and outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting. At a Special Meeting of Stockholders, only
such business shall be conducted as shall be specified in the notice of
meeting or any supplement thereto.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date, and hour of the meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of
the meeting to each stockholder entitled to vote at such meeting.
SECTION 5. ADJOURNMENTS. Any meeting of the stockholders may be adjourned
from time to time to reconvene at the same or some other place, and notice
need not be given of any such adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for
2
<PAGE>
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 6. QUORUM. Unless otherwise required by law or the Certificate of
Incorporation, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. A quorum, once established, shall not be broken by
the withdrawal of enough votes to leave less than a quorum. If, however, such
quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to
time, in the manner provided in Section 5, until a quorum shall be present or
represented.
SECTION 7. VOTING. Unless otherwise required by law, the Certificate of
Incorporation, or these By-Laws, any question brought before any meeting of
stockholders, other than the election of directors, shall be decided by the
vote of the holders of a majority of the total number of votes of the capital
stock represented and entitled to vote thereat, voting as a single class.
Unless otherwise provided in the Certificate of Incorporation, and subject to
Section 5 of Article V hereof, each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for each share of the capital
stock entitled to vote thereat held by such stockholder. Such votes may be
cast in person or by proxy, but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. The
Board of Directors, in its discretion, or the officer of the Corporation
3
<PAGE>
presiding at a meeting of stockholders, in such officer's discretion, may
require that any votes cast at such meeting be cast by written ballot.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless otherwise
provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation may be taken without a meeting, without prior notice, and without
a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of the issued and outstanding capital
stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, and shall be delivered to
the Corporation by delivery to its registered office in the State of
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty days of
the earliest dated consent delivered in the manner required by this Section
8 to the Corporation, written consents signed by a sufficient number of
holders to take action are delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented
in writing and who, if the action had been taken
4
<PAGE>
at a meeting, would have been entitled to notice of the meeting if the record
date for such meeting had been the date that written consents signed by a
sufficient number of holders to take the action were delivered to the
Corporation as provided above in this section.
SECTION 9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder of the
Corporation who is present.
SECTION 10. STOCK LEDGER. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 9 of this Article II or the books
of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 11. CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the
conduct of the meeting of the stockholders as it shall deem appropriate.
Except to the extent inconsistent with such rules and regulations as adopted
by the Board of Directors, the chairman of any meeting of the
5
<PAGE>
stockholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of
such chairman, are appropriate for the proper conduct of the meeting. Such
rules, regulations or procedures, whether adopted by the Board of Directors
or prescribed by the chairman of the meeting, may include, without
limitation, the following: (i) the establishment of an agenda or order of
business for the meeting; (ii) the determination of when the polls shall open
and close for any given matter to be voted on at the meeting; (iii) the
establishment and enforcement of rules and procedures for maintaining order
at the meeting and the safety of those present; (iv) the establishment and
enforcement of limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies, or such other persons as the chairman of the meeting
shall determine; (v) the establishment and enforcement of restrictions on
entry to the meeting after the time fixed for the commencement thereof; and
(vi) the establishment and enforcement of limitations on the time allotted to
questions or comments by participants.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. The Board of Directors shall
consist of not less than one nor more than fifteen members, the exact number
of which shall initially be fixed by the Incorporator and thereafter from
time to time by the Board of Directors. Except as provided in Section 2 of
this Article III, directors shall be elected by a plurality of the votes cast
at the Annual Meeting of Stockholders and each director so elected shall hold
office until the next Annual Meeting of Stockholders and until such
director's successor is duly elected and qualified, or until such director's
earlier death, resignation, or
6
<PAGE>
removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
SECTION 2. VACANCIES. Unless otherwise required by law or the Certificate
of Incorporation, vacancies arising through death, resignation, removal, an
increase in the number of directors, or otherwise may be filled only by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
qualified, or until their earlier death, resignation or removal.
SECTION 3. DUTIES AND POWERS. The business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors, which
may exercise all such powers of the Corporation and do all such lawful acts
and things as are not by statute or by the Certificate of Incorporation or by
these By-Laws required to be exercised or done by the stockholders.
SECTION 4. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time
and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by
the Chairman, if there be one, the President, or by any director. Notice
thereof stating the place, date, and hour of the meeting shall be given to
each director either by mail not less than forty-eight (48) hours before the
date of the meeting, by telephone or telegram on twenty-four (24) hours'
notice, or on such shorter notice as the person or persons calling such
meeting may deem necessary or appropriate in the circumstances.
7
<PAGE>
SECTION 5. QUORUM. Except as otherwise required by law or the Certificate
of Incorporation, at all meetings of the Board of Directors, a majority of
the entire Board of Directors shall constitute a quorum for the transaction
of business and the act of a majority of the directors present at any meeting
at which there is a quorum shall be the act of the Board of Directors. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting of the time and place of the
adjourned meeting, until a quorum shall be present.
SECTION 6. ACTIONS BY WRITTEN CONSENT. Unless otherwise provided in the
Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless otherwise
provided in the Certificate of Incorporation, members of the Board of
Directors of the Corporation, or any committee thereof, may participate in a
meeting of the Board of Directors or such committee by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section 7 shall constitute presence in person at
such meeting.
SECTION 8. COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
Corporation.
8
<PAGE>
The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of any such committee. In the event of an absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent permitted by law and
provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it.
Each committee shall keep regular minutes and report to the Board of
Directors when required.
SECTION 9. COMPENSATION. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a
stated salary as director, payable in cash or securities. No such payment
shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
SECTION 10. INTERESTED DIRECTORS. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors
or officers or have a financial interest, shall be void or
9
<PAGE>
voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because the
director's or officer's vote is counted for such purpose if (i) the material
facts as to the director's or officer's relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to the director's or officer's
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee thereof or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorized the contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary, and one or
more Treasurers. The Board of Directors, in its discretion, also may elect a
Chairman of the Board of Directors (who must be a director) and one or more
Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other
officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law or the Certificate of Incorporation. The
officers of the
10
<PAGE>
Corporation need not be stockholders of the Corporation or, except in the
case of the Chairman of the Board of Directors, need such officers be directors
of the Corporation.
SECTION 2. ELECTION. The Board of Directors, at its first meeting
held after each Annual Meeting of Stockholders (or action by written consent
of stockholders in lieu of the Annual Meeting of Stockholders), shall elect
the officers of the Corporation who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors; and all officers of the
Corporation shall hold office until their successors are chosen and
qualified, or until their earlier death, resignation or removal. Any officer
elected by the Board of Directors may be removed at any time by the
affirmative vote of the Board of Directors. Any vacancy occurring in any
office of the Corporation shall be filled by the Board of Directors. The
salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meetings, consents and other
instruments relating to securities owned by the Corporation may be executed
in the name of and on behalf of the Corporation by the President or any Vice
President or any other officer authorized to do so by the Board of Directors,
and any such officer may, in the name of and on behalf of the Corporation,
take all such action as any such officer may deem advisable to vote in person
or by proxy at any meeting of security holders of any corporation in which
the Corporation may own securities and at any such meeting shall possess and
may exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any other person or
persons.
11
<PAGE>
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board Of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the signature
of the President is required, the Chairman of the Board of Directors shall
possess the same power as the President to sign all contracts, certificates,
and other instruments of the Corporation which may be authorized by the Board
of Directors. During the absence or disability of the President, the Chairman
of the Board of Directors (if not the same person as the President) shall
exercise all the powers and discharge all the duties of the President. The
Chairman of the Board of Directors shall also perform such other duties and
may exercise such other powers as may from time to time be assigned by these
By-Laws or by the Board of Directors.
SECTION 5. PRESIDENT. The President shall, subject to the control of
the Board of Directors and, if there be one who is not also the President, the
Chairman of the Board of Directors, have general supervision of the business of
the Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall execute all bonds,
mortgages, contracts and other instruments of the Corporation requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except that the other officers of the
Corporation may sign and execute documents when so authorized by these By-Laws,
the Board of Directors or the President. In the absence or disability of the
Chairman of the Board of Directors, or if there be none, the President shall
preside at all meetings of the stockholders and the Board of Directors. The
President shall also perform such other duties and may exercise such other
powers as may from time to time be assigned to such officer by these By-Laws
or by the Board of Directors. If there be no Chairman of the Board of
Directors, or if the Chairman of
12
<PAGE>
the Board of Directors is also the President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President
or in the event of the inability or refusal of the President to act, shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
SECTION 6. VICE PRESIDENTS. The Vice President (if there be one) or
the Vice Presidents, if there is more than one (in the order designated by the
Board of Directors), shall perform the duties of the President, and when so
acting, shall perform such duties and have such powers as the Board of
Directors from time to time may prescribe.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of
the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose. The
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors, the Chairman of the Board of Directors or the President,
under whose supervision the Secretary shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there be
no Assistant Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary of any
Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the
13
<PAGE>
Corporation and to attest to the affixing by such officer's signature. The
Secretary shall see that all books, reports, statements, certificates, and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
SECTION 8. TREASURER. The Treasurer (or if there be more than
one, the Treasurers jointly) shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an
account of all transactions as Treasurer and of the financial condition of
the Corporation. If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance
of the duties of the office of the Treasurer and for the restoration to the
Corporation, in case of the Treasurer's death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money and other property
of whatever kind in the Treasurer's possession or under the Treasurer's
control belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Assistant Secretaries, if there
be any, shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to
14
<PAGE>
act, shall perform the duties of the Secretary, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may
be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or any Treasurer, and in the absence of any such
Treasurer or in the event of any such Treasurer's inability or refusal to
act, shall perform the duties of such Treasurer, and when so acting, shall
have all the powers of and be subject to all the restrictions upon such
Treasurer. If required by the Board of Directors, an Assistant Treasurer
shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of the office of Assistant Treasurer and for the
restoration to the Corporation, in case of the Assistant Treasurer's death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging
to the Corporation.
SECTION 11. OTHER OFFICERS. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and
powers.
15
<PAGE>
ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President, or a
Vice President, and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number of
shares owned by such stockholder in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with
the same effect as if such person were such officer, transfer agent or
registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued
by the Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or the owner's legal representative, to advertise the
same in such manner as the Board of Directors shall require and/or to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the
16
<PAGE>
Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed or the issuance of such new certificate.
SECTION 4. TRANSFERS. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws. Transfers
of stock shall be made on the books of the Corporation only by the person
named in the certificate or by such person's attorney lawfully constituted in
writing and upon the surrender of the certificate therefor, which shall be
cancelled before a new certificate shall be issued. No transfer of stock
shall be valid as against the Corporation for any purpose until it shall have
been entered in the stock records of the Corporation by an entry showing from
and to whom transferred.
SECTION 5. RECORD DATE.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
is fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
providing, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the
Board of Directors may fix a
17
<PAGE>
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required
by law, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its principal
place of business, or an officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be
at the close of business on the day on which the Board of Directors adopts
the resolutions taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion, or exchange of stock, or for the
purpose of any lawful action, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted, and which record date shall not be more than
sixty days prior to such action. If no record date is fixed, the record date
for determining stockholders for any such
18
<PAGE>
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
SECTION 6. RECORD OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise required by law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation, or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with
postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written
notice may also be given personally or by telegram, telex or cable.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by
law, the Certificate of Incorporation, or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting, present in person or represented by
19
<PAGE>
proxy, shall constitute a waiver of notice of such meeting, except where the
person attends the meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the Corporation,
subject to the requirements of the Delaware General Corporation Law ("DGCL") and
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting of the Board of
Directors (or any action by written consent in lieu thereof in accordance with
Section 6 of Article III hereof), and may be paid in cash, in property, or in
shares of the Corporation's capital stock. Before payment of any dividend, there
may be set aside out of any funds of the Corporation available for dividends
such sum or sums as the Board of Directors from time to time, in its absolute
discretion, deems proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for any proper purpose, and the Board of Directors may modify or
abolish any such reserve.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal,
20
<PAGE>
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VII
INDEMNIFICATION
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN
THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a director
or officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director or
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith and
in a manner which such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any
21
<PAGE>
criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN
THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is
22
<PAGE>
proper in the circumstances because such person has met the applicable
standard of conduct set forth in Section 1 or Section 2 of this Article VIII,
as the case may be. Such determination shall be made (i) by a majority vote
of the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (ii) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or
(iii) by the stockholders. To the extent, however, that a director or officer
of the Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith, without the necessity of authorization in the
specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interest of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe such person's conduct was
unlawful, if such person's action is based on the records or books of account of
the Corporation or another enterprise, or on information supplied to such person
by the officers of the Corporation or another enterprise in the course of their
duties, or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the Corporation
or another enterprise by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care by the Corporation or
another enterprise. The term "another enterprise" as used in this Section 4
shall mean any other corporation or any partnership, joint venture,
23
<PAGE>
trust, employee benefit plan or other enterprise of which such person is or was
serving at the request of the Corporation as a director, officer, employee or
agent. The provisions of this Section 4 shall not be deemed to be exclusive or
to limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action,
24
<PAGE>
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the Corporation as
authorized in this Article VIII.
SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
The indemnification and advancement of expenses provided by or granted pursuant
to this Article VIII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
the Certificate of Incorporation, any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power or the
obligation to indemnify such person against such liability under the
provisions of this Article VIII.
25
<PAGE>
SECTION 9. CERTAIN DEFINITIONS. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer
of such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
shall stand in the same position under the provisions of this Article VIII
with respect to the resulting or surviving corporation as such person would
have with respect to such constituent corporation if its separate existence
had continued. For purposes of this Article VIII, references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director
or officer with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to
in this Article VIII.
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VIII shall, unless otherwise provided when authorized or ratified,
continue as to a
26
<PAGE>
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 hereof),
the Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may,
to the extent authorized from time to time by the Board of Directors, provide
rights to indemnification and to the advancement of expenses to employees and
agents of the Corporation similar to those conferred in this Article VIII to
directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be altered, amended or repealed,
in whole or in part, or new By-Laws may be adopted by the stockholders or by the
Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
27
<PAGE>
SECTION 2. ENTIRE BOARD OF DIRECTORS. As used in this Article IX and in
these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no
vacancies.
* * *
Adopted as of: May 20, 1997
---------------------------
Last Amended as of:
----------------------
28
<PAGE>
Exhibit 3.7
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "NEW HAUSMAN BUS SALES, INC.", FILED IN THIS OFFICE ON THE
SEVENTEENTH DAY OF MARCH, A.D. 1994, AT 4:30 O'CLOCK P.M.
SEAL /s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 9802035
DATE: 06-14-99
<PAGE>
*****
CERTIFICATE OF INCORPORATION
OF
NEW HAUSMAN BUS SALES, INC.
*****
1. The name of the corporation is New Hausman Bus Sales, Inc.
2. The address of its registered office in the state of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is the
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) and the par value of each of such
shares is One Dollar ($1.00) amounting in the aggregate to One Thousand
Dollars ($1,000.00).
5. The name and mailing address of the incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
Kristin S. Schloemer 1850 N. Central Ave.
Phoenix, AZ 85004
</TABLE>
<PAGE>
6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized to make, alter or repeal the
by-laws of the corporation.
8. Elections of directors need not be by written ballot unless the by-laws
of the corporation shall so provide. Meetings of the stockholders may be held
within or without the state of Delaware, as the by-laws may provide. The
books of the corporation may be kept (subject to any provision contained in
the statutes) outside the state of Delaware at such place or places as may be
designated from time to time by the board of directors or in the by-laws of
the corporation.
9. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
10. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the
2
<PAGE>
Delaware General Corporation Law, or (iv) for any transaction from which the
director derived any improper personal benefit.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, does make this certificate, hereby declaring and
certifying that this is my act and deed and the facts herein stated are true,
and accordingly have hereunto set my hand this 14th day of March, 1994.
/s/ Kristin S. Schloemer
--------------------------------
Kristin S. Schloemer
3
<PAGE>
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
MERGER, WHICH MERGES:
"HAUSMAN BUS SALES, INC.", A ARIZONA CORPORATION,
WITH AND INTO "NEW HAUSMAN BUS SALES, INC." UNDER THE NAME OF "HAUSMAN
BUS SALES, INC.", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE
STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE FOURTH DAY OF
APRIL, A.D. 1994, AT 4 O'CLOCK P.M.
[SEAL] /s/ Edward J. Freel
------------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
2387084 8100M AUTHENTICATION: 9802036
991237929 DATE: 06-14-99
<PAGE>
CERTIFICATE OF MERGER 4-4-94
OF
HAUSMAN BUS SALES, INC.
INTO
NEW HAUSMAN BUS SALES, INC.
(Under Section 252 of the General Corporation
Law of the State of Delaware)
New Hausman Bus Sales, Inc., a corporation organized and existing under
and by virtue of the laws of the State of Delaware ("New Hausman"), DOES
HEREBY CERTIFY THAT:
1. The name and state of incorporation of each of the constituent
corporations are:
(a) New Hausman Bus Sales, Inc., a Delaware corporation; and
(b) Hausman Bus Sales, Inc., and Arizona corporation ("Hausman").
2. An Agreement and Plan of Merger ("Agreement") has been approved,
adopted, certified, executed and acknowledged by New Hausman and by Hausman
in accordance with the provisions of Section 252 of the General Corporation
Law of the State of Delaware.
3. As to Hausman, there are 1,000 shares of common stock authorized.
4. The surviving corporation of the merger is New Hausman.
5. The surviving corporation is a corporation of the State of Delaware.
6. Article 1 of the Certificate of Incorporation of New Hausman shall
be amended to read in its entirety as follows:
"The name of the corporation is Hausman Bus Sales, Inc."
Such Certificate of Incorporation, as so amended, shall be the
certificate of incorporation of New Hausman, until altered, amended or
repealed in accordance with the laws of the State of Delaware.
7. The executed Agreement is on file at the principal place of
business of New Hausman Bus Sales, Inc. at 10 East Golf Road, Des Plaines,
IL 60016.
8. A copy of the Agreement will be furnished by New Hausman, on
request and without cost, to any stockholder of Hausman.
IN WITNESS WHEREOF, New Hausman has caused this certificate to be
executed by John R. Nasi, its President, and attested by Kristin S.
Schloemer, its Secretary, on this 1st day of April, 1994.
NEW HAUSMAN BUS SALES, INC.
By: /s/ John R. Nasi
------------------------
President
ATTEST:
By: /s/ Kristin S. Schloemer
----------------------------
Secretary
<PAGE>
Exhibit 3.8
BY-LAWS
OF
HAUSMAN BUS SALES, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the Stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. The Annual Meeting of Stockholders for the
election of directors shall be held on such date and at such time as shall be
designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
<PAGE>
SECTION 3. SPECIAL MEETINGS. Unless otherwise required by law or by the
certificate of incorporation of the Corporation, as amended and restated from
time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President, or (iii) any Vice
President, if there be one, or (iv) the Secretary, or (v) any Assistant
Secretary, if there be one, and shall be called by any such officer at the
request in writing of (i) the Board of Directors, or (ii) a committee of the
Board of Directors that has been duly designated by the Board of Directors
and whose powers and authority include the power to call such meetings, or
(iii) the stockholders owning a majority of the capital stock of the
Corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting. At a Special Meeting
of Stockholders, only such business shall be conducted as shall be specified
in the notice of meeting or any supplement thereto.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date, and hour of the meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of
the meeting to each stockholder entitled to vote at such meeting.
SECTION 5. ADJOURNMENTS. Any meeting of the stockholders may be
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the Corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for
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more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 6. QUORUM. Unless otherwise required by law or the Certificate
of Incorporation, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. A quorum, once established, shall not be broken by
the withdrawal of enough votes to leave less than a quorum. If, however,
such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, in the manner provided in Section 5, until a quorum shall be present
or represented.
SECTION 7. VOTING. Unless otherwise required by law, the Certificate
of Incorporation, or these By-Laws, any question brought before any meeting
of stockholders, other than the election of directors, shall be decided by
the vote of the holders of a majority of the total number of votes of the
capital stock represented and entitled to vote thereat, voting as a single
class. Unless otherwise provided in the Certificate of Incorporation, and
subject to Section 5 of Article V hereof, each stockholder represented at a
meeting of stockholders shall be entitled to cast one vote for each share of
the capital stock entitled to vote thereat held by such stockholder. Such
votes may be cast in person or by proxy, but no proxy shall be voted on or
after three years its date, unless such proxy provides for a longer period.
The Board of Directors, in its discretion, or the officer of the Corporation
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presiding at a meeting of stockholders, in such officer's discretion, may
require that any votes cast at such meeting be cast by written ballot.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless
otherwise provided in the Certificate of Incorporation, any action required
or permitted to be taken at any Annual or Special Meeting of Stockholders of
the Corporation may be taken without a meeting, without prior notice, and
without a vote, if a consent or consents in writing, setting forth the action
so taken, shall be signed by the holders of the issued and outstanding
capital stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, and shall be delivered to
the Corporation by delivery to its registered office in the State of
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. Every written consent shall bear the date of signature of each
stockholder who signs the consent and no written consent shall be effective
to take the corporate action referred to therein unless, within sixty days of
the earliest dated consent delivered in the manner required by this Section 8
to the Corporation, written consents signed by a sufficient number of holders
to take action are delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented
in writing and who, if the action had been taken
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at a meeting, would have been entitled to notice of the meeting if the record
date for such meeting had been the date that written consents signed by a
sufficient number of holders to take the action were delivered to the
Corporation as provided above in this section.
SECTION 9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder of the
Corporation who is present.
SECTION 10. STOCK LEDGER. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by Section 9 of this Article II or the books
of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 11. CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the
conduct of the meeting of the stockholders as it shall deem appropriate.
Except to the extent inconsistent with such rules and regulations as adopted
by the Board of Directors, the chairman of any meeting of the
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stockholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgement of
such chairman, are appropriate for the proper conduct of the meeting. Such
rules, regulations or procedures, whether adopted by the Board of Directors
or prescribed by the chairman of the meeting, may include, without
limitation, the following: (i) the establishment of an agenda or order of
business for the meeting; (ii) the determination of when the polls shall open
and close for any given matter to be voted on at the meeting; (iii) the
establishment and enforcement of rules and procedures for maintaining order
at the meeting and the safety of those present; (iv) the establishment and
enforcement of limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies, or such other persons as the chairman of the meeting
shall determine; (v) the establishment and enforcement of restrictions on entry
to the meeting after the time fixed for the commencement thereof; and (vi)
the establishment and enforcement of limitations on the time allotted to
questions or comments by participants.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. The Board of Directors shall
consist of not less than one nor more than fifteen members, the exact number
of which shall initially be fixed by the Incorporator and thereafter from time
to time by the Board of Directors. Except as provided in Section 2 of this
Article III, directors shall be elected by a plurality of the votes cast at
the Annual Meeting of Stockholders and each director so elected shall hold
office until the next Annual Meeting of Stockholders and until such
director's successor is duly elected and qualified, or until such director's
earlier death, resignation, or
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removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
SECTION 2. VACANCIES. Unless otherwise required by law or the
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors, or otherwise may be filled
only by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall
hold office until the next annual election and until their successors are
duly elected and qualified, or until their earlier death, resignation or
removal.
SECTION 3. DUTIES AND POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws required to be exercised or done by the
stockholders.
SECTION 4. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time
and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Chairman, if there be one, the President, or by any director. Notice thereof
stating the place, date, and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date
of the meeting, by telephone or telegram on twenty-four (24) hours' notice,
or on such shorter notice as the person or persons calling such meeting may
deem necessary or appropriate in the circumstances.
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SECTION 5. QUORUM. Except as otherwise required by law or the
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting of the time and
place of the adjourned meeting, until a quorum shall be present.
SECTION 6. ACTIONS BY WRITTEN CONSENT. Unless otherwise provided in
the Certificate of Incorporation of these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless
otherwise provided in the Certificate of Incorporation, members of the Board
of Directors of the Corporation, or any committee thereof, may participate in
a meeting of the Board of Directors or such committee by means of a
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 7 shall constitute
presence in person at such meeting.
SECTION 8. COMMITTEES. The Board of Directors may designate one or
more committees, each committee to consist of one or more of the directors of
the Corporation.
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The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of any such committee. In the event of an absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent permitted by law and
provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require
it. Each committee shall keep regular minutes and report to the Board of
Directors when required.
SECTION 9. COMPENSATION. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a
stated salary as director, payable in cash or securities. No such payment
shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
SECTION 10. INTERESTED DIRECTORS. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors
or officers or have a financial interest, shall be void or
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voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because the director's or officer's vote is counted for such purpose if (i)
the material facts as to the director's or officer's relationship or interest
and as to the contract or transaction are disclosed or are known to the Board
of Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to the
director's or officer's relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good
faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified by the Board of Directors, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or of a committee which
authorized the contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary, and one or more
Treasurers. The Board of Directors, in its discretion, also may elect a
Chairman of the Board of Directors (who must be a director) and one or more
Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other
officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law or the Certificate of Incorporation. The officers
of the
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Corporation need not be stockholders of the Corporation or, except in the
case of the Chairman of the Board of Directors, need such officers be
directors of the Corporation.
SECTION 2. ELECTION. The Board of Directors, at its first meeting held
after each Annual Meeting of Stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of Stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors; and all officers of the
Corporation shall hold office until their successors are chosen and
qualified, or until their earlier death, resignation or removal. Any officer
elected by the Board of Directors may be removed at any time by the
affirmative vote of the Board of Directors. Any vacancy occurring in any
office of the Corporation shall be filled by the Board of Directors. The
salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed
in the name of and on behalf of the Corporation by the President or any Vice
President or any other officer authorized to do so by the Board of Directors,
and any such officer may, in the name of and on behalf of the Corporation,
take all such action as any such officer may deem advisable to vote in person
or by proxy at any meeting of security holders of any corporation in which
the Corporation may own securities and at any such meeting shall possess and
may exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any other person or
persons.
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SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the
signature of the President is required, the Chairman of the Board of
Directors shall possess the same power as the President to sign all
contracts, certificates, and other instruments of the Corporation which may
be authorized by the Board of Directors. During the absence of disability of
the President, the Chairman of the Board of Directors (if not the same person
as the President) shall exercise all the powers and discharge all the duties
of the President. The Chairman of the Board of Directors shall also perform
such other duties and may exercise such other powers as may from time to time
be assigned by these By-Laws or by the Board of Directors.
SECTION 5. PRESIDENT. The President shall, subject to the control of
the Board of Directors and, if there be one who is not also the President,
the Chairman of the Board of Directors, have general supervision of the
business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. The President shall execute
all bonds, mortgages, contracts and other instruments of the Corporation
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except that the
other officers of the Corporation may sign and execute documents when so
authorized by these By-Laws, the Board of Directors or the President. In the
absence or disability of the Chairman of the Board of Directors, or if there
be none, the President shall preside at all meetings of the stockholders and
the Board of Directors. The President shall also perform such other duties
and may exercise such other powers as may from time to time be assigned to
such officer by these By-Laws or by the Board of Directors. If there be no
Chairman of the Board of Directors, or if the Chairman of
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the Board of Directors is also the President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President
or in the event of the inability or refusal of the President to act, shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
SECTION 6. VICE PRESIDENTS. The Vice President (if there be one) or
the Vice Presidents, if there is more than one (in the order designated by
the Board of Directors), shall perform the duties of the President, and when
so acting, shall perform such duties and have such powers as the Board of
Directors from time to time may prescribe.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose. The
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors, the Chairman of the Board of Directors or the President,
under whose supervision the Secretary shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there be
no Assistant Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the
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Corporation and to attest to the affixing by such officer's signature. The
Secretary shall see that all books, reports, statements, certificates, and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
SECTION 8. TREASURER. The Treasurer (or if there be more than one, the
the Treasurers jointly) shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an
account of all transactions as Treasurer and of the financial condition of
the Corporation. If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance
of the duties of the office of the Treasurer and for the restoration to the
Corporation, in case of the Treasurer's death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money and other property
of whatever kind in the Treasurer's possession or under the Treasurer's
control belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Assistant Secretaries, if there be
any, shall perform such duties and have such powers as from time to time may
be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to
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act, shall perform the duties of the Secretary, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may
be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or any Treasurer, and in the absence of any such
Treasurer or in the event of any such Treasurer's inability or refusal to
act, shall perform the duties of such Treasurer, and when so acting, shall
have all the powers of and be subject to all the restrictions upon such
Treasurer. If required by the Board of Directors, an Assistant Treasurer
shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of the office of Assistant Treasurer and for the
restoration to the Corporation, in case of the Assistant Treasurer's death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging
to the Corporation.
SECTION 11. OTHER OFFICERS. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and
powers.
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ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President, or
a Vice President, and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number
of shares owned by such stockholder in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on a certificate
may be a facsimile. In case any officer, transfer agent, or registrar who
has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same
effect as if such person were such officer, transfer agent or registrar at
the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or the owner's legal representative, to advertise the
same in such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the
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Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed or the issuance of such new certificate.
SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these By-Laws. Transfers of stock shall
be made on the books of the Corporation only by the person named in the
certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be cancelled
before a new certificate shall be issued. No transfer of stock shall be
valid as against the Corporation for any purpose until it shall have been
entered in the stock records of the Corporation by an entry showing from and
to whom transferred.
SECTION 5. RECORD DATE.
(a) In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no
record is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; providing, however, that the Board of Directors
may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the
Board of Directors may fix a
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record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If
no record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required
by law, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the
Corporation by delivery to its registered office in this State, its principal
place of business, or an officer or agent of the Corporation having custody
of the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be
at the close of business on the day on which the Board of Directors adopts
the resolutions taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion, or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more
than sixty days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such
18
<PAGE>
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
SECTION 6. RECORD OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise required by law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation, or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with
postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written
notice may also be given personally or by telegram, telex or cable.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by law,
the Certificate of Incorporation, or these By-Laws, to be given to any
director, member of a committee or stockholder, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or
after the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting, present in person or represented by
19
<PAGE>
proxy, shall constitute a waiver of notice of such meeting, except where the
person attends the meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the requirements of the Delaware General Corporation
Law ("DGCL") and the provisions of the Certificate of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting
of the Board of Directors (or any action by written consent in lieu thereof
in accordance with Section 6 of Article III hereof), and may be paid in cash,
in property, or in shares of the Corporation's capital stock. Before payment
of any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time
to time, in its absolute discretion, deems proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for any proper purpose, and
the Board of Directors may modify or abolish any such reserve.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of
the Corporation shall be signed by such officer of officers or such other
person or persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the
words "Corporate Seal,
20
<PAGE>
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER
THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of
this Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a director
or officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director or
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which such person reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
21
<PAGE>
criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN
THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is
22
<PAGE>
proper in the circumstances because such person has met the applicable
standard of conduct set forth in Section 1 or Section 2 of this Article VIII,
as the case may be. Such determination shall be made (i) by a majority vote
of the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (ii) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or
(iii) by the stockholders. To the extent, however, that a director or
officer of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding described above, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith, without the necessity of authorization in the
specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interest of the Corporation, or, with respect to any
criminal action or proceeding, to have had no reasonable cause to believe
such person's conduct was unlawful, if such person's action is based on the
records or books of account of the Corporation or another enterprise, or on
information supplied to such person by the officers of the Corporation or
another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or
records given or reports made to the Corporation or another enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Corporation or another enterprise. The
term "another enterprise" as used in this Section 4 shall mean any other
corporation or any partnership, joint venture,
23
<PAGE>
trust, employee benefit plan or other enterprise of which such person is or
was serving at the request of the Corporation as a director, officer,
employee or agent. The provisions of this Section 4 shall not be deemed to
be exclusive or to limit in any way the circumstances in which a person may
be deemed to have met the applicable standard of conduct set forth in Section
1 or 2 of this Article VIII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer
is proper in the circumstances because such person has met the applicable
standards of conduct set forth in Section 1 or 2 of this Article VIII, as the
case may be. Neither a contrary determination in the specific case under
Section 3 of this Article VIII nor the absence of any determination thereunder
shall be a defense to such application or create a presumption that the
director or officer seeking indemnification has not met any applicable
standard of conduct. Notice of any application for indemnification pursuant
to this Section 5 shall be given to the Corporation promptly upon the filing
of such application. If successful, in whole or in part, the director or
officer seeking indemnification shall also be entitled to be paid the expense
of prosecuting such application.
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action,
24
<PAGE>
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the Corporation as
authorized in this Article VIII.
SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under the Certificate of Incorporation, any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in such person's official capacity and as to action in another
capacity while holding such office, it being the policy of the Corporation
that indemnification of the persons specified in Sections 1 and 2 of this
Article VIII shall be made to the fullest extent permitted by law. The
provisions of this Article VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Section 1 or 2 of this
Article VIII but whom the Corporation has the power or obligation to
indemnify under the provisions of the General Corporation Law of the State of
Delaware, or otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power or the
obligation to indemnify such person against such liability under the
provisions of this Article VIII.
25
<PAGE>
SECTION 9. CERTAIN DEFINITIONS. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer
of such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
shall stand in the same position under the provisions of this Article VIII
with respect to the resulting or surviving corporation as such person would
have with respect to such constituent corporation if its separate existence
had continued. For purposes of this Article VIII, references to "fines"
shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or
agent of the Corporation which imposes duties on, or involves services by,
such director or officer with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article VIII.
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
The indemnification and advancement of expenses provided by, or granted
pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a
26
<PAGE>
person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5
hereof), the Corporation shall not be obligated to indemnify any director or
officer in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented
to by the Board of Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation
may, to the extent authorized from time to time by the Board of Directors,
provide rights to indemnification and to the advancement of expenses to
employees and agents of the Corporation similar to those conferred in this
Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be altered, amended or
repealed, in whole or in part, or new By-Laws may be adopted by the
stockholders or by the Board of Directors, provided, however, that notice of
such alteration, amendment, repeal or adoption of new By-Laws be contained in
the notice of such meeting of stockholders or Board of Directors as the case
may be. All such amendments must be approved by either the holders of a
majority of the outstanding capital stock entitled to vote thereon or by a
majority of the entire Board of Directors then in office.
27
<PAGE>
SECTION 2. ENTIRE BOARD OF DIRECTORS. As used in this Article IX and in
these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no
vacancies.
***
Adopted as of: May 20, 1997
------------------------
Last Amended as of:
------------------------
28
<PAGE>
Exhibit 3.9
CERTIFICATE OF INCORPORATION
OF
MOTOR COACH INDUSTRIES, INC.
FIRST. The name of the corporation is MOTOR COACH INDUSTRIES, INC.
SECOND. Its principal office in the State of Delaware is located
at No. 100 West Tenth Street, in the City of Wilmington 99, County of New
Castle. The name and address of its resident agent is The Corporation Trust
Company, No. 100 West Tenth Street, Wilmington 99, Delaware.
THIRD. The nature of the business, or objects or purposes to be
transacted, promoted or carried on are:
To manufacture, build, assemble, buy, sell, lease, import, export,
own, hold, deal in, maintain, improve, service, clean, equip, repair, use,
operate, rent, hire, charter, loan, grant the use of, mortgage, pledge,
encumber and otherwise acquire or dispose of automobiles, buses, coaches,
cars, trucks, taxis, motor vehicles, trailers., motorcycles, boats, aircraft
and vehicles of all kinds, used or useful for the transportation of persons
or property, and to manufacture, purchase, acquire, own, hold, use, deal in,
sell, mortgage, pledge, encumber and dispose of any articles , materials,
parts, accessories, supplies, tools, fuels, oils, greases, devices,
appliances, apparatus, machinery, equipment and property related or
incidental to or useful, necessary or convenient in connection with any
property or business of the corporation.
To establish, build, purchase, lease, acquire, own, hold, maintain,
improve, equip and operate manufacturing plants, assembly plants, garages,
service stations, parking lots and facilities
<PAGE>
of all kinds for the manufacture, assembly, repair, maintenance, cleaning,
servicing, rebuilding and otherwise caring for vehicles of all kinds; to
maintain, service, repair, rebuild, clean, lubricate, store and otherwise
care for vehicles of all kinds; to manufacture, purchase, acquire, own, hold,
deal in, use, sell and otherwise dispose of petroleum, petroleum products,
motor fuels, lubricating oils, greases, polishes and any other articles,
materials or products used for or in connection with the operation,
lubrication, cleaning and maintenance of vehicles of all kinds; and to
manufacture, purchase, acquire, own, hold, maintain, use, deal in, sell and
otherwise dispose of any tools, parts, accessories, articles, materials,
machinery, equipment and property used for or in connection with any of the
foregoing.
To engage in and carry on the business of training, instructing,
qualifying mechanics, repair service and maintenance men, chauffeurs,
truckers, drivers, operators, attendance, freight handlers, helpers and
allied and associated trades and occupations in connection with any and all
of the purposes of the corporation and in the business of furnishing and
supplying such personnel to others.
To acquire, construct, own, hold, maintain, operate, equip, lease,
let, mortgage, pledge, exchange, sell or otherwise dispose of, such lands,
buildings, manufacturing plants, assembly plants, garages, repair shops,
stations, offices and other real and personal property, as may be necessary,
desirable, useful or convenient, for the purposes of this corporation, either
in the State of Delaware or elsewhere.
To acquire, and pay for in cash, stock or bonds of this corporation
or otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in
respect of, mortgage or
<PAGE>
otherwise dispose of letters patent of the United States or any foreign
country, patent rights, licenses and privileges, inventions, improvements and
processes, copyrights, trademarks and trade names, relating to or useful in
connection with any business of this corporation.
To acquire by purchase, subscription or otherwise, and to receive,
hold, own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or
otherwise dispose of or deal in and with any of the shares of the capital
stock, or any voting trust certificates in respect of the shares of capital
stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts, and
other securities, obligations, choses in action and evidences of indebtedness
or interest issued or created by any corporations, joint stock companies,
syndicates, associations, firms, trusts or persons, public or private, or by
the government of the United States of America, or by any foreign government,
or by any state, territory, province, municipality or other political
subdivision or by any governmental agency, and as owner thereof to possess
and exercise all the rights, powers and privileges of ownership, including
the right to execute consents and vote thereon, and to do any and all acts
and things necessary or advisable for the preservation, protection,
improvement and enhancement in value thereof.
To enter into, make and perform contracts of every kind and
description with any person, firm, association, corporation, municipality,
county, state, body politic or government or colony or dependency thereof.
To borrow or raise moneys for any of the purposes of the
corporation, and, from time to time without limit as to amount, to draw,
make, accept, endorse, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures and other negotiable or non-negotiable
instruments and evidences of indebtedness, and to secure the payment of any
thereof and of the interest thereon by mortgage upon or pledge, conveyance or
assignment in trust of the whole or any
<PAGE>
part of the property of the corporation, whether at the time owned or
thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To loan to any person, firm or corporation any of its surplus
funds, either with or without security.
To purchase, hold, sell and transfer the shares of its own capital
stock; provided it shall not use its funds or property for the purchase of
its own shares of capital stock when such use would cause any impairment of
its capital except as otherwise permitted by law, and provided further that
shares of its own capital stock belonging to it shall not be voted upon
directly or indirectly.
To have one or more offices, to carry on all or any of its
operations and business and without restriction or limit as to amount, to
purchase or otherwise acquire, hold, own, mortgage, sell, convey, or
otherwise dispose of, real and personal property of every class and
description in any of the states, districts, territories or colonies of the
United States, and in any and all foreign countries, subject to the laws of
such state, district, territory, colony or country.
In general, to carry on any other business in connection with the
foregoing, and to have and exercise all the powers conferred by the laws of
Delaware upon corporations formed under the General Corporation Law of the
State of Delaware, and to do any or all of the things hereinbefore set forth
to the same extent as natural persons might or could do.
The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in nowise limited or restricted by
reference to, or inference from, the terms of any other clause in this
certificate of incorporation, but the objects and purposes specified in each
of the foregoing clauses of this article shall be regarded as independent
objects and purposes.
<PAGE>
FOURTH. The total number of shares of stock which the corporation
shall have authority to issue is 250. All of such shares shall be without par
value.
FIFTH. The minimum amount of capital with which the corporation
will commence business is One Thousand Dollars ($1,000.00).
SIXTH. The names and places of residence of the incorporators are
as follows:
<TABLE>
<CAPTION>
NAMES RESIDENCES
----- ----------
<S> <C>
G. T. Christie Park, Ridge, Illinois
M. Buffington Wilmette, Illinois
P. K. Nevitt Winnetka, Illinois
</TABLE>
SEVENTH. The corporation is to have perpetual existence.
EIGHTH. The private property of the stockholders shall not be
subject to the payment of corporate debts to any extent whatever.
NINTH. In furtherance and not in limitation of the powers
conferred by statute, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed, mortgages and liens upon the
real and personal property of the corporation.
To set apart out of any of the funds of the corporation available
for dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
By resolution passed by a majority of the whole board, to designate
one or more committees, each committee to consist of two or more of the
directors of the corporation, which, to
<PAGE>
the extent provided in the resolution or in the by-laws of the corporation,
shall have and may exercise the powers of the board of directors in the
management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may be stated
in the by-laws of the corporation or as may be determined from time to time
by resolution adopted by the board of directors.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders meeting duly called for that purpose, or when authorized by the
written consent of the holders of a majority of the voting stock issued and
outstanding, to sell, lease or exchange all of the property and assets of the
corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may be in whole or in
part shares of stock in, and/or other securities of, any other corporation or
corporations, as its board of directors shall deem expedient and for the best
interests of the corporation.
TENTH. Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors, or in the by-laws of the corporation. Elections of
directors need not be by ballot unless the by-laws of the corporation shall so
provide.
ELEVENTH. The corporation reserves the right to amend, alter, change
or repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
<PAGE>
TWELFTH. In the absence of fraud, no contract or other transaction
between this corporation and any other corporation or any partnership or
association shall be affected or invalidated by the fact that any director or
officer of this corporation is pecuniarily or otherwise interested in or is a
director, member or officer of such other corporation or of such firm,
association or partnership or is a party to or is pecuniarily or otherwise
interested in such contract or other transaction or in any way connected with
any person or persons, firm, association, partnership or corporation pecuniarily
or otherwise interested therein; any director may be counted in determining the
existence of a quorum at any meeting of the board of directors of this
corporation for the purpose of authorizing any such contract or transaction with
like force and effect as if he were not so interested, or were not a director,
member or officer of such other corporation, firm, association or partnership.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set our hands and seals this ____day of March, A.D. 1962.
____________________________ (SEAL)
G. T. Christie
____________________________ (SEAL)
M. Buffington
____________________________ (SEAL)
P. K. Nevitt
<PAGE>
STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )
BE IT REMEMBERED that on this _____ day of March, A.D. 1962,
personally came before me, a Notary Public for the State of Illinois, G. T.
Christie, M. Buffington and P. K. Nevitt, all of the parties to the foregoing
certificate of incorporation, known to me personally to be such, and severally
acknowledged the said certificate to be the act and deed of the signers
respectively and that the facts therein stated are truly set forth.
GIVEN under my hand and seal of office the day and year aforesaid.
_______________________________
Notary Public
<PAGE>
Exhibit 3.10
BY-LAWS
OF
MOTOR COACH INDUSTRIES, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the
Corporation shall be in the City of Wilmington, County of New Castle, State of
Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the Stockholders for
the election of directors or for any other purpose shall be held at such time
and place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. The Annual Meeting of Stockholders
for the election of directors shall be held on such date and at such time as
shall be designated from time to time by the Board of Directors. Any other
proper business may be transacted at the Annual Meeting of Stockholders.
SECTION 3. SPECIAL MEETINGS. Unless otherwise required by law or
by the certificate of incorporation of the Corporation, as amended and restated
from time to time (the
<PAGE>
"Certificate of Incorporation"), Special Meetings of Stockholders, for any
purpose or purposes, may be called by either (i) the Chairman, if there be
one, or (ii) the President, or (iii) any Vice President, if there be one, or
(iv) the Secretary, or (v) any Assistant Secretary, if there be one, and
shall be called by any such officer at the request in writing of (i) the
Board of Directors, or (ii) a committee of the Board of Directors that has
been duly designated by the Board of Directors and whose powers and authority
include the power to call such meetings, or (iii) the stockholders owning a
majority of the capital stock of the Corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting. At a Special Meeting of Stockholders, only such business
shall be conducted as shall be specified in the notice of meeting or any
supplement thereto.
SECTION 4. NOTICE. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date, and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of the
meeting to each stockholder entitled to vote at such meeting.
SECTION 5. ADJOURNMENTS. Amy meeting of the stockholders may be
adjourned from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
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SECTION 6. QUORUM. Unless otherwise required by law or the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. A quorum, once established, shall
not be broken by the withdrawal of enough votes to leave less than a quorum. If,
however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
in the manner provided in Section 5, until a quorum shall be present or
represented.
SECTION 7. VOTING. Unless otherwise required by law, the
Certificate of Incorporation, or these By-Laws, any question brought before any
meeting of stockholders, other than the election of directors, shall be decided
by the vote of the holders of a majority of the total number of votes of the
capital stock represented and entitled to vote thereat, voting as a single
class. Unless otherwise provided in the Certificate of Incorporation, and
subject to Section 5 of Article V hereof, each stockholder represented at a
meeting of stockholders shall be entitled to cast one vote for each share of the
capital stock entitled to vote thereat held by such stockholder. Such votes may
be cast in person or by proxy, but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. The Board
of Directors, in its discretion, or the officer of the Corporation presiding at
a meeting of stockholders, in such officer's discretion, may require that any
votes cast at such meeting be cast by written ballot.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless
otherwise provided in the Certificate of Incorporation, any action required or
permitted to be taken at any Annual or Special Meeting of Stockholders of the
Corporation may be taken without a meeting,
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without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
the issued and outstanding capital stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted,
and shall be delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. Every written consent shall bear
the date of signature of each stockholder who signs the consent and no
written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered in
the manner required by this Section 8 to the Corporation, written consents
signed by a sufficient number of holders to take action are delivered to the
Corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders
are recorded. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing and who, if the action had
been taken at a meeting, would have been entitled to notice of the meeting if
the record date for such meeting had been the date that written consents
signed by a sufficient number of holders to take the action were delivered to
the Corporation as provided above in this section.
SECTION 9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of
the Corporation who has charge of the stock ledger of the Corporation shall
prepare and make, at least ten days before
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every meeting of stockholders, a complete list of the stockholders entitled
to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares registered in the name
of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder of the Corporation who is present.
SECTION 10. STOCK LEDGER. The stock ledger of the Corporation
shall be the only evidence as to who are the stockholders entitled to examine
the stock ledger, the list required by Section 9 of this Article II or the
books of the Corporation, or to vote in person or by proxy at any meeting of
stockholders.
SECTION 11. CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the
conduct of the meeting of the stockholders as it shall deem appropriate.
Except to the extent inconsistent with such rules and regulations as adopted
by the Board of Directors, the chairman of any meeting of the stockholders
shall have the right and authority to prescribe such rules, regulations and
procedures and to do all such acts as, in the judgment of such chainnan, are
appropriate for the proper conduct of the meeting. Such rules, regulations or
procedures, whether adopted by the Board of Directors or prescribed by the
chairman of the meeting, may include, without limitation, the following: (i)
the establishment of an agenda or order of business for the meeting; (ii) the
determination of when the polls shall open and close for any
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given matter to be voted on at the meeting; (iii) the establishment and
enforcement of rules and procedures for maintaining order at the meeting and
the safety of those present; (iv) the establishment and enforcement of
limitations on attendance at or participation in the meeting to stockholders
of record of the corporation, their duly authorized and constituted proxies,
or such other persons as the chairman of the meeting shall determine; (v) the
establishment and enforcement of restrictions on entry to the meeting after
the time fixed for the commencement thereof; and (vi) the establishment and
enforcement of limitations on the time allotted to questions or comments by
participants.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. The Board of
Directors shall consist of not less than one nor more than fifteen members, the
exact number of which shall initially be fixed by the Incorporator and
thereafter from time to time by the Board of Directors. Except as provided in
Section 2 of this Article III, directors shall be elected by a plurality of the
votes cast at the Annual Meeting of Stockholders and each director so elected
shall hold office until the next Annual Meeting of Stockholders and until such
director's successor is duly elected and qualified, or until such director's
earlier death, resignation, or removal. Any director may resign at any time upon
written notice to the Corporation. Directors need not be stockholders.
SECTION 2. VACANCIES. Unless otherwise required by law or the
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors, or otherwise may be filled only
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
the next
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annual election and until their successors are duly elected and qualified, or
until their earlier death, resignation or removal.
SECTION 3. DUTIES AND POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawfid acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws required to be exercised or done by the
stockholders.
SECTION 4. MEETINGS. The Board of Directors may hold meetings,
both regular and special, either within or without the State of Delaware.
Regular meetings of the Board of Directors may be held without notice at such
time and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Chairman, if there be one, the President, or by any director. Notice thereof
stating the place, date, and hour of the meeting shall be given to each director
either by mail not less than forty-eight (48) hours before the date of the
meeting, by telephone or telegram on twenty-four (24) hours' notice, or on such
shorter notice as the person or persons calling such meeting may deem necessary
or appropriate in the circumstances.
SECTION 5. QUORUM. Except as otherwise required by law or the
Certificate of Incorporation, at all meetings of the Board of Directors, a
majority of the entire Board of Directors shall constitute a quorum for the
transaction of business and the act of a majority of the directors present at
any meeting at which there is a quonun shall be the act of the Board of
Directors. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat
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may adjourn the meeting from time to time, without notice other than
announcement at the meeting of the time and place of the adjourned meeting,
until a quorum shall be present.
SECTION 6. ACTIONS BY WRITTEN CONSENT. Unless otherwise
provided in the Certificate of Incorporation or these By-Laws, any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting, if all the members
of the Board of Directors or committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors or committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless
otherwise provided in the Certificate of Incorporation, members of the Board
of Directors of the Corporation, or any committee thereof, may participate in
a meeting of the Board of Directors or such committee by means of a
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 7 shall constitute
presence in person at such meeting.
SECTION 8. COMMITTEES. The Board of Directors may designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board of Directors may designate one or
more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of any such committee. In the
event of an absence or disqualification of a member of a committee, and in
the absence of a designation by the Board of Directors of an alternate member
to replace the absent or disqualified member, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member
of the
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Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent permitted by law and
provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it.
Each committee shall keep regular minutes and report to the Board of
Directors when required.
SECTION 9. COMPENSATION. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director, payable in cash or securities. No
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
SECTION 10. INTERESTED DIRECTORS. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership, association,
or other organization in which one or more of its directors or officers are
directors or officers or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is present
at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because the
director's or officer's vote is counted for such purpose if (i) the material
facts as to the director's or officer's relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested
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directors, even though the disinterested directors be less than a quorum; or
(ii) the material facts as to the director's or officer's relationship or
interest and as to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified by the Board of Directors, a committee
thereof or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors
or of a committee which authorized the contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a President, a Secretary, and
one or more Treasurers. The Board of Directors, in its discretion, also may
elect a Chairman of the Board of Directors (who must be a director) and one
or more Vice Presidents, Assistant Secretaries, Assistant Treasurers, and
other officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law or the Certificate of Incorporation. The officers
of the Corporation need not be stockholders of the Corporation or, except in
the case of the Chairman of the Board of Directors, need such officers be
directors of the Corporation.
SECTION 2. ELECTION. The Board of Directors, at its first
meeting held after each Annual Meeting of Stockholders (or action by written
consent of stockholders in lieu of the Annual Meeting of Stockholders), shall
elect the officers of the Corporation who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time
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to time by the Board of Directors; and all officers of the Corporation shall
hold office until their successors are chosen and qualified, or until their
earlier death, resignation or removal. Any officer elected by the Board of
Directors may be removed at any time by the affirmative vote of the Board of
Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The salaries of all officers of the
Corporation shall be fixed by the Board of Directors.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers
of attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed
in the name of and on behalf of the Corporation by the President or any Vice
President or any other officer authorized to do, so by the Board of
Directors, and any such officer may, in the name of and on behalf of the
Corporation, take all such action as any such officer may deem advisable to
vote in person or by proxy at any meeting of security holders of any
corporation in which the Corporation may own securities and at any such
meeting shall possess and may exercise any and all rights and power incident
to the ownership of such securities and which, as the owner thereof, the
Corporation might have exercised and possessed if present. The Board of
Directors may, by resolution, from time to time confer like powers upon any
other person or persons.
SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the signature
of the President is required, the Chairman of the Board of Directors shall
possess the same power as the President to sign all contracts, certificates,
and other instruments of the Corporation which may be authorized by the Board
of Directors. During the absence or disability of the President, the Chairman
of the Board of Directors (if not the same person as the President) shall
exercise all the powers and discharge all the duties of the President. The
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Chairman of the Board of Directors shall also perform such other duties and
may exercise such other powers as may from time to time be assigned by these
By-Laws or by the Board of Directors.
SECTION 5. PRESIDENT. The President shall, subject to the
control of the Board of Directors and, if there be one who is not also the
President, the Chairman of the Board of Directors, have general supervision
of the business of the Corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. The President
shall execute all bonds, mortgages, contracts and other instruments of the
Corporation requiring a seal, under the seat of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
that the other officers of the Corporation may sign and execute documents
when so authorized by these By-Laws, the Board of Directors or the President.
In the absence or disability of the Chairman of the Board of Directors, or if
there be none, the President shall preside at all meetings of the
stockholders and the Board of Directors. The President shall also perform
such other duties and may exercise such other powers as may from time to time
be assigned to such officer by these By-Laws or by the Board of Directors. If
there be no Chairman of the Board of Directors, or if the Chairman of the
Board of Directors is also the President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President
or in the event of the inability or refusal of the President to act, shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
SECTION 6. VICE PRESIDENTS. The Vice President (if there be
one) or the Vice Presidents, if there is more than one (in the order
designated by the Board of Directors), shall perform the duties of the
President, and when so acting, shall perform such duties and have such powers
as the Board of Directors from time to time may prescribe.
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SECTION 7. SECRETARY. The Secretary shall attend all meetings
of the Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose. The
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors, the Chairman of the Board of Directors or the President,
under whose supervision the Secretary shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there be
no Assistant Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest to the affixing by
such officer's signature. The Secretary shall see that all books, reports,
statements, certificates, and other documents and records required by law to
be kept or filed are properly kept or filed, as the case may be.
SECTION 8. TREASURER. The Treasurer (or if there be more than
one, the Treasurers jointly) shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds
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of the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the President and the
Board of Directors, at its regular meetings, or when the Board of Directors
so requires, an account of all transactions as Treasurer and of the financial
condition of the Corporation. If required by the Board of Directors, the
Treasurer shall give the Corporation a bond in such sum and with such surety
or sureties as shall be satisfactory to the Board of Directors for the
faithful performance of the duties of the office of the Treasurer and for the
restoration to the Corporation, in case of the Treasurer's death,
resignation, retirement, or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Treasurer's
possession or under the Treasurer's control belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Assistant Secretaries, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any
Vice President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to act,
shall perform the duties of the Secretary, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if
there be any, shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President, any
Vice President, if there be one, or any Treasurer, and in the absence of any
such Treasurer or in the event of any such Treasurer's inability or refusal
to act, shall perform the duties of such Treasurer, and when so acting, shall
have all the powers of and be subject to all the restrictions upon such
Treasurer. If required by the Board of Directors, an Assistant Treasurer
shall give the Corporation a bond in such sum and with such surety or
sureties as shall be
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satisfactory to the Board of Directors for the faithful performance of the
duties of the office of Assistant Treasurer and for the restoration to the
Corporation, in case of the Assistant Treasurer's death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in the Assistant Treasurer's possession or
under the Assistant Treasurer's control belonging to the Corporation.
SECTION 11. OTHER OFFICERS. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and
powers.
ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President, or
a Vice President, and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the number
of shares owned by such stockholder in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with
the same effect as if such person were such officer, transfer agent or
registrar at the date of issue.
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SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued by
the Corporation alleged to have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen or destroyed. When authorizing such issue of a new certificate,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or the owner's legal representative, to advertise the same in such
manner as the Board of Directors shall require and/or to give the Corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed or the issuance of such new certificate.
SECTION 4. TRANSFERS. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws. Transfers of
stock shall be made on the books of the Corporation only by the person named in
the certificate or by such person's attorney lawfully constituted in writing and
upon the surrender of the certificate therefor, which shall be cancelled before
a new certificate shall be issued. No transfer of stock shall be valid as
against the Corporation for any purpose until it shall have been entered in the
stock records of the Corporation by an entry showing from and to whom
transferred.
SECTION 5. RECORD DATE.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty
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nor less than ten days before the date of such meeting. If no record is fixed
by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; providing, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors, and which date shall not be more than ten days after the
date upon which the resolution fixing the record date is adopted by the Board
of Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the Board of
Directors is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in this
State, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of Directors and
prior action by the Board of Directors is required by law, the record date
for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolutions taking such prior action.
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(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion, or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more
than sixty days prior to such action. If no record date is fixed, the record
date for determining stockholders for any such purpose shall be at the close
of business on the day on which the Board of Directors adopts the resolution
relating thereto.
SECTION 6. RECORD OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise required by law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by
law, the Certificate of Incorporation, or these By-Laws, to be given to any
director, member of a committee or stockholder, such notice may be given by
mail, addressed to such director, member of a committee or stockholder, at
such person's address as it appears on the records of the Corporation, with
postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be
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deposited in the United States mail. Written notice may also be given
personally or by telegram, telex or cable.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required
by law, the Certificate of Incorporation, or these By-Laws, to be given to
any director, member of a committee or stockholder, a waiver thereof in
writing, signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent thereto.
Attendance of a person at a meeting, present in person or represented by
proxy, shall constitute a waiver of notice of such meeting, except where the
person attends the meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the requirements of the Delaware General Corporation
Law ("DGCL") and the provisions of the Certificate of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting
of the Board of Directors (or any action by written consent in lieu thereof
in accordance with Section 6 of Article III hereof), and may be paid in cash,
in property, or in shares of the Corporation's capital stock. Before payment
of any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time
to time, in its absolute discretion, deems proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for any proper purpose, and
the Board of Directors may modify or abolish any such reserve.
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<PAGE>
SECTION 2. DISBURSMENTS. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may from time to time
designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its organization
and the words "Corporate Seal, Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE VIII
INDEMNIFICATION
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS
OTHER THAN THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3
of this Article VIII, the Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a director
or officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director or
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed
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<PAGE>
to the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the Corporation,
and, with respect to any criminal action or proceeding, had reasonable cause
to believe that such person's conduct was unlawful.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS
BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article
VIII, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that such person is or was a director or officer
of the Corporation, or is or was a director or officer of the Corporation
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the Corporation; except that no indemnification
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Corporation unless and
only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the
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<PAGE>
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any
indemnification under this Article VIII (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in
the circumstances because such person has met the applicable standard of
conduct set forth in Section 1 or Section 2 of this Article VIII, as the case
may be. Such determination shall be made (i) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (ii) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or
(iii) by the stockholders. To the extent, however, that a director or officer
of the Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith, without the necessity of authorization in the
specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any
determination under Section 3 of this Article VIII, a person shall be deemed
to have acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interest of the Corporation, or, with
respect to any criminal action or proceeding, to have had no reasonable cause
to believe such person's conduct was unlawful, if such person's action is
based on the records or books of account of the Corporation or another
enterprise, or on information supplied to such person by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the
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<PAGE>
Corporation or another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care
by the Corporation or another enterprise. The term "another enterprise" as
used in this Section 4 shall mean any other corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise of which such
person is or was serving at the request of the Corporation as a director,
officer, employee or agent. The provisions of this Section 4 shall not be
deemed to be exclusive or to limit in any way the circumstances in which a
person may be deemed to have met the applicable standard of conduct set forth
in Section 1 or 2 of this Article VIII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any
contrary determination in the specific case under Section 3 of this Article
VIII, and notwithstanding the absence of any determination thereunder, any
director or officer may apply to the Court of Chancery in the State of
Delaware for indemnification to the extent otherwise permissible under
Sections 1 and 2 of this Article VIII. The basis of such indemnification by
a court shall be a determination by such court that indemnification of the
director or officer is proper in the circumstances because such person has
met the applicable standards of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be. Neither a contrary determination in the
specific case under Section 3 of this Article VIII nor the absence of any
determination thereunder shall be a defense to such application or create a
presumption that the director or officer seeking indemnification has not met
any applicable standard of conduct. Notice of any application for
indemnification pursuant to this Section 5 shall be given to the Corporation
promptly upon the filing of such application. If successful, in whole or in
part, the director or officer seeking indemnification shall also be entitled
to be paid the expense of prosecuting such application.
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<PAGE>
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a
director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that such person is
not entitled to be indemnified by the Corporation as authorized in this
Article VIII.
SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The inderrinification and advancement of expenses provided by or
granted pursuant to this Article VIII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of
expenses may be entitled under the Certificate of Incorporation, any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in such person's official capacity and as to action in another
capacity while holding such office, it being the policy of the Corporation
that indemnification of the persons specified in Sections 1 and 2 of this
Article VIII shall be made to the fullest extent permitted by law. The
provisions of this Article VIII shall not be deemed to preclude the
indemnification of any person who is not specified in Section 1 or 2 of this
Article VIII but whom the Corporation has the power or obligation to
indemnify under the provisions of the General Corporation Law of the State of
Delaware, or otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and
maintain insurance on behalf of any person who is or was a director or
officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise against any liability asserted
against such person and incurred by such person in any such
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<PAGE>
capacity, or arising out of such person's status as such, whether or not the
Corporation would have the power or the obligation to indernnify such person
against such liability under the provisions of this Article VIII.
SECTION 9. CERTAIN DEFINITIONS. For purposes of this Article
VIII, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors or officers, so that any person who is or was a
director or officer of such constituent corporation, or is or was a director
or officer of such constituent corporation serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, shall stand in the same position under the provisions of
this Article VIII with respect to the resulting or surviving corporation as
such person would have with respect to such constituent corporation if its
separate existence had continued. For purposes of this Article VIII,
references to "fines" shall include any excise taxes assessed on a person
with respect to an employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director or officer with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner such person reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article VIII.
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<PAGE>
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF
EXPENSES. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VIII shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors
and administrators of such a person.
SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding
anything contained in this Article VIII to the contrary, except for
proceedings to enforce rights to indemnification (which shall be governed by
Section 5 hereof), the Corporation shall not be obligated to indemnify any
director or officer in connection with a proceeding (or part thereof)
initiated by such person unless such proceeding (or part thereof) was
authorized or consented to by the Board of Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, provide rights to indemnification and to the advancement of
expenses to employees and agents of the Corporation similar to those
conferred in this Article VIII to directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be altered, amended
or repealed, in whole or in part, or new By-Laws may be adopted by the
stockholders or by the Board of Directors, provided, however, that notice of
such alteration, amendment, repeal or adoption of new By-Laws be contained in
the notice of such meeting of stockholders or Board of Directors as the case
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<PAGE>
may be. All such amendments must be approved by either the holders of a
majority of the outstanding capital stock entitled to vote thereon or by a
majority of the entire Board of Directors then in office.
SECTION 2. ENTIRE BOARD OF DIRECTORS. As used in this Article
IX and in these By-Laws generally, the term "entire Board-of Directors" means
the total number of directors which the Corporation would have if there were
no vacancies.
* * *
Adopted as of: _______________.
Last Amended as of: ________________.
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<PAGE>
Exhibit 3.11
STATE OF DELAWARE
PAGE 1
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "UNIVERSAL COACH PARTS, INC.", FILED IN THIS OFFICE ON THE
FIFTEENTH DAY OF SEPTEMBER, A.D. 1975, AT 10 O'CLOCK A.M.
/s/ Edward J. Freel
[SEAL] --------------------------------------
EDWARD J. FREEL, SECRETARY OF STATE
0816293 8100 AUTHENTICATION: 9802092
991237985 DATE: 06-14-99
<PAGE>
CERTIFICATE OF INCORPORATION
OF
UNIVERSAL COACH PARTS, INC.
1. The name of the corporation is
UNIVERSAL COACH PARTS, INC.
2. The address of its registered office in the State of Delaware is
No. 100 West Tenth Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
3. The nature of the business or purposes to be conducted or
promoted is:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of common stock which the corporation
shall have authority to issue is One Thousand (1,000) and the par value of
each of such shares is One Hundred Dollars ($100.00) amounting in the
aggregate to One Hundred Thousand Dollars ($100,000.00).
5. The name and mailing address of each incorporator is as follows:
<TABLE>
<CAPTION>
Name Mailing Address
---- ---------------
<S> <C>
F.G. Emerson 1919 Greyhound Tower
Phoenix, Arizona 85077
W.J. Hallinan 1707 Greyhound Tower
Phoenix, Arizona 85077
P.J. Novak 1727 Greyhound Tower
Phoenix, Arizona 85077
</TABLE>
<PAGE>
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6. The corporation is to have perpetual existence.
7. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the Bylaws of the corporation.
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
When and as authorized by the stockholders in accordance with statute,
to sell, lease or exchange all or substantially all of the property and assets
of the corporation, including its good will and its corporate franchises, upon
such terms and conditions and for such consideration, which may consist in whole
or in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its Board of Directors
shall deem expedient and for the best interests of the corporation.
<PAGE>
-3-
8. Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of the corporation. Elections of
Directors need not be by written ballot unless the Bylaws of the corporation
shall so provide.
9. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are
true, and accordingly have hereunto set our hands this 10th day of September,
1975.
/s/ F. G. Emerson
---------------------------
F. G. Emerson
/s/ W. J. Hallinan
---------------------------
W. J. Hallinan
/s/ P. J. Novak
---------------------------
P. J. Novak
<PAGE>
Exhibit 3.12
BY-LAWS
OF
UNIVERSAL COACH PARTS, INC.
(hereinafter called the "Corporation")
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. Meetings of the Stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. The Annual Meeting of Stockholders for the
election of directors shall be held on such date and at such time as shall be
designated from time to time by the Board of Directors. Any other proper
business may be transacted at the Annual Meeting of Stockholders.
<PAGE>
SECTION 3. SPECIAL MEETINGS. Unless otherwise required by law or by the
certificate of incorporation of the Corporation, as amended and restated from
time to time (the "Certificate of Incorporation"), Special Meetings of
Stockholders, for any purpose or purposes, may be called by either (i) the
Chairman, if there be one, or (ii) the President, or (iii) any Vice
President, if there be one, or (iv) the Secretary, or (v) any Assistant
Secretary, if there be one, and shall be called by any such officer at the
request in writing of (i) the Board of Directors, or (ii) a committee of the
Board of Directors that has been duly designated by the Board of Directors
and whose powers and authority include the power to call such meetings, or
(iii) the stockholders owning a majority of the capital stock of the
Corporation issued and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting. At a Special Meeting
of Stockholders, only such business shall be conducted as shall be specified
in the notice of meeting or any supplement thereto.
SECTION 4. NOTICE. Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall be given
which shall state the place, date, and hour of the meeting, and, in the case
of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise required by law, the written notice of any meeting
shall be given not less than ten nor more than sixty days before the date of
the meeting to each stockholder entitled to vote at such meeting.
SECTION 5. ADJOURNMENTS. Any meeting of the stockholders may be adjourned
from time to time to reconvene at the same or some other place, and notice need
not be given of any such adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting, the Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for
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<PAGE>
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
SECTION 6. QUORUM. Unless otherwise required by law or the Certificate
of Incorporation, the holders of a majority of the capital stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business. A quorum, once established, shall not be broken by
the withdrawal of enough votes to leave less than a quorum. If, however, such
quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to
time, in the manner provided in Section 5, until a quorum shall be present or
represented.
SECTION 7. VOTING. Unless otherwise required by law, the Certificate of
Incorporation, or these By-Laws, any question brought before any meeting of
stockholders, other than the election of directors, shall be decided by the
vote of the holders of a majority of the total number of votes of the capital
stock represented and entitled to vote thereat, voting as a single class.
Unless otherwise provided in the Certificate of Incorporation, and subject to
Section 5 of Article V hereof, each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for each share of the capital
stock entitled to vote thereat held by such stockholder. Such votes may be
cast in person or by proxy, but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. The
Board of Directors, in its discretion, or the officer of the Corporation
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<PAGE>
presiding at a meeting of stockholders, in such officer's discretion, may
require that any votes cast at such meeting be cast by written ballot.
SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless otherwise
provided in the Certificate of Incorporation, any action required or permitted
to be taken at any Annual or Special Meeting of Stockholders of the Corporation
may be taken without a meeting, without prior notice, and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of the issued and outstanding capital stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted, and shall be delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within
sixty days of the earliest dated consent delivered in the manner required by
this Section 8 to the Corporation, written consents signed by a sufficient
number of holders to take action are delivered to the Corporation by delivery to
its registered office in the State of Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and who, if the action had been taken
4
<PAGE>
at a meeting, would have been entitled to notice of the meeting if the record
date for such meeting had been the date that written consents signed by a
sufficient number of holders to take the action were delivered to the
Corporation as provided above in this section.
SECTION 9. LIST OF STOCKHOLDERS ENTITLED TO VOTE. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting either at a place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder of the Corporation who is present.
SECTION 10. STOCK LEDGER. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 9 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
SECTION 11. CONDUCT OF MEETINGS. The Board of Directors of the Corporation
may adopt by resolution such rules and regulations for the conduct of the
meeting of the stockholders as it shall deem appropriate. Except to the extent
inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of the
5
<PAGE>
stockholders shall have the right and authority to prescribe such rules,
regulations and procedures and to do all such acts as, in the judgment of
such chairman, are appropriate for the proper conduct of the meeting. Such
rules, regulations or procedures, whether adopted by the Board of Directors
or prescribed by the chairman of the meeting, may include, without
limitation, the following: (i) the establishment of an agenda or order of
business for the meeting; (ii) the determination of when the polls shall open
and close for any given matter to be voted on at the meeting; (iii) the
establishment and enforcement of rules and procedures for maintaining order
at the meeting and the safety of those present; (iv) the establishment and
enforcement of limitations on attendance at or participation in the meeting
to stockholders of record of the corporation, their duly authorized and
constituted proxies, or such other persons as the chairman of the meeting
shall determine; (v) the establishment and enforcement of restrictions on
entry to the meeting after the time fixed for the commencement thereof; and
(vi) the establishment and enforcement of limitations on the time allotted to
questions or comments by participants.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND ELECTION OF DIRECTORS. The Board of Directors shall
consist of not less than one nor more than fifteen members, the exact number of
which shall initially be fixed by the Incorporator and thereafter from time to
time by the Board of Directors. Except as provided in Section 2 of this Article
III, directors shall be elected by a plurality of the votes cast at the Annual
Meeting of Stockholders and each director so elected shall hold office until the
next Annual Meeting of Stockholders and until such director's successor is duly
elected and qualified, or until such director's earlier death, resignation, or
6
<PAGE>
removal. Any director may resign at any time upon written notice to the
Corporation. Directors need not be stockholders.
SECTION 2. VACANCIES. Unless otherwise required by law or the
Certificate of Incorporation, vacancies arising through death, resignation,
removal, an increase in the number of directors, or otherwise may be filled
only by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director, and the directors so chosen shall
hold office until the next annual election and until their successors are
duly elected and qualified, or until their earlier death, resignation or
removal.
SECTION 3. DUTIES AND POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors, which may exercise all such powers of the Corporation and do all
such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-Laws required to be exercised or done by the
stockholders.
SECTION 4. MEETINGS. The Board of Directors may hold meetings, both
regular and special, either within or without the State of Delaware. Regular
meetings of the Board of Directors may be held without notice at such time
and at such place as may from time to time be determined by the Board of
Directors. Special meetings of the Board of Directors may be called by the
Chairman, if there be one, the President, or by any director. Notice thereof
stating the place, date, and hour of the meeting shall be given to each
director either by mail not less than forty-eight (48) hours before the date
of the meeting, by telephone or telegram on twenty-four (24) hours' notice,
or on such shorter notice as the person or persons calling such meeting may
deem necessary or appropriate in the circumstances.
7
<PAGE>
SECTION 5. QUORUM. Except as otherwise required by law or the
Certificate of Incorporation, at all meetings of the Board of Directors,
a majority of the entire Board of Directors shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting of
the time and place of the adjourned meeting, until a quorum shall be present.
SECTION 6. ACTIONS BY WRITTEN CONSENT. Unless otherwise provided in
the Certificate of Incorporation or these By-Laws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all the members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
SECTION 7. MEETINGS BY MEANS OF CONFERENCE TELEPHONE. Unless
otherwise provided in the Certificate of Incorporation, members of the Board
of Directors of the Corporation, or any committee thereof, may participate in
a meeting of the Board of Directors or such committee by means of a
conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this Section 7 shall constitute
presence in person at such meeting.
SECTION 8. COMMITTEES. The Board of Directors may designate one or
more committees, each committee to consist of one or more of the directors of
the Corporation.
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The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of any such committee. In the event of an absence or
disqualification of a member of a committee, and in the absence of a
designation by the Board of Directors of an alternate member to replace the
absent or disqualified member, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or
members constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent permitted by law and
provided in the resolution establishing such committee, shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, and may authorize
the seal of the Corporation to be affixed to all papers which may require it.
Each committee shall keep regular minutes and report to the Board of
Directors when required.
SECTION 9. COMPENSATION. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director, payable in cash or securities. No
such payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
SECTION 10. INTERESTED DIRECTORS. No contract or transaction
between the Corporation and one or more of its directors or officers, or
between the Corporation and any other corporation, partnership, association,
or other organization in which one or more of its directors or officers are
directors or officers or have a financial interest, shall be void or
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voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or
committee thereof which authorizes the contract or transaction, or solely
because the director's or officer's vote is counted for such purpose if (i)
the material facts as to the director's or officer's relationship or interest
and as to the contract or transaction are disclosed or are known to the Board
of Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to the
director's or officer's relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good
faith by vote of the stockholders; or (iii) the contract or transaction is
fair as to the Corporation as of the time it is authorized, approved or
ratified by the Board of Directors, a committee thereof or the stockholders.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or of a committee which
authorized the contract or transaction.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL. The officers of the Corporation shall be chosen
by the Board of Directors and shall be a President, a Secretary, and one or
more Treasurers. The Board of Directors, in its discretion, also may elect a
Chairman of the Board of Directors (who must be a director) and one or more
Vice Presidents, Assistant Secretaries, Assistant Treasurers, and other
officers. Any number of offices may be held by the same person, unless
otherwise prohibited by law or the Certificate of Incorporation. The officers
of the
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Corporation need not be stockholders of the Corporation or, except in the
case of the Chairman of the Board of Directors, need such officers be
directors of the Corporation.
SECTION 2. ELECTION. The Board of Directors, at its first meeting held
after each Annual Meeting of Stockholders (or action by written consent of
stockholders in lieu of the Annual Meeting of Stockholders), shall elect the
officers of the Corporation who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors; and all officers of the
Corporation shall hold office until their successors are chosen and
qualified, or until their earlier death, resignation or removal. Any officer
elected by the Board of Directors may be removed at any time by the
affirmative vote of the Board of Directors. Any vacancy occurring in any
office of the Corporation shall be filled by the Board of Directors. The
salaries of all officers of the Corporation shall be fixed by the Board of
Directors.
SECTION 3. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Corporation may be executed
in the name of and on behalf of the Corporation by the President or any Vice
President or any other officer authorized to do so by the Board of Directors,
and any such officer may, in the name of and on behalf of the Corporation,
take all such action as any such officer may deem advisable to vote in person
or by proxy at any meeting of security holders of any corporation in which
the Corporation may own securities and at any such meeting shall possess and
may exercise any and all rights and power incident to the ownership of such
securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors may, by
resolution, from time to time confer like powers upon any other person or
persons.
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SECTION 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the
Board of Directors, if there be one, shall preside at all meetings of the
stockholders and of the Board of Directors. Except where by law the signature
of the President is required, the Chairman of the Board of Directors shall
possess the same power as the President to sign all contracts, certificates,
and other instruments of the Corporation which may be authorized by the Board
of Directors. During the absence or disability of the President, the Chairman
of the Board of Directors (if not the same person as the President) shall
exercise all the powers and discharge all the duties of the President. The
Chairman of the Board of Directors shall also perform such other duties and
may exercise such other powers as may from time to time be assigned by these
By-Laws or by the Board of Directors.
SECTION 5. PRESIDENT. The President shall, subject to the control of
the Board of Directors and, if there be one who is not also the President,
the Chairman of the Board of Directors, have general supervision of the
business of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. The President shall execute
all bonds, mortgages, contracts and other instruments of the Corporation
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except that the
other officers of the Corporation may sign and execute documents when so
authorized by these By-Laws, the Board of Directors or the President. In the
absence or disability of the Chairman of the Board of Directors, or if there
be none, the President shall preside at all meetings of the stockholders and
the Board of Directors. The President shall also perform such other duties
and may exercise such other powers as may from time to time be assigned to
such officer by these By-Laws or by the Board of Directors. If there be no
Chairman of the Board of Directors, or if the Chairman of
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the Board of Directors is also the President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President
or in the event of the inability or refusal of the President to act, shall
perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President.
SECTION 6. VICE PRESIDENTS. The Vice President (if there be one) or the
Vice Presidents, if there is more than one (in the order designated by the
Board of Directors), shall perform the duties of the President, and when so
acting, shall perform such duties and have such powers as the Board of
Directors from time to time may prescribe.
SECTION 7. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or books to be kept for that purpose. The
Secretary shall also perform like duties for committees of the Board of
Directors when required. The Secretary shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors, the Chairman of the Board of Directors or the President,
under whose supervision the Secretary shall be. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
stockholders and special meetings of the Board of Directors, and if there be
no Assistant Secretary, then either the Board of Directors or the President
may choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Corporation and the Secretary or any
Assistant Secretary, if there be one, shall have authority to affix the same
to any instrument requiring it and when so affixed, it may be attested by the
signature of the Secretary or by the signature of any such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the
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Corporation and to attest to the affixing by such officer's signature. The
Secretary shall see that all books, reports, statements, certificates, and
other documents and records required by law to be kept or filed are properly
kept or filed, as the case may be.
SECTION 8. TREASURER. The Treasurer (or if there be more than one,
the Treasurers jointly) shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors,
at its regular meetings, or when the Board of Directors so requires, an
account of all transactions as Treasurer and of the financial condition of
the Corporation. If required by the Board of Directors, the Treasurer shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance
of the duties of the office of the Treasurer and for the restoration to the
Corporation, in case of the Treasurer's death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money and other property
of whatever kind in the Treasurer's possession or under the Treasurer's
control belonging to the Corporation.
SECTION 9. ASSISTANT SECRETARIES. Assistant Secretaries, if there be
any, shall perform such duties and have such powers as from time to time may
be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to
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act, shall perform the duties of the Secretary, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
Secretary.
SECTION 10. ASSISTANT TREASURERS. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time may
be assigned to them by the Board of Directors, the President, any Vice
President, if there be one, or any Treasurer, and in the absence of any such
Treasurer or in the event of any such Treasurer's inability or refusal to
act, shall perform the duties of such Treasurer, and when so acting, shall
have all the powers of and be subject to all the restrictions upon such
Treasurer. If required by the Board of Directors, an Assistant Treasurer
shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of the office of Assistant Treasurer and for the
restoration to the Corporation, in case of the Assistant Treasurer's death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging
to the Corporation.
SECTION 11. OTHER OFFICERS. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Directors. The Board of
Directors may delegate to any other officer of the Corporation the power to
choose such other officers and to prescribe their respective duties and
powers.
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ARTICLE V
STOCK
SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President, or
a Vice President, and (ii) by the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by such stockholder in the Corporation.
SECTION 2. SIGNATURES. Any or all of the signatures on a
certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with
the same effect as if such person were such officer, transfer agent or
registrar at the date of issue.
SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a
new certificate to be issued in place of any certificate theretofore issued
by the Corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate, or the owner's legal representative, to advertise the
same in such manner as the Board of Directors shall require and/or to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the
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Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed or the issuance of such new certificate.
SECTION 4. TRANSFERS. Stock of the Corporation shall be
transferable in the manner prescribed by law and in these By-Laws. Transfers
of stock shall be made on the books of the Corporation only by the person
named in the certificate or by such person's attorney lawfully constituted in
writing and upon the surrender of the certificate therefor, which shall be
cancelled before a new certificate shall be issued. No transfer of stock shall
be valid as against the Corporation for any purpose until it shall have been
entered in the stock records of the Corporation by an entry showing from and
to whom transferred.
SECTION 5. RECORD DATE.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such
meeting. If no record is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; providing, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the
Board of Directors may fix a
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record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
law, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the Corporation by
delivery to its registered office in this State, its principal place of
business, or an officer or agent of the Corporation having custody of the book
in which proceedings of meetings of stockholders are recorded. Delivery made to
the Corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the Board of Directors and prior action by the Board of Directors is required by
law, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the Board of Directors adopts the resolutions taking such
prior action.
(c) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion, or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such
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purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
SECTION 6. RECORD OWNERS. The Corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the owner of
shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof, except as otherwise
required by law.
ARTICLE VI
NOTICES
SECTION 1. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation, or these By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at such
person's address as it appears on the records of the Corporation, with
postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written
notice may also be given personally or by telegram, telex or cable.
SECTION 2. WAIVERS OF NOTICE. Whenever any notice is required by law, the
Certificate of Incorporation, or these By-Laws, to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto. Attendance of a
person at a meeting, present in person or represented by
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proxy, shall constitute a waiver of notice of such meeting, except where the
person attends the meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.
ARTICLE VII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the Corporation,
subject to the requirements of the Delaware General Corporation Law ("DGCL") and
the provisions of the Certificate of Incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting of the Board of
Directors (or any action by written consent in lieu thereof in accordance with
Section 6 of Article III hereof), and may be paid in cash, in property, or in
shares of the Corporation's capital stock. Before payment of any dividend, there
may be set aside out of any funds of the Corporation available for dividends
such sum or sums as the Board of Directors from time to time, in its absolute
discretion, deems proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for any proper purpose, and the Board of Directors may modify or
abolish any such reserve.
SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
SECTION 4. CORPORATE SEAL. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal,
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Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VII
INDEMNIFICATION
SECTION 1. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS OTHER THAN
THOSE BY OR IN THE RIGHT OF THE CORPORATION. Subject to Section 3 of this
Article VIII, the Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the Corporation) by reason of the fact that such person is or was a director
or officer of the Corporation, or is or was a director or officer of the
Corporation serving at the request of the Corporation as a director or
officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe such person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith and
in a manner which such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any
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criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
SECTION 2. POWER TO INDEMNIFY IN ACTIONS, SUITS OR PROCEEDINGS BY OR IN
THE RIGHT OF THE CORPORATION. Subject to Section 3 of this Article VIII, the
Corporation shall indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by
or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the Corporation; except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
SECTION 3. AUTHORIZATION OF INDEMNIFICATION. Any indemnification under
this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is
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proper in the circumstances because such person has met the applicable
standard of conduct set forth in Section 1 or Section 2 of this Article VIII,
as the case may be. Such determination shall be made (i) by a majority vote
of the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (ii) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or
(iii) by the stockholders. To the extent, however, that a director or officer
of the Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding described above, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith, without the necessity of authorization in the
specific case.
SECTION 4. GOOD FAITH DEFINED. For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interest of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe such person's conduct was
unlawful, if such person's action is based on the records or books of account of
the Corporation or another enterprise, or on information supplied to such person
by the officers of the Corporation or another enterprise in the course of their
duties, or on the advice of legal counsel for the Corporation or another
enterprise or on information or records given or reports made to the Corporation
or another enterprise by an independent certified public accountant or by an
appraiser or other expert selected with reasonable care by the Corporation or
another enterprise. The term "another enterprise" as used in this Section 4
shall mean any other corporation or any partnership, joint venture,
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trust, employee benefit plan or other enterprise of which such person is or was
serving at the request of the Corporation as a director, officer, employee or
agent. The provisions of this Section 4 shall not be deemed to be exclusive or
to limit in any way the circumstances in which a person may be deemed to have
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article VIII, as the case may be.
SECTION 5. INDEMNIFICATION BY A COURT. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to the Court of Chancery in the State of Delaware for
indemnification to the extent otherwise permissible under Sections 1 and 2 of
this Article VIII. The basis of such indemnification by a court shall be a
determination by such court that indemnification of the director or officer is
proper in the circumstances because such person has met the applicable standards
of conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
SECTION 6. EXPENSES PAYABLE IN ADVANCE. Expenses incurred by a director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action,
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suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the Corporation as
authorized in this Article VIII.
SECTION 7. NONEXCLUSIVITY OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
The indemnification and advancement of expenses provided by or granted pursuant
to this Article VIII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
the Certificate of Incorporation, any By-Law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, it being the policy of the Corporation that indemnification of the
persons specified in Sections 1 and 2 of this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VIII but whom the Corporation has the power or
obligation to indemnify under the provisions of the General Corporation Law of
the State of Delaware, or otherwise.
SECTION 8. INSURANCE. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director or officer of the
Corporation, or is or was a director or officer of the Corporation serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise against any liability asserted against such person and
incurred by such person in any such capacity, or arising out of such person's
status as such, whether or not the Corporation would have the power or the
obligation to indemnify such person against such liability under the
provisions of this Article VIII.
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SECTION 9. CERTAIN DEFINITIONS. For purposes of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer
of such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
shall stand in the same position under the provisions of this Article VIII
with respect to the resulting or surviving corporation as such person would
have with respect to such constituent corporation if its separate existence
had continued. For purposes of this Article VIII, references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director
or officer with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to
in this Article VIII.
SECTION 10. SURVIVAL OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VIII shall, unless otherwise provided when authorized or ratified,
continue as to a
26
<PAGE>
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
SECTION 11. LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 hereof),
the Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding (or part thereof) was authorized or consented to by the Board of
Directors of the Corporation.
SECTION 12. INDEMNIFICATION OF EMPLOYEES AND AGENTS. The Corporation may,
to the extent authorized from time to time by the Board of Directors, provide
rights to indemnification and to the advancement of expenses to employees and
agents of the Corporation similar to those conferred in this Article VIII to
directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
SECTION 1. AMENDMENTS. These By-Laws may be altered, amended or repealed,
in whole or in part, or new By-Laws may be adopted by the stockholders or by the
Board of Directors, provided, however, that notice of such alteration,
amendment, repeal or adoption of new By-Laws be contained in the notice of such
meeting of stockholders or Board of Directors as the case may be. All such
amendments must be approved by either the holders of a majority of the
outstanding capital stock entitled to vote thereon or by a majority of the
entire Board of Directors then in office.
27
<PAGE>
SECTION 2. ENTIRE BOARD OF DIRECTORS. As used in this Article IX and in
these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no
vacancies.
* * *
Adopted as of: May 20, 1997
---------------------------
Last Amended as of:
----------------------
28
<PAGE>
Exhibit 4.1
________________________________________________________________________________
________________________________________________________________________________
TRANSPORTATION MANUFACTURING OPERATIONS, INC.,
as Issuer,
The GUARANTORS named herein
and
IBJ WHITEHALL BANK & TRUST COMPANY, as Trustee
---------------
INDENTURE
Dated as of June 16, 1999
---------------
11 1/4% Senior Subordinated Notes due 2009, Series A
11 1/4% Senior Subordinated Notes due 2009, Series B
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1)............................................. 7.10
(a)(2)............................................. 7.10
(a)(3)............................................. N.A.
(a)(4)............................................. N.A
(b)................................................ 7.08; 7.10; 13.02
(b)(1)............................................. 7.10
(b)(9)............................................. 7.10
(c)................................................ N.A.
311(a)................................................ 7.11
(b)................................................ 7.11
(c)................................................ N.A.
312(a)................................................ 2.05
(b)................................................ 13.03
(c)................................................ 13.03
313(a)................................................ 7.06
(b)(1)............................................. 7.06
(b)(2)............................................. 7.06
(c)................................................ 7.06; 13.02
(d)................................................ 7.06
314(a)................................................ 4.02; 4.08; 13.02
(b)................................................ N.A.
(c)(1)............................................. 13.04; 13.05
(c)(2)............................................. 13.04; 13.05
(c)(3)............................................. N.A.
(d)................................................ N.A.
(e)................................................ 13.05
(f)................................................ N.A.
315(a)................................................ 7.01; 7.02
(b)................................................ 7.05; 13.02
(c)................................................ 7.01
(d)................................................ 6.05; 7.01; 7.02
(e)................................................ 6.11
316(a) (last sentence)................................ 2.09
(a)(1)(A).......................................... 6.05
(a)(1)(B).......................................... 6.04
(a)(2)............................................. 8.02
(b)................................................ 6.07
(c)................................................ 8.04
317(a)(1)............................................. 6.08
(a)(2)............................................. 6.09
(b)................................................ 2.04
318(a)................................................ 13.01
N.A. means Not Applicable
____________________
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions. . . . . . . . . . . . . . . . . . . . .26
Section 1.03. Incorporation by Reference of Trust Indenture Act. . . . .26
Section 1.04. Rules of Construction. . . . . . . . . . . . . . . . . . .27
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating. . . . . . . . . . . . . . . . . . . . . .27
Section 2.02. Execution and Authentication.. . . . . . . . . . . . . . .28
Section 2.03. Registrar and Paying Agent.. . . . . . . . . . . . . . . .29
Section 2.04. Paying Agent to Hold Assets in Trust.. . . . . . . . . . .29
Section 2.05. Noteholder Lists.. . . . . . . . . . . . . . . . . . . . .29
Section 2.06. Transfer and Exchange. . . . . . . . . . . . . . . . . . .29
Section 2.07. Replacement Notes. . . . . . . . . . . . . . . . . . . . .30
Section 2.08. Outstanding Notes. . . . . . . . . . . . . . . . . . . . .30
Section 2.09. Treasury Notes.. . . . . . . . . . . . . . . . . . . . . .31
Section 2.10. Temporary Notes. . . . . . . . . . . . . . . . . . . . . .31
Section 2.11. Cancellation.. . . . . . . . . . . . . . . . . . . . . . .31
Section 2.12. Defaulted Interest.. . . . . . . . . . . . . . . . . . . .31
Section 2.13. Deposit of Moneys. . . . . . . . . . . . . . . . . . . . .32
Section 2.14. CUSIP Number.. . . . . . . . . . . . . . . . . . . . . . .32
Section 2.15. Book-Entry Provisions for Global Notes.. . . . . . . . . .32
Section 2.16. Registration of Transfers and Exchanges. . . . . . . . . .33
Section 2.17. Restrictive Legends. . . . . . . . . . . . . . . . . . . .37
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.. . . . . . . . . . . . . . . . . . . .38
Section 3.02. Selection of Notes to Be Redeemed. . . . . . . . . . . . .39
Section 3.03. Notice of Redemption.. . . . . . . . . . . . . . . . . . .39
Section 3.04. Effect of Notice of Redemption.. . . . . . . . . . . . . .40
Section 3.05. Deposit of Redemption Price. . . . . . . . . . . . . . . .40
Section 3.06. Notes Redeemed in Part.. . . . . . . . . . . . . . . . . .40
i
<PAGE>
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.. . . . . . . . . . . . . . . . . . . . .40
Section 4.02. Provision of Financial Statements and Other Information. .41
Section 4.03. Waiver of Stay, Extension or Usury Laws. . . . . . . . . .41
Section 4.04. Compliance Certificate; Notice of Default; Tax
Information. . . . . . . . . . . . . . . . . . . . . . . .41
Section 4.05. Payment of Taxes and Other Claims. . . . . . . . . . . . .42
Section 4.06. Corporate Existence. . . . . . . . . . . . . . . . . . . .42
Section 4.07. Maintenance of Office or Agency. . . . . . . . . . . . . .43
Section 4.08. Compliance with Laws.. . . . . . . . . . . . . . . . . . .43
Section 4.09. Maintenance of Properties and Insurance. . . . . . . . . .43
Section 4.10. Limitation on Additional Indebtedness. . . . . . . . . . .44
Section 4.11. Limitation on Restricted Payments. . . . . . . . . . . . .44
Section 4.12. Limitation on Other Senior Subordinated Indebtedness.. . .47
Section 4.13. Limitation on Certain Asset Sales. . . . . . . . . . . . .47
Section 4.14. Limitation on Transactions with Affiliates.. . . . . . . .50
Section 4.15. Limitations on Liens.. . . . . . . . . . . . . . . . . . .51
Section 4.16. Limitations on Investments.. . . . . . . . . . . . . . . .52
Section 4.17. Change of Control. . . . . . . . . . . . . . . . . . . . .52
Section 4.18. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. . . . . . . . . . . . .54
Section 4.19. Limitation on Conduct of Business. . . . . . . . . . . . .55
Section 4.20. Limitation on Preferred Stock of Restricted
Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . .56
Section 4.21. Limitation on Creation of Subsidiaries.. . . . . . . . . .56
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets.. .56
Section 5.02. Successor Person Substituted.. . . . . . . . . . . . . . .57
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. . . . . . . . . . . . . . . . . . . . .58
Section 6.02. Acceleration.. . . . . . . . . . . . . . . . . . . . . . .59
Section 6.03. Other Remedies.. . . . . . . . . . . . . . . . . . . . . .60
Section 6.04. Waiver of Past Defaults and Events of Default. . . . . . .60
Section 6.05. Control by Majority. . . . . . . . . . . . . . . . . . . .61
Section 6.06. Limitation on Suits. . . . . . . . . . . . . . . . . . . .61
Section 6.07. Rights of Holders to Receive Payment.. . . . . . . . . . .61
Section 6.08. Collection Suit by Trustee.. . . . . . . . . . . . . . . .62
Section 6.09. Trustee May File Proofs of Claim.. . . . . . . . . . . . .62
Section 6.10. Priorities.. . . . . . . . . . . . . . . . . . . . . . . .62
Section 6.11. Undertaking for Costs. . . . . . . . . . . . . . . . . . .63
ii
<PAGE>
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . .63
Section 7.02. Rights of Trustee. . . . . . . . . . . . . . . . . . . . .64
Section 7.03. Individual Rights of Trustee.. . . . . . . . . . . . . . .64
Section 7.04. Trustee's Disclaimer.. . . . . . . . . . . . . . . . . . .65
Section 7.05. Notice of Defaults.. . . . . . . . . . . . . . . . . . . .65
Section 7.06. Reports by Trustee to Holders. . . . . . . . . . . . . . .65
Section 7.07. Compensation and Indemnity.. . . . . . . . . . . . . . . .66
Section 7.08. Replacement of Trustee.. . . . . . . . . . . . . . . . . .66
Section 7.09. Successor Trustee by Consolidation, Merger or
Conversion.. . . . . . . . . . . . . . . . . . . . . . . .67
Section 7.10. Eligibility; Disqualification. . . . . . . . . . . . . . .67
Section 7.11. Preferential Collection of Claims Against Company. . . . .67
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.. . . . . . . . . . . . . . . .68
Section 8.02. With Consent of Holders. . . . . . . . . . . . . . . . . .68
Section 8.03. Compliance with TIA. . . . . . . . . . . . . . . . . . . .70
Section 8.04. Revocation and Effect of Consents. . . . . . . . . . . . .70
Section 8.05. Notation on or Exchange of Notes.. . . . . . . . . . . . .70
Section 8.06. Trustee to Sign Amendments, etc. . . . . . . . . . . . . .70
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Satisfaction and Discharge of Indenture. . . . . . . . . .71
Section 9.02. Legal Defeasance.. . . . . . . . . . . . . . . . . . . . .72
Section 9.03. Covenant Defeasance. . . . . . . . . . . . . . . . . . . .72
Section 9.04. Conditions to Defeasance or Covenant Defeasance. . . . . .73
Section 9.05. Application of Trust Money.. . . . . . . . . . . . . . . .74
Section 9.06. Repayment to the Company.. . . . . . . . . . . . . . . . .75
Section 9.07. Reinstatement. . . . . . . . . . . . . . . . . . . . . . .75
ARTICLE 10
GUARANTEE
Section 10.01. Unconditional Guarantee. . . . . . . . . . . . . . . . . .75
Section 10.02. Severability.. . . . . . . . . . . . . . . . . . . . . . .76
Section 10.03. Limitation on Guarantor's Liability; Contribution. . . . .76
Section 10.04. Successors and Assigns.. . . . . . . . . . . . . . . . . .77
Section 10.05. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . .77
Section 10.06. Release of Guarantor.. . . . . . . . . . . . . . . . . . .77
iii
<PAGE>
Section 10.07. Execution of Supplemental Indenture for Future Guarantors.77
Section 10.08. Execution and Delivery of Guarantee. . . . . . . . . . . .78
Section 10.09. Subordination of Subrogation and Other Rights. . . . . . .78
ARTICLE 11
SUBORDINATION OF GUARANTEE
Section 11.01. Guarantee Obligations Subordinated to Guarantor
Senior Indebtedness. . . . . . . . . . . . . . . . . . . .78
Section 11.02. Payment Over of Proceeds upon Dissolution, etc.. . . . . .78
Section 11.03. Suspension of Guaranteed Obligations When Guarantor
Senior Indebtedness in Default.. . . . . . . . . . . . . .80
Section 11.04. Trustee's Relation to Guarantor Senior Indebtedness. . . .81
Section 11.05. Subrogation. . . . . . . . . . . . . . . . . . . . . . . .81
Section 11.06. Guarantee Subordination Provisions Solely to Define
Relative Rights. . . . . . . . . . . . . . . . . . . . . .82
Section 11.07. Trustee to Effectuate Subordination. . . . . . . . . . . .82
Section 11.08. No Waiver of Subordination Provisions. . . . . . . . . . .82
Section 11.09. Notice to Trustee. . . . . . . . . . . . . . . . . . . . .83
Section 11.10. Reliance on Judicial Order or Certificate of
Liquidating Agent. . . . . . . . . . . . . . . . . . . . .83
Section 11.11. No Suspension of Remedies. . . . . . . . . . . . . . . . .84
ARTICLE 12
SUBORDINATION OF NOTES
Section 12.01. Notes Subordinate to Senior Indebtedness.. . . . . . . . .84
Section 12.02. Payment Over of Proceeds upon Dissolution, etc.. . . . . .84
Section 12.03. Suspension of Payment When Senior Indebtedness in
Default. . . . . . . . . . . . . . . . . . . . . . . . . .85
Section 12.04. Trustee's Relation to Senior Indebtedness. . . . . . . . .86
Section 12.05. Subrogation. . . . . . . . . . . . . . . . . . . . . . . .87
Section 12.06. Provisions Solely to Define Relative Rights. . . . . . . .87
Section 12.07. Trustee to Effectuate Subordination. . . . . . . . . . . .88
Section 12.08. No Waiver of Subordination Provisions. . . . . . . . . . .88
Section 12.09. Notice to Trustee. . . . . . . . . . . . . . . . . . . . .88
Section 12.10. Reliance on Judicial Order or Certificate of
Liquidating Agent. . . . . . . . . . . . . . . . . . . . .89
Section 12.11. No Suspension of Remedies. . . . . . . . . . . . . . . . .89
ARTICLE 13
MISCELLANEOUS
Section 13.01. TIA Controls.. . . . . . . . . . . . . . . . . . . . . . .89
Section 13.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . .90
Section 13.03. Communications by Holders with Other Holders.. . . . . . .91
Section 13.04. Certificate and Opinion as to Conditions Precedent.. . . .91
Section 13.05. Statements Required in Certificate and Opinion.. . . . . .91
Section 13.06. Rules by Trustee and Agents. . . . . . . . . . . . . . . .91
iv
<PAGE>
Section 13.07. Business Days; Legal Holidays. . . . . . . . . . . . . . .92
Section 13.08. Governing Law. . . . . . . . . . . . . . . . . . . . . . .92
Section 13.09. No Adverse Interpretation of Other Agreements. . . . . . .92
Section 13.10. No Recourse Against Others.. . . . . . . . . . . . . . . .92
Section 13.11. Successors.. . . . . . . . . . . . . . . . . . . . . . . .92
Section 13.12. Multiple Counterparts. . . . . . . . . . . . . . . . . . .92
Section 13.13. Table of Contents, Headings, etc.. . . . . . . . . . . . .92
Section 13.14. Separability.. . . . . . . . . . . . . . . . . . . . . . .93
EXHIBITS
Exhibit A. Form of Series A Note. . . . . . . . . . . . . . . . . . A-1
Exhibit B. Form of Series B Note. . . . . . . . . . . . . . . . . . B-1
Exhibit C. Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors. . . . . . . . C-1
Exhibit D Form of Transferee Letter of Representaiton. . . . . . . D-1
Exhibit E. Form of Certificate to Be Delivered in Connection with
Regulation S Transfers . . . . . . . . . . . . . . . . . E-1
Exhibit F. Form of Supplemental Indenture . . . . . . . . . . . . . F-1
v
<PAGE>
INDENTURE, dated as of June 16, 1999, among TRANSPORTATION
MANUFACTURING OPERATIONS, INC. a Delaware corporation (to be renamed Motor
Coach Industries International, Inc.) (the "COMPANY"), each of the GUARANTORS
(as defined herein) and IBJ WHITEHALL BANK & TRUST COMPANY, a banking
organization organized under the laws of New York, as Trustee (the "TRUSTEE").
The Company has duly authorized the creation of an issue of Series A
11 1/4% Senior Subordinated Notes due 2009 (the "INITIAL NOTES") and Series B
11 1/4% Senior Subordinated Notes due 2009 (the "EXCHANGE NOTES") and, to
provide therefor, the Company and each Guarantor has duly authorized the
execution and delivery of this Indenture. All things necessary to make the
Notes, when duly issued and executed by the Company, and authenticated and
delivered hereunder, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company and the Guarantors,
have been done.
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. DEFINITIONS.
"ACQUIRED INDEBTEDNESS" means Indebtedness of a Person existing at
the time such Person becomes a Restricted Subsidiary or is merged into or
consolidated with any other Person or which is assumed in connection with the
acquisition of assets from such Person and, in each case, not incurred by
such Person in connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary or such merger, consolidation or
acquisition.
"ADDITIONAL INTEREST" has the meaning provided to such term in the
Registration Rights Agreement.
"ADJUSTED NET ASSETS" of any Person at any date shall mean the
lesser of the amount by which the fair value of the property of such Person
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities), but excluding liabilities under the Guarantee of such Person at
such date and the present fair salable value of the assets of such Person at
such date exceeds the amount that will be required to pay the probable
liability of such Person on its debts (after giving effect to all other fixed
and contingent liabilities and after giving effect to any collection from any
Subsidiary of such Person in respect of the Obligations of such Person under
the Guarantee of such Person), excluding Indebtedness in respect of the
Guarantee of such Person, as they become absolute and matured.
"AFFILIATE" means, with respect to any specific Person, any other
Person that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such
specified Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling," "controlled by," and
"under common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that, for
<PAGE>
2
purposes of Section 4.14 of this Indenture, beneficial ownership of at least
10% of the voting securities of a Person, either directly or indirectly,
shall be deemed to be control.
"AGENT" means any Registrar, Paying Agent, co-Registrar,
Authenticating Agent or agent for service of notices and demands.
"ASSET ACQUISITION" means
(1) an Investment by the Company or any Restricted Subsidiary of
the Company in any other Person pursuant to which such Person shall
become a Restricted Subsidiary of the Company, or shall be merged with
or into the Company or any Restricted Subsidiary of the Company or
(2) the acquisition by the Company or any Restricted Subsidiary
of the Company of the assets of any Person (other than a Restricted
Subsidiary of the Company) which constitute all or substantially all
of the assets of such Person or comprise any division or line of
business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.
"ASSET SALE" means any direct or indirect sale, issuance,
conveyance, assignment, transfer, lease or other disposition (including any
sale and lease-back transaction), other than to the Company or any of its
Restricted Subsidiaries, in any single transaction or series of related
transactions of
(1) any Capital Stock of or other equity interest in any
Restricted Subsidiary of the Company; or
(2) any other property or assets of the Company or of any
Restricted Subsidiary thereof other than the sale of the Company's
products (including, without limitation, the sale or lease of buses)
in the ordinary course of business;
PROVIDED that Asset Sales shall not include
(1) a transaction or series of related transactions for which
the Company or its Restricted Subsidiaries receive aggregate
consideration of less than $1,000,000;
(2) the sale, lease, conveyance, disposition or other transfer
of all or substantially all of the assets of the Company as permitted
under Section 5.01 of this Indenture;
(3) any Restricted Payment made in compliance with Section 4.11
of this Indenture, and any making of any Permitted Investment;
(4) surrender or waiver of contract rights or the settlement,
release or surrender of contract, tort or other claims of any kind;
(5) the licensing of intellectual property in the ordinary
course of business;
(6) transfers of Receivables and Related Assets in connection
with a Permitted Receivables Financing;
<PAGE>
3
(7) sales of Cash Equivalents;
(8) granting of Liens not otherwise prohibited by this
Indenture; and
(9) leases or subleases to third persons in the ordinary course
of business that do not interfere in any material respect with the
business of the Company or any of its Restricted Subsidiaries.
"ASSET SALE PROCEEDS" means, with respect to any Asset Sale,
(1) cash and Cash Equivalents received by the Company or any
Restricted Subsidiary of the Company from such Asset Sale (including
cash or Cash Equivalents received as consideration for the assumption
of liabilities incurred in connection with or in anticipation of such
Asset Sale), after
(a) provision for all income or other taxes measured by or
resulting from such Asset Sale,
(b) payment of all brokerage commissions, underwriting and
other fees and expenses related to such Asset Sale,
(c) provision for minority interest holders in any
Restricted Subsidiary of the Company as a result of such Asset
Sale,
(d) repayment of Indebtedness that is secured by the
assets subject to such Asset Sale or otherwise required to be
repaid in connection with such Asset Sale and
(e) deduction of appropriate amounts to be provided by the
Company or a Restricted Subsidiary of the Company as a reserve,
in accordance with GAAP, against any liabilities associated with
the assets sold or disposed of in such Asset Sale and retained by
the Company or a Restricted Subsidiary after such Asset Sale,
including, without limitation, pension and other post-employment
benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated
with the assets sold or disposed of in such Asset Sale, and
(2) promissory notes and other non-cash consideration received
by the Company or any Restricted Subsidiary of the Company from such
Asset Sale or other disposition upon the liquidation or conversion of
such notes or non-cash consideration into cash or Cash Equivalents.
"AVAILABLE ASSET SALE PROCEEDS" means, with respect to any Asset Sale,
the aggregate Asset Sale Proceeds from such Asset Sale that have not been
applied in accordance with clauses (3)(a) or (3)(b), and which have not yet been
the basis for an Excess Proceeds Offer in accordance with clause (3)(c) of
Section 4.13A under this Indenture.
"BOARD OF DIRECTORS" means, with respect to any Person, the board of
directors of such Person or similar governing body or any duly authorized
committee thereof.
<PAGE>
4
"BOARD RESOLUTION" means with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification and delivered to the
Trustee.
"CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated and whether
or not voting) of corporate stock, partnership or limited liability company
interests or any other participation, right or other interest in the nature of
an equity interest in such Person including, without limitation, Common Stock
and Preferred Stock of such Person, or any option, warrant or other security
convertible into any of the foregoing.
"CAPITALIZED LEASE OBLIGATIONS" means with respect to any Person,
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such Indebtedness shall be the capitalized amount of such obligations
determined in accordance with GAAP.
"CASH EQUIVALENTS" means
(1) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency or
instrumentality 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;
(2) 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 one of the two highest ratings obtainable from either
Standard & Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("MOODY'S");
(3) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a
rating of at least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances maturing
within one year from the date of acquisition thereof issued by any
bank organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of a
foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $250,000,000;
(5) repurchase obligations with a term of not more than 365 days
for underlying securities of the types described in clause (1) above
entered into with any bank meeting the qualifications specified in
clause (4) above; and
(6) investments in money market funds which invest substantially
all their assets in securities of the types described in clauses (1)
through (5) above.
"CERTIFICATED NOTES" means one or more certificated Notes in
registered form.
A "CHANGE OF CONTROL" of the Company will be deemed to have occurred
at such time as
<PAGE>
5
(1) any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act (a "Group"), other than a Permitted
Holder, becomes the beneficial owner (as defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act,
except that a Person shall 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) of
50% or more of the total voting or economic power of the Company's
Capital Stock, and (b) the Permitted Holders no longer have the power
to elect a majority of the directors of the Board of Directors of the
Company,
(2) the occurrence of any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of
all or substantially all of the assets of the Company and its
Restricted Subsidiaries, taken as a whole, to any Person or Group
(whether or not otherwise in compliance with the provisions of the
Indenture) other than to the Permitted Holders,
(3) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of
the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the
shareholders of the Company has been approved by the Permitted Holders
or a majority of the directors then still in office who either were
directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to
constitute a majority of the Board of Directors of the Company, or
(4) the approval by the holders of Capital Stock of the Company
of any plan or proposal for the liquidation or dissolution of the
Company (whether or not otherwise in compliance with the provisions of
this Indenture).
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMMON STOCK" of any Person means all Capital Stock of such Person
that is generally entitled to
(1) vote in the election of directors of such Person or
(2) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers
or others that will control the management and policies of such
Person.
"COMPANY" means the party named as such in the first paragraph of this
Indenture until a successor replaces such party pursuant to Article 5 of this
Indenture and thereafter means the successor.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" means, with respect to any
Person, the ratio of EBITDA of such Person during the four full fiscal quarters
(the "FOUR QUARTER PERIOD") ending on or prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "TRANSACTION DATE") to Consolidated Fixed Charges of such Person for
the Four Quarter Period. In addition to and without limitation of the foregoing,
for purposes of this definition, "CONSOLIDATED EBITDA" and "CONSOLIDATED FIXED
CHARGES" shall be calculated after giving effect on a PRO FORMA basis for the
period of such calculation to
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6
(1) the incurrence or repayment of any Indebtedness of such
Person or any of its Restricted Subsidiaries or the issuance or
redemption or other repayment of Preferred Stock of any such
Restricted Subsidiary (and the application of the proceeds thereof)
giving rise to the need to make such calculation and any incurrence or
repayment of other Indebtedness and, in the case of any Restricted
Subsidiary, the issuance or redemption or other repayment of Preferred
Stock (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of
business for working capital purposes pursuant to working capital
facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior
to the Transaction Date (except that, in determining the Consolidated
Fixed Charge Coverage Ratio as of any Transaction Date, any Permitted
Indebtedness that is incurred at the same time as the Indebtedness
giving rise to the need to calculate the Consolidated Fixed Charge
Coverage Ratio shall not be included for purposes of such
calculation), as if such incurrence or repayment or issuance or
redemption or other repayment, as the case may be (and the application
of the proceeds thereof), occurred on the first day of the Four
Quarter Period, and
(2) any Asset Sales or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its 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 and also including any EBITDA
(PROVIDED that such EBITDA shall be included only to the extent
includable pursuant to the definition of "Consolidated Net Income")
(including any PRO FORMA expense and cost reductions calculated on a
basis consistent with Regulation S-X of the Exchange Act) attributable
to the assets which are the subject of the Asset Acquisition or Asset
Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date, as if such Asset Sale
or Asset Acquisition (including the incurrence, assumption or
liability for any such Acquired Indebtedness) occurred on the first
day of the Four Quarter Period.
If such Person or any of its Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Restricted Subsidiary of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"CONSOLIDATED FIXED CHARGES" for purposes of determining the denominator (but
not the numerator) of this "CONSOLIDATED FIXED CHARGE COVERAGE RATIO":
(1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue
to be so determined thereafter shall be deemed to have accrued at a
fixed rate PER ANNUM equal to the rate of interest on such
Indebtedness in effect on the Transaction Date;
(2) 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 Four Quarter Period; and
(3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is
covered by one or more Hedging Obligations,
<PAGE>
7
shall be deemed to accrue at the rate PER ANNUM resulting after
giving effect to the operation of such agreements.
"CONSOLIDATED FIXED CHARGES" means, with respect to any Person, for
any period, the sum, without duplication, on a consolidated basis, of
(1) Consolidated Interest Expense, plus
(2) the product of
(a) the amount of all dividend and distribution payments
on any series of Disqualified Capital Stock and Preferred Stock
of such Person and its Restricted Subsidiaries paid (other than
dividends paid in Capital Stock (other than Disqualified Capital
Stock)), accrued or scheduled to be paid or accrued during such
period, times
(b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person, for
any period, the aggregate amount of interest which, in conformity with GAAP,
would be set forth opposite the caption "interest expense" or any like caption
on an income statement for such Person and its Restricted Subsidiaries on a
consolidated basis including, but not limited to,
(1) Redeemable Dividends, whether paid or accrued, on Subsidiary
Preferred Stock,
(2) imputed interest included in Capitalized Lease Obligations
in accordance with GAAP,
(3) all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing,
(4) the net costs associated with Hedging Obligations,
(5) the interest portion of any deferred payment obligation in
accordance with GAAP,
(6) amortization of discount or premium, if any, and
(7) interest-equivalent costs associated with any Permitted
Receivables Financing, whether accounted for as interest expense or
loss on the sale of Receivables and Related Assets,
plus, without duplication,
(1) all net capitalized interest for such period, and
<PAGE>
8
(2) all interest incurred or paid under any guarantee of
Indebtedness (including a guarantee of principal, interest or any
combination thereof) of any Person.
Notwithstanding the foregoing, the amortization of deferred financing
fees and expenses shall not be included in "CONSOLIDATED INTEREST EXPENSE."
"CONSOLIDATED NET INCOME" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED, HOWEVER, that:
(1) the Net Income of any Person, other than a Restricted
Subsidiary of the referent Person, shall be included only to the
extent of the amount of dividends or distributions paid to the
referent Person or a Restricted Subsidiary of such referent Person;
(2) the Net Income of any Restricted Subsidiary of the Person in
question that is subject to any restriction or limitation on the
payment of dividends or the making of other distributions shall be
excluded to the extent of such restriction or limitation;
(3) solely for the purposes of determining the aggregate amount
available for Restricted Payments under clause (3)(a) of
Section 4.11(A) under this Indenture, the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded;
(4) any net gain or loss resulting from an Asset Sale by the
Person in question or any of its Restricted Subsidiaries other than in
the ordinary course of business shall be excluded;
(5) all extraordinary gains and losses, non-recurring cumulative
effects of accounting changes and, without duplication, non-recurring
or unusual gains and losses and all restructuring charges shall be
excluded;
(6) income or loss attributable to discontinued operations
(including, without limitation, operations disposed of during such
period whether or not such operations were classified as discontinued)
shall be excluded;
(7) solely for the purposes of determining the aggregate amount
available for Restricted Payments under clause (3)(a) of
Section 4.11(A) under this Indenture, in the case of a successor to
the referent Person by consolidation or merger or as a transferee of
the referent Person's assets, any earnings of the successor
corporation prior to such consolidation, merger or transfer of assets
shall be excluded; and
(8) any non-cash charges attributable to applying the purchase
of accounting in accordance with GAAP shall be excluded.
"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 One State Street, New York, New York 10004.
<PAGE>
9
"CUMULATIVE CONSOLIDATED NET INCOME" means, with respect to any
Person, as of any date of determination, Consolidated Net Income from July 1,
1999 to such date of determination, taken as a single accounting period.
"DEFAULT" means any event that is, or after notice or passage of time
or both would be, an Event of Default.
"DEPOSITORY" means, with respect to the Notes issued in the form of
one or more Global Notes, The Depository Trust Company or another Person
designated as Depository by the Company, which Person must be a clearing agency
registered under the Exchange Act.
"DESIGNATED PREFERRED STOCK" means Preferred Stock (not constituting
Disqualified Capital Stock) of the Company (excluding any Preferred Stock issued
on or prior to the Issue Date and any Preferred Stock issued in exchange or
substitution therefor) that is designated as Designated Preferred Stock pursuant
to an Officers' Certificate delivered to the Trustee on the issuance date
thereof, the cash proceeds of which are excluded from the calculation set forth
in clause (3)(b) of Section 4.11(A) of this Indenture.
"DESIGNATED SENIOR INDEBTEDNESS" as to the Company or any Guarantor,
as the case may be, means
(1) any Senior Indebtedness under the Senior Credit Facility,
and
(2) after the Senior Credit Facility has been paid in full and
terminated, any other Senior Indebtedness which at the time of
determination exceeds $25,000,000 in aggregate principal amount (or
accreted value in the case of Indebtedness issued at a discount)
outstanding or available under a committed facility, which is
specifically designated in the instrument evidencing such Senior
Indebtedness as "DESIGNATED SENIOR INDEBTEDNESS" by such Person and as
to which the Trustee has been given written notice of such
designation.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock of a Person or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable solely at the option of the holder thereof, in whole or in part,
on or prior to the maturity date of the Notes, for cash or securities
constituting Indebtedness; PROVIDED, HOWEVER, that Preferred Stock of a Person
or any Restricted Subsidiary thereof that is issued with the benefit of
provisions requiring a change of control offer or an asset sale offer to be made
for such Preferred Stock in the event of a change of control of or sale of
assets by such Person or Restricted Subsidiary which provisions have
substantially the same effect as the provisions described under Sections 4.17
and 4.13 of this Indenture, respectively, shall not be deemed to be Disqualified
Capital Stock solely by virtue of such provisions; PROVIDED, FURTHER, that if
such Capital Stock is issued pursuant to any plan for the benefit of employees
of the Company or its Subsidiaries or by any such plan to such employees, such
Capital Stock shall not constitute Disqualified Capital Stock solely because it
may be required to be repurchased by the Company in order to satisfy applicable
statutory or regulatory obligations.
"DOMESTIC RESTRICTED SUBSIDIARY" means any Restricted Subsidiary of
the Company that is organized under the laws of the United States or any State
thereof, or the District of Columbia.
<PAGE>
10
"EBITDA" means, with respect to any Person and its Restricted
Subsidiaries, for any period, an amount equal to
(1) the sum of
(a) Consolidated Net Income for such period, plus
(b) the provision for taxes for such period based on
income or profits to the extent such income or profits were
included in computing Consolidated Net Income and any provision
for taxes utilized in computing net loss under clause (a) hereof,
plus
(c) Consolidated Interest Expense for such period, plus
(d) depreciation for such period on a consolidated basis,
plus
(e) amortization of intangibles for such period on a
consolidated basis, plus
(f) any other non-cash items reducing Consolidated Net
Income for such period (other than any non-cash item requiring an
accrual or reserve for cash disbursements in any future period),
minus
(2) all non-cash items increasing Consolidated Net Income for
such period (other than any non-cash item which represents a reversal
of an accrual or reserve initially recorded in anticipation of a cash
disbursement to be made in a future period),
all for such Person and its Restricted Subsidiaries determined on a consolidated
basis in accordance with GAAP; PROVIDED, HOWEVER, that, for purposes of
calculating EBITDA during any fiscal quarter, cash income from a particular
Investment (other than a Restricted Subsidiary) of such Person shall be included
only
(1) if cash income has been received by such Person with respect
to such Investment during each of the previous four fiscal quarters,
or
(2) if the cash income derived from such Investment is
attributable to Cash Equivalents.
"EQUITY OFFERING" means a sale by the Company of shares of its Common
Stock (however designated and whether voting or non-voting) (other than
Disqualified Capital Stock) and any and all rights, warrants or options to
acquire such Common Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"EXCHANGE NOTES" has the meaning provided in the preamble to this
Indenture.
"FAIR MARKET VALUE" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value
shall be de-
<PAGE>
11
termined by the Board of Directors of the Company acting reasonably and in
good faith and shall be evidenced by a Board Resolution.
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States from time to time.
"GUARANTEE" means the guarantee of the Obligations of the Company with
respect to the Notes by each Guarantor.
"GUARANTOR" means the issuer at any time of a Guarantee (so long as
such Guarantee remains outstanding).
"GUARANTOR SENIOR INDEBTEDNESS" means the principal of and premium, if
any, and interest on, and any and all other fees, expense reimbursement
obligations and other amounts due pursuant to the terms of all agreements,
documents and instruments providing for, creating, securing or evidencing or
otherwise entered into in connection with
(1) all Indebtedness of any Guarantor owed to lenders under the
Senior Credit Facility,
(2) all obligations of any Guarantor with respect to any
Hedging Obligations,
(3) all obligations of any Guarantor to reimburse any bank or
other person in respect of amounts paid under letters of credit,
acceptances or other similar instruments,
(4) all other Indebtedness of or any Guarantor which does not
provide that it is to rank PARI PASSU with or subordinate to the
Guarantee of such Guarantor, and
(5) all deferrals, renewals, extensions and refundings of, and
amendments, modifications and supplements to, any of the Guarantor
Senior Indebtedness described above.
Notwithstanding anything to the contrary in the foregoing, Guarantor
Senior Indebtedness will not include
(1) Indebtedness of any Guarantor to any of its Subsidiaries, or
to any Affiliate of such Guarantor or any of such Affiliate's
Subsidiaries,
(2) Indebtedness represented by the Guarantees,
(3) any Indebtedness which by the express terms of the agreement
or instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Guarantor Senior
Indebtedness,
(4) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business,
(5) Indebtedness incurred in violation of the Indenture, unless
such Indebtedness consists of Indebtedness under the Senior Credit
Facility, and the holder(s) of such Indebted-
<PAGE>
12
ness and their agents and representatives had no actual knowledge
at the time of incurrence that the incurrence of such Indebtedness
violated the Indenture,
(6) Indebtedness represented by Disqualified Capital Stock, and
(7) any Indebtedness to or guaranteed on behalf of, any
shareholders, director, officer or employee of such Guarantor or any
Subsidiary of such Guarantor.
"HEDGING OBLIGATIONS" means, with respect to any Person, the net
payment obligations of such Person under (a) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (b) other
agreements or arrangements entered into in order to protect such Person against
fluctuations in commodity prices, interest rates or currency exchange rates.
"HOLDER" or "NOTEHOLDER" means a Person in whose name a Note is
registered on the Registrar's book.
"INCUR" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
(and "INCURRENCE," "INCURRED," "INCURABLE," and "INCURRING" shall have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness.
"INDEBTEDNESS" means (without duplication), with respect to any
Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (excluding, without limitation, any balances that
constitute accounts payable or trade payables, and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, and shall also include, to the extent
not otherwise included,
(1) any Capitalized Lease Obligations of such Person,
(2) obligations secured by a lien to which the property or
assets owned or held by such Person is subject, whether or not the
obligation or obligations secured thereby shall have been assumed;
provided that, if such obligations have not been assumed by such
Person, the amount of such Indebtedness shall be the lesser of (A) the
fair market value of such assets at such date of determination and (B)
the amount of such obligations,
(3) guarantees of items of other Persons which would be included
within this definition for such other Persons (whether or not such
items would appear upon the balance sheet of the guarantor),
(4) all obligations for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction,
<PAGE>
13
(5) Disqualified Capital Stock of such Person or any Restricted
Subsidiary thereof, and valued at its mandatory maximum redemption
price or liquidation preference plus accrued dividends,
(6) Obligations of any such Person under any hedging obligations
applicable to any of the foregoing (if and to the extent such hedging
obligations would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP);
provided that,
(1) the amount outstanding at any time of any Indebtedness
issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as
determined in conformity with GAAP; and
(2) Indebtedness shall not include any liability for
federal, state, local or other taxes.
Guarantees of (or obligations with respect to letters of credit
supporting) Indebtedness otherwise included in the determination of such amount
shall not be included as Indebtedness.
"INDENTURE" means this Indenture as amended, restated or supplemented
from time to time.
"INDEPENDENT FINANCIAL ADVISOR" means an investment banking, financial
advisory, valuation or accounting firm of national reputation in the United
States
(1) which does not, and whose directors, officers and employees
or Affiliates do not, have a direct or indirect financial interest in
the Company and
(2) 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 NOTES" has the meaning provided in the preamble to this
Indenture.
"INITIAL PURCHASERS" refers to CIBC World Markets Corp. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
"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)
promulgated under the Securities Act.
"INTEREST PAYMENT DATE" means the stated maturity of an installment of
interest on the Notes.
"INVESTMENTS" means, with respect of any Person, directly or
indirectly, any advance, account receivable (other than an account receivable
arising in the ordinary course of business of such Person), loan or capital
contribution to (by means of transfers of property to others, payments for
property or services for the account or use of others or otherwise), the
purchase of any Capital Stock, bonds, notes, debentures, partnership or joint
venture interests or other securities of, the acquisition, by purchase or
otherwise, of all or substantially all of the business or assets or stock or
other evidence of beneficial ownership of, any Person or the making of
<PAGE>
14
any investment in any Person. Investments shall exclude extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices of such Person, but shall include the repurchase of securities of
any Person by such Person.
For the purposes of Sections 4.11 and 4.16 of this Indenture,
(1) "INVESTMENT" shall include and be valued at the fair market
value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary,
(2) the fair market value of the net assets of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated
a Restricted Subsidiary shall be deemed a repayment of such
Investment, and
(3) the amount of any Investment shall be the original cost of
such Investment plus the cost of all additional Investments by the
Company or any of its Restricted Subsidiaries, without any adjustments
for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment, reduced by the payment of
cash distributions in respect thereof;
PROVIDED, FURTHER, that no such payment of distributions or receipt of any such
other amounts shall reduce the amount of any Investment if such payment of
distributions or receipt of any such amounts would be included in Consolidated
Net Income. If the Company or any Restricted Subsidiary of the Company sells or
otherwise disposes of any Common Stock of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Common Stock of such Restricted Subsidiary not sold or disposed of.
"ISSUE DATE" means June 16, 1999.
"LIEN" means, with respect to any property or assets of any Person,
any mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"MATURITY DATE" means May 1, 2009.
"MCII FINANCIAL SERVICES" means MCII Financial Services Inc, a
Delaware corporation, and any successor Person performing similar functions.
"NET INCOME" means, with respect to any Person, for any period, the
net income (loss) of such Person determined in accordance with GAAP.
"NET PROCEEDS" means
<PAGE>
15
(1) in the case of any sale of Capital Stock by or equity
contribution to any Person, the aggregate net proceeds received by
such Person, after payment of expenses, commissions and the like
incurred in connection therewith, whether such proceeds are in cash or
in property (valued at the fair market value thereof, as determined in
good faith by the Board of Directors of such Person, at the time of
receipt),
(2) in the case of any exchange, exercise, conversion or
surrender of outstanding securities of any kind for or into shares of
Capital Stock of the Company which is not Disqualified Capital Stock,
the net book value of such outstanding securities on the date of such
exchange, exercise, conversion or surrender (plus any additional
amount required to be paid by the holder to such Person upon such
exchange, exercise, conversion or surrender, less any and all payments
made to the holders, e.g., on account of fractional shares and less
all expenses incurred by such Person in connection therewith), and
(3) in the case of any issuance of any Indebtedness by the
Company or any Restricted Subsidiary, the aggregate net cash proceeds
received by such Person after the payments of expenses, commissions,
underwriting discounts and the like incurred in connection therewith.
"NON-PAYMENT EVENT OF DEFAULT" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"NOTES" means the Initial Notes and the Exchange Notes treated as a
single class of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to this Indenture.
"OBLIGATIONS" means all obligations for principal, premium, interest,
penalties, charges, fees, fees and expenses of counsel, indemnities,
reimbursement obligations, damages, claims and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING MEMORANDUM" means the offering memorandum dated June 14,
1999 pursuant to which the Notes were originally offered.
"OFFICER" means, with respect to any Person, the Chief Executive
Officer, the Chief Financial Officer, Chief Accounting Officer, Treasurer,
President or any Vice President of such Person.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President and the Chief Financial Officer or any Treasurer of such Person that
shall comply with applicable provisions of this Indenture.
"OPINION OF COUNSEL" means a written opinion from legal counsel who
and which is acceptable to the Trustee complying with the requirements of this
Indenture. Such legal counsel shall be outside counsel and not an employee of
or in-house counsel to the Company.
"PAYMENT DEFAULT" means any Default, whether or not any requirement
for the giving of notice, the lapse of time or both, or any other condition to
such Default becoming an Event of Default has occurred, in the payment of
principal of or premium, if any, or interest on or any other amount payable in
connection with Designated Senior Indebtedness.
<PAGE>
16
"PERMITTED ASSET SWAP" means, with respect to any Person, the
substantially concurrent exchange of assets of such Person for assets of another
Person which are useful to the business of such aforementioned Person.
"PERMITTED BUSINESS" means any business (i) which is the same,
similar, ancillary or related to or that has manufacturing processes and
technologies similar to any of the businesses that the Company and its
Restricted Subsidiaries are engaged in on the Issue Date and (ii) in the
transportation industry.
"PERMITTED HOLDERS" means Joseph Littlejohn & Levy, Inc. ("JLL"),
investment funds managed by JLL, partners of JLL, an entity controlled by any of
the foregoing and/or by a trust of the type described hereafter, and/or a trust
for the benefit of any of the foregoing.
"PERMITTED INDEBTEDNESS" means:
(1) Indebtedness of the Company or any Restricted Subsidiary
arising under or in connection with one or more debt facilities
(including, without limitation, the Senior Credit Facility) or
commercial paper facilities or indentures providing for revolving
credit loans, term loans, receivables financing (including through the
sale of receivables to lenders or to special purpose entities formed
to borrow from lenders against receivables), letters of credit or
other long-term indebtedness, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time, in an aggregate principal amount not to exceed
at any time outstanding the sum of (A) $333,000,000, plus (B) the
greater of (x) $117,000,000 and (y) the amount equal to the sum of 85%
of the net book value of accounts receivable, 60% of the net book
value of inventory (determined on a first-in-first-out basis) and 50%
of the book value of bus lease and loan portfolio assets, of the
Company and its Restricted Subsidiaries on a consolidated basis at the
time such Indebtedness is incurred, as determined in accordance with
GAAP, less (C) any amounts outstanding under subclause (10) of this
definition, less (D) in case of clauses (A) and (B), any mandatory
prepayments actually made thereunder (to the extent, in the case of
payments of revolving credit borrowings, that the corresponding
commitments have been permanently reduced) or scheduled payments
actually made thereunder (except to the extent any such prepayments or
payments are made in connection with the refinancing of such
Indebtedness);
(2) Indebtedness under (a) the Notes outstanding on the Issue
Date and (b) the Guarantees;
(3) Indebtedness not covered by any other clause of this
definition which is outstanding on the Issue Date;
(4) Indebtedness of the Company to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to the Company or another
Restricted Subsidiary;
(5) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred to acquire property used or useful in the
ordinary course of business which Purchase Money Indebtedness and
Capitalized Lease Obligations do not in the aggregate exceed at any
one time outstanding an amount equal to the greater of (a) $25,000,000
and (b) 3% of the Total Assets of the Company determined on a
consolidated basis, as shown on the balance sheet of the Company as of
the end of the most recent fiscal quarter, in accordance with GAAP;
<PAGE>
17
(6) Hedging Obligations;
(7) Refinancing Indebtedness;
(8) Indebtedness of the Company or any Restricted Subsidiary
arising from the honoring by a bank or other financial institution of
a check, draft or similar instrument inadvertently (except in the case
of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; PROVIDED, that such Indebtedness is
extinguished within five Business Days of incurrence;
(9) Indebtedness of the Company or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of
purchase price adjustments (including adjustments in the purchase
price related to the performance or results of any acquired business)
in connection with the acquisition or disposition of assets permitted
under the Indenture;
(10) Indebtedness of a Receivables Subsidiary pursuant to a
Permitted Receivables Financing; PROVIDED that after giving effect to
the incurrence thereof, the Company could incur at least $1.00 of
Indebtedness under subclauses (1)(A) or (1)(B) of this definition in
compliance with Section 4.10 of this Indenture;
(11) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, issued in
the ordinary course of business of the Company or such Restricted
Subsidiary, including, without limitation, in order to provide
security for worker's compensation claims or payment obligations in
connection with self-insurance or similar requirements in the ordinary
course of business and other Indebtedness with respect to workers'
compensation claims, self-insurance obligations, performance, surety
and similar bonds and completion guarantees provided by the Company or
any Restricted Subsidiary in the ordinary course of business;
(12) guarantees of Indebtedness otherwise permitted under this
Indenture; and
(13) additional Indebtedness of the Company and its Restricted
Subsidiaries not to exceed $65,000,000 in aggregate principal amount
at any one time outstanding.
"PERMITTED INVESTMENTS" means Investments made on or after the Issue
Date consisting of:
(1) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary;
(2) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person, if as a result of such Investment
(a) such Person becomes a Restricted Subsidiary of the
Company, or
(b) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted
Subsidiary thereof;
<PAGE>
18
(3) Investments in cash and Cash Equivalents;
(4) loans and advances made to officers and employees of the Company
and its Restricted Subsidiaries in the ordinary course of business not to
exceed $5,000,000 in the aggregate at any one time outstanding;
(5) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any Capital Stock, bonds, notes,
debentures, partnership or joint venture interests or other securities that
are issued by a third party to the Company or such Restricted Subsidiary
solely as partial consideration for the consummation of an Asset Sale that
is otherwise permitted under Section 4.13 of this Indenture;
(6) Hedging Obligations entered into in the ordinary course of the
Company's or its Restricted Subsidiaries' business and not for speculative
purposes;
(7) notes or chattel paper received by the Company or a Restricted
Subsidiary as consideration for the ordinary course of business sale or
lease of buses;
(8) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and workers compensation, performance and
similar deposits entered into as a result of the operations of the business
in the ordinary course of business;
(9) Investments in any of the Notes;
(10) receivables owing to the Company or any Restricted Subsidiary
created in the ordinary course of business;
(11) Investments in connection with a Permitted Receivables Financing
by or to any Receivables Subsidiary, including Investments of funds held in
accounts permitted or required by the arrangements governing such Permitted
Receivables Financing or any related Indebtedness;
(12) Investments in securities of trade debtors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade debtors or customers or in good
faith settlement of delinquent obligations of such trade creditors or
customers;
(13) obligations of one or more officers or other employees of the
Company or any of its Restricted Subsidiaries in connection with such
officer's or employee's acquisition of shares of Common Stock of the
Company so long as no cash is paid by the Company or any of its Restricted
Subsidiaries to such officers or employees in connection with the
acquisition of any such obligations;
(14) Investments acquired in exchange for, or out of the Net Proceeds
(which have not, and will not, be included pursuant to clause (3)(b) of
Section 4.11(A) under this Indenture) of a substantially concurrent
offering of, shares of Capital Stock (other than Disqualified Capital
Stock) of the Company (or options, warrants or other rights to acquire such
Capital Stock);
(15) Investments in Unrestricted Subsidiaries not to exceed an amount
equal to $20,000,000 in the aggregate at any one time outstanding; and
<PAGE>
19
(16) additional Investments the amount of which when made, when taken
together with the then outstanding amount of other Investments made under
this clause (16), shall not exceed the greater of (a) $30,000,000, or (b)
4% of Total Assets of the Company determined on a consolidated basis, as
shown on the balance sheet of the Company as of the end of the most recent
fiscal quarter, in accordance with GAAP.
"PERMITTED RECEIVABLES FINANCING" means a transaction or series of
transactions (including amendments, supplements, extensions, renewals,
replacements, refinancings or modifications thereof) pursuant to which a
Receivables Subsidiary purchases Receivables and Related Assets from the Company
or any Subsidiary and finances such Receivables and Related Assets through the
issuance of indebtedness or equity interests or through the sale of the
Receivables and Related Assets or a fractional undivided interest in the
Receivables and Related Assets; provided that:
(1) the Board of Directors shall have determined in good faith
that such Permitted Receivables Financing is economically fair and
reasonable to the Company and the Receivables Subsidiary;
(2) all sales of Receivables and Related Assets to or by the
Receivables Subsidiary are made at fair market value (as determined in
good faith by the Board of Directors of the Company);
(3) the financing terms, covenants, termination events and other
provisions thereof shall be market terms (as determined in good faith
by the Board of Directors of the Company);
(4) no portion of the Indebtedness of a Receivables Subsidiary
is guaranteed by or is recourse to the Company or any Restricted
Subsidiary (other than recourse for customary representations,
warranties, covenants and indemnities, none of which shall relate to
the collectibility of the Receivables and Related Assets); and
(5) neither the Company nor any Subsidiary has any obligation to
maintain or preserve the Receivables Subsidiary's financial condition.
"PERMITTED TAX SHARING AGREEMENT" means any agreement between or among
the Company and/or any of its Restricted Subsidiaries and any other Person or
Persons which provides for consolidated federal tax return reporting by the
parties thereto; PROVIDED that any such agreement shall not result in any direct
or indirect payments by the Company and its Restricted Subsidiaries in respect
of federal tax obligations in excess of payments that would have been made in
the absence of such agreement.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
"PREFERRED STOCK" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
<PAGE>
20
"PROPERTY" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of any Person
incurred for the purpose of financing all or any part of the purchase price, or
the cost of installation, construction or improvement of, any Property.
"QUALIFIED INSTITUTIONAL BUYER" shall have the meaning specified in
Rule 144A promulgated under the Securities Act.
"RECEIVABLES AND RELATED ASSETS" means accounts receivable and
instruments, chattel paper, obligations, general intangibles and other similar
assets, in each case relating to such receivables, including interests in
merchandise or goods, the sale or lease of which gave rise to such receivable,
related contractual rights, guarantees, insurance proceeds, collections, other
related assets and proceeds of all of the foregoing.
"RECEIVABLES SUBSIDIARY" means a Wholly Owned Restricted Subsidiary
which is established for the limited purpose of acquiring and financing
Receivables and Related Assets and engaging in activities ancillary thereto.
"RECORD DATE" for interest payable on any Interest Payment Date
(except a date for payment of default interest) means the April 15 and October
15 (whether or not a Business Day) as the case may be, immediately preceding
such Interest Payment Date.
"REDEEMABLE DIVIDEND" means, for any cash dividend or distribution
with regard to Preferred Stock, the quotient of the dividend or distribution
divided by the difference between one and the maximum statutory federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to the
issuer of such Preferred Stock.
"REDEMPTION DATE" when used with respect to any Note to be redeemed
means the date fixed for such redemption pursuant to this Indenture.
"REDEMPTION PRICE" when used with respect to any Note to be redeemed
means the price fixed for such redemption pursuant to this Indenture.
"REFINANCING INDEBTEDNESS" means Indebtedness that refunds, refinances
or extends any Indebtedness of the Company outstanding on the Issue Date or
other Indebtedness permitted to be incurred by the Company or its Restricted
Subsidiaries pursuant to the terms of the Indenture, but only to the extent that
(1) the Refinancing Indebtedness is subordinated to the Notes to
at least the same extent as the Indebtedness being refunded,
refinanced or extended, if at all,
(2) the Refinancing Indebtedness is scheduled to mature either
(a) no earlier than the Indebtedness being refunded,
refinanced or extended, or
(b) after the maturity date of the Notes,
<PAGE>
21
(3) the portion, if any, of the Refinancing Indebtedness that is
scheduled to mature on or prior to the maturity date of the Notes has a
Weighted Average Life to Maturity at the time such Refinancing Indebtedness
is incurred that is equal to or greater than the Weighted Average Life to
Maturity of the portion of the Indebtedness being refunded, refinanced or
extended that is scheduled to mature on or prior to the maturity date of
the Notes, and
(4) such Refinancing Indebtedness is in an aggregate principal amount
that is equal to or less than the sum of
(a) the aggregate principal amount then outstanding under the
Indebtedness being refunded, refinanced or extended,
(b) the amount of accrued and unpaid interest, if any, and
premiums owed, if any, not in excess of preexisting prepayment
provisions on such Indebtedness being refunded, refinanced or extended
and
(c) the amount of customary fees, expenses and costs related to
the incurrence of such Refinancing Indebtedness.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of June 16, 1999 among the Company, the Guarantors and CIBC
World Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
Initial Purchasers.
"REGULATION S" means Regulation S promulgated under the Securities
Act.
"RESTRICTED PAYMENT" means any of the following:
(1) the declaration or payment of any dividend or any other
distribution or payment on Capital Stock of the Company or any
Restricted Subsidiary of the Company or any payment made to the direct
or indirect holders (in their capacities as such) of Capital Stock of
the Company or any Restricted Subsidiary of the Company (other than
(a) dividends or distributions payable solely in Capital Stock (other
than Disqualified Capital Stock) or in options, warrants or other
rights to purchase such Capital Stock (other than Disqualified Capital
Stock), and (b) in the case of Restricted Subsidiaries of the Company,
dividends or distributions payable to the Company or to a Restricted
Subsidiary of the Company and PRO RATA dividends or distributions
payable to the other holders of Common Stock of such Restricted
Subsidiary),
(2) the purchase, redemption or other acquisition or retirement
for value of any Capital Stock of the Company or any of its Restricted
Subsidiaries (other than Capital Stock owned by the Company or a
Wholly Owned Restricted Subsidiary of the Company, excluding
Disqualified Capital Stock) or any option, warrants or other rights to
purchase such Capital Stock,
(3) the making of any principal payment on, or the purchase,
defeasance, repurchase, redemption or other acquisition or retirement
for value, prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Indebtedness which is
subordinated in right of payment to the Notes (other than subordinated
Indebtedness acquired in an-
<PAGE>
22
ticipation of satisfying a scheduled sinking fund obligation,
principal installment or final maturity, in each case due within
one year of the date of acquisition),
(4) the making of any Investment or guarantee of any Investment
in any Person other than a Permitted Investment,
(5) any designation of a Restricted Subsidiary as an
Unrestricted Subsidiary (valued at the fair market value of the net
assets of such Restricted Subsidiary on the date of such designation),
and
(6) forgiveness of any Indebtedness of an Affiliate of the
Company to the Company or a Restricted Subsidiary of the Company.
"RESTRICTED SECURITY" has the meaning set forth in Rule 144(a)(3)
promulgated 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 any Note is a Restricted Security.
"RESTRICTED SUBSIDIARY" means a Subsidiary of the Company other than
an Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing as of the Issue Date. The Board of Directors of the Company may
designate any Unrestricted Subsidiary as a Restricted Subsidiary if immediately
after giving effect to such action (and treating any Acquired Indebtedness as
having been incurred at the time of such action),
(1) the Company could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to
Section 4.10 of this Indenture and
(2) no Default or Event of Default shall have occurred and be
continuing or result therefrom.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended,and the
rules and regulations of the Commission promulgated thereunder.
"SENIOR CREDIT FACILITY" means the Credit Agreement dated as of June
16, 1999, among the Company, the lenders party thereto in their capacities as
lenders thereunder and the Canadian Imperial Bank of Commerce, as agent,
together with the related documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder (PROVIDED that such
increase in borrowings is permitted by Section 4.10 of this Indenture ) or
adding Restricted Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.
"SENIOR INDEBTEDNESS" means the principal of and premium, if any, and
interest on, and any and all other fees, expense reimbursement obligations and
other amounts due pursuant to the terms of all agree-
<PAGE>
23
ments, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with
(1) all Indebtedness of the Company owed to lenders under the
Senior Credit Facility,
(2) all obligations of the Company with respect to any Hedging
Obligations,
(3) all obligations of the Company to reimburse any bank or
other person in respect of amounts paid under letters of credit,
acceptances or other similar instruments,
(4) all other Indebtedness of the Company which does not provide
that it is to rank PARI PASSU with or subordinate to the Notes and
(5) all deferrals, renewals, extensions and refundings of, and
amendments, modifications and supplements to, any of the Senior
Indebtedness described above.
Notwithstanding anything to the contrary in the foregoing, Senior
Indebtedness will not include
(1) Indebtedness of the Company to any of its Subsidiaries, or
to any Affiliate of the Company or any of such Affiliate's
Subsidiaries,
(2) Indebtedness represented by the Notes,
(3) any Indebtedness which by the express terms of the agreement
or instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Senior Indebtedness,
(4) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business,
(5) Indebtedness incurred in violation of this Indenture, unless
such Indebtedness consists of Indebtedness under the Senior Credit
Facility, and the holder(s) of such Indebtedness and their agents and
representatives had no actual knowledge at the time of incurrence that
the incurrence of such Indebtedness violated the Indenture,
(6) Indebtedness represented by Disqualified Capital Stock, and
(7) any Indebtedness to or guaranteed on behalf of, any
shareholders, director, officer or employee of the Company or any
Subsidiary of the Company.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means, with respect to any Person,
any Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1.02 (w) of Regulation S-X under the
Securities Act, as such Rule is in effect on the Issue Date.
<PAGE>
24
"SUBSIDIARY" of any specified Person means any corporation,
partnership, limited liability company, joint venture, association or other
business entity, whether now existing or hereafter organized or acquired,
(1) in the case of a corporation, of which more than 50% of the
total voting power of the Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named
Person or any of its Subsidiaries; or
(2) in the case of a partnership, limited liability company,
joint venture, association or other business entity, with respect to
which such first-named Person or any of its Subsidiaries has the power
to direct or cause the direction of the management and policies of
such entity by contract or otherwise or if in accordance with GAAP
such entity is consolidated with the first-named Person for financial
statement purposes.
"TOTAL ASSETS" means the total consolidated assets of the Company and
its Restricted Subsidiaries, as set forth on the Company's most recent
consolidated balance sheet.
"TRANSACTIONS" has the meaning provided to such term under the heading
"The Transactions" in the Offering Memorandum.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939
(15 U.S. Code sections 77aaa-77bbbb) as in effect on the date of this Indenture
(except as provided in Section 8.03 hereof).
"TRUST OFFICER" means any officer or assistant officer of the Trustee
with direct responsibility for the administration of this Indenture and also
means, with respect to a particular corporate trust officer, any other officer
to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"TRUSTEE" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
"UNRESTRICTED SUBSIDIARY" means
(1) any Subsidiary of an Unrestricted Subsidiary and
(2) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary by a resolution adopted by
the Board of Directors of the Company;
PROVIDED that a Subsidiary may be so classified as an Unrestricted Subsidiary
only if
(a) such classification is in compliance with Section 4.11
of this Indenture, and
(b) neither the Company nor any Restricted Subsidiary shall
at any time
(i) provide a guarantee of, or similar credit support to,
any Indebtedness of such Subsidiary (including any undertaking, agreement
or instrument evidencing such Indebtedness),
<PAGE>
25
(ii) be directly or indirectly liable for any Indebtedness
of such Subsidiary or
(iii) be directly or indirectly liable for any other
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 other Indebtedness that is
Indebtedness of such Subsidiary (including any corresponding right to take
enforcement action against such Subsidiary),
except in the case of clause (i) or (ii) to the extent
(i) that the Company or such Restricted Subsidiary could
otherwise provide such a guarantee or incur such Indebtedness (other
than as Permitted Indebtedness) pursuant to Section 4.10 under this
Indenture and
(ii) the provision of such guarantee and the incurrence of
such Indebtedness otherwise would be permitted under Section 4.11 of
this Indenture.
The Trustee shall be given prompt notice by the Company of each
resolution adopted by the Board of Directors of the Company under this
provision, together with a copy of each such resolution adopted.
"U.S. GOVERNMENT OBLIGATIONS" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the 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 a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing
(1) the then outstanding aggregate principal amount of such
Indebtedness into
(2) the sum of the total of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking
fund, serial maturity or other required payment of principal,
including payment at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest
one-twelfth) which will elapse between such date and the
making of such payment.
<PAGE>
26
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means any Restricted Subsidiary,
all of the outstanding voting securities (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company. 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.
Section 1.02. OTHER DEFINITIONS.
The definitions of the following terms may be found in the sections
indicated as follows:
Term Defined in Section
"Affiliate Transaction".............................. 4.14
"Agent Members"...................................... 2.15
"Authenticating Agent"............................... 2.02
"Bankruptcy Law"..................................... 6.01
"Business Day"....................................... 13.07
"Change of Control Offer"............................ 4.17
"Change of Control Payment Date"..................... 4.17
"Change of Control Purchase Price"................... 4.17
"Covenant Defeasance"................................ 9.03
"Custodian".......................................... 6.01
"Event of Default"................................... 6.01
"Excess Proceeds Offer".............................. 4.13
"Excess Proceeds Payment Date"....................... 4.13
"Funding Guarantor".................................. 10.03
"Global Notes"....................................... 2.01
"Guarantee Payment Blockage Period".................. 11.03
"Guarantor Representative"........................... 11.03
"Initial Blockage Period"............................ 12.03
"Initial Guarantee Blockage Period".................. 11.03
"Legal Defeasance"................................... 9.02
"Legal Holiday"...................................... 13.07
"Paying Agent"....................................... 2.03
"Payment Blockage Period"............................ 12.03
"Registrar".......................................... 2.03
"Regulation S Global Note"........................... 2.01
"Representative"..................................... 12.03
"Resale Restriction Termination Date"................ 2.16
"Rule 144A Global Note".............................. 2.01
Section 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the portion
of such provision required to be incorporated herein in order for this Indenture
to be qualified under the TIA is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"INDENTURE SECURITIES" means the Notes.
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27
"INDENTURE SECURITYHOLDER" means a Noteholder.
"INDENTURE TO BE QUALIFIED" means this Indenture.
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.
"OBLIGOR ON THE INDENTURE SECURITIES" means the Company, the
Guarantors or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by Commission rule
have the meanings therein assigned to them.
Section 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether defined
expressly or by reference;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) words used herein implying any gender shall apply to every
gender.
ARTICLE 2
THE NOTES
Section 2.01. FORM AND DATING.
The Initial Notes and the Trustee's certificate of authentication
shall be substantially in the form of EXHIBIT A hereto. The Exchange Notes and
the Trustee's certificate of authentication shall be substantially in the form
of EXHIBIT B hereto. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or Depository rule or usage. The form of
the Notes and any notation, legend or endorsement on them shall be satisfactory
to both the Company and the Trustee. Each Note shall be dated the date of its
issuance and shall show the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto as
EXHIBITS A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
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The Notes shall be issued initially in the form of two or more
permanent global Notes (the "GLOBAL NOTES"). Notes offered and sold (i) in
reliance on Rule 144A shall be issued initially in the form of one or more
permanent Global Notes in registered form, substantially in the form set forth
in EXHIBIT A (the " RULE 144A GLOBAL NOTE") and (ii) in offshore transactions in
reliance on Regulation S shall be issued initially in the form of one or more
permanent global Notes in registered form, substantially in the form set forth
in Exhibit A (the "REGULATION S GLOBAL NOTE"), and in each case shall be
deposited with the Trustee, as custodian for the Depository, duly executed by
the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of any Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.
Section 2.02. EXECUTION AND AUTHENTICATION.
The Notes shall be executed on behalf of the Company by two Officers
of the Company or an Officer and the Secretary of the Company. Such signature
may be either manual or facsimile. The Company's seal may be impressed,
affixed, imprinted or reproduced on the Notes and may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office
at the time the Trustee authenticates the Note, the Note shall be valid
nevertheless.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. Such signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee or an authentication agent (the "AUTHENTICATING AGENT")
shall authenticate (i) Initial Notes for original issue (a) on the date of this
Indenture in the aggregate principal amount not to exceed $152,250,000 and (b)
after the date of this Indenture one or more additional series in aggregate
principal amounts of not less than $25,000,000 per series, subject to compliance
with Section 4.10 and provided that no Default or Event of Default shall exist
or would result therefrom and (ii) Exchange Notes from time to time for issue
only in exchange for a like principal amount of Initial Notes, in each case upon
written orders of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of Notes to be authenticated, the
date on which the Notes are to be authenticated and the aggregate principal
amount of Notes outstanding on the date of authentication, whether the Notes are
to be Initial Notes or Exchange Notes, and shall further specify the amount of
such Notes to be issued as the Global Note or Certificated Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
Notwithstanding the foregoing, all Notes issued under this Indenture
shall vote and consent together on all matters (as to which any of such Notes
may vote or consent) as one class and no series of Notes will have the right to
vote or consent as a separate class on any matter.
The Trustee may, at the Company's expense, appoint an Authenticating
Agent to authenticate Notes. Any such appointment shall be evidenced by an
instrument signed by a Trust Officer, a copy of which shall be furnished to the
Company. An Authenticating Agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by such Authenticating Agent. An Authenticating Agent
has the same right as an Agent to deal with the Company and Affiliates of the
Company.
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29
The Notes shall be issuable only in registered form without coupons
and only in denominations of $1,000 and integral multiples thereof.
Section 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("REGISTRAR"), an office
or agency located in the Borough of Manhattan, City of New York, State of New
York where Notes may be presented for payment ("PAYING AGENT") and an office or
agency where notices and demands to or upon the Company in respect of the Notes
and this Indenture may be served. The Registrar shall keep a register of the
Notes and of their transfer and exchange. The Registrar shall provide the
Company a current copy of such register from time to time upon request of the
Company. The Company may have one or more co-Registrars and one or more
additional Paying Agents. Neither the Company nor any Affiliate of the Company
may act as Paying Agent. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to any Noteholder.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture. 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 agent for service of notices
and demands, or fails to give the foregoing notice, the Trustee shall act as
such. The Company initially appoints the Trustee as Registrar, Paying Agent and
agent for service of notices and demands in connection with the Notes.
Section 2.04. PAYING AGENT TO HOLD ASSETS IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on Notes (whether such assets have
been distributed to it by the Company or any other obligor on the Notes), and
shall notify the Trustee in writing of any Default in making any such payment.
The Company at any time may require a Paying Agent to distribute all assets held
by it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any Payment Default, upon written request to
a Paying Agent, require such Paying Agent to forthwith distribute to the Trustee
all assets so held in trust by such Paying Agent together with a complete
accounting of such sums. Upon distribution to the Trustee of all assets that
shall have been delivered by the Company to the Paying Agent, the Paying Agent
shall have no further liability for such assets.
Section 2.05. NOTEHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Noteholders. If the Trustee is not the Registrar, the Company shall furnish or
cause the Registrar to furnish to the Trustee at least seven (7) Business Days
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 Noteholders which list may be
conclusively relied on by the Trustee.
Section 2.06. TRANSFER AND EXCHANGE.
Subject to the provisions of Sections 2.15 and 2.16, when Notes are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Notes or to exchange such Notes for an equal
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30
principal amount of Notes of other authorized denominations of the same
series, the Registrar or co-Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
PROVIDED, HOWEVER, that the Notes presented or surrendered for registration
of transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Registrar
or co-Registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing. To permit registrations of transfer and exchanges,
the Company shall execute and the Trustee shall authenticate Notes at the
Registrar's or co-Registrar's request. No service charge shall be made for
any registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge
in connection therewith payable by the transferor of such Notes (other than
any such transfer taxes or similar governmental charge payable upon exchanges
or transfers pursuant to Section 2.10, 3.06, 4.13, 4.17 or 9.06, in which
event the Company shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article 3, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of a Global Note shall, by acceptance of such Global Note,
agree that transfers of beneficial interests in such Global Notes may be
effected only through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial interest in the
Note shall be required to be reflected in a book entry.
Section 2.07. REPLACEMENT NOTES.
If a mutilated Note is surrendered to the Trustee or if the Holder
presents evidence to the satisfaction of the Company and the Trustee that the
Note has been lost, destroyed or wrongfully taken, the Company shall issue and
the Trustee shall authenticate a replacement Note. An indemnity bond may be
required by the Company or the Trustee that is sufficient in the judgment of the
Company and the Trustee to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Note is replaced. In every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
to the Trustee evidence to their satisfaction of the destruction, loss or the
theft of such Note and the ownership thereof. Each of the Company and the
Trustee may charge for its expenses in replacing a Note. In the event any such
mutilated, lost, destroyed or wrongfully taken Note has become due and payable,
the Company in their discretion may pay such Note instead of issuing a new Note
in replacement thereof. The provisions of this Section 2.07 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with respect
to replacement or payment of mutilated, lost, destroyed or wrongfully taken
Notes.
Every replacement Note is an additional Obligation of the Company.
Section 2.08. OUTSTANDING NOTES.
Notes outstanding at any time are all Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding until the Company
and the Trustee receive proof satisfactory to each of
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31
them that the replaced Note is held by a protected purchaser. A mutilated
Note ceases to be outstanding upon surrender of such Note and replacement
thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date, the Paying Agent holds
U.S. legal tender sufficient to pay all of the principal and interest due on the
Notes 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 Notes cease to be outstanding and interest on them ceases to accrue.
Section 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Company or any of its Affiliates shall be considered as though they are not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes which a Trust Officer of the Trustee actually knows are so owned shall be
so considered. The Company shall notify the Trustee, in writing, when it or any
of its Affiliates repurchases or otherwise acquires Notes, of the aggregate
principal amount of such Notes so repurchased or otherwise acquired.
Section 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Company considers appropriate for temporary Notes. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
upon receipt of a written order of the Company pursuant to Section 2.02
definitive Notes in exchange for temporary Notes.
Section 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent, and no one else, shall cancel and, at the written direction of the
Company, dispose of and deliver evidence of such disposal of all Notes
surrendered for registration of transfer, exchange, payment or cancellation.
Subject to Section 2.07, the Company may not issue new Notes to replace Notes
that it has paid or delivered to the Trustee for cancellation. If the Company
shall acquire any of the Notes, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Notes unless
and until the same are surrendered to the Trustee for cancellation pursuant to
this Section 2.11.
Section 2.12. DEFAULTED INTEREST.
The Company shall pay interest on overdue principal (including
post-petition interest in a proceeding under Bankruptcy Law) at the rate of
interest then borne by the Notes. The Company shall, to the extent lawful,
pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the rate of interest then borne by the Notes.
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32
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a subsequent
special record date, which date shall be the fifteenth day next preceding the
date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, as of a recent date selected by the Company, with a copy to the Trustee,
a notice that states the subsequent special record date, the payment date and
the amount of defaulted interest, and interest payable on such defaulted
interest, if any, to be paid.
Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(b) shall be paid to
Holders as of the Record Date for the Interest Payment Date for which interest
has not been paid.
Section 2.13. DEPOSIT OF MONEYS.
Prior to 10:00 a.m., New York City time, on each Interest Payment
Date, Redemption Date, Change of Control Payment Date, Excess Proceeds Payment
Date and Maturity Date, the Company shall have deposited with the Paying Agent
in immediately available funds U.S. legal tender sufficient to make payments, if
any, due on such Interest Payment Date, Redemption Date, Change of Control
Payment Date, Excess Proceeds Payment Date or Maturity Date, as the case may be,
in a timely manner which permits the Trustee to remit payment to the Holders on
such Interest Payment Date, Redemption Date, Change of Control Payment Date,
Excess Proceeds Payment Date or Maturity Date, as the case may be. The
principal and interest on Global Notes shall be payable to the Depository or its
nominee, as the case may be, as the sole registered owner and the sole holder of
the Global Notes represented thereby. The principal and interest on Notes in
certificated form shall be payable at the office of the Paying Agent.
Section 2.14. CUSIP NUMBER.
The Company in issuing the Notes may use one or more "CUSIP" numbers,
and if so, the Trustee shall use such CUSIP numbers in notices of redemption or
exchange as a convenience to Holders; PROVIDED that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
numbers printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The Company
shall promptly notify the Trustee of any change in the CUSIP number.
Section 2.15. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES.
(a) The Global Notes 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
Section 2.18.
Members of, or participants in, the Depository ("AGENT MEMBERS") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository or under the Global Note, 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 Note 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 De-
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33
pository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder.
(b) Interests of beneficial owners in the Global Notes may be
transferred or exchanged for Certificated Notes in accordance with the rules and
procedures of the Depository and the provisions of Section 2.16. In addition,
Certificated Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in Global Notes if (i) the Depository (x) notifies
the Company that it is unwilling or unable to continue as Depository for any
Global Note or (y) has ceased to be a clearing company registered under the
Exchange Act and, in each case, a successor depositary is not appointed by the
Company within 90 days of such notice or (ii) a Default or an Event of Default
has occurred and is continuing and the Registrar has received a written request
from the Depository to issue Certificated Notes.
(c) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall
be deemed to be surrendered to the Trustee for cancellation, and the Company
shall execute, and the Trustee shall, upon receipt of an authentication order
from the Company in the form of an Officers' Certificate, authenticate and
deliver, to each beneficial owner identified by the Depository in writing in
exchange for its beneficial interest in the Global Notes, an equal aggregate
principal amount of Certificated Notes of authorized denominations.
(d) Any Certificated Note constituting a Restricted Security
delivered in exchange for an interest in a Global Note pursuant to paragraph (b)
or (c) shall, except as otherwise provided by Section 2.16, bear the Private
Placement Legend.
(e) The Holder of any Global Note 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 Notes.
Section 2.16. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) TRANSFER AND EXCHANGE OF CERTIFICATED NOTES. When
Certificated Notes are presented to the Registrar or co-Registrar with a
request:
(i) to register the transfer of the Certificated Notes; or
(ii) to exchange such Certificated Notes for an equal principal
amount of Certificated Notes of other authorized denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if the requirements under this Indenture as set forth in this
Section 2.16 for such transactions are met; PROVIDED, HOWEVER, that the
Certificated Notes presented or surrendered for registration of transfer or
exchange:
(I) shall be duly endorsed or accompanied by a written instrument
of transfer in form satisfactory to the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing;
and
(II) in the case of Certificated Notes the offer and sale of which
have not been registered under the Securities Act and are presented for
transfer or exchange prior to (x) the date which is two years after the
later of the date of original issue and the last date on which the Company
or any Affiliate
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34
of the Company was the owner of such Note, or any predecessor thereto
and (y) such later date, if any, as may be required by any subsequent
change in applicable law (the "RESALE RESTRICTION TERMINATION DATE"),
such Certificated Notes shall be accompanied, in the sole discretion of
the Company, by the following additional information and documents, as
applicable:
(A) if such Certificated Note is being delivered to the
Registrar or co-Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification to that effect
(substantially in the form of EXHIBIT C hereto); or
(B) if such Certificated Note is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A, a
certification to that effect (substantially in the form of EXHIBIT C
hereto); or
(C) if such Certificated Note is being transferred in
reliance on Regulation S, delivery of a certification to that effect
(substantially in the form of EXHIBIT C hereto) and a transferor
certificate for Regulation S transfers substantially in the form of
EXHIBIT E hereto; or
(D) if such Certificated Note is being transferred to an
Institutional Accredited Investor, delivery of certification to that
effect (substantially in the form of EXHIBIT C hereto), certificates
of the transferee in substantially the form of EXHIBIT D and, at the
option of the Company, an Opinion of Counsel reasonably satisfactory
to the Company to the effect that such transfer is in compliance with
the Securities Act; or
(E) if such Certificated Note is being transferred in
reliance on Rule 144 under the Securities Act, delivery of a
certification to that effect substantially in the form of EXHIBIT C
hereto and, at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(F) if such Certificated Note is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect (substantially in
the form of EXHIBIT C hereto) and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the Company to the
effect that such transfer is in compliance with the Securities Act.
(b) RESTRICTIONS ON TRANSFER OF A CERTIFICATED NOTE FOR A
BENEFICIAL INTEREST IN A GLOBAL NOTE. A Certificated Note may not be exchanged
for a beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar or co-Registrar of
a Certificated Note, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Registrar or co-Registrar, together with:
(A) in the case of Certificated Notes, the offer and sale of
which have not been registered under the Securities Act and which are
presented for transfer prior to the Resale Restriction Termination Date,
certification, substantially in the form of EXHIBIT C hereto, that such
Certificated Note is being transferred (I) to a Qualified Institutional
Buyer, (II) and Institutional Accredited Investor (and, in the case of this
clause (II), the Company shall have received a transferee letter of
representation substantially in the form of EXHIBIT A hereto and, at the
option of the Company, an Opinion of Counsel reasonably satisfactory to the
Company to the effect that such transaction is in compliance with the
Securities Act) or (III) in an offshore transaction in reliance on
Regulation S (and, in the case of this
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35
clause III, the Company shall have received a transferor certificate for
Regulation S transfers substantially in the form of EXHIBIT E hereto
and, at the option of the Company, an Opinion of Counsel reasonably
satisfactory to the Company to the effect that such transaction is in
comnpliance with the Securities Act); and
(B) written instructions from the Holder thereof directing the
Registrar or co-Registrar to make, or to direct the Depository to make, an
endorsement on the applicable Global Note to reflect an increase in the
aggregate amount of the Notes represented by the Global Note,
then the Registrar or co-Registrar shall cancel such Certificated Note and
cause, or direct the Depository to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar or
co-Registrar, the principal amount of Notes represented by the applicable Global
Note to be increased accordingly. If no Global Note representing Notes held by
Qualified Institutional Buyers or Persons acquiring Notes in offshore
transactions in reliance on Regulation S, as the case may be, is then
outstanding, the Company shall issue and the Trustee shall, upon receipt of an
authentication order in the form of an Officers' Certificate in accordance with
Section 2.02, authenticate such a Global Note in the appropriate principal
amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor. Upon receipt by the Registrar or co-Registrar of written
instructions, or such other instruction as is customary for the Depository, from
the Depository or its nominee, requesting the registration of transfer of an
interest in a U.S. Global Note or Regulation S Global Note, as the case may be,
to another type of Global Note, together with the applicable Global Notes (or,
if the applicable type of Global Note required to represent the interest as
requested to be transferred is not then outstanding, only the Global Note
representing the interest being transferred), the Registrar or Co-Registrar
shall cancel such Global Notes (or Global Note) and the Company shall issue and
the Trustee shall, upon receipt of an authentication order in the form of an
Officers' Certificate in accordance with Section 2.02, authenticate new Global
Notes of the types so cancelled (or the type so cancelled and applicable type
required to represent the interest as requested to be transferred) reflecting
the applicable increase and decrease of the principal amount of Notes
represented by such types of Global Notes, giving effect to such transfer. If
the applicable type of Global Note required to represent the interest as
requested to be transferred is not outstanding at the time of such request, the
Company shall issue and the Trustee shall, upon written instructions from the
Company in accordance with Section 2.02, authenticate a new Global Note of such
type in principal amount equal to the principal amount of the interest requested
to be transferred.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
CERTIFICATED NOTE. (i) Any Person having a beneficial interest in a Global Note
may upon request exchange such beneficial interest for a Certificated Note.
Upon receipt by the Registrar or co-Registrar of written instructions, or such
other form of instructions as is customary for the Depository, from the
Depository or its nominee on behalf of any Person having a beneficial interest
in a Global Note and upon receipt by the Trustee of a written order or such
other form of instructions as is customary for the Depository or the Person
designated by the Depository as having such a beneficial interest containing
registration instructions and, in the case of any such transfer or exchange of a
beneficial interest in Notes the offer and sale of which have not been
registered under the Securities Act and which Notes are presented for transfer
or exchange prior to the Resale Restriction Termination Date, the following
additional information and documents:
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36
(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner, a
certification from such Person to that effect (substantially in the form of
EXHIBIT C hereto); or
(B) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule l44A, a certification
to that effect (substantially in the form of EXHIBIT C hereto); or
(C) if such beneficial interest is being transferred in reliance
on Regulation S, delivery of a certification to that effect (substantially
in the form of EXHIBIT C hereto) and a transferor certificate for
Regulation S transfers substantially in the form of EXHIBIT E hereto; or
(D) if such beneficial interest is being transferred to an
Institutional Accredited Investor, delivery of certification (substantially
in the form of EXHIBIT C hereto), a certificate of the transferee in
substantially the form of EXHIBIT D and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities Act; or
(E) if such beneficial interest is being transferred in reliance
on Rule 144 under the Securities Act, delivery of a certification to that
effect (substantially in the form of EXHIBIT C hereto); or
(F) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the Securities
Act, a certification to that effect (substantially in the form of EXHIBIT C
hereto) and, at the option of the Company, an Opinion of Counsel reasonably
satisfactory to the Company to the effect that such transfer is in
compliance with the Securities Act,
then the Registrar or co-Registrar will cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar or
co-Registrar, the aggregate principal amount of the applicable Global Note to be
reduced and, following such reduction, the Company will execute and, upon
receipt of an authentication order in the form of an Officers' Certificate in
accordance with Section 2.02, the Trustee will authenticate and deliver to the
transferee a Certificated Note in the appropriate principal amount.
(ii) Certificated Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.16(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Registrar or co-Registrar in writing. The
Registrar or co-Registrar shall deliver such Certificated Notes to the
Persons in whose names such Certificated Notes are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provisions of this Indenture, a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar or
co-Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Registrar or co-Registrar shall deliver only Notes that
bear the Private Placement Legend unless, and the Trustee is hereby authorized
to deliver Notes without the Private Placement Legend if, (i) the Resale
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37
Restriction Termination Date shall have occurred, (ii) there is delivered to the
Trustee an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act or (iii) such Note has been sold pursuant to an effective
registration statement under the Securities Act.
(g) GENERAL. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Note (including any transfers between or among Agent Members or
beneficial owners of interest in any Global Note) other than to require delivery
of such certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by the terms of, this
Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
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 written notice to the Registrar.
(b) Section 2.17. RESTRICTIVE LEGENDS.
Each Global Note and Certificated Note that constitutes a Restricted
Security shall bear the following legend (the "PRIVATE PLACEMENT LEGEND") on the
face thereof until June 16, 2001, unless otherwise agreed to by the Company and
the Holder thereof:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT 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. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) AGREES THAT IT WILL NOT, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE OF THIS NOTE AND THE LAST DATE ON WHICH THE COMPANY,
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF THIS NOTE), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF SUBPARAGRAPH 501(a)(1), (2), (3), or (7)
UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE FOR THIS NOTE), (D) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (E) PUSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
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38
REQUIREMENTS OF THE SECURITIES ACT, OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (2) WILL GIVE TO EACH
PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE PRIOR
TO THE RESALE RESTRICTION TERMINATION DATE, IF THE PROPOSED TRANSFER IS
BEING MADE PURSUANT TO CLAUSE (C) OR (E) ABOVE, PRIOR TO SUCH TRANSFER, THE
HOLDER WILL BE REQUIRED TO FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legend:
THIS NOTE IS A GLOBAL NOTE 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 NOTE IS NOT
EXCHANGEABLE FOR NOTES 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 NOTE (OTHER THAN A TRANSFER OF THIS
NOTE 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.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, AND TRANSFERS OF INTERESTS IN THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.16 OF THE INDENTURE.
ARTICLE 3
REDEMPTION
Section 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to paragraph 7 of the
Notes, at least 60 days prior to the Redemption Date or during such other period
as the Trustee may agree to, the Company shall notify the Trustee in writing of
the Redemption Date, the principal amount of Notes to be redeemed and the
Redemption Price, and deliver to the Trustee an Officers' Certificate stating
that such redemption will comply with the conditions contained herein and in the
Notes, as appropriate.
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39
Section 3.02. SELECTION OF NOTES TO BE REDEEMED.
In the event that less than all of the Notes are to be redeemed at any
time, selection of the Notes to be redeemed shall be made by the Trustee in
compliance with the requirements of the principal securities exchange, if any,
on which such Notes are listed or, if such Notes are not then listed on a
national securities exchange, on a PRO RATA basis, by lot or by such method as
the Trustee shall deem fair and appropriate; PROVIDED, HOWEVER, that no Notes of
a principal amount of $1,000 or less shall be redeemed in part; PROVIDED,
FURTHER, that if a partial redemption is made with the proceeds of any Equity
Offering, selection of the Notes or portions thereof for redemption shall be
made by the Trustee only on a PRO RATA basis or on as nearly a PRO RATA basis as
is practicable (subject to the procedures of the Depository), unless such method
is otherwise prohibited. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
delivery of the original Note to the Paying Agent and cancellation of the
original Note. On and after the Redemption Date, interest will cease to accrue
on Notes or portions thereof called for redemption as long as the Company has
deposited with the Paying Agents in U.S. legal tender in satisfaction of the
applicable Redemption Price pursuant to this Indenture.
Section 3.03. NOTICE OF REDEMPTION.
Notice of redemption shall be mailed by first class mail at least 30
but not more than 60 calendar 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 shall state the
portion of the principal amount thereof to be redeemed.
The notice shall identify the Notes to be redeemed (including the
CUSIP number(s) thereof) and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any,
to be paid;
(3) that, if any Note is being redeemed in part, the portion of the
principal amount (equal to $1,000 in principal amount or any integral
multiple thereof) of such Note to be redeemed and that, on and after the
Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued;
(4) the name, address and telephone number of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the
Paying Agent at the address specified to collect the Redemption Price plus
accrued interest, if any;
(6) that, unless the Company defaults in making the redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the Redemption Date and the only remaining right of the Holders is to
receive payment of the Redemption Price plus accrued interest to the
Redemption Date upon surrender of the Notes to the Paying Agent;
(7) the subparagraph of the Notes pursuant to which the Notes called
for redemption are being redeemed; and
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40
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be redeemed,
as well as the aggregate principal amount of Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such partial
redemption.
Section 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once the notice of redemption described in Section 3.03 is mailed,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price, including any premium, plus accrued interest to the
Redemption Date, if any. Upon surrender to the Paying Agent, such Notes shall
be paid at the Redemption Price, including any premium, plus accrued interest to
the Redemption Date, if any; PROVIDED that if the Redemption Date is after a
Record Date and on or prior to the Interest Payment Date, the accrued interest
shall be payable to the Holder of the redeemed Notes registered on the relevant
Record Date.
Section 3.05. DEPOSIT OF REDEMPTION PRICE.
On or prior to 10:00 a.m., New York City time, on each Redemption
Date, the Company shall have deposited with the Paying Agent in immediately
available funds U.S. legal tender sufficient to pay the Redemption Price of and
accrued interest on all Notes to be redeemed on that date.
On and after any Redemption Date, if U.S. legal tender sufficient to
pay the Redemption Price of and accrued interest on Notes called for redemption
shall have been made available in accordance with the preceding paragraph, the
Notes called for redemption will cease to accrue interest and the only right of
the Holders of such Notes will be to receive payment of the Redemption Price of
and, subject to the first proviso in Section 3.04, accrued and unpaid interest
on such Notes to the Redemption Date. If any Note called for redemption shall
not be so paid, interest will continue to accrue and be paid, from the
Redemption Date until such redemption payment is made, on the unpaid principal
of the Note and any interest not paid on such unpaid principal, in each case, at
the rate and in the manner provided for in Section 2.12.
Section 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Trustee shall
authenticate, at the expense of the Company, for a Holder a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
ARTICLE 4
COVENANTS
Section 4.01. PAYMENT OF NOTES.
The Company shall pay the principal of and interest (including all
Additional Interest as provided in the Registration Rights Agreement) on the
Notes on the dates and in the manner provided in the Notes and this Indenture.
An installment of principal or interest shall be considered paid on the date it
is due if the Trustee or Paying Agent holds, for the benefit of the Holders, on
that date U.S. legal tender designated for and sufficient to pay such
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture.
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41
The Company shall pay interest on overdue principal and interest on
overdue interest, to the extent lawful as provided for in Section 2.12.
Section 4.02. PROVISION OF FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) The Company will file with the Commission all information,
documents and reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act and will provide the Trustee and the
Noteholders with copies of all such information, documents and reports within 15
days of filing thereof with the Commission; PROVIDED that if the Company is not
required to file such information, documents or reports with the Commission, it
will nonetheless continue to furnish such information, documents and reports
required to be filed by a company subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act to the Trustee and the Noteholders
within 15 days of the date on which filing with the Commission would have been
otherwise required. The Company shall also comply with the provisions of TIA
Section 314(a). Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
(b) The Company will, upon request, provide to any Holder or any
prospective transferee of any such Holder any information concerning the Company
(including financial statements) necessary in order to permit such Holder to
sell or transfer Notes in compliance with Rule 144 and Rule 144A under the
Securities Act.
Section 4.03. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead (as a defense or otherwise) or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company from paying all or any portion of the principal of, premium, if any,
and/or interest on the Notes as contemplated herein, wherever enacted, now or at
any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that they may lawfully do so)
the Company 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.
Section 4.04. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT; TAX INFORMATION.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of the Company's fiscal year an Officers' Certificate (one of the
signers of which shall be the principal executive officer, principal financial
officer or principal accounting officer of each of the Company) stating that a
review of the activities of the Company and its Subsidiaries during such fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and, in the case of Restricted Payments, listing all Restricted
Payments for such year, and is not in default in the performance or observance
of any of the terms, provisions and conditions hereof (or, if a Default or Event
of Default shall have occurred, describing all or such Defaults or Events of
Default of which he or she may have knowledge and what action each is taking or
proposes to take with respect thereto)
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42
and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal
of or interest, if any, on the Notes are prohibited or if such event has
occurred, a description of the event and what action the Company is taking or
proposes to take with respect thereto. The Officers' Certificate shall also
notify the Trustee should the Company elect to change the manner in which it
fixes its fiscal year end.
(b) [Intentionally Omitted]
(c) The annual financial statements delivered pursuant to
Section 4.02 shall be accompanied by a written report addressed to the Trustee
of the Company's independent accountants (who shall be a firm of established
national reputation) that in conducting their audit of such financial statements
nothing has come to their attention that would lead them to believe that a
Default or Event of Default has occurred under this Indenture insofar as they
relate to accounting matters or, if any such violation has occurred, specifying
the nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(d) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed default under this indenture of the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 13.02 hereof,
by registered or certified mail or by telegram, telex or facsimile transmission
followed by hard copy by registered or certified mail an Officers' Certificate
specifying such Default or Event of Default, notice or other action, the status
thereof and what action the Company is taking or proposes to take within five
Business Days of its becoming aware of such occurrence.
(e) The Company shall calculate and deliver to the Trustee all
original issue discount information to be reported by the Trustee to Holders as
required by applicable law.
Section 4.05. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries or
properties of it or any of its Subsidiaries and (ii) all lawful claims for
labor, materials and supplies that, if unpaid, might by law become a Lien upon
the property of it or any of its Subsidiaries; PROVIDED, HOWEVER, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings properly
instituted and diligently conducted for which adequate reserves, to the extent
required under GAAP, have been taken.
Section 4.06. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or limited liability company
or other existence of each Subsidiary, in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
Subsidiary and the material rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries except where the failure to
preserve and keep in full force and effect any such rights, licenses and
franchise shall not have a material adverse effect on the financial condition,
business, operations or prospects of the Company and its Subsidiaries taken as a
whole; and
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43
PROVIDED that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, limited liability company,
partnership or other existence of any of Subsidiaries, 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 its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders.
Section 4.07. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York where Notes may be surrendered for registration
of transfer or exchange or for presentation for payment and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee as set forth in Section 13.02.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations. The
Company shall give prompt written notice to the Trustee of such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby initially designates the Corporate Trust Office of
the Trustee set forth in Section 13.02 as such office of the Company.
Section 4.08. COMPLIANCE WITH LAWS.
The Company shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as would not in the aggregate have a
material adverse effect on the financial condition or results of operations of
the Company and its Subsidiaries taken as a whole.
Section 4.09. MAINTENANCE OF PROPERTIES AND INSURANCE.
(a) The Company shall cause all material properties owned by or
leased by it or any of its Subsidiaries used or useful to the conduct of the
Company's business or the business of any of its Subsidiaries to be maintained
and kept in normal condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its judgment 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 4.09 shall prevent the Company or any of its
Subsidiaries from discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Board of Directors of the Company or of the Board of
Directors of any Subsidiary of the Company concerned, or of an officer (or other
agent employed by the Company or of any of its Subsidiaries) of the Company or
any of its Subsidiaries having managerial responsibility for any such property,
desirable in the conduct of the business of the Company
<PAGE>
44
or any Subsidiary of the Company, and if such discontinuance or disposal is
not adverse in any material respect to the Holders.
(b) The Company shall maintain, and shall cause its respective
Subsidiaries to maintain, insurance with responsible carriers against such risks
and in such amounts, and with such deductibles, retentions, self-insured amounts
and co-insurance provisions, as are customarily carried by similar businesses of
similar size, including property and casualty loss, workers' compensation and
interruption of business insurance.
Section 4.10. LIMITATION ON ADDITIONAL INDEBTEDNESS.
(A) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, incur (as defined) any
Indebtedness (including Acquired Indebtedness); PROVIDED that the Company or any
of the Guarantors may incur Indebtedness (including Acquired Indebtedness) if
after giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, the Company's Consolidated Fixed Charge
Coverage Ratio is at least 2.0 to 1.
(B) Notwithstanding the foregoing clause (A), the Company and its
Restricted Subsidiaries may incur Permitted Indebtedness; PROVIDED that the
Company will not incur any Permitted Indebtedness that ranks junior in right of
payment to the Notes that has a maturity or mandatory sinking fund payment prior
to the maturity of the Notes. Notwithstanding any other provision of this
Section 4.10, (i) the maximum amount of Indebtedness that the Company or a
Restricted Subsidiary may incur pursuant to this covenant shall not be deemed to
be exceeded, with respect to any outstanding Indebtedness, due solely to the
result of fluctuations in the exchange rates of currencies and (ii) in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness or is otherwise entitled to be incurred
pursuant to this Section 4.10, the Company may, in its sole discretion, classify
(or reclassify) such item of Indebtedness in any manner that complies with this
Section 4.10 and such items of Indebtedness will be treated as having been
incurred pursuant to only one of such clauses or pursuant to the first paragraph
hereof. Accrual of interest or accretion of accreted value will not be deemed to
be an incurrence of Indebtedness for purposes of this Section 4.10. Accruals of
dividends or the payment of dividends through the issuance of additional shares
of the same class of Capital Stock in accordance with the provisions thereof
permitting such pay-in-kind dividends will not be deemed an issuance of Capital
Stock for purposes of this Section 4.10.
Section 4.11. LIMITATION ON RESTRICTED PAYMENTS.
(A) The Company will not make, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, make, any Restricted
Payment, unless:
(1) no Default or Event of Default shall have occurred and
be continuing at the time of or immediately after giving effect to
such Restricted Payment;
(2) immediately after giving PRO FORMA effect to such
Restricted Payment, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 4.10 of
this Indenture; and
(3) immediately after giving effect to such Restricted
Payment, the aggregate of all Restricted Payments declared or made
after the Issue Date does not exceed the sum of
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45
(a) 50% of the Company's Cumulative Consolidated Net
Income (or minus 100% of any cumulative deficit in Consolidated Net
Income),
(b) 100% of the aggregate Net Proceeds received by the
Company from the issue or sale after the Issue Date of Capital Stock
(other than any Disqualified Capital Stock, Designated Preferred
Stock, or Capital Stock of the Company issued to any Subsidiary of the
Company) of the Company or any Indebtedness or other securities of the
Company convertible into or exercisable or exchangeable for Capital
Stock (other than Disqualified Capital Stock or Designated Preferred
Stock) of the Company which have been so converted, exercised or
exchanged, as the case may be,
(c) without duplication of any amounts included in
clause (3)(b) above, 100% of the aggregate Net Proceeds received by
the Company from any equity contribution from a holder of the
Company's Capital Stock, excluding, in the case of clauses (3)(b) and
(c), any Net Proceeds from a Equity Offering to the extent used to
redeem the Notes, and
(d) without duplication, the sum of
(i) the aggregate amount returned in cash on
or with respect to Investments (other than Permitted
Investments) made subsequent to the Issue Date whether
through interest payments, principal payments,
dividends or other distributions;
(ii) the net proceeds received by the Company
or any of its Restricted Subsidiaries from the
disposition, retirement or redemption of all or any
portion of such Investments (other than to a Subsidiary
of the Company); and
(iii) upon redesignation of an Unrestricted
Subsidiary as a Restricted Subsidiary, the fair market
value of the net assets of such Subsidiary,
PROVIDED, HOWEVER, that the sum of clauses (i), (ii) and (iii) above shall not
exceed the aggregate amount of all such Investments made subsequent to the Issue
Date.
For purposes of determining under clause (3) above, the amount
expended for Restricted Payments, cash distributed shall be valued at the face
amount thereof and property other than cash shall be valued at its fair market
value.
(B) The provisions of this Section 4.11 shall not prohibit
(1) the payment of any distribution within 60 days after
the date of declaration thereof, if at such date of declaration such
payment would comply with the provisions of this Indenture,
(2) the repurchase, redemption or other acquisition or
retirement of any shares of Capital Stock of the Company or
Indebtedness subordinated to the Notes by conversion into, or by or in
exchange for, shares of Capital Stock of the Company (other than
Disqualified
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46
Capital Stock), or out of the Net Proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of
other shares of Capital Stock of the Company (other than
Disqualified Capital Stock),
(3) the redemption or retirement of Indebtedness of the
Company subordinated to the Notes in exchange for, by conversion into,
or out of the Net Proceeds of a substantially concurrent sale or
incurrence of, Indebtedness of the Company (other than any
Indebtedness owed to a Subsidiary) that is Refinancing Indebtedness,
(4) the retirement of any shares of Disqualified Capital
Stock of the Company by conversion into, or by exchange for, shares of
Disqualified Capital Stock of the Company, or out of the Net Proceeds
of the substantially concurrent sale (other than to a Subsidiary of
the Company) of other shares of Disqualified Capital Stock of the
Company,
(5) the declaration and payment of regularly accruing
dividends to holders of any class or series of Disqualified Capital
Stock of the Company or its Restricted Subsidiaries issued after the
Issue Date in accordance with Section 4.10 of this Indenture,
(6) the declaration and payment of regularly accruing
dividends to holders of any class or series of Designated Preferred
Stock of the Company issued after the Issue Date; PROVIDED that at the
time of such issuance, and after giving effect to such issuance on a
PRO FORMA basis (for purposes of making determinations on a PRO FORMA
basis pursuant to this clause (6), treating all dividends which will
accrue on such Designated Preferred Stock during the four full fiscal
quarters immediately following such issuance, as well as all other
Designated Preferred Stock then outstanding, as if same will in fact
be, or have in fact been, paid in cash), the Company would have been
able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to Section 4.10 of this Indenture,
(7) Restricted Payments in aggregate amount not to exceed
$25 million,
(8) payments made under any Permitted Tax Sharing
Agreement,
(9) payments made to effect the Transactions on the Issue
Date, and
(10) repurchases by the Company of Capital Stock (other than
Disqualified Capital Stock) (or options therefor) of the Company from
directors, officers or employees of the Company or any of its
Restricted Subsidiaries or their authorized representatives upon the
death, disability or termination of employment of such officers or
employees, in an aggregate amount not to exceed, in any calendar year,
$2,000,000; PROVIDED that unused amounts in any calendar year
(beginning with calendar year 1999) may be carried forward and used to
make repurchases as described above in this clause (10) in any
succeeding calendar year, PROVIDED FURTHER that the aggregate amount
expended pursuant to this clause (10) in any calendar year (both
pursuant to the immediately preceding proviso and the portion of this
clause (10) which precedes said proviso) does not exceed $4,000,000 in
any calendar year.
In calculating the aggregate amount of Restricted Payments made
subsequent to the Issue Date for purposes of clause (3) of the first
paragraph above, amounts expended pursuant to clause (1) of the immediately
preceding paragraph shall be included in such calculation.
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47
(C) For purposes of determining compliance with this Section 4.11, in
the event that a Restricted Payment meets the criteria of more than one of the
types of Restricted Payments described in the above clauses, the Company, in its
sole discretion, may order and classify, and from time to time may reclassify,
such Restricted Payment if it would have been permitted at the time such
Restricted Payment was made and at the time of such reclassification.
Section 4.12. LIMITATION ON OTHER SENIOR SUBORDINATED INDEBTEDNESS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness (other than the Notes and the Guarantees, as the case may be) that
is both (i) subordinated in right of payment to any Senior Indebtedness of the
Company or any of its Restricted Subsidiaries, as the case may be, and
(ii) senior in right of payment to the Notes and the Guarantees, as the case may
be. For purposes of this Section 4.12, Indebtedness is deemed to be senior in
right of payment to the Notes or the Guarantees, as the case may be, if it is
not explicitly subordinated in right of payment to Senior Indebtedness at least
to the same extent as the Notes and the Guarantees, as the case may be, are
subordinated to such Senior Indebtedness.
Section 4.13. LIMITATION ON CERTAIN ASSET SALES.
(A) The Company will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless
(1) the Company or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such sale or other
disposition at least equal to the fair market value of the assets sold
or otherwise disposed of (as determined in good faith by the Board of
Directors of the Company, and evidenced by a Board Resolution);
(2) not less than 75% of the consideration received by the
Company or such Restricted Subsidiary, as the case may be, is in the
form of cash or Cash Equivalents other than in the case where the
Company or such Restricted Subsidiary is undertaking a Permitted Asset
Swap; PROVIDED that this clause (2) shall not apply to any Asset Sale
(or series of related Asset Sales), involving assets that accounted
for less than one percent of the Company's EBITDA during the period of
the most recent four consecutive full fiscal quarters ending prior to
the date of such Asset Sale for which consolidated financial
statements of the Company are available; and PROVIDED, FURTHER, that
the amount of
(a) any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet), of the Company or
any of its Restricted Subsidiaries (other than contingent liabilities
and liabilities that are by their terms subordinated to the Notes)
that are assumed by the transferee of any such assets shall be deemed
to be cash for purposes of this clause (2); and
(b) any promissory notes and other non-cash
consideration received by the Company or any Restricted Subsidiary of
the Company from such Asset Sale that are converted by the Company or
such Restricted Subsidiary into cash within 180 days of the applicable
Asset Sale shall be deemed to be cash for purposes of this clause (2).
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48
(3) the Asset Sale Proceeds received by the Company or
such Restricted Subsidiary are applied:
(a) to the extent the Company or any such
Restricted Subsidiary, as the case may be, elects, or is
required, to prepay, repay or purchase Indebtedness under any
then existing Senior Indebtedness of the Company or any such
Restricted Subsidiary within 365 days following the receipt
of the Asset Sale Proceeds from any Asset Sale; provided that
any such repayment shall result in a permanent reduction of
the commitments thereunder in an amount equal to the
principal amount so repaid;
(b) to the extent the Company elects, to an
investment in assets (including Capital Stock or other
securities purchased in connection with the acquisition of
Capital Stock or property of another Person) used or useful
in a Permitted Business; provided that such investment occurs
or the Company or any such Restricted Subsidiary enters into
contractual commitments to make such investment, subject only
to customary conditions, within 365 days following receipt of
such Asset Sale Proceeds (provided that such investment shall
in any event be consummated no later than 90 days following
such 365th day); and
(c) if on such 365th day in the case of clauses
(3)(a) and (3)(b) (or on such 90th day in the case of the
proviso to clause (3)(b)) with respect to any Asset Sale, the
Available Asset Sale Proceeds exceed $10 million, the Company
shall apply an amount equal to the Available Asset Sale
Proceeds to an offer to repurchase the Notes, at a purchase
price in cash equal to 100% of the principal amount thereof
plus accrued and unpaid interest, if any, to the purchase
date (an "EXCESS PROCEEDS OFFER").
Notwithstanding the foregoing, in the event that a Restricted
Subsidiary that is not a Wholly Owned Restricted Subsidiary dividends or
distributes to all of its stockholders on a PRO RATA basis any proceeds of an
Asset Sale to the Company or another Restricted Subsidiary, the Company or such
Restricted Subsidiary need only apply its share of such proceeds in accordance
with the preceding clauses (a), (b) and (c).
If an Excess Proceeds Offer is not fully subscribed, the Company may
retain the portion of the Available Asset Sale Proceeds not required to
repurchase Notes.
(B) If the Company is required to make an Excess Proceeds Offer,
the Company shall mail, within 30 days following the date specified in
clause (3)(c) above, a notice to the holders. Such notice shall be sent by
first-class mail, postage prepaid, to the Trustee and to each Noteholder, at the
address appearing in the register maintained by the Registrar of the Notes, and
shall state:
(1) that the Excess Proceeds Offer is being made pursuant to this
Section 4.13;
(2) that such Holders have the right to require the Company to
apply the Available Asset Sale Proceeds to repurchase such Notes at a
purchase price in cash equal to 100% of the principal amount thereof plus
accrued and unpaid interest, if any, to the purchase date which shall be no
earlier than 30 days and not later than 60 days from the date such notice
is mailed (the "EXCESS PROCEEDS PAYMENT DATE");
(3) that any Note not tendered or accepted for payment will
continue to accrue interest;
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49
(4) that any Notes accepted for payment pursuant to the Excess
Proceeds Offer shall cease to accrue interest after the Excess Proceeds
Payment Date;
(5) that Holders accepting the offer to have their Notes
purchased pursuant to an Excess Proceeds Offer will be required to
surrender the Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the
Business Day preceding the Excess Proceeds Payment Date;
(6) that Holders will be entitled to withdraw their acceptance of
the Excess Proceeds Offer if the Paying Agent receives, not later than the
close of business on the third Business Day preceding the Excess Proceeds
Payment Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Notes delivered
for purchase, and a statement that such Holder is withdrawing his election
to have such Notes purchased;
(7) that if the aggregate principal amount of Notes surrendered
by Holders exceeds the amount of Excess Proceeds, Company shall select the
Notes to be purchased on a PRO RATA basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of
$1,000 or integral multiples thereof, shall be purchased);
(8) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered, PROVIDED that each Note purchased and
each such new Note issued shall be in an original principal amount in
denominations of $1,000 and integral multiples thereof;
(9) the calculations used in determining the amount of Available
Asset Sale Proceeds to be applied to the purchase of such Notes;
(10) any other procedures that a Holder must follow to accept an
Excess Proceeds Offer or effect withdrawal of such acceptance; and
(11) the name and address of the Paying Agent.
On the Excess Proceeds Payment Date, the Company shall, to the extent
lawful, (1) accept for payment, on a PRO RATA basis to the extent necessary,
Notes or portions thereof tendered pursuant to the Excess Proceeds Offer,
(2) deposit with the Paying Agent U.S. legal tender sufficient to pay the
purchase price plus accrued and unpaid interest, if any, on the Notes to be
purchased or portions thereof, (3) deliver or cause to be delivered to the
Trustee Notes so accepted together with an Officers' Certificate stating that
such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 4.13. The Paying Agent shall promptly
mail to each Holder so accepted payment in an amount equal to the purchase price
for such Notes, and the Company shall execute and issue, and the Trustee shall
promptly authenticate and make available for delivery to such Holder, a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered;
PROVIDED that each such new Note shall be issued in an original principal amount
in denominations of $1,000 and integral multiples thereof. The Company will
publicly announce the results of the Excess Proceeds Offer on the Excess
Proceeds Payment Date.
(C) In the event of the transfer of substantially all of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01 of
<PAGE>
50
this Indenture, the successor Person shall be deemed to have sold the
properties and assets of the Company and its Restricted Subsidiaries not so
transferred for purposes of this Section 4.13, and shall comply with the
provisions of this Section 4.13 with respect to such deemed sale as if it
were an Asset Sale.
(D) The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Excess Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with this
Section 4.13, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.13 by virtue thereof.
Section 4.14. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
(A) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate (each an "AFFILIATE TRANSACTION") or extend, renew,
waive or otherwise modify the terms of any Affiliate Transaction entered into
prior to the Issue Date unless
(1) such Affiliate Transaction is between or among the
Company and its Restricted Subsidiaries; or
(2) the terms of such Affiliate Transaction are fair and
reasonable to the Company or such Restricted Subsidiary, as the case
may be, and the terms of such Affiliate Transaction are at least as
favorable as the terms which could be obtained by the Company or such
Restricted Subsidiary, as the case may be, in a comparable transaction
made on an arm's-length basis between unaffiliated parties.
In any Affiliate Transaction (or any series of related Affiliate
Transactions which are similar or part of a common plan) involving an amount or
having a fair market value in excess of $5,000,000 which is not permitted under
clause (1) above, the Company must obtain a resolution of the Board of Directors
of the Company certifying that such Affiliate Transaction complies with
clause (2) above. In any Affiliate Transaction (or any series of related
Affiliate Transactions which are similar or part of a common plan) involving an
amount or having a fair market value in excess of $10,000,000 which is not
permitted under clause (1) above, the Company must obtain a favorable written
opinion as to the fairness of such transaction or transactions, as the case may
be, from an Independent Financial Advisor.
(B) The foregoing provisions will not apply to
(1) any Restricted Payment that is not prohibited by the
provisions described under Section 4.11 of this Indenture or any
Permitted Investment,
(2) reasonable fees and compensation paid to, and indemnity
provided on behalf of, officers, directors or employees of the Company
or any Restricted Subsidiary of the Company as determined in good
faith by the Company's Board of Directors or senior management,
(3) any agreement as in effect as of the Issue Date
(including, without limitation, any agreement entered into on the
Issue Date in connection with the Transactions) or any
<PAGE>
51
amendment thereto or any transaction contemplated thereby
(including pursuant to any amendment thereto) in any replacement
agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Holders in any
material respect than the original agreement as in effect on the
Issue Date,
(4) transactions with a Receivables Subsidiary in
connection with Permitted Receivables Financing,
(5) any transaction between the Company and any of its
Affiliates involving ordinary course of business investment banking,
commercial banking, financial advisory services and related
activities,
(6) the payment of management fees to any Affiliate of the
Company not to exceed in the aggregate to all Affiliates, in any
calendar year, $1,000,000,
(7) customer financing and financing services transactions
between the Company or any of its Restricted Subsidiaries on the one
hand and MCII Financial Services on the other hand occurring in the
ordinary course of business, PROVIDED that the terms of each such
transaction are at least as favorable as the terms which could be
obtained by the Company or such Restricted Subsidiary in a comparable
transaction made on an arm's-length basis between unaffiliated
parties,
(8) issuances of Capital Stock of the Company (other than
Disqualified Capital Stock), to the extent otherwise permitted under
this Indenture,
(9) the existence of, or the performance by the Company or
any of its Restricted Subsidiaries of its obligations under the terms
of, any stockholders agreement (including any registration rights
agreement or purchase agreement related thereto) to which it is a
party as of the Issue Date and any similar agreements which it may
enter into thereafter, in each case subject to compliance with the
other provisions of this Indenture; PROVIDED, HOWEVER, that the
existence, or the performance by the Company or any of its Restricted
Subsidiaries of obligations under any future amendment to any such
existing agreement or under any similar agreement entered into after
the Issue Date shall only be permitted by this clause (9) to the
extent that the terms (taken as a whole) of any such amendment or new
agreement are not otherwise disadvantageous to the holders of the
Notes in any material respect, and
(10) payments made under any Permitted Tax Sharing
Agreement.
Section 4.15. LIMITATIONS ON LIENS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind securing Indebtedness other than Senior
Indebtedness upon any property or asset of the Company or any of its Restricted
Subsidiaries or any shares of Capital Stock or Indebtedness of any Restricted
Subsidiary of the Company which owns property or assets, now owned or hereafter
acquired, unless:
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52
(1) if such Lien secures Indebtedness which is subordinated
to the Notes, any such Lien shall be subordinated to the Lien granted
to the holders of the Notes to the same extent as such Indebtedness is
subordinated to the Notes; and
(2) in all other cases, the Notes are equally and ratably
secured.
Section 4.16. LIMITATIONS ON INVESTMENTS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Investment other than
(1) a Permitted Investment, or
(2) an Investment that is made after the Issue Date as a
Restricted Payment in compliance with Section 4.11.
Section 4.17. CHANGE OF CONTROL.
(A) Upon the occurrence of a Change of Control, the Company shall
be obligated to make an offer to purchase (the "CHANGE OF CONTROL OFFER") each
Holder's 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 Payment Date in accordance with the
procedures set forth below.
(B) Within 30 days of the occurrence of a Change of Control, the
Company shall send by first-class mail, postage prepaid, to the Trustee and to
each holder of the Notes, at the address appearing in the register maintained by
the Registrar of the Notes, a notice stating:
(1) that the Change of Control Offer is being made pursuant
to this Section 4.17 and that all Notes tendered will be accepted for
payment;
(2) the Change of Control Purchase Price and the purchase
date (which shall be a Business Day no earlier than 30 days nor later
than 60 days from the date such notice is mailed (the "CHANGE OF
CONTROL PAYMENT DATE"));
(3) that any Note not tendered will continue to accrue
interest;
(4) that, unless the Company defaults in the payment of the
Change of Control Purchase Price, any Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(5) that Holders accepting the offer to have their Notes
purchased pursuant to a Change of Control Offer will be required to
surrender the Notes, with the form entitled "Option of the Holder to
Elect Purchase" on the reverse of the Note completed, to the Paying
Agent at the address specified in the notice prior to the close of
business on the Business Day preceding the Change of Control Payment
Date;
(6) that holders will be entitled to withdraw their
acceptance if the Paying Agent receives, not later than the close of
business on the third Business Day preceding the Change of
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53
Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the holder, the principal amount
of the Notes delivered for purchase, and a statement that such
holder is withdrawing his election to have such Notes purchased;
(7) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered;
(8) any other procedures that a holder must follow to
accept a Change of Control Offer or effect withdrawal of such
acceptance; and
(9) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent U.S.
legal tender sufficient to pay the purchase price of all Notes or portions
thereof so tendered and (3) deliver or cause to be delivered to the Trustee
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof tendered to the Company. The Paying Agent shall promptly mail
to each holder of Notes so accepted payment in an amount equal to the purchase
price for such Notes, and the Company shall execute and issue, and the Trustee
shall promptly authenticate and mail to such holder, a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered; PROVIDED
that each such new Note shall be issued in an original principal amount in
denominations of $1,000 and integral multiples thereof.
(C) If the Senior Credit Facility is in effect, or any amounts
are owing thereunder or in respect thereof, at the time of the occurrence of a
Change of Control, prior to the mailing of the notice to Holders described in
the second preceding paragraph, the Company covenants to
(1) repay in full all obligations and terminate all
commitments under or in respect of the Senior Credit Facility and all
other Senior Indebtedness the terms of which require repayment upon a
Change of Control or offer to repay in full all obligations and
terminate all commitments under or in respect of the Senior Credit
Facility and all such Senior Indebtedness and repay the Indebtedness
owed to each such lender who has accepted such offer or
(2) obtain the requisite consents under the Senior Credit
Facility and all such other Senior Indebtedness to permit the
repurchase of the Notes as described above.
The Company must first comply with the covenant described in the
preceding sentence before it shall be required to purchase Notes in the event of
a Change of Control; PROVIDED that, notwithstanding the foregoing, the Company's
failure to consummate a Change of Control Offer in accordance with the
provisions of this Section 4.17 due to the covenant described in the immediately
preceding sentence shall constitute an Event of Default described in clause (3)
under Section 6.01 if not cured within 30 days of the last date on which the
Company would have been required to consummate the Change of Control Offer
without giving effect to the convenant described in the immediately preceding
sentence.
(D) (1) If the Company or any Restricted Subsidiary thereof has
issued any outstanding (a) Indebtedness that is subordinated in right of payment
to the Notes or (b) Preferred Stock, and the Company or such Restricted
Subsidiary is required to make a change of control offer or to make a
distribution with respect to such subordinated indebtedness or Preferred Stock
in the event of a change of control, the Company shall not consummate any such
offer or distribution with respect to such subordinated indebtedness or
Preferred Stock
<PAGE>
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until such time as the Company shall have paid the Change of Control Purchase
Price in full to the holders of Notes that have accepted the Company's change
of control offer and shall otherwise have consummated the change of control
offer made to holders of the Notes and (2) the Company will not issue
Indebtedness that is subordinated in right of payment to the Notes or
Preferred Stock with change of control provisions requiring the payment of
such Indebtedness or Preferred Stock prior to the payment of the Notes
tendered pursuant to a Change of Control Offer in the event of a Change in
Control under this Indenture.
(E) The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with this
Section 4.17, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.17 by virtue thereof.
Section 4.18. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company to
(1) pay dividends or make any other distributions to the
Company or any Restricted Subsidiary of the Company
(a) on its Capital Stock or
(b) with respect to any other interest or
participation in, or measured by, its profits or
(2) repay any Indebtedness or any other obligation owed to
the Company or any Restricted Subsidiary of the Company,
(3) make loans or advances or capital contributions to the
Company or any of its Restricted Subsidiaries or
(4) transfer any of its properties or assets to the Company
or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of
(1) encumbrances or restrictions existing on the Issue Date
to the extent and in the manner such encumbrances and restrictions are
in effect on the Issue Date,
(2) the Indenture, the Notes and the Guarantees,
(3) applicable law,
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(4) contracts to which any Person who is acquired in
accordance with the terms of this Indenture is a party, including any
instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets
of the Person (including any Subsidiary of the Person), so acquired,
(5) customary non-assignment provisions in leases or other
agreements entered in the ordinary course of business and consistent
with past practices,
(6) Refinancing Indebtedness; PROVIDED that such
restrictions are no more restrictive than those contained in the
agreements governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded,
(7) customary restrictions in Capitalized Lease
Obligations, security agreements or mortgages securing Indebtedness of
the Company or a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such Capitalized
Lease Obligations, security agreements and mortgages,
(8) customary restrictions with respect to a Restricted
Subsidiary of the Company pursuant to an agreement that has been
entered into for the sale or disposition of any Capital Stock or
assets of such Restricted Subsidiary, but only to the extent such
encumberance or restriction applies only to the Capital Stock or
assets being sold or otherwise disposed of,
(9) contracts entered into in the ordinary course of
business, not relating to any Indebtedness, and that do not,
individually or in the aggregate, detract from the value of property
or assets of the Company or any Restricted Subsidiary in any manner
material to the Company or any Restricted Subsidiary,
(10) restrictions on cash or other deposits or net worth
imposed by customers under contracts (not evidencing or relating to
Indebtedness) entered into the ordinary course of business,
(11) customary provisions in joint venture agreements and
other similar agreements (in each case relating solely to the
respective joint venture or similar entity or the equity interests
therein) entered into in the ordinary course of business,
(12) customary provisions restricting dispositions of real
property interests set forth in any reciprocal easement agreements of
the Company or any Restricted Subsidiary, or
(13) with respect to a Receivables Subsidiary, an agreement
relating to Indebtedness of such Receivables Subsidiary which is
permitted under Section 4.10 or pursuant to an agreement relating to a
Permitted Receivables Financing by such Receivables Subsidiary.
Section 4.19. LIMITATION ON CONDUCT OF BUSINESS.
The Company and its Restricted Subsidiaries will not engage in any
business other than a Permitted Business.
<PAGE>
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Section 4.20. LIMITATION ON PREFERRED STOCK OF RESTRICTED SUBSIDIARIES.
The Company will not permit any of its Restricted Subsidiaries to
issue any Preferred Stock (except Preferred Stock issued to the Company or a
Wholly Owned Restricted Subsidiary of the Company) or permit any Person (other
than the Company or a Wholly Owned Restricted Subsidiary of the Company) to hold
any such Preferred Stock unless such Restricted Subsidiary would be entitled to
incur or assume Indebtedness under Section 4.10 (other than Permitted
Indebtedness) in the aggregate principal amount equal to the aggregate
liquidation value as of the date of issuance thereof of the Preferred Stock to
be issued.
Section 4.21. LIMITATION ON CREATION OF SUBSIDIARIES.
The Company will not create or acquire, and will not permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than
(1) a Restricted Subsidiary existing as of the Issue Date,
(2) a Restricted Subsidiary that is acquired or created
after the Issue Date; PROVIDED, HOWEVER, that each Domestic Restricted
Subsidiary acquired or created pursuant to this clause (2) shall have
executed a guarantee, pursuant to which such Domestic Restricted
Subsidiary will become a Guarantor; PROVIDED, FURTHER, in the event
the Company or any of its Restricted Subsidiaries incurs Acquired
Indebtedness (assuming such incurrence is in accordance with
Section 4.10) as a result of the acquisition of a Restricted
Subsidiary and as long as the terms of such Acquired Indebtedness
prohibit the Guarantee of the Notes by such newly- acquired Restricted
Subsidiary or such newly-acquired Restricted Subsidiary would be in
breach or default of the terms of the Acquired Indebtedness as a
result of such Guarantee, such Restricted Subsidiary will not be
required to execute a Guarantee; PROVIDED that, until such Restricted
Subsidiary executes and delivers a Guarantee in accordance with this
Section 4.21, (a) none of the Company or any other Restricted
Subsidiary of the Company will transfer any assets (other than in the
ordinary course of business) to such newly-acquired Restricted
Subsidiary, (b) such newly-acquired Restricted Subsidiary will not
transfer such Acquired Indebtedness to the Company or any other
Restricted Subsidiary and (c) neither the Company nor any Restricted
Subsidiary of the Company shall provide any guarantee of, or similar
credit support for, or otherwise become directly or indirectly liable
for any Indebtedness of such newly-acquired Restricted Subsidiary, or
(3) an Unrestricted Subsidiary.
ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. LIMITATION ON CONSOLIDATION, MERGER AND SALE OF ASSETS.
The Company will not and will not permit any of its Restricted
Subsidiaries to consolidate with, merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of
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the assets of the Company and its Restricted Subsidiaries (as an entirety or
substantially as an entirety in one transaction or a series of related
transactions), to any Person unless:
(1) the Company or such Restricted Subsidiary, as the case
may be, shall be the continuing Person, or the Person (if other than
the Company or such Restricted Subsidiary) formed by such
consolidation or into which the Company or such Restricted Subsidiary,
as the case may be, is merged or to which the properties and assets of
the Company or such Restricted Subsidiary, as the case may be, are
sold, assigned, transferred, leased, conveyed or otherwise disposed of
shall be a corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia and
shall expressly assume, by a supplemental indenture, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all of
the obligations of the Company or such Restricted Subsidiary, as the
case may be, under the Indenture, the Notes and the Guarantees, and
the obligations thereunder shall remain in full force and effect;
(2) immediately before and immediately after giving effect
to such transaction, no Default or Event of Default shall have
occurred and be continuing; and
(3) immediately after giving effect to such transaction on
a PRO FORMA basis the Company or such Person could incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness)
under Section 4.10; PROVIDED that (x) a Guarantor may merge into the
Company or another Person that is a Guarantor without complying with
this clause (3) and (y) the Company may merge with an Affiliate that
has no material assets or liabilities and that is incorporated or
organized for the purpose of reincorporating or reorganizing the
Company in another jurisdiction to realize tax benefits without
complying with this clause (3) PROVIDED, in the case of a transaction
pursuant to this subclause (y), immediately after giving effect to
such transaction on A PRO FORMA basis, the Consolidated Fixed Charge
Coverage Ratio of the surviving Person is not less than the
Consolidated Fixed Charge Coverage Ratio of the Company immediately
prior to such transaction.
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate, each stating that such consolidation, merger
or transfer and the supplemental indenture in respect thereto comply with this
provision and that all conditions precedent herein provided for relating to such
transaction or transactions have been complied with.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
Section 5.02. SUCCESSOR PERSON SUBSTITUTED.
Upon any consolidation, merger, conveyance or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.01
above, the successor entity formed by such consolidation or into which the
Company or any such Restricted Subsidiary is merged or to which such transfer is
made 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 with the same effect as if such successor entity had been named
as the Company or such Restricted Subsidiary, as the case may be herein, and
thereafter the predecessor entity shall be relieved of all obligations and
covenants under this Indenture and the Notes.
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ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if
(a) there is a default in the payment of any principal of, or
premium, if any, on the Notes when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise, whether or not such
payment is prohibited by the provisions of Article 12 hereof;
(b) there is a default in the payment of any interest on any Note
when the same becomes due and payable and the default continues for a
period of 30 calendar days, whether or not such payment is prohibited by
the provisions of Article 12 hereof;
(c) there is a default by the Company or any Restricted
Subsidiary in the observance or performance of any other covenant in the
Notes or this Indenture for 30 calendar days after written notice from the
Trustee or the holders of not less than 25% in aggregate principal amount
of the Notes then outstanding (except in the case of a default with respect
to Sections 4.17 or 5.01 which shall constitute an Event of Default with
such notice requirement but without such passage of time requirement);
(d) there is a failure to pay when due principal, interest or
premium with respect to any Indebtedness of the Company or any Restricted
Subsidiary thereof, which failure to pay, other than a failure to pay
principal at the final maturity thereof, shall not be cured, waived or
postponed pursuant to an agreement with the holders of such Indebtedness
within 60 days after written notice to the Company by the Trustee or any
Holder, or the acceleration of any such Indebtedness, which acceleration
shall not be rescinded or annulled within 20 days after written notice to
the Company by the Trustee or any Holder, if the aggregate amount of such
Indebtedness, together with the amount of any other such Indebtedness in
default for failure to pay or which has been accelerated, aggregates
$10,000,000 or more at any time;
(e) any final judgment or judgments (not covered by insurance)
which can no longer be appealed for the payment of money in excess of
$10,000,000 shall be rendered against the Company or any Restricted
Subsidiary thereof, and shall not be discharged for any period of 60
consecutive calendar days during which a stay of enforcement shall not be
in effect;
(f) the Company or any Significant Restricted Subsidiary pursuant
to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it
in an involuntary case,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its Property,
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(D) makes a general assignment for the benefit of its
creditors,
(E) generally is not able to pay its debts as they become
due, or
(F) takes any corporate action to authorize or effect any
of the foregoing;
(g) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Restricted Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any Significant
Restricted Subsidiary or for all or substantially all of the Property
of the Company or any Significant Restricted Subsidiary, or
(C) orders the liquidation of the Company or any
Significant Restricted Subsidiary,
and the order or decree remains unstayed and in effect for 60 days; and
(h) any Guarantee of a Significant Restricted Subsidiary ceases
to be in full force and effect or any Guarantee of a Significant Restricted
Subsidiary is declared to be null and void and unenforceable or any
Guarantee of a Significant Restricted Subsidiary is found to be invalid or
any of the Guarantors that is a Significant Restricted Subsidiary denies
its liability under its Guarantee (other than by reason of release of a
Guarantor in accordance with the terms of this Indenture).
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
Section 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default of the type
described in Section 6.01(f) or (g)) shall have occurred and be continuing, then
the Trustee or the holders of not less than 25% in aggregate principal amount of
the Notes then outstanding may declare to be immediately due and payable the
entire principal amount of all the Notes then outstanding plus accrued interest
to the date of acceleration and (1) the same shall become immediately due and
payable or (2) if there are any amounts outstanding under the Senior Credit
Facility, shall become immediately due and payable upon the first to occur of an
acceleration under the Senior Credit Facility or five Business Days after
receipt by the Company and the representative under the Senior Credit Facility
of a notice of acceleration; PROVIDED, HOWEVER, that after such acceleration but
before a judgment or decree based on such acceleration is obtained by the
Trustee, the holders of a majority in aggregate principal amount of outstanding
Notes may rescind and annul such acceleration if
(1) all Events of Default, other than nonpayment of principal,
premium, if any, or interest that has become due solely because of the
acceleration, have been cured or waived,
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(2) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal, which has become
due otherwise than by such declaration of acceleration, has been paid,
(3) the Company have paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and
(4) in the event of the cure or waiver of an Event of Default of the
type described in Section 6.01(f) or (g) above, the Trustee shall have
received an Officers' Certificate and an Opinion of Counsel that such Event
of Default has been cured or waived.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto. In case an Event of Default of the type described in Section
6.01(f) or (g) above shall occur, the principal, premium and interest amount
with respect to all of the Notes shall be due and payable immediately without
any declaration or other act on the part of the Trustee or the Noteholders.
Section 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, or premium, if any, and interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture and may
take any necessary action requested of it as Trustee to settle, compromise,
adjust or otherwise conclude any proceedings to which it is a party.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Section 6.04. WAIVER OF PAST DEFAULTS AND EVENTS OF DEFAULT.
Subject to Sections 2.09, 6.02, 6.07 and 8.02 hereof, the holders of a
majority in principal amount of the Notes then outstanding have the right to
waive past Defaults under this Indenture EXCEPT a Default in the payment of the
principal of, or interest or premium, if any, on any Note as specified in
clauses (a) and (b) of Section 6.10 or in respect of a covenant or a provision
which cannot be modified or amended without the consent of all Holders as
provided for in Section 8.02. The Company shall deliver to the Trustee an
Officers' Certificate stating that the requisite percentage of Holders have
consented to such waiver and attaching copies of such consents. In case of any
such waiver, the Company, the Trustee and the Holders shall be restored to their
former positions and rights hereunder and under the Notes, respectively. This
paragraph of this Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the
TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded from
this Indenture and the Notes, as permitted by the TIA.
Upon any such waiver, such Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
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Section 6.05. CONTROL BY MAJORITY.
Subject to Section 2.09, the Holders of a majority in 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 by this Indenture. The Trustee,
however, may refuse to follow any direction that conflicts with law or this
Indenture or that the Trustee determines may be unduly prejudicial to the rights
of another Noteholder not taking part in such direction, and the Trustee shall
have the right to decline to follow any such direction if the Trustee, being
advised by counsel, determines that the action so directed may not lawfully be
taken or if the Trustee in good faith shall, by a Trust Officer, determine that
the proceedings so directed may involve it in personal liability; PROVIDED that
the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. In the event the Trustee takes any action or
follows any direction pursuant to this Indenture, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against any loss or
expense caused by taking such action or following such direction. This
Section 6.05 shall be in lieu of Section 316(a)(1)(A) of the TIA, and such
Section 316(a)(1)(A) of the TIA is hereby expressly excluded from this
Indenture and the Notes, as permitted by the TIA.
Section 6.06. LIMITATION ON SUITS.
Subject to Section 6.07 below, no Holder has any right to institute
any proceeding with respect to this Indenture or any remedy thereunder unless:
(1) the Holder gives the Trustee written notice of a continuing Event
of Default;
(2) the holders of at least 25% in aggregate principal amount of the
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense which
may be incurred in compliance with such request;
(4) the Trustee fails to institute such proceeding within 45 calendar
days after receipt of such notice and the offer of indemnity; and
(5) the Trustee has not received directions inconsistent with such
written request during such 45-day period by the holders of a majority in
aggregate principal amount of the outstanding Notes.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of, or premium, if any, or accrued
interest of any Note held by such Holder on or after the respective due dates
expressed in such Note, or to bring suit for the enforcement of any such payment
on or after such respective dates, is absolute and unconditional and shall not
be impaired or affected without the consent of the Holder.
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Section 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of principal, premium or interest
specified in Section 6.01(a), (b) or (c) hereof occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount of unpaid principal, premium and
accrued interest remaining unpaid, together with, to the extent that payment of
such interest is lawful, interest on overdue principal and interest on overdue
installments of interest, in each case at the rate set forth in Section 4.01,
and such further amounts as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
Section 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same after
deduction of its charges and expenses to the extent that any such charges and
expenses are not paid out of the estate in any such proceedings and any
custodian in any such judicial proceeding is hereby authorized by each
Noteholder 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
Noteholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
or reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Noteholder in any such proceedings.
Section 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: if the Holders are forced to proceed against the Company or
any Guarantor directly without the Trustee, to Holders for their collection
costs;
THIRD: to Noteholders for amounts due and unpaid on the Notes for
principal, premium, if any, and interest as to each, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Notes; and
FOURTH: to the Company or, to the extent the Trustee collects any
amounts from any Guarantor, to such Guarantor.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Noteholders pursuant to this
Section 6.10.
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Section 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in
principal amount of the Notes then outstanding.
ARTICLE 7
TRUSTEE
Section 7.01. DUTIES OF TRUSTEE.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of such person's own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture against the Trustee.
(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. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained,
the Trustee may not be relieved from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05.
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(d) 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 to take or omit to take any action
under this Indenture or take any action at the request or direction of Holders
if it shall have reasonable grounds for believing that repayment of such funds
is not assured to it or it does not receive from such Holders an indemnity
reasonably satisfactory to it against such risk, liability, loss, fee or expense
which might be incurred by it in compliance with such request or direction.
(e) Whether or not herein expressly provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest on any money or
assets received by it except as the Trustee may agree in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
Section 7.02. RIGHTS OF TRUSTEE.
Subject to Section 7.01 hereof:
(a) The Trustee may rely on any document reasonably believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting with respect to
any matters contemplated by this Indenture or the Notes it may consult with
counsel and may require an Officers' Certificate or an Opinion of Counsel,
or both, which shall conform to the provisions of Section 13.05 hereof.
The Trustee shall be protected and shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate or
opinion.
(c) The Trustee may act through attorneys and agents and shall not be
responsible for the misconduct or negligence of any attorney or agent
(other than an agent who is an employee of the Trustee) so long as the
appointment of such agent was made with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection from liability in respect of any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be charged with knowledge of any Default or
Event of Default unless either (i) a Trust Officer shall have actual
knowledge of such Default or Event of Default or (ii) written notice of
such Default or Event of Default shall have been given to the Trustee by
the Company or any Holder.
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Section 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may make loans to, accept deposits from, perform
services for or otherwise deal with the Company, or any Affiliates thereof, with
the same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. The Trustee, however, shall be subject to Sections 7.10 and
7.11 hereof.
Section 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the sale of Notes or any
money paid to the Company pursuant to the terms of this Indenture and it shall
not be responsible for any statement of the Company in this Indenture or the
Notes other than the Trustee's certificate of authentication.
Section 7.05. NOTICE OF DEFAULTS.
If a Default or an Event of Default occurs and is continuing and if
the Trustee has actual knowledge of such Default or Event of Default, the
Trustee shall mail to each Noteholder notice of the uncured Default or Event of
Default within 30 days after such Default or Event of Default occurs. Except in
the case of a Default or an Event of Default in payment of principal of, premium
or interest on, any Note, including an accelerated payment and the failure to
make payment on the Change of Control Payment Date pursuant to a Change of
Control Offer or on the Excess Proceeds Payment Date pursuant to an Excess
Proceeds Offer and, except in the case of a failure to comply with Article 5
hereof, the Trustee may withhold the notice if and so long as its Board of
Directors, the executive committee of its Board of Directors or a committee of
its directors and/or Trust Officers in good faith determines that withholding
the notice is in the interest of the Noteholders. This Section 7.05 shall be in
lieu of the proviso to Section 315(b) of the TIA, and such proviso of
Section 315(b) of the TIA is hereby expressly excluded from this Indenture and
the Notes, as permitted by the TIA.
Section 7.06. REPORTS BY TRUSTEE TO HOLDERS.
If required by TIA Section 313(a), within 60 days after May 15 of any
year, commencing the May 15 following the date of this Indenture, the Trustee
shall mail to each Noteholder a brief report dated as of such May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b), (c) and (d).
Reports pursuant to this Section 7.06 shall be transmitted by mail:
(1) to all registered Holders, as the names and addresses of such
Holders appear on the Registrar's books; and
(2) to such Holder as have, within the two years preceding such
transmission, filed their names and addresses with the Trustee for that
purpose.
A copy of each report at the time of its mailing to Noteholders shall
be filed with the Commission and each stock exchange, if any, on which the Notes
are listed. The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange or of any delisting thereof.
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Section 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed in writing between the Company and the Trustee
for the Trustee's services. The Trustee's compensation shall not be limited by
any law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all reasonable fees and expenses,
including out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under this Indenture or in connection with the
collection of any funds. Such expenses shall include the reasonable fees and
expenses of the Trustee's agents and counsel.
The Company shall indemnify each of the Trustee and its agents,
employees, stockholders and directors and officers for, and hold them harmless
against, any loss, liability or expense incurred by them except for such actions
to the extent caused by any negligence, bad faith or willful misconduct on their
part, arising out of or in connection with the administration of this trust
including the reasonable costs and expenses of defending themselves against any
claim or liability in connection with the exercise or performance of any of
their rights, powers or duties hereunder. The Trustee shall notify the Company
promptly, in writing, of any claim asserted against the Trustee for which it may
seek indemnity. At the Trustee's sole discretion, the Company shall defend the
claim and the Trustee shall cooperate and may participate in the defense;
PROVIDED that any settlement of a claim shall be approved in writing by the
Trustee. The Company need not pay for any settlement made without its written
consent, which consent shall not be unreasonably withheld. The Company need not
reimburse any expense or indemnify against any loss or liability to the extent
incurred by the Trustee through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of, premium or interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The obligation of the Company under this Section 7.07 shall survive
the resignation or removal of the Trustee and the satisfaction and discharge of
this Indenture.
Section 7.08. REPLACEMENT OF TRUSTEE.
The Trustee may resign at any time by so notifying the Company in
writing. The holders of a majority in principal amount of the outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing
and may appoint a successor Trustee. The Company may remove the Trustee at its
election if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the
Trustee or its property; or
(d) the Trustee otherwise becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the holders
of a majority in principal amount of the Notes may appoint a successor Trustee
to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer, after payment of all sums then owing to the
Trustee pursuant to Section 7.07, all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Noteholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the outstanding Notes may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 hereof shall continue
for the benefit of the retiring Trustee.
Section 7.09. SUCCESSOR TRUSTEE BY CONSOLIDATION, MERGER OR CONVERSION.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, subject to this Article 7, the successor corporation without any
further act shall be the successor Trustee.
Section 7.10. ELIGIBILITY; DISQUALIFICATION.
This Indenture shall always have a Trustee which shall be eligible to
act as Trustee under TIA Sections 310(a)(1) and 310(a)(2). The Trustee shall
have a combined capital and surplus of at least $100,000,000 as set forth in its
most recent published annual report of condition. If the Trustee has or shall
acquire any "conflicting interest" within the meaning of TIA Section 310(b), the
Trustee and the Company shall comply with the provisions of TIA Section 310(b);
PROVIDED, HOWEVER, that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA
Section 310(b)(1) are met. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section 7.10, the Trustee shall resign
immediately in the manner and with the effect hereinbefore specified in this
Article 7.
Section 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311 (b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to
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the extent indicated therein. The provisions of TIA Section 311 shall apply
to the Company as obligors of the Notes.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. WITHOUT CONSENT OF HOLDERS.
The Company and the Guarantors, when authorized by a Board Resolution,
and the Trustee may amend or supplement this Indenture, the Notes or the
Guarantees without notice to or consent of any Noteholder:
(1) to cure any ambiguity, defect or inconsistency; PROVIDED that
such amendment or supplement does not, in the opinion of the Trustee,
adversely affect the rights of any Holder in any material respect;
(2) to provide for uncertificated Notes in addition to or in place of
Certificated Notes;
(3) to comply with Article 5;
(4) to comply with any requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA;
(5) to make any change that would provide any additional benefit or
rights to the Holders;
(6) to make any other change that does not adversely affect the
rights of any Holder under this Indenture;
(7) to add to the covenants of the Company or a Guarantor for the
benefit of the Holders, or to surrender any right or power herein conferred
upon the Company or any Guarantor;
(8) to secure the Notes pursuant to the requirements of Section 4.15
or otherwise;
(9) to reflect the release of a Guarantor from its obligations with
respect to its Guarantee pursuant to Section 10.07 or to add a Guarantor
pursuant to Section 4.21;
Section 8.02. WITH CONSENT OF HOLDERS.
Subject to Section 6.07, the Company, and the Guarantors, when each is
authorized by a Board Resolution of their respective Boards of Directors, and
the Trustee may amend or supplement this Indenture or the Notes or the
Guarantees with the written consent of the Holders of at least a majority in
principal amount of the outstanding Notes. Subject to Section 6.07, the Holders
of a majority in principal amount of the outstanding Notes may waive compliance
by the Company, or any Guarantor with any provision of this Indenture, the
Notes, or the Guarantees. However, without the consent of each Noteholder
affected, an amendment, supplement or waiver, including a waiver pursuant to
Section 6.04, may not:
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(1) reduce the percentage in principal amount of outstanding Notes
whose Holders must consent to an amendment, supplement or waiver, or
consent to take any action under this Indenture or the Notes;
(2) reduce the rate of or change the time for payment of interest
(including Additional Interest) on any Note;
(3) reduce the principal of or change or have the effect of changing
the fixed maturity of any Notes, or change the date on which any Notes may
be subject to redemption or repurchase, or reduce the redemption or
repurchase price therefor;
(4) make any Note payable in money other than that stated in the Note
or changing the place of payment from New York, New York;
(5) waive a Default in the payment of the principal of, or interest
or premium on, or any redemption payment with respect to, any Note (except
a rescission of acceleration of the Notes by the Holders as provided in
Section 6.02 and a waiver of the payment default that resulted from such
acceleration);
(6) make any changes in Sections 6.04 or 6.07 hereof or this sentence
of Section 8.02;
(7) affect the subordination or ranking of the Notes or any Guarantee
in a manner adverse to the Holders;
(8) amend, change or modify in any material respect, any obligation
of the Company to make and consummate a Change of Control Offer in the
event of a Change of Control or, make and consummate an Excess Proceeds
Offer with respect to any Asset Sale that has been consummated or modify
any of the provisions or definitions with respect thereto; or
(9) release any Guarantor that is a Significant Restricted Subsidiary
from any of its obligations under its Guarantee or this Indenture otherwise
than in accordance with the terms of this Indenture.
After an amendment, supplement or waiver under this Section 8.02
becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.
Upon the request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
receipt by the Trustee of evidence reasonably satisfactory to the Trustee of the
consent of the Noteholders as aforesaid and upon receipt by the Trustee of the
documents described in Section 8.06 hereof, the Trustee shall join with the
Company and the Guarantors in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
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It shall not be necessary for the consent of the Holders under this
Section 8.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 8.03. COMPLIANCE WITH TIA.
Every amendment to or supplement of this Indenture, the Notes or the
Guarantees shall comply with the TIA as then in effect.
Section 8.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Company received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
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 amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only those Persons,
shall be entitled 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.
After an amendment, supplement or waiver becomes effective, it shall
bind every Noteholder, unless it makes a change described in any of clauses (1)
through (9) of Section 8.02, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; PROVIDED that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal of and interest
on a Note, on or after the respective due dates expressed in such Note, or to
bring suit for the enforcement of any such payment on or after such respective
dates without the consent of such Holder.
Section 8.05. NOTATION ON OR EXCHANGE OF NOTES.
If an amendment, supplement, or waiver changes the terms of a Note,
the Trustee may request the Holder to deliver it to the Trustee. In such case,
the Trustee shall place an appropriate notation on the Note about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determine, in exchange for the Note the Company shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Failure to make
the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment supplement or waiver.
Section 8.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall be entitled to receive, and shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of any
amendment, supplement or waiver authorized pursuant to this Article 8 is
authorized or permitted by this Indenture and that such amendment, supplement or
waiver constitutes
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the legal, valid and binding obligation of the Company and any Guarantors,
enforceable in accordance with its terms (subject to customary exceptions).
The Trustee may, but shall not be obligated to, execute any such amendment,
supplement or waiver which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall be discharged and shall cease to be of further
effect (except those obligations referred to in the penultimate paragraph of
this Section 9.01) 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 Notes theretofore authenticated and delivered (other than
(i) Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.07 hereof and (ii) 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) (i) either (A) pursuant to Article 3, the Company shall have
given notice to the Trustee and mailed a notice of redemption to each
Holder of the redemption of all of the Notes under arrangements
satisfactory to the Trustee for the giving of such notice or (B) all Notes
not theretofore delivered to the Trustee for cancellation have become due
and payable; (ii) the Company has irrevocably deposited or caused to be
deposited with the Trustee in trust for the purpose an amount of U.S. legal
tender or U.S. Government Obligations sufficient to pay and discharge the
entire Indebtedness on such Notes not theretofore delivered to the Trustee
for cancellation, for the principal of, premium, if any, and interest to
the date of such deposit; (iii) no Default or Event of Default with respect
to this Indenture or the Notes shall have occurred and be continuing on the
date of such deposit or shall occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which the Company is a party or by
which it is bound; (iv) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; (v) the Company has delivered to the
Trustee (A) irrevocable instructions to apply the deposited money toward
payment of the Notes at the maturity thereof, and (B) 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 and that such satisfaction and
discharge does not result in a default under the Senior Credit Facility (if
then in effect) or any other agreement or instrument then known to such
counsel which binds or affects the Company; and (vi) that from and after
the time of deposit, the money deposited shall not be subject to the rights
of holders of Senior Indebtedness pursuant to the provisions of Article 12
or to the rights of holders of Guarantor Senior Indebtedness pursuant to
the provisions of Article 11.
Notwithstanding the foregoing paragraph, the Company's obligations in
Article 2 and Sections 4.01, 4.07, 7.07 and 8.06 shall survive until the Notes
are no longer outstanding pursuant to the last paragraph of
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Section 2.08. After the Notes are no longer outstanding, the Company's
obligations in Sections 7.07, 8.05 and 8.06 shall survive.
After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's and each Guarantor's
obligations under the Notes, the Guarantees and this Indenture except for those
surviving obligations specified above.
Section 9.02. LEGAL DEFEASANCE.
(a) The Company may, at its option by Board Resolution of the
Board of Directors of the Company, at any time, elect to have this section
be applied to all outstanding Notes upon compliance with the conditions set
forth in Section 9.04.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company and each Guarantor
shall, subject to the satisfaction of the conditions set forth in Section
9.04, be deemed to have been discharged from their respective obligations
with respect to all outstanding Notes and the Guarantees on the date the
conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE").
For this purpose, Legal Defeasance means that the Company and each
Guarantor shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes and the Guarantees, which
shall thereafter be deemed to be "outstanding" only for the purposes of
Section 9.05 hereof and the other Sections of this Indenture referred to in
(i) and (ii) below, and to have satisfied all their other respective
obligations under such Notes and this Indenture (and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging the same), and Holders of the Notes and any amounts deposited
under Section 9.04 hereof shall cease to be subject to any obligations to,
or the rights of, any holder of Senior Indebtedness under Article 12 or
otherwise or any holder of Guarantor Senior Indebtedness under Article 11
or otherwise, except for the following provisions, which shall survive
until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Notes to receive solely from the trust fund
described in Section 9.05 hereof, and as more fully set forth in such
Section, payments in respect of the principal of, premium, if any, and
interest on such Notes when such payments are due, (ii) the Company's
obligations with respect to such Notes under Article 2 and Section 4.07
hereof, (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Company's obligations in connection therewith and
(iv) this Article 9. Subject to compliance with this Article 9, the
Company may exercise its option under this Section 9.02 notwithstanding the
prior exercise of its option under Section 9.03 below with respect to the
Notes.
Section 9.03. COVENANT DEFEASANCE.
(a) The Company may, at its option by Board Resolution of the
Board of Directors of the Company, at any time, elect to have this Section
be applied to all outstanding Notes upon compliance with the conditions set
forth in Section 9.04.
(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company and each Guarantor
shall, subject to the satisfaction of the conditions set forth in Section
9.04 hereof, be released from their respective obligations under the
covenants contained in Sections 4.05, 4.08, 4.09 and 4.10 through 4.21,
inclusive, and Article 5 hereof with respect to the outstanding Notes and
the Guarantees on and after the date the conditions set forth below are
satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Notes and the
Guarantees shall thereafter be deemed
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not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder and Holders of the Notes
and any amounts deposited under Section 9.04 hereof shall cease to be
subject to any obligations to the rights of, any holder of Senior
Indebtedness under Article 12 or otherwise or any holder of Guarantor
Senior Indebtedness under Article 11 or otherwise. For this purpose,
such Covenant Defeasance means that, with respect to the outstanding
Notes and the Guarantees, 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 covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event or Default under Section
6.01(c) hereof, but, except as specified above, the remainder of this
Indenture, such Notes and the Guarantees shall be unaffected thereby.
In addition, upon the Company's exercise under paragraph (a) hereof of
the option applicable to this paragraph (b), subject to the satisfaction
of the conditions set forth in Section 9.04 hereof, Sections 6.01(c),
6.01(d) and 6.01(e) shall not constitute Events of Default.
Section 9.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 9.02 or 9.03 hereof to the outstanding Notes and the Guarantees:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, U.S. legal tender or U.S. Government
Obligations, 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 Notes on the
stated date for payment thereof or on the applicable Redemption Date, as the
case may be, PROVIDED that the Trustee shall have received an irrevocable
written order from the Company instructing the Trustee to apply such U.S. legal
tender or the proceeds of such U.S. Government Obligations to said payments with
respect to the Notes;
(b) in the case of an election under Section 9.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel reasonably
acceptable to the Trustee confirming that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (ii) since
the date of this Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of an election under Section 9.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel confirming
that the Holders will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Sections 6.01(f) and
6.01(g) hereof are concerned, at any time in the period ending on
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the 91st day after the date of such deposit or, if longer, ending on the day
following the expiration of the longest preference period under any
Bankruptcy Law (it being understood that this condition should not be deemed
to be satisfied until the expiration of such period);
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of or constitute a default under this Indenture or any
other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with;
(h) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that (i) the trust funds will not be subject to any rights
of any holders of Senior Indebtedness of the Company or Guarantor Senior
Indebtedness of any Guarantor, and (ii) assuming no intervening event of the
type described in Sections 6.01(f) and 6.01(g) between the date of deposit and
the 91st day following the deposit or, if longer, ending on the day following
the expiration of the longest preference period under any Bankruptcy Law (it
being understood that this condition should not be deemed to be satisfied until
the expiration of such period) and further assuming that no Holder is an insider
of the Company, after the 91st day following the deposit or, if longer, ending
on the day following the expiration of the longest preference period under any
Bankruptcy Law (it being understood that this condition should not be deemed to
be satisfied until the expiration of such period), the trust funds will not be
subject to the effect of any applicable Bankruptcy Law;
(i) such Legal Defeasance or Covenant Defeasance shall not cause
the Trustee to have a conflicting interest for purposes of the TIA with respect
to any securities of the Company; and
(j) the Company shall have delivered to the Trustee an Opinion of
Counsel stating that, as a result of such Legal Defeasance or Covenant
Defeasance, neither the trust nor the Trustee will be required to register as an
investment company under the Investment Company Act of 1940, as amended.
Section 9.05. APPLICATION OF TRUST MONEY.
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 9.01 or 9.04 hereof in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent as the Trustee may
determine, to the Holders of such Notes, of all sums due and to become due
thereon in respect of principal, premium, if any, and accrued interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company and the Guarantors shall pay and indemnify the Trustee
against any tax, fee or other charge imposed on or assessed against the U.S.
Government Obligations deposited pursuant to Section 9.01 or 9.04 hereof 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 outstanding Notes.
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Anything in this Article 9 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon a written
request of the Company in the form of an Officers' Certificate any money or U.S.
Government Obligations held by it as provided in Section 9.01 or 9.04 hereof
which, in the opinion of a nationally-recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 9.06. REPAYMENT TO THE COMPANY.
Subject to Sections 9.01, 9.,02, 9.03, 9.04, 9.05 and 9.07, the
Trustee and the Paying Agent shall promptly pay to the Company upon request any
excess U.S. legal tender or U.S. Government Obligations held by them at any time
and thereupon shall be relieved from all liability with respect to such money.
The Trustee and the Paying Agent shall pay to the Company upon request any money
held by them for the payment of principal, premium, if any, or interest that
remains unclaimed for two years; PROVIDED that the Trustee or such Paying Agent,
before being required to make any payment, may at the expense of the Company
cause to be published once in a newspaper of general circulation in the City of
New York or mail to each Holder entitled to such money notice that such money
remains unclaimed, and that after a date specified therein which shall be at
least 30 days from the date of such publication or mailing, any unclaimed
balance of such money then remaining will be repaid to the Company. After
payment to the Company, Noteholders entitled to such money must look to the
Company for payment as general creditors unless an applicable law designates
another Person.
Section 9.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's and each Guarantor's obligations under this
Indenture, the Notes and the Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to this Article 9 until such time as the
Trustee or Paying Agent is permitted to apply all such U.S. legal tender or U.S.
Government Obligations in accordance with Section 9.01 hereof; PROVIDED,
HOWEVER, that if the Company or the Guarantors have made any payment of
principal of, premium, if any, or accrued interest on any Notes because of the
reinstatement of their obligations, the Company and each such Guarantor shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
ARTICLE 10
GUARANTEE
Section 10.01. UNCONDITIONAL GUARANTEE.
Each Guarantor hereby unconditionally, jointly and severally,
guarantees to each Holder of a Note authenticated by the Trustee and to the
Trustee and its successors and assigns that the principal of, premium thereon
(if any) and interest on the Notes will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration or
otherwise, and interest on the overdue principal and interest on any overdue
interest on the Notes and all other obligations of the Company to the Holders or
the Trustee hereunder or under the Notes will be promptly paid in full or
performed, all in accordance with the terms hereof
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and thereof; subject, however, to the limitations set forth in Section 10.03.
Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any Holder of the Notes with respect to any
provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor hereby waives 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
the Guarantee will not be discharged except by complete performance of the
obligations contained in the Notes and this Indenture. If any Holder or the
Trustee is required by any court or otherwise to return to the Company, any
Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor to the Trustee or such Holder, each Guarantee, to
the extent theretofore discharged, shall be reinstated in ful force and
effect. Each Guarantor further agrees that, as between a Guarantor, on the
one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations Guaranteed hereby may be accelerated as provided
in Article 6 for the purpose of each Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any acceleration
of such obligations as provided in Article 6, such obligations (whether or
not due and payable) shall become due and payable by each Guarantor for the
purpose of each Guarantee.
Each Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Article 10.
Section 10.02. SEVERABILITY.
In case any provision of this Article 10 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 10.03. LIMITATION ON GUARANTOR'S LIABILITY; CONTRIBUTION.
Each Guarantor, and by its acceptance hereof, each Holder and the
Trustee, hereby confirm that it is the intention of all such parties that the
Guarantee does not constitute a fraudulent transfer or conveyance for purposes
of Title 11 of the United States Code, as amended, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar U.S. Federal
or state or other applicable law. To effectuate the foregoing intention, each
Holder and each Guarantor hereby irrevocably agree that the obligations of a
Guarantor under its Guarantee shall be limited to the maximum amount as will,
after giving effect to all other contingent and fixed liabilities of such
Guarantor, and after giving effect to any collections from or payments made by
or on behalf of such Guarantor in respect of the obligations of such Guarantor
pursuant to the second paragraph of Section 10.03, result in the obligations of
such Guarantor not constituting such a fraudulent transfer or conveyance.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, INTER SE, that in the event any payment or
distribution is made by any Guarantor (a "FUNDING GUARANTOR") under a Guarantee
such Funding Guarantor shall be entitled to a contribution from all other
Guarantors in a PRO RATA amount, based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor), determined in accordance with GAAP,
subject to the first paragraph of this Section 10.03, for all payments, damages
and expenses incurred by such Funding Guarantor in discharging the Company's
obligations with respect to the Notes or any other Guarantor's obligations under
a Guarantee.
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Section 10.04. SUCCESSORS AND ASSIGNS.
This Article 10 shall be binding upon each Guarantor and its
successors and assigns and shall ensure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
conferred upon that party in this Indenture and in the Notes shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions of this Indenture.
Section 10.05. NO WAIVER.
Neither a failure nor a delay on the part of either the Trustee or the
Holders in exercising any right, power or privilege under this Article 10 shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege. The
rights, remedies and benefits of the Trustee and the Holders herein expressly
specified are cumulative and not exclusive of any other rights, remedies or
benefits which either may have under this Article 10 at law, in equity, by
statute or otherwise.
Section 10.06. RELEASE OF GUARANTOR.
A Guarantor shall be released from all of its obligations under its
Guarantee if:
(i) the Guarantor has sold all or substantially all of its assets
or the Company and its Subsidiaries have sold all of the Capital Stock of
the Guarantor owned by them, in each case in a transaction in compliance
with Sections 4.13 and 5.01 hereof; or
(ii) the Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, the Company or another
Guarantor in a transaction in compliance with Section 5.01 hereof;
and in each such case, the Company have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to such transactions have been complied
with.
Section 10.07. EXECUTION OF SUPPLEMENTAL INDENTURE FOR FUTURE GUARANTORS.
Each Subsidiary which is required to become a Guarantor pursuant to
Section 4.21 shall, and the Company shall cause each such Subsidiary to,
promptly execute and deliver to the Trustee a supplemental indenture
substantially in the form of EXHIBIT F hereto pursuant to which such Subsidiary
shall become a Guarantor under this Article 10 and shall guarantee the
obligations of the Company under the Notes and this Indenture. Concurrently
with the execution and delivery of such supplemental indenture, the Company
shall deliver to the Trustee an Opinion of Counsel to the effect that such
supplemental indenture has been duly authorized, executed and delivered by such
Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Guarantee of such Guarantor is a legal,
valid and binding obligation of such Guarantor, enforceable against such
Guarantor in accordance with its terms.
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Section 10.08. EXECUTION AND DELIVERY OF GUARANTEE.
To evidence the Guarantee set forth in this Article 10, each Guarantor
hereby agrees that a notation of such Guarantee shall be placed on each Note
authenticated and made available for delivery by the Trustee and that this
Guarantee shall be executed on behalf of each Guarantor by the manual or
facsimile signature of two Officers or an Officer and the Secretary of each
Guarantor. Each Guarantor hereby agrees that the Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee. If an Officer of a
Guarantor whose signature is on the Guarantee no longer holds that office at the
time the Trustee authenticates the Note on which the Guarantee is endorsed, the
Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee,
after the authentication thereof hereunder, shall constitute due delivery of the
Guarantee set forth in this Indenture on behalf of each Guarantor.
Section 10.09. SUBORDINATION OF SUBROGATION AND OTHER RIGHTS.
Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under the Guarantee or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to, and
no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full in cash of all outstanding Notes in accordance with
the provisions provided therefor in this Indenture.
ARTICLE 11
SUBORDINATION OF GUARANTEE
Section 11.01. GUARANTEE OBLIGATIONS SUBORDINATED TO GUARANTOR SENIOR
INDEBTEDNESS.
Each Guarantor covenants and agrees, and the Trustee and each Holder,
by its acceptance of the Notes, likewise covenants and agrees, that to the
extent and in the manner hereinafter set forth in this Article 11, the
Indebtedness represented by the Guarantee and the payment of all Obligations on
the Notes pursuant to the Guarantee by such Guarantor are hereby expressly made
subordinate and subject in right of payment as provided in this Article 11 to
the prior indefeasible payment in full in cash of all Guarantor Senior
Indebtedness of such Guarantor whether outstanding on the Issue Date or
thereafter incurred.
This Section 11.01 and the following Sections 11.02 through 11.06
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; 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 11.02. 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 any Guarantor or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or (b)
any liquidation, dissolution or other winding-up of any Guarantor, whether
voluntary or involuntary and whether or not involving insolvency
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or bankruptcy or (c) any general 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 indefeasible payment in full in cash
of all amounts due on or in respect of all such Guarantor Senior
Indebtedness before the Holders are entitled to receive, pursuant to the
Guarantee of such Guarantor, any payment or distribution of any kind or
character (other than payment or distribution from the trust described in
Section 9.01 or Section 9.04) by such Guarantor on account of any of the
Obligations of such Guarantor under its Guarantee; and
(2) any payment or distribution of assets of such Guarantor of any
kind or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders or the Trustee would be entitled but for
the subordination provisions of this Article 11 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 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 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 11.02, the Trustee or any Holder shall have received any
payment or distribution of assets of such Guarantor of any kind or
character, whether in cash, Property or securities, including, without
limitation, by way of set-off or otherwise, in respect of any of the
Obligations of any Guarantor pursuant to its Guarantee before all Guarantor
Senior Indebtedness of such Guarantor is indefeasibly paid in full, then
and in such event such payment or distribution 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
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 5 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 11 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 5 hereof.
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Section 11.03. SUSPENSION OF GUARANTEED OBLIGATIONS WHEN GUARANTOR SENIOR
INDEBTEDNESS IN DEFAULT.
(a) Unless Section 11.02 hereof shall be applicable, upon the
occurrence of a Payment Default on Designated Senior Indebtedness of any
Guarantor no payment or distribution (other than a payment or distribution from
the trust described in Section 9.01 or Section 9.04) of any assets or securities
of a Guarantor of any kind or character (including, without limitation, cash,
property and any payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of such Guarantor being
subordinated to its Obligations under its Guarantee) may be made by or on behalf
of such Guarantor, including, without limitation, by way of set-off or
otherwise, for or on account of its Obligations under its Guarantee, or for or
on account of the purchase, redemption or other acquisition of the Notes and
neither the Trustee nor any Holder shall take or receive from any Guarantor,
directly or indirectly in any manner, payment in respect of all or any portion
of its Obligations under its Guarantee commencing on the date of receipt by the
Trustee of a written notice from the representative of the holders of such
Guarantor Senior Indebtedness (the "GUARANTOR REPRESENTATIVE") of the occurrence
of a Payment Default, and in any such event, such prohibition shall continue
until such Payment Default is cured, waived in writing or otherwise ceases to
exist. At such time as the prohibition set forth in the preceding sentence
shall no longer be in effect, subject to the provisions of the following
paragraph (b), such Guarantor shall resume making any and all required payments
in respect of the Obligations, including any missed payments.
(b) Unless Section 11.02 hereof shall be applicable, upon the
occurrence of a Non-Payment Event of Default on Designated Senior Indebtedness
of any Guarantor, no payment or distribution (other than a payment or
distribution made from the trust described in Section 9.01 or Section 9.04) of
any assets of such Guarantor of any kind or character (including, without
limitation, cash, Property and any payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of such
Guarantor being subordinated to its Obligations under its Guarantee) shall be
made by such Guarantor, including, without limitation, by way of set-off or
otherwise, on account of any of its Obligations and its Guarantee, or on account
of the purchase, redemption, defeasance or other acquisition of the Notes for a
period (the "GUARANTEE PAYMENT BLOCKAGE PERIOD") commencing on the date of
receipt by the Trustee of written notice from the Guarantor Representative of
such Non-Payment Event of Default, unless and until (subject to any blockage of
payments that may then be in effect under the preceding paragraph (a)) the
earliest to occur of the following events: (w) more than 179 days shall have
elapsed since the date of receipt of such written notice by the Trustee, (x)
such Non-Payment Event of Default shall have been cured or waived in writing or
shall have ceased to exist, (y) such Designated Senior Indebtedness shall have
been discharged or indefeasibly paid in full in cash or (z) such Guarantee
Payment Blockage Period shall have been terminated by written notice to such
Guarantor or the Trustee from the Guarantor Representative initiating such
Guarantee 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), such Guarantor shall resume making
any and all required payments in respect of its Obligations under its Guarantee,
including any missed payments. Notwithstanding any other provisions of this
Indenture, no Non-Payment Event of Default with respect to Designated Senior
Indebtedness which existed or was continuing on the date of the commencement of
any Guarantee Payment Blockage Period initiated by the Guarantor Representative
shall be, or be made, the basis for the commencement of a second Guarantee
Payment Blockage Period initiated by the Guarantor Representative unless such
Non-Payment Event of Default shall have been cured or waived for a period of not
less than 90 consecutive days. In no event shall a Guarantee Payment Blockage
Period extend beyond 179 days from the date of the receipt by the Trustee of the
notice referred to in this Section 11.03(b) or, in the event of a Non-Payment
Event of Default which formed the basis for a Payment Blockage Period under
Section 12.03(b) hereof, 179 days from the date of the receipt by the Trustee of
the notice referred to in Section 12.03(b) (the "INITIAL GUARANTEE BLOCKAGE
PERIOD"). Any number of additional Guar-
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antee Payment Blockage Periods may be commenced during the Initial Guarantee
Blockage Period; PROVIDED, HOWEVER, that no such additional Guarantee Payment
Blockage Period shall extend beyond the Initial Guarantee Blockage Period.
After the expiration of the Initial Guarantee Blockage Period, no Guarantee
Payment Blockage Period may be commenced under this Section 12.03(b) and no
Payment Blockage Period may be commenced under Section 11.03(b) hereof until
at least 180 consecutive days have elapsed from the last day of the Initial
Guarantee Blockage Period.
(c) In the event that, notwithstanding the foregoing, the Trustee
or any Holder shall have received any payment from a Guarantor prohibited by the
foregoing provisions of this Section 11.03, then and in such event such payment
shall be paid over and delivered forthwith to the Guarantor Representative
initiating the Guarantee Payment Blockage Period, in trust for distribution to
the holders of Guarantor Senior Indebtedness or, if no amounts are then due in
respect of Guarantor Senior Indebtedness, promptly returned to the Guarantor, or
as a court of competent jurisdiction shall direct.
Section 11.04. TRUSTEE'S RELATION TO GUARANTOR SENIOR INDEBTEDNESS.
The Trustee and any agent of any Guarantor or the Trustee shall be
entitled to all the rights set forth in this Article 11 with respect to any
Guarantor Senior Indebtedness which may at any time be held by it in its
individual or any other capacity to the same extent as any other holder of
Guarantor Senior Indebtedness and nothing in this Indenture shall deprive the
Trustee or any such agent of any of its rights as such holder.
With respect to the holders of Guarantor 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 11, and no implied
covenants or obligations with respect to the holders of Guarantor 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 Guarantor Senior
Indebtedness and the Trustee shall not be liable to any holder of Guarantor
Senior Indebtedness if it shall mistakenly pay over or deliver to Holders, such
Guarantor or any other person moneys or assets to which any holder of Guarantor
Senior Indebtedness shall be entitled by virtue of this Article 11 or otherwise.
Nothing in this Section 11.04 shall affect the obligation of any other such
person receiving such payment or distribution from the Trustee or any other
Agent to hold such payment for the benefit of, and to pay such payment over to,
the holders of Guarantor Senior Indebtedness.
Section 11.05. SUBROGATION.
Upon the payment in full of all amounts payable under or in respect of
all Guarantor Senior Indebtedness of a Guarantor, the Holders shall be
subrogated to the rights of the holders of such Guarantor Senior Indebtedness to
receive payments and distributions of cash, property and securities of such
Guarantor made on such Guarantor Senior Indebtedness until all amounts due to be
paid under the Guarantee shall be paid in full. For the purposes of such
subrogation, no payments or distributions to holders of Guarantor Senior
Indebtedness of any cash, property or securities to which Holders or the Trustee
would be entitled except for the provisions of this Article 11, and no payments
over pursuant to the provisions of this Article 11 to holders of Guarantor
Senior Indebtedness by Holders or the Trustee, shall, as among each Guarantor,
its creditors other than holders of Guarantor Senior Indebtedness and the
Holders, be deemed to be a payment or distribution by such Guarantor to or on
account of such Guarantor Senior Indebtedness.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 11 shall have been
applied, pursuant to the provisions of this Article 11, to the payment of all
amounts payable under Guarantor Senior Indebtedness, then and in such case, the
Holders shall
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be entitled to receive from the holders of such Guarantor Senior Indebtedness
at the time outstanding any payments or distributions received by such
holders of Guarantor Senior Indebtedness in excess of the amount sufficient
to pay all amounts payable under or in respect of such Guarantor Senior
Indebtedness in full in cash.
Section 11.06. GUARANTEE SUBORDINATION PROVISIONS SOLELY TO DEFINE RELATIVE
RIGHTS.
The subordination provisions of this Article 11 are and are intended
solely for the purpose of defining the relative rights of the Holders on the one
hand and the holders of Guarantor Senior Indebtedness on the other hand.
Nothing contained in this Article 11 or elsewhere in this Indenture or in the
Notes is intended to or shall (a) impair, as among each Guarantor, its creditors
other than holders of its Guarantor Senior Indebtedness and the Holders, the
obligation of such Guarantor, which is absolute and unconditional, to make
payments to the Holders in respect of its Obligations under its Guarantee in
accordance with its terms; or (b) affect the relative rights against such
Guarantor of the Holders and creditors of such Guarantor other than the holders
of the Guarantor Senior Indebtedness; or (c) prevent the Trustee or any Holder
from exercising all remedies otherwise permitted by applicable law upon a
Default or an Event of Default under this Indenture, subject to the rights, if
any, under this Article 11 of the holders of Guarantor Senior Indebtedness (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 11.02 hereof, 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 11.03 hereof, to prevent any payment prohibited
by such Section or enforce their rights pursuant to Section 11.03(c) hereof.
The failure by any Guarantor to make a payment in respect of its
obligations on its Guarantee by reason of any provision of this Article 11 shall
not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
Section 11.07. TRUSTEE TO EFFECTUATE SUBORDINATION.
Each Holder of an Obligation under a Guarantee 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 11 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 a Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely 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.
Section 11.08. NO WAIVER OF SUBORDINATION PROVISIONS.
(a) No right of any present or future holder of any Guarantor
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 a 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 paragraph (a) of this
section, the holders of Guarantor Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Trustee or the Holders,
without incurring responsibility to the Holders and without impairing or
releasing the subordination provided in this Article 11 or the obligations
hereunder of the Holders to the holders of Guarantor Senior Indebtedness, do any
one or more of the following: (1) change the manner, place or terms of payment
or extend
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the time of payment of, or renew or alter, Guarantor Senior Indebtedness or
any instrument evidencing the same or any agreement under which Guarantor
Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Guarantor
Senior Indebtedness; (3) release any person liable in any manner for the
collection or payment of Guarantor Senior Indebtedness; and (4) exercise or
refrain from exercising any rights against a Guarantor and any other person;
PROVIDED, HOWEVER, that in no event shall any such actions limit the right of
the Holders to take any action to accelerate the maturity of the Obligations
under the Guarantees pursuant to Article 6 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.
Section 11.09. NOTICE TO TRUSTEE.
(a) A 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 at its Corporate Trust Office in respect of the
Notes. Notwithstanding the provisions of this Article 11 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 Obligations under the Guarantees, unless and until
the Trustee shall have received written notice thereof from such Guarantor or a
holder of 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 11.09, 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 11.09 at
least five 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 Obligation under a Guarantee), then, anything herein contained
to the contrary notwithstanding but without limiting the rights and remedies of
the holders of Guarantor Senior Indebtedness or any trustee, fiduciary or agent
therefor, 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 five 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) 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
of Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article 11, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Guarantor 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 11, 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 11.10. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets of a Guarantor referred to
in this Article 11, the Trustee 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
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in such payment or distribution, the holders of Guarantor Senior Indebtedness
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 11.
Section 11.11. NO SUSPENSION OF REMEDIES.
Nothing contained in this Article 11 shall limit the right of the
Trustee or the Holders to take any action to accelerate the maturity of the
Obligations under the Guarantees pursuant to Article 6 or to pursue any rights
or remedies hereunder or under applicable law, subject to the rights, if any,
under this Article 11 of the holders, from time to time, of Guarantor Senior
Indebtedness.
ARTICLE 12
SUBORDINATION OF NOTES
Section 12.01. NOTES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company covenants and agrees, and the Trustee and each Holder by
its acceptance of Notes likewise covenants and agrees, that to the extent and in
the manner hereinafter set forth in this Article 12; the payment of all
Obligations on the Notes by the Company are hereby expressly made subordinate
and subject in right of payment as provided in this Article 12 to the prior
indefeasible payment in full in cash of all Senior Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter incurred.
This Section 12.01 and the following Sections 12.02 through 12.11
shall constitute a continuing offer to all Persons who, in reliance on such
provisions, become holders of or continue to hold Senior Indebtedness of the
Company; and such provisions are made for the benefit of all the holders of
Senior Indebtedness of the Company; 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, whether voluntary or involuntary 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
general 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 of the Company shall be
entitled to receive indefeasible payment in full in cash of all amounts due
on or in respect of all Senior Indebtedness before the Holders are entitled
to receive any payment or distribution of any kind or character (other than
a payment or distribution from the trust described in Section 9.01 or
Section 9.04) on account of any Obligations on the Notes; and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, Property or securities, by set-off or
otherwise, to which the Holders or the Trustee would be enti-
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tled but for the provisions of this Article 12 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 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 any Holder shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including, without limitation, by
way of set-off or otherwise, in respect of the principal of, premium, if
any, and interest on the Notes before all Senior Indebtedness is
indefeasibly paid in full, then and in such event such payment or
distribution 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 the Company for
application to the payment of all such Senior Indebtedness remaining
unpaid, to the extent necessary to pay all Senior Indebtedness in full in
cash or, as acceptable to the holders of such Senior Indebtedness, any
other manner, after giving effect to any concurrent payment or
distribution, to or for the holders of such 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 5 hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshaling of assets and liabilities of the Company for the purposes of this
Article 12 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 5 hereof.
Section 12.03. SUSPENSION OF PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT.
(a) Unless Section 12.02 hereof shall be applicable, upon the
occurrence of a Payment Default on Designated Senior Indebtedness of the
Company, no payment or distribution (other than a payment or distribution from
the trust described in Section 9.01 or Section 9.04) of any assets or securities
of the Company of any kind or character (including, without limitation, cash,
property and any payment or distribution which may be payable or deliverable by
reason of the payment of any other Indebtedness of the Company being
subordinated to the payment of the Notes by the Company) may be made by or on
behalf of the Company or any Restricted Subsidiary of the Company, including,
without limitation, by way of set-off or otherwise, for or on account of any
Obligations under the Notes or this Indenture, or for or on account of the
purchase, redemption or other acquisition of the Notes, and neither the Trustee
nor any Holder shall take or receive from the Company, directly or indirectly in
any manner, payment in respect of all or any portion of Notes commencing on the
date of receipt by the Trustee of written notice from the representative of the
holders of such Designated Senior Indebtedness (the "REPRESENTATIVE") to the
Trustee of written notice of the occurrence of a Payment Default, and in any
such event, such prohibition shall continue until such Payment Default is cured,
waived in writing or otherwise ceases to exist. At such time as the prohibition
set forth in the preceding sentence shall no longer be in
<PAGE>
86
effect, subject to the provisions of the following paragraph (b), the Company
shall resume making any and all required payments in respect of the Notes,
including any missed payments.
(b) Unless Section 12.02 hereof shall be applicable, upon the
occurrence of a Non-Payment Event of Default on Designated Senior Indebtedness
of the Company, no payment or distribution (other than a payment or distribution
from the trust described in Section 9.01 or Section 9.04) of any assets of the
Company of any kind or character (including, without limitation, cash, property
and any payment or distribution which may be payable or deliverable by reason of
the payment of any other Indebtedness of the Company being subordinated to the
payment of the Notes by the Company) shall be made by the Company or any
Restricted Subsidiary of the Company, including, without limitation, by way of
set-off or otherwise, on account of any Obligations under the Notes or this
Indenture or on account of the purchase, redemption, defeasance or other
acquisition of Notes for a period (the "PAYMENT BLOCKAGE PERIOD") commencing on
the date of receipt by the Trustee of written notice from the Representative of
such Non-Payment Event of Default unless and until (subject to any blockage of
payments that may then be in effect under the preceding paragraph (a)) the
earliest to occur of the following events: (w) more than 179 days shall have
elapsed since the date of receipt of such written notice by the Trustee, (x)
such Non-Payment Event of Default shall have been cured or waived in writing or
shall have ceased to exist, (y) such Designated Senior Indebtedness shall have
been discharged or indefeasibly paid in full in cash or (z) such Payment
Blockage Period shall have been terminated by written notice to the Company or
the Trustee from the Representative 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 Notes, including any missed payments. Notwithstanding any other
provisions of this Indenture, no Non-Payment Event of Default with respect to
Designated Senior Indebtedness which existed or was continuing on the date of
the commencement of any Payment Blockage Period initiated by the Representative
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period initiated by the Representative 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 by the Trustee of the notice referred to in this Section
12.03(b) or in the event of a Non-Payment Event of Default which formed the
basis of a Guarantee Payment Blockage Period under Section 11.03(b) hereof, 179
days from the default the receipt by the Trustee of the notice referred to in
Section 11.03(b) (the "INITIAL BLOCKAGE PERIOD"). Any number of additional
Payment Blockage Periods may be commenced during the Initial Blockage Period;
PROVIDED, HOWEVER, that no such additional Payment Blockage Period shall extend
beyond the Initial Blockage Period. After the expiration of the Initial
Blockage Period, no Payment Blockage Period may be commenced under this clause
(b) and no Guarantee Payment Blockage Period may be commenced under
Section 11.03(b) hereof until at least 180 consecutive days have elapsed from
the last day of the Initial Blockage Period.
(c) In the event that, notwithstanding the foregoing, the Trustee
or any Holder 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 Representative initiating the Payment
Blockage Period, in trust for distribution to the holders of Senior Indebtedness
or, if no amounts are then due in respect of Senior Indebtedness, promptly
returned to the Company, or otherwise as a court of competent jurisdiction shall
direct.
Section 12.04. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.
The Trustee and any agent of the Company or the Trustee shall be
entitled to all the rights set forth in this Article 12 with respect to any
Senior Indebtedness which may at any time be held by it in its indi-
<PAGE>
87
vidual or any other capacity to the same extent as any other holder of Senior
Indebtedness and nothing in this Indenture shall deprive the Trustee or any
such agent of any of its rights as such holder.
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 12, 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 12 or otherwise. Nothing in this Section 12.04 shall affect the
obligation of any other such person receiving such payment or distribution from
the Trustee or any other Agent to hold such payment for the benefit of, and to
pay such payment over to, the holders of Senior Indebtedness.
Section 12.05. SUBROGATION.
Upon the payment in full of all Senior Indebtedness, the Holders 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 Notes 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 or the Trustee would be entitled
except for the provisions of this Article 12, and no payments over pursuant to
the provisions of this Article 12 to the holders of Senior Indebtedness by
Holders or the Trustee, shall, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders, 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 12 shall have been
applied, pursuant to the provisions of this Article 12, 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 to
pay all amounts payable under or in respect of such Senior Indebtedness in full
in cash.
Section 12.06. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS.
The provisions of this Article 12 are and are intended solely for the
purpose of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article 12 or elsewhere in this Indenture or in the Notes is intended to or
shall (a) impair, as among the Company, its creditors other than holders of
Senior Indebtedness and the Holders, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders the principal of, premium, if
any, and interest on the Notes 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 and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or any Holder from exercising
all remedies otherwise permitted by applicable law upon a Default or an Event of
Default under this Indenture, subject to the rights, if any, under this
Article 12 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 marshaling of assets and liabilities of the Company referred
to in Section 12.02 hereof, 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
<PAGE>
88
conditions specified in Section 12.03, to prevent any payment prohibited by
such section or enforce their rights pursuant to Section 12.03(c) hereof.
The failure to make a payment on account of principal of, premium, if
any, or interest on the Notes by reason of any provision of this Article 12
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 Note 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 12 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 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.
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 paragraph (a) of this
section, 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, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article 12 or the obligations hereunder of the
Holders 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 to take any action to accelerate the
maturity of the Notes pursuant to Article 6 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.
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 at its Corporate Trust Office in respect of the Notes.
Notwithstanding the provisions of this Article 12 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 Notes, 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 this Section 12.09,
shall be entitled in all respects to assume that no such facts exist; PROVIDED,
HOWEVER, that if
<PAGE>
89
the Trustee shall not have received the notice provided for in this Section
12.09 at least five 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 Note), 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 therefor,
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
five 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) 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
of Senior Indebtedness to participate in any payment or distribution pursuant to
this Article 12, 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 12, 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 12, the Trustee 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 12.
Section 12.11. NO SUSPENSION OF REMEDIES.
Nothing contained in this Article 12 shall limit the right of the
Trustee or the Holders to take any action to accelerate the maturity of the
Notes pursuant to Article 6 or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article 12 of
the holders, from time to time, of Senior Indebtedness.
ARTICLE 13
MISCELLANEOUS
Section 13.01. TIA CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
<PAGE>
90
Section 13.02. NOTICES.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to the Company or any Guarantor:
Transportation Manufacturing Operations, Inc.
10 East Golf Road
Des Plaines, Illinois 60016
Attention: General Counsel
Tel: (847) 299-9900
Fax: (847) 299-6773
Copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: James Blanco
Tel: (312) 372-0524
Fax: (312) 558-5700
If to the Trustee:
IBJ Whitehall Bank & Trust Company
One State Street
New York, New York 10004
Attention: Steve Giurlando
Tel: (212) 858-2724
Fax: (212) 858-2952
The Company, any Guarantor or the Trustee by written notice to the
others may designate additional or different addresses for subsequent notices or
communications. Any notice or communication to the Company, any Guarantors or
the Trustee, shall be deemed to have been given or made as of the date so
delivered if personally delivered; when answered back, if telexed; when receipt
is acknowledged, if telecopied; and five (5) calendar days after mailing if sent
by registered or certified mail, postage prepaid (except that a notice of change
of address shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Noteholder shall be mailed to
him by first-class mail, postage prepaid, at his address shown on the register
kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication to a Noteholder is mailed in the manner provided
above, it shall be deemed duly given, whether or not the addressee receives it.
<PAGE>
91
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as required
by this Indenture, then such method of notification as shall be made with the
approval of the Trustee shall constitute a sufficient mailing of such notice.
Section 13.03. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantor,
as the case may be, shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the statements set
forth in Section 13.05 below) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel (which shall include the statements set
forth in Section 13.05 below) stating that, in the opinion of such counsel,
all such conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with.
Section 13.05. STATEMENTS REQUIRED IN CERTIFICATE AND OPINION.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition and the definitions relating thereto;
(2) 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;
(3) a statement that, in the opinion of such person, it or he has
made such examination or investigation as is necessary to enable such
person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such covenant or condition has been complied with.
Section 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at meetings of
Noteholders. The Registrar and Paying Agent may make reasonable rules for their
functions.
<PAGE>
92
Section 13.07. BUSINESS DAYS; LEGAL HOLIDAYS.
A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day on
which banking institutions are not required to be open in the State of New York.
If a payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
Section 13.08. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan,
security or debt agreement of the Company or any Subsidiary thereof. No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 13.10. NO RECOURSE AGAINST OTHERS.
A director, officer, employee, stockholder or incorporator, as such,
of the Company or any Guarantor shall not have any liability for any obligations
of the Company or any Guarantor under the Notes, the Guarantees or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creations. Each Noteholder by accepting a Note waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
Section 13.11. SUCCESSORS.
All agreements of each of the Company and each Guarantor in this
Indenture and the Notes shall bind their respective successors. All agreements
of the Trustee, any additional trustee and any Paying Agents in this Indenture
shall bind its successor.
Section 13.12. MULTIPLE COUNTERPARTS.
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
<PAGE>
93
Section 13.14. SEPARABILITY.
Each provision of this Indenture shall be considered separable and if
for any reason any provision which is not essential to the effectuation of the
basic purpose of this Indenture or the Notes 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.
<PAGE>
94
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed all as of the date and year first written above.
TRANSPORTATION MANUFACTURING
OPERATIONS, INC.
(to be renamed Motor Coach Industries
International, Inc.)
By:
-----------------------------------
Name:
Title:
<PAGE>
95
Guarantors:
BUSLEASE, INC.
By:
-----------------------------------
Name:
Title:
HAUSMAN BUS SALES, INC.
By:
-----------------------------------
Name:
Title:
MOTOR COACH INDUSTRIES, INC.
By:
-----------------------------------
Name:
Title:
TRANSIT BUS INTERNATIONAL, INC.
By:
-----------------------------------
Name:
Title:
UNIVERSAL COACH PARTS, INC.
By:
-----------------------------------
Name:
Title:
<PAGE>
96
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By:
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
CUSIP No.:
TRANSPORTATION MANUFACTURING OPERATIONS, INC.
(to be renamed Motor Coach Industries International, Inc.)
11 1/4% SENIOR SUBORDINATED NOTE DUE 2009
No. $
TRANSPORTATION MANUFACTURING OPERATIONS, INC., a Delaware corporation
(the "Company," which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum of
$ on May 1, 2009.
Interest Payment Dates: May 1 and November 1, commencing November 1,
1999.
Record Dates: April 15 and October 15.
Reference is made to the further provisions of this Note contained
herein and the Indenture (as defined), which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
TRANSPORTATION MANUFACTURING
OPERATIONS, INC.
By: ____________________________
Name:
Title:
By: ___________________________
Name:
Title:
A-1
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the 11 1/4% Senior Subordinated Notes due 2009 referred
to in the within-mentioned Indenture.
IBJ WHITEHALL BANK & TRUST COMPANY
as Trustee
By: ____________________________
Authorized Signatory
A-2
<PAGE>
(REVERSE OF SECURITY)
11 1/4% SENIOR SUBORDINATED NOTE DUE 2009
1. INTEREST. TRANSPORTATION MANUFACTURING OPERATIONS, INC., a
Delaware corporation (the "COMPANY"), promises to pay interest on the principal
amount of this Note at the rate PER ANNUM shown above. Interest on the Notes
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from the date of the original issuance of the Notes.
The Company will pay interest semi-annually in arrears on each Interest Payment
Date, commencing November 1, 1999. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful from time to time on demand at the rate borne by the Notes.
2. METHOD OF PAYMENT. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on April 15 or October 15 immediately preceding the
Interest Payment Date (whether or not such day is a Business Day) even if the
Notes are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Notes to a Paying Agent to
collect principal payments. Payments of principal and premium, if any, will be
made (on presentation of such Notes if in certificated form) in money of the
United States that at the time of payment is legal tender for payment of public
and private debts; PROVIDED, HOWEVER, that the Company may pay principal,
premium, if any, and interest by check payable in such money. The Company may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Whitehall Bank &
Trust Company, a banking organization organized under the laws of New York (the
"TRUSTEE"), will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders. Neither
the Company nor any of its Subsidiaries or Affiliates may act as Paying Agent
but may act as Registrar or co-Registrar.
4. INDENTURE. The Company issued this Note under an Indenture,
dated as of June 16, 1999 (the "INDENTURE"), by and among the Company, the
Guarantors and the Trustee. This Note is one of a duly authorized issue of
Initial Notes of the Company designated as its 11 1/4% Senior Subordinated Notes
due 2009 (the "NOTES"). The Notes are limited in aggregate principal amount to
$152,250,000 and one or more additional series of Notes to be issued from time
to time in aggregate principal amounts of not less than $25 million as provided
in the Indenture. The Notes include the Initial Notes and the Exchange Notes
(as defined below) issued in exchange for the Initial Notes pursuant to the
Indenture. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections -
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and the TIA for a
statement of them. The Notes are general unsecured obligations of the Company.
5. SUBORDINATION. The Notes are unsecured obligations of the
Company and subordinated in right of payment, in the manner and to the extent
set forth in the Indenture, to the prior payment in full in cash of all Senior
Indebtedness of the Company, whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed or guaranteed. Each Holder by his
acceptance hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee, on his behalf, to take such action as may be
neces-
A-3
<PAGE>
sary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.
6. GUARANTEE. The obligations of the Company hereunder are
guaranteed on a senior subordinated basis by the Guarantors. Each Guarantee by
a Guarantor is subordinated in right of payment to all Guarantor Senior
Indebtedness of such Guarantor to the same extent that the Notes are
subordinated to Senior Indebtedness of the Company.
7. REDEMPTION.
(a) OPTIONAL REDEMPTION. The Company may redeem the Notes, at its
option, in whole at any time or in part from time to time, on and after May 1,
2004 at the following Redemption Prices (expressed as percentages of the
principal amount thereof) if redeemed during the twelve-month period commencing
on May 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption.
Year Percentage
2004..................................................... 105.625%
2005..................................................... 103.750%
2006..................................................... 101.875%
2007 and thereafter...................................... 100.000%
(b) OPTIONAL REDEMPTION UPON EQUITY OFFERINGS. Notwithstanding
the foregoing, the Company may redeem in the aggregate up to 35% of the original
principal amount of Notes at any time and from time to time prior to May 1, 2002
at a Redemption Price equal to 111.25% of the aggregate principal amount so
redeemed, plus accrued and unpaid interest, if any, to the Redemption Date out
of the Net Proceeds of one or more Equity Offerings; provided that
(1) at least 65% of the principal amount of Notes originally
issued remains outstanding immediately after the occurrence of any such
redemption and
(2) any such redemption occurs within 90 days following the
closing of any such Equity Offering.
8. NOTICE OF REDEMPTION. Notice of redemption under paragraphs
7(a) and 7(b) of this Note will be mailed at least 30 days but not more than 60
days before the Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
9. OFFERS TO PURCHASE. The Indenture provides that, after
certain Asset Sales (as defined in the Indenture) and upon the occurrence of a
Change of Control (as defined in the Indenture), and subject to further
limitations contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures set forth in the
Indenture.
A-4
<PAGE>
10. REGISTRATION RIGHTS. Pursuant to the Registration Rights
Agreement by and among the Company, the Guarantors and the Initial Purchasers,
the Company will be obligated to consummate an exchange offer pursuant to which
the Holder of this Note shall have the right to exchange this Note for the
Company's Series B 11 1/4% Senior Subordinated Notes due 2009 (the "EXCHANGE
NOTES"), which have been registered under the Securities Act, in like principal
amount and having terms identical in all material respects to the Initial Notes.
The Holders of the Initial Notes 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.
11. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. A Holder shall register the transfer or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Notes or portions thereof selected for
redemption.
12. PERSONS DEEMED OWNERS. The registered Holder of a Note shall
be treated as the owner of it for all purposes.
13. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, Holders entitled to money must
look to the Company for payment as general creditors unless an "abandoned
property" law designates another person.
14. DEFEASANCE AND COVENANT DEFEASANCE. If the Company at any
time deposits with the Trustee U.S. legal tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating to
defeasance, the Company will be discharged from certain provisions of the
Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of and interest on the Notes).
15. AMENDMENTS, SUPPLEMENTS, AND WAIVERS. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Notes in addition to or in place of certificated Notes or make any other change
that does not adversely affect in any material respect the rights of any Holder
of a Note.
16. RESTRICTIVE COVENANTS. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock, enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Subsidiaries, merge or consolidate with any other person,
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets. Such limitations are subject to a number of
important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
17. SUCCESSOR ENTITY. When a successor entity assumes, in
accordance with the Indenture, all the obligations of its predecessor under the
Notes and the Indenture, and immediately before and thereafter no Default exists
and certain other conditions are satisfied, the predecessor entity will be
released from those obligations.
A-5
<PAGE>
18. DEFAULTS AND REMEDIES. Events of Default are set forth in the
Indenture. If an Event of Default (other than an Event of Default pursuant to
Section 6.01(f) or (g) of the Indenture) shall have occurred and be continuing,
then the Trustee or the holders of not less than 25% in aggregate principal
amount of the Notes then outstanding, may declare to be immediately due and
payable the entire principal amount of all the Notes then outstanding plus
accrued interest to the date of acceleration; PROVIDED, HOWEVER, that after such
acceleration but before a judgment or decree based on such acceleration is
obtained by the Trustee, the holders of a majority in aggregate principal amount
of the outstanding Notes may rescind and annul such acceleration and its
consequences if all existing Events of Default, other than the nonpayment of
principal, premium, if any, or interest that has become due solely because of
the acceleration, have been cured or waived. No such rescission shall affect any
subsequent Default or impair any right consequent thereto. In case an Event of
Default specified in Section 6.01(f) or (g) of the Indenture occurs, such
principal amount, together with premium, if any, and interest with respect to
all of the Notes, shall be due and payable immediately without any declaration
or other act on the part of the Trustee or the Holders of the Notes.
19. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company, and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
20. NO RECOURSE AGAINST OTHERS. As more fully described in the
Indenture, no director, officer, employee, stockholder or incorporator, as such,
of the Company shall have any liability for any obligation of the Company under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. Each Noteholder by accepting a Note
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
21. AUTHENTICATION. This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.
22. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES TO THE INDENTURE HAS AGREED TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.
23. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may
be used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
24. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders.
No representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
25. INDENTURE. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Transportation Manufacturing Operations,
Inc., 10 East Golf Road, Des Plaines, Illinois 60016, Attention: Executive Vice
President, Finance and Administration.
A-6
<PAGE>
FORM OF GUARANTEE
SENIOR SUBORDINATED GUARANTEE
Each Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Note upon which this notation is
endorsed) hereby unconditionally guarantees on a senior subordinated basis (such
guarantee being referred to herein as the "GUARANTEE") the due and punctual
payment of the principal of, premium, if any, and interest on the Notes, whether
at maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal, premium and interest on the Notes, and the
due and punctual performance of all other obligations of the Company to the
Holders or the Trustee, all in accordance with the terms set forth in Article 10
of the Indenture.
The obligations of each Guarantor to the Holders and to the Trustee
pursuant to the Guarantee and the Indenture are expressly set forth, and are
expressly subordinated and subject in right of payment to the prior payment in
full of all Guarantor Senior Indebtedness of each Guarantor, to the extent and
in the manner provided in Article 11 of the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Notes upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
BUSLEASE, INC.
By: ----------------------------------
Name:
Title:
HAUSMAN BUS SALES, INC.
By: ----------------------------------
Name:
Title:
A-7
<PAGE>
MOTOR COACH INDUSTRIES, INC.
By: ----------------------------------
Name:
Title:
TRANSIT BUS INTERNATIONAL, INC.
By: ----------------------------------
Name:
Title:
UNIVERSAL COACH PARTS, INC.
By: ----------------------------------
Name:
Title:
A-8
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _______________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: ______________________________ Signed: ________________________________
(Sign exactly as your name
appears on the other side of
this Note)
Medallion Guarantee: _____________________________
A-9
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 or Section 4.17 of the Indenture, check the appropriate
box:
Section 4.13 / /
Section 4.17 / /
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.13 or Section 4.17 of the Indenture, state the
amount you elect to have purchased:
$ __________________
Date: _______________________ ________________________________________
NOTICE: The signature on this
assignment must correspond with the name
as it appears upon the face of the
within Note in every particular without
alteration or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Medallion Guarantee:__________________________________
A-10
<PAGE>
EXHIBIT B
ISIN No.:
TRANSPORTATION MANUFACTURING OPERATIONS, INC.
(to be renamed Motor Coach Industries International, Inc.)
SERIES B 11 1/4% SENIOR SUBORDINATED NOTE DUE 2009
No. $
TRANSPORTATION MANUFACTURING OPERATIONS, INC., a Delaware corporation
(the "Company," which term includes any successor entity), for value received
promises to pay to or registered assigns, the principal sum of
$ on May 1, 2009.
Interest Payment Dates: May 1 and November 1, commencing November 1,
1999.
Record Dates: April 15 and October 15.
Reference is made to the further provisions of this Note contained
herein and the Indenture (as defined), which will for all purposes have the same
effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of its
corporate seal to be affixed hereto or imprinted hereon.
TRANSPORTATION MANUFACTURING
OPERATIONS, INC.
By: ____________________________
Name:
Title:
By: ___________________________
Name:
Title:
B-1
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Series B 11 1/4% Senior Subordinated Notes due 2009
referred to in the within-mentioned Indenture.
IBJ WHITEHALL BANK & TRUST COMPANY
as Trustee
By: ____________________________
Authorized Signatory
B-2
<PAGE>
(REVERSE OF SECURITY)
11 1/4% SENIOR SUBORDINATED NOTE DUE 2009
1. INTEREST. TRANSPORTATION MANUFACTURING OPERATIONS, INC., a
Delaware corporation (the "COMPANY"), promises to pay interest on the principal
amount of this Note at the rate PER ANNUM shown above. Interest on the Notes
will accrue from the most recent date on which interest has been paid or, if no
interest has been paid, from the date of the original issuance of the Notes.
The Company will pay interest semi-annually in arrears on each Interest Payment
Date, commencing November 1, 1999. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) to the
extent lawful from time to time on demand at the rate borne by the Notes.
2. METHOD OF PAYMENT. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on April 15 or October 15 immediately preceding the
Interest Payment Date (whether or not such day is a Business Day) even if the
Notes are cancelled on registration of transfer or registration of exchange
after such Record Date. Holders must surrender Notes to a Paying Agent to
collect principal payments. Payments of principal and premium, if any, will be
made (on presentation of such Notes if in certificated form) in money of the
United States that at the time of payment is legal tender for payment of public
and private debts; PROVIDED, HOWEVER, that the Company may pay principal,
premium, if any, and interest by check payable in such money. The Company may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, IBJ Whitehall Bank &
Trust Company, a banking organization organized under the laws of New York (the
"TRUSTEE"), will act as Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar or co-Registrar without notice to the Holders. Neither
the Company nor any of its Subsidiaries or Affiliates may act as Paying Agent
but may act as Registrar or co-Registrar.
4. INDENTURE. The Company issued this Note under an Indenture,
dated as of June 16, 1999 (the "INDENTURE"), by and among the Company, the
Guarantors and the Trustee. This Note is one of a duly authorized issue of
Notes of the Company designated as its Series B 11 1/4% Senior Subordinated
Notes due 2009 (the "EXCHANGE NOTES") issued in exchange for the initial 11/
1/4% Senior Subordinated Notes due 2009 (the "INITIAL NOTES" and, together with
the Exchange Notes, the "NOTES"). The Notes are limited in aggregate principal
amount to $152,500,000 and one or more additional series of Notes to be issued
from time to time in aggregate principal amounts of not less than $25 million as
provided in the Indenture. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"),
as in effect on the date of the Indenture. Notwithstanding anything to the
contrary herein, the Notes are subject to all such terms, and Holders of Notes
are referred to the Indenture and the TIA for a statement of them. The Notes
are general unsecured obligations of the Company.
5. SUBORDINATION. The Notes are unsecured obligations of the
Company and subordinated in right of payment, in the manner and to the extent
set forth in the Indenture, to the prior payment in full in cash of all Senior
Indebtedness of the Company, whether outstanding on the date of the Indenture or
thereafter created, incurred, assumed or guaranteed. Each Holder by his
acceptance hereof agrees to be bound by such provisions and authorizes and
expressly directs the Trustee, on his behalf, to take such action as may be
neces-
B-3
<PAGE>
sary or appropriate to effectuate the subordination provided for in the
Indenture and appoints the Trustee his attorney-in-fact for such purposes.
6. GUARANTEE. The obligations of the Company hereunder are
guaranteed on a senior subordinated basis by the Guarantors. Each Guarantee by
a Guarantor is subordinated in right of payment to all Guarantor Senior
Indebtedness of such Guarantor to the same extent that the Notes are
subordinated to Senior Indebtedness of the Company.
7. REDEMPTION.
(a) OPTIONAL REDEMPTION. The Company may redeem the Notes, at its
option, in whole at any time or in part from time to time, on and after May 1,
2004 at the following Redemption Prices (expressed as percentages of the
principal amount thereof) if redeemed during the twelve-month period commencing
on May 1 of the year set forth below, plus, in each case, accrued and unpaid
interest thereon, if any, to the date of redemption.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004................................... 105.625%
2005................................... 103.750%
2006................................... 101.875%
2007 and thereafter.................... 100.000%
</TABLE>
(b) OPTIONAL REDEMPTION UPON EQUITY OFFERINGS. Notwithstanding
the foregoing, the Company may redeem in the aggregate up to 35% of the original
principal amount of Notes at any time and from time to time prior to May 1, 2002
at a Redemption Price equal to 111.25% of the aggregate principal amount so
redeemed, plus accrued and unpaid interest, if any, to the Redemption Date out
of the Net Proceeds of one or more Equity Offerings; provided that
(1) at least 65% of the principal amount of Notes originally
issued remains outstanding immediately after the occurrence of any such
redemption and
(2) any such redemption occurs within 90 days following the
closing of any such Equity Offering.
8. NOTICE OF REDEMPTION. Notice of redemption under paragraphs
7(a) and 7(b) of this Note will be mailed at least 30 days but not more than 60
days before the Redemption Date to each Holder of Notes to be redeemed at such
Holder's registered address.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Company defaults in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
9. OFFERS TO PURCHASE. The Indenture provides that, after
certain Asset Sales (as defined in the Indenture) and upon the occurrence of a
Change of Control (as defined in the Indenture), and subject to further
limitations contained therein, the Company will make an offer to purchase
certain amounts of the Notes in accordance with the procedures set forth in the
Indenture.
B-4
<PAGE>
10. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. A Holder shall register the transfer or exchange of Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
certain transfer taxes or similar governmental charges payable in connection
therewith as permitted by the Indenture. The Registrar need not register the
transfer of or exchange of any Notes or portions thereof selected for
redemption.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note shall
be treated as the owner of it for all purposes.
12. UNCLAIMED MONEY. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent will
pay the money back to the Company. After that, Holders entitled to money must
look to the Company for payment as general creditors unless an "abandoned
property" law designates another person.
13. DEFEASANCE AND COVENANT DEFEASANCE. If the Company at any
time deposits with the Trustee U.S. legal tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating to
defeasance, the Company will be discharged from certain provisions of the
Indenture and the Notes (including certain covenants, but excluding its
obligation to pay the principal of and interest on the Notes).
14. AMENDMENTS, SUPPLEMENTS, AND WAIVERS. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
written consent of the holders of at least a majority in aggregate principal
amount of the Notes then outstanding, and any existing Default or Event of
Default or noncompliance with any provision may be waived with the written
consent of the holders of a majority in aggregate principal amount of the Notes
then outstanding. Without notice to or consent of any Holder, the parties
thereto may amend or supplement the Indenture or the Notes to, among other
things, cure any ambiguity, defect or inconsistency, provide for uncertificated
Notes in addition to or in place of certificated Notes or make any other change
that does not adversely affect in any material respect the rights of any Holder
of a Note.
15. RESTRICTIVE COVENANTS. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of its Capital
Stock, enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Subsidiaries, merge or consolidate with any other person,
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets. Such limitations are subject to a number of
important qualifications and exceptions. The Company must annually report to
the Trustee on compliance with such limitations.
16. SUCCESSOR ENTITY. When a successor entity assumes, in
accordance with the Indenture, all the obligations of its predecessor under the
Notes and the Indenture, and immediately before and thereafter no Default exists
and certain other conditions are satisfied, the predecessor entity will be
released from those obligations.
17. DEFAULTS AND REMEDIES. Events of Default are set forth in the
Indenture. If an Event of Default (other than an Event of Default pursuant to
Section 6.01(f) or (g) of the Indenture) shall have occurred and be continuing,
then the Trustee or the holders of not less than 25% in aggregate principal
amount of the Notes then outstanding, may declare to be immediately due and
payable the entire principal amount of all the Notes then outstanding plus
accrued interest to the date of acceleration; PROVIDED, HOWEVER, that after such
acceleration but before a judgment or decree based on such acceleration is
obtained by the Trustee, the holders of a majority in aggregate principal amount
of the outstanding Notes may rescind and annul such acceleration and its
consequences if all existing Events of Default, other than the nonpayment of
principal, premium, if any, or interest that has become due solely because of
the acceleration, have been cured or waived. No such rescission shall
B-5
<PAGE>
affect any subsequent Default or impair any right consequent thereto. In
case an Event of Default specified in Section 6.01(f) or (g) of the Indenture
occurs, such principal amount, together with premium, if any, and interest
with respect to all of the Notes, shall be due and payable immediately
without any declaration or other act on the part of the Trustee or the
Holders of the Notes.
18. TRUSTEE DEALINGS WITH COMPANY. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company, and may otherwise deal
with the Company, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
19. NO RECOURSE AGAINST OTHERS. As more fully described in the
Indenture, no director, officer, employee, stockholder or incorporator, as such,
of the Company shall have any liability for any obligation of the Company under
the Notes or the Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. Each Noteholder by accepting a Note
waives and releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Notes.
20. AUTHENTICATION. This Note shall not be valid until the
Trustee or Authenticating Agent manually signs the certificate of authentication
on this Note.
21. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES TO THE INDENTURE HAS AGREED TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE.
22. ABBREVIATIONS AND DEFINED TERMS. Customary abbreviations may
be used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes as a convenience to the Holders.
No representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
24. INDENTURE. Each Holder, by accepting a Note, agrees to be
bound by all of the terms and provisions of the Indenture, as the same may be
amended from time to time.
The Company will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note in
larger type. Requests may be made to: Transportation Manufacturing Operations,
Inc., 10 East Golf Road, Des Plaines, Illinois 60016, Attention: Executive Vice
President, Finance and Administration.
B-6
<PAGE>
FORM OF GUARANTEE
SENIOR SUBORDINATED GUARANTEE
Each Guarantor (capitalized terms used herein have the meanings given
such terms in the Indenture referred to in the Note upon which this notation is
endorsed) hereby unconditionally guarantees on a senior subordinated basis (such
guarantee being referred to herein as the "GUARANTEE") the due and punctual
payment of the principal of, premium, if any, and interest on the Notes, whether
at maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal, premium and interest on the Notes, and the
due and punctual performance of all other obligations of the Company to the
Holders or the Trustee, all in accordance with the terms set forth in Article 10
of the Indenture.
The obligations of each Guarantor to the Holders and to the Trustee
pursuant to the Guarantee and the Indenture are expressly set forth, and are
expressly subordinated and subject in right of payment to the prior payment in
full of all Guarantor Senior Indebtedness of each Guarantor, to the extent and
in the manner provided in Article 11 of the Indenture.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Notes upon which this Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
law.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
BUSLEASE, INC.
By: _________________________
Name:
Title:
HAUSMAN BUS SALES, INC.
By: _________________________
Name:
Title:
B-7
<PAGE>
MOTOR COACH INDUSTRIES, INC.
By: _________________________
Name:
Title:
TRANSIT BUS INTERNATIONAL, INC.
By: _________________________
Name:
Title:
UNIVERSAL COACH PARTS, INC.
By: _________________________
Name:
Title:
B-8
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint ______________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: ______________________ Signed: _______________________________
(Sign exactly as your name
appears on the other side of
this Note)
Medallion Guarantee: ___________________________
B-9
<PAGE>
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.13 or Section 4.17 of the Indenture, check the appropriate
box:
Section 4.13 / /
Section 4.17 / /
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.13 or Section 4.17 of the Indenture, state the
amount you elect to have purchased:
$ __________________
Date: __________________________ _______________________________________
NOTICE: The signature on this
assignment must correspond with the name
as it appears upon the face of the
within Note in every particular without
alteration or enlargement or any change
whatsoever and be guaranteed by the
endorser's bank or broker.
Medallion Guarantee: ___________________________
B-10
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: Transportation Manufacturing Operations, Inc. (the "COMPANY")
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009 (THE "NOTES")
This Certificate relates to $_______ principal amount of Notes held in
the form of* ___ a beneficial interest in a Global Note or* _______ Certificated
Notes by ______ (the "TRANSFEROR").
The Transferor:
/ / has requested by written order that the Registrar deliver in
exchange for its beneficial interest in the Global Note held by the Depository a
Certificated Note or Certificated Notes in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Note (or the portion thereof indicated above); or
/ / has requested by written order that the Registrar exchange or
register the transfer of a Certificated Note or Certificated Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Notes and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of the Notes does not require registration under the Securities Act of
1933, as amended (the "SECURITIES ACT"), because*:
/ / Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16 of the Indenture).
/ / Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act), in reliance on
Rule 144A.
/ / Such Note is being transferred to an institutional "accredited
investor" (within the meaning of subparagraph (a)(1), (2), (3) or (7) of
Rule 501 under the Securities Act) which delivers a certificate to the Trustee
in the form of EXHIBIT D to the Indenture.
/ / Such Note is being transferred in reliance on Regulation S
under the Securities Act and a transfer certificate for Regulation S transfers
in the form of EXHIBIT E to the Indenture accompanies this certification. [An
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this certification.]
/ / Such Note is being transferred in reliance on Rule 144 under
the Securities Act. [An Opinion of Counsel to the effect that such transfer
does not require registration under the Securities Act accompanies this
certification.]
C-1
<PAGE>
/ / Such Note is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act other than Rule 144A or Rule 144 under the Securities Act to a
person other than an institutional "accredited investor." [An Opinion of
Counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this certification.]
____________________________________
[INSERT NAME OF TRANSFEROR]
By: ____________________________________
[Authorized Signatory]
Date: ___________________________
*Check applicable box.
C-2
<PAGE>
EXHIBIT D
Form of Transferee Letter of Representation
IBJ Whitehall Bank & Trust Company
1 State Street
New York, New York
Attention: Corporate Trust Division
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $________
principal amount of the 11 1/4% Senior Subordinated Notes due 2009 of
Transportation Manufacturing Operations, Inc., (the "COMPANY") and any
guarantee thereof (the "NOTES"). Upon transfer, the Notes would be registered
in the name of the new beneficial owner as follows:
Name: _____________________________________________
Address: __________________________________________
Taxpayer ID Number: _______________________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the
"SECURITIES ACT")) purchasing Notes for our own account or for the account of
such an institutional "accredited investor" and we are acquiring the Notes not
with a view to, or for offer or sale in connection with, any distribution in
violation of the Securities Act. We have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risk of our investment in the Notes and we invest in or purchase securities
similar to the Notes in the normal course of our business. We and any accounts
for which we are acting are each able to bear the economic risk of our or its
investment.
2. We acknowledge that we have had access to such financial and
other information, and have been afforded the opportunity to ask such questions
of representatives of the Company and receive answers thereto, as we deem
necessary.
3. We understand that the Notes have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Notes that we will not prior
to the date (the "RESALE RESTRICTION TERMINATION DATE") that is two years after
the later of the original issuance of the Note and the last date on which the
Company or any affiliate of the Company was the owner of such Notes (or any
predecessor thereto) offer, sell or otherwise transfer such Notes except (a) to
the Company or any subsidiary of the Company, (b) inside the United States to a
"qualified institutional buyer" in compliance with Rule 144A under the
Securities Act (c) inside the United States to an "institutional accredited
investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act
that, prior to such transfer, furnishes (or has furnished on its behalf by a
U.S. broker-dealer) to the Trustee a signed letter substantially in the form of
this letter (d) outside the United States in an offshore transaction in
compliance with Rule 904 under the Securities Act (e) pursuant to any other
available exemption from the registration requirements of the Securities Act or
(f) pursuant to an effective registration statement under the Securities Act.
We acknowledge that the Company and the Trustee reserve the right prior to any
offer, sale or other transfer prior to the Resale Restriction Termination Date
of the applicable Notes pursuant to clause (c) or (e) above to require the
delivery of an opinion of counsel, certification and/or other information
satisfactory to the Company and the Trustee.
We understand that the Trustee will not be required to accept for
registration of transfer any Notes acquired by us, except upon presentation of
evidence satisfactory to the Company and the Trustee that the foregoing
restrictions on transfer have been complied with. We further understand that
any Notes purchased by us will be in the form of definitive physical
certificates and that such certificates will bear a legend reflecting the
D-1
<PAGE>
substance of paragraph 3 of this letter. We further agree to provide to any
person acquiring any of the Notes from us a notice advising such person that
transfers of such Notes are restricted as stated herein and that certificates
representing such Notes will bear a legend to that effect.
We represent that the Company and the Trustee and others are entitled
to rely upon the truth and accuracy of our acknowledgments, representations and
agreements set forth herein, and we agree to notify you promptly in writing if
any of our acknowledgments, representations or agreements herein cease to be
accurate and complete. You are also irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
We represent to you that we have full power to make the foregoing
acknowledgments, representations and agreements on our own behalf and on behalf
of any investor account for which we are acting as fiduciary agent.
As used herein, the terms "offshore transaction," "United States" and
"U.S. person" have the respective meanings given to them in Regulation S under
the Securities Act.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
Dated: __________ TRANSFEREE:
By: _________________________
D-2
<PAGE>
EXHIBIT E
Form of Certificate To Be
Delivered in Connection
with Regulation S Transfers
_______________, ____
Attention: Corporate Trust Administration
Re: TRANSPORTATION MANUFACTURING OPERATIONS, INC. 11 1/4% SENIOR
SUBORDINATED NOTES DUE 2009 (THE "NOTES")
Ladies and Gentlemen:
In connection with our proposed sale of $__________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "SECURITIES ACT"), and, accordingly, we represent that:
(1) the offer of the Notes 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
prearranged 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(a) or Rule 904(a)
of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
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. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By: _____________________________
E-1
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
, among (the "NEW GUARANTOR"), a subsidiary of Transportation
Manufacturing Operations, Inc. (or its successor), a Delaware corporation (the
"COMPANY"), the Guarantors (the "EXISTING GUARANTORS") under the Indenture
referred to below, and IBJ Whitehall Bank & Trust Company, as trustee under the
Indenture referred to below (the "TRUSTEE").
W I T N E S S E T H :
WHEREAS the Company has heretofore executed and delivered to the
Trustee an Indenture (as such may be amended from time to time, the
"Indenture"), dated as of June 16, 1999, providing for the issuance of its
11 1/4% Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS Section 4.21 of the Indenture provides that under certain
circumstances the Company is required to cause the New Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the New
Guarantor shall unconditionally guarantee all of the Company's obligations under
the Notes pursuant to a Guarantee on the terms and conditions set forth herein;
and
WHEREAS pursuant to Section 8.01 of the Indenture, the Trustee, the
Company and Existing Guarantors are authorized to execute and deliver this
Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Company, the Existing Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the Noteholders as
follows:
1. DEFINITIONS. (a) Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(i) the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
Supplemental Indenture refer to this Supplemental Indenture as a whole and not
to any particular section hereof.
2. AGREEMENT TO GUARANTEE. The New Guarantor hereby agrees,
jointly and severally with all other Guarantors, to Guarantee the Company's
Obligations under the Notes on the terms and subject to the conditions set
forth in Article 10 of the Indenture and to be bound by all other applicable
provisions of the Indenture. From and after the date hereof, the New
Guarantor shall be a Guarantor for all purposes under the Indenture and the
Notes.
3. RATIFICATION OF INDENTURE; SUPPLEMENTAL INDENTURES PART OF
INDENTURE. Except as expressly amended hereby, the Indenture is in all
respects ratified and confirmed and all the terms, conditions and provisions
thereof shall remain in full force and effect. This Supplemental Indenture
shall form a part of the Indenture for all purposes, and every Noteholder
heretofore or hereafter authenticated and delivered shall be bound hereby.
F-1
<PAGE>
4. GOVERNING LAW. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SUPPLEMENTAL INDENTURE.
5. TRUSTEE MAKES NO REPRESENTATION. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Supplemental Indenture or for or in respect of the
recitals contained herein, all of which are made solely by the Company.
6. MULTIPLE COUNTERPARTS. The parties may sign multiple
counterparts of this Supplemental Indenture. Each signed counterpart shall
be deemed an original, but all of them together represent one and the same
agreement.
7. HEADINGS. The headings of this Supplemental Indenture have
been inserted for convenience of reference only, are not to be considered a
part hereof, and shall in no way modify or restrict any of the terms or
provisions hereof.
F-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date and year first
above written.
[NEW GUARANTOR]
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
TRANSPORTATION MANUFACTURING
OPERATIONS, INC.
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
F-3
<PAGE>
EXISTING GUARANTORS:
By: __________________________________
Name:
Title:
By: __________________________________
Name:
Title:
IBJ WHITEHALL BANK & TRUST COMPANY,
as Trustee
By: __________________________________
Name:
Title:
F-4
<PAGE>
Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
Dated as of June 16, 1999
by and among
TRANSPORTATION MANUFACTURING OPERATIONS, INC.,
(to be renamed Motor Coach Industries International, Inc.)
THE GUARANTORS
named herein
and
CIBC WORLD MARKETS CORP.
and
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
as Initial Purchasers
--------------------------
$152,250,000
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
1. Definitions.................................................................................1
2. Exchange Offer..............................................................................5
3. Shelf Registration..........................................................................9
4. Additional Interest........................................................................10
5. Registration Procedures....................................................................12
6. Registration Expenses......................................................................22
7. Indemnification............................................................................23
8. Rules 144 and 144A.........................................................................27
9. Underwritten Registrations.................................................................28
10. Miscellaneous..............................................................................28
(a) Remedies...............................................................................28
(b) No Inconsistent Agreements.............................................................28
(c) Adjustments Affecting Registrable Notes................................................29
(d) Amendments and Waivers.................................................................29
(e) Notices................................................................................29
(f) Successors and Assigns.................................................................31
(g) Counterparts...........................................................................31
(h) Headings...............................................................................31
(i) Governing Law..........................................................................31
(j) Severability...........................................................................31
(k) Notes Held by any Issuer or Its Affiliates.............................................32
(l) Third Party Beneficiaries..............................................................32
(m) Entire Agreement.......................................................................32
(n) Joint and Several Obligations..........................................................32
</TABLE>
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<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "AGREEMENT") is made and
entered into as of June 16, 1999, by and among Transportation Manufacturing
Operations, Inc., a Delaware corporation (the "COMPANY"), the Guarantors (as
defined) and CIBC World Markets Corp. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the "INITIAL PURCHASERS").
This Agreement is entered into in connection with the Purchase
Agreement, dated June 14, 1999, by and among the Company, the Guarantors and the
Initial Purchasers (the "PURCHASE AGREEMENT") relating to the sale by the
Company to the Initial Purchasers of $152,250,000 aggregate principal amount of
the Company's 11 1/4% Senior Subordinated Notes due 2009 (the "NOTES") and the
unconditional senior subordinated guarantee thereof by the Guarantors on a joint
and several basis (the "GUARANTEE"). In order to induce the Initial Purchasers
to enter into the Purchase Agreement, the Issuers (as defined) have agreed to
provide the registration rights set forth in this Agreement for the benefit of
the holders of Registrable Notes (as defined), including, without limitation,
the Initial Purchasers. The execution and delivery of this Agreement is a
condition to the Initial Purchasers' obligation to purchase the Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
ADDITIONAL INTEREST: See Section 4(a).
ADVICE: See the last paragraph of Section 5.
AGREEMENT: See the first introductory paragraph to this Agreement.
APPLICABLE PERIOD: See Section 2(b).
BUSINESS DAY: A day that is not a Saturday, a Sunday, or a day on
which banking institutions in New York, New York are required to be closed.
CLOSING DATE: The Closing Date as defined in the Purchase Agreement.
<PAGE>
-2-
COMMISSION: The Securities and Exchange Commission.
COMPANY: See the first introductory paragraph to this Agreement.
EFFECTIVENESS DATE: The 180th day after the Issue Date, in the case of
the Exchange Registration Statement or Initial Shelf Registration.
EFFECTIVENESS PERIOD: See Section 3(a).
EVENT DATE: See Section 4(b).
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
EXCHANGE NOTES: See Section 2(a).
EXCHANGE OFFER: See Section 2(a).
EXCHANGE REGISTRATION STATEMENT: See Section 2(a).
FILING DATE: The 90th day after the Issue Date (regardless of whether
the actual filing precedes such date).
GUARANTEE: See the second introductory paragraph to this Agreement.
GUARANTORS: See Guarantors as defined in the Purchase Agreement.
HOLDER: Any registered holder of Registrable Notes.
INDEMNIFIED PERSON: See Section 7(c).
INDEMNIFYING PERSON: See Section 7(c).
INDENTURE: The Indenture, dated as of June 16, 1999, by and among the
Company, the Guarantors and IBJ Whitehall Bank & Trust Company, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.
INITIAL PURCHASERS: See the first introductory paragraph to this
Agreement.
INITIAL SHELF REGISTRATION: See Section 3(a).
<PAGE>
-3-
INSPECTORS: See Section 5(o).
ISSUE DATE: The date on which the original Notes were sold to the
Initial Purchasers pursuant to the Purchase Agreement.
ISSUERS: The Company and the Guarantors, collectively.
NASD: National Association of Securities Dealers, Inc.
NOTES: See the second introductory paragraph to this Agreement.
PARTICIPANT: See Section 7(a).
PARTICIPATING BROKER-DEALER: See Section 2(b).
PERSON: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
PRIVATE EXCHANGE: See Section 2(b).
PRIVATE EXCHANGE NOTES: See Section 2(b).
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
PURCHASE AGREEMENT: See the second introductory paragraph to this
Agreement.
RECORDS: See Section 5(o).
REGISTRABLE NOTES: Each Note upon original issuance thereof and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original
<PAGE>
-4-
issuance thereof and at all times subsequent thereto and each Private
Exchange Note upon original issuance thereof and at all times subsequent
thereto, until, in the case of any such Note, Exchange Note or Private
Exchange Note, as the case may be, the earliest to occur of (i) a
Registration Statement (other than, with respect to any Exchange Note as to
which Section 2(c)(iv) hereof is applicable) covering such Note, Exchange
Note or Private Exchange Note, as the case may be, has been declared
effective by the Commission and such Note, Exchange Note or Private Exchange
Note, as the case may be, has been disposed of in accordance with such
effective Registration Statement, (ii) such Note, Exchange Note or Private
Exchange Note, as the case may be, is sold in compliance with Rule 144, (iii)
in the case of any Note, such Note has been exchanged pursuant to the
Exchange Offer for an Exchange Note or Exchange Notes which may be resold
without restriction under federal securities laws, or (iv) such Note,
Exchange Note or Private Exchange Note, as the case may be, ceases to be
outstanding for purposes of the Indenture.
REGISTRATION STATEMENT: Any registration statement of the Company,
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
RULE 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the Commission providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
RULE 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the Commission.
RULE 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
<PAGE>
-5-
SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
SHELF NOTICE: See Section 2(c).
SHELF REGISTRATION: See Section 3(b).
SUBSEQUENT SHELF REGISTRATION: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
TRUSTEE: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A registration in
which securities of one or more of the Issuers are sold to an underwriter for
reoffering to the public.
2. EXCHANGE OFFER
(a) Each of the Issuers agrees to file with the Commission no
later than the Filing Date, an offer to exchange (the "EXCHANGE OFFER") any and
all of the Registrable Notes (other than Private Exchange Notes, if any) for a
like aggregate principal amount of debt securities of the Company which are
identical in all material respects to the Notes (the "EXCHANGE NOTES") (and
which are entitled to the benefits of the Indenture or a trust indenture which
is identical in all material respects to the Indenture (other than such changes
to the Indenture or any such identical trust indenture as are necessary to
comply with any requirements of the Commission to effect or maintain the
qualification thereof under the TIA) and which, in either case, has been
qualified under the TIA), except that the Exchange Notes shall have been
registered pursuant to an effective Registration Statement under the Securities
Act and shall contain no restrictive legend thereon. The Exchange Offer shall be
registered under the Securities Act on the appropriate form (the "EXCHANGE
REGISTRATION STATEMENT") and shall comply with all applicable tender offer rules
and regulations under the Exchange Act. Each of the Issuers agrees to use its
best efforts to (x) cause the Exchange Registration Statement to be declared
effective under the Securities Act on or before the Effectiveness Date; (y) keep
the Exchange Offer open for at least 30 Business Days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is first mailed
to Holders; and (z) consummate the Exchange Offer within 225 days of the Issue
Date. If after
<PAGE>
-6-
such Exchange Registration Statement is initially declared effective by the
Commission, the Exchange Offer or the issuance of the Exchange Notes
thereunder is interfered with by any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or court, such
Exchange Registration Statement shall be deemed not to have become effective
for purposes of this Agreement. Each Holder who participates in the Exchange
Offer will be required to represent that any Exchange Notes received by it
will be acquired in the ordinary course of its business, that at the time of
the consummation of the Exchange Offer such Holder will have no arrangement
or understanding with any Person to participate in the distribution of the
Exchange Notes, that such Holder is not an affiliate of any Issuer within the
meaning of the Securities Act, and any additional representations that in the
written opinion of counsel to the Issuers are necessary under then-existing
interpretations of the Commission in order for the Exchange Registration
Statement to be declared effective. Upon consummation of the Exchange Offer
in accordance with this Section 2, the provisions of this Agreement shall
continue to apply, MUTATIS MUTANDIS, solely with respect to Registrable Notes
that are Private Exchange Notes and Exchange Notes held by Participating
Broker-Dealers, and the Issuers shall have no further obligation to register
Registrable Notes (other than Private Exchange Notes and other than in
respect of any Exchange Notes as to which clause 2(c)(iv) hereof applies)
pursuant to Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus contained in
the Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the Staff of the Commission
with respect to the potential "underwriter" status of any broker-dealer that is
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Notes received by such broker-dealer in the Exchange Offer (a
"PARTICIPATING BROKER-DEALER"), whether such positions or policies have been
publicly disseminated by the Staff of the Commission or such positions or
policies, in the judgment of the Initial Purchasers, represent the prevailing
views of the Staff of the Commission. Such "Plan of Distribution" section shall
also allow, to the extent permitted by applicable policies and regulations of
the Commission, the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including, to the extent
so permitted, all Participating Broker-Dealers, and include a
<PAGE>
-7-
statement describing the manner in which Participating Broker-Dealers may
resell the Exchange Notes.
Each of the Issuers shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the Prospectus
contained therein, in order to permit such Prospectus to be 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 connection with offers and sales of the Exchange Notes (the "APPLICABLE
PERIOD").
If, upon consummation of the Exchange Offer, any Initial Purchaser
holds any Notes acquired by it and having the status of an unsold allotment in
the initial distribution, the Issuers upon the request of such Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchaser, in exchange (the "PRIVATE
EXCHANGE") for the Notes held by such Initial Purchaser, a like principal amount
of debt securities of the Company that are identical in all material respects to
the Exchange Notes except for the existence of restrictions on transfer thereof
under the Securities Act and securities laws of the several states of the U.S.
(the "PRIVATE EXCHANGE NOTES") (and which are issued pursuant to the same
indenture as the Exchange Notes). The Private Exchange Notes shall bear the same
CUSIP number as the Exchange Notes. Interest on the Exchange Notes and Private
Exchange Notes will accrue from the last interest payment date on which interest
was paid on the Notes surrendered in exchange therefor or, if no interest has
been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Issuers shall:
(1) for a period of 180 days after the consummation of the Exchange
Offer, make available to each Holder a copy of the Prospectus forming part
of the Exchange Registration Statement, together with an appropriate letter
of transmittal and related documents;
(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York, which may be
the Trustee or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Notes at any time
prior to the close of business, New York
<PAGE>
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time, on the last Business Day on which the Exchange Offer shall remain
open; and
(4) otherwise comply in all material respects with all applicable
laws.
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Registrable Notes validly tendered and
not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(2) deliver to the Trustee for cancellation all Registrable Notes so
accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder tendering such Registrable Notes, Exchange Notes or Private Exchange
Notes, as the case may be, equal in principal amount to the Registrable
Notes of such Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under
(i) the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that the
Exchange Notes, the Private Exchange Notes and the Notes, if any, will vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes, if any, will have the right to
vote or consent as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the Commission, the Company is not permitted to
effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 225
days of the Issue Date, (iii) any holder of Private Exchange Notes so requests
in writing to the Company or (iv) in the case of any Holder that participates in
the Exchange Offer (and tenders its Registrable Notes prior to the expiration
thereof), such Holder does not receive Exchange Notes on the date of the
exchange that may be sold without restriction under federal securities laws
(other than due solely to the status of such Holder as an affiliate of any
Issuer within the meaning of the Securities Act) and so notifies the Company
within 30 days following the consummation of the Exchange Offer (and provides a
reasonable basis for its conclusions), in the case of each of
<PAGE>
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clauses (i)-(iv), then the Issuers shall promptly, but in any event no later
than 5 Business Days after any of (i)-(iv), deliver to the Holders and the
Trustee written notice thereof (the "SHELF NOTICE") and shall file a Shelf
Registration pursuant to Section 3.
3. SHELF REGISTRATION
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) SHELF REGISTRATION. The Issuers shall as promptly as reasonably
practicable following delivery of a Shelf Notice file with the Commission a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Registrable Notes (the "INITIAL SHELF
REGISTRATION"). Each of the Issuers shall file with the Commission the Initial
Shelf Registration within the later of the Filing Date and 45 days of the
delivery of the Shelf Notice and shall use its best efforts to cause such Shelf
Registration to be declared effective under the Securities Act on or prior to
the Effectiveness Date. The Initial Shelf Registration shall be on Form S-1 or
another appropriate form permitting registration of such Registrable Notes for
resale by Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Issuers shall not
permit any securities other than the Registrable Notes to be included in any
Shelf Registration. Each of the Issuers shall use its best efforts to keep the
Initial Shelf Registration continuously effective under the Securities Act until
the date which is 24 months from the Issue Date (or, if Rule 144(k) under the
Securities Act is amended to permit unlimited resales by non-affiliates within a
lesser period, such lesser period) (subject to extension pursuant to the last
paragraph of Section 5 hereof) (the "EFFECTIVENESS PERIOD") or such shorter
period ending when (i) all Registrable Notes covered by the Initial Shelf
Registration have been sold in the manner set forth and as contemplated in the
Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering all
of the Registrable Notes has been declared effective under the Securities Act.
(b) SUBSEQUENT SHELF REGISTRATIONS. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), each of the Issuers shall
use its best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any
<PAGE>
-10-
event shall within 30 days of such cessation of effectiveness amend the Shelf
Registration in a manner to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Notes (a "SUBSEQUENT
SHELF REGISTRATION"). If a Subsequent Shelf Registration is filed, each of
the Issuers shall use its best efforts to cause the Subsequent Shelf
Registration to be declared effective as soon as practicable after such
filing and to keep such Subsequent Shelf Registration continuously effective
for a period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registrations was previously continuously effective. As
used herein the term "SHELF REGISTRATION" means the Initial Shelf
Registration and any Subsequent Shelf Registration.
(c) SUPPLEMENTS AND AMENDMENTS. Each of the Issuers shall promptly
supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Shelf Registration or by any underwriter of
such Registrable Notes, in each case, with each Issuer's consent, which consent
shall not be unreasonably withheld or delayed.
4. ADDITIONAL INTEREST
(a) The Issuers and the Initial Purchasers agree that the Holders of
Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
each of the Issuers agrees to pay, as liquidated damages, additional interest on
the Registrable Notes ("ADDITIONAL INTEREST") under the circumstances and to the
extent set forth below (each of which shall be given independent (and not
cumulative) effect):
(i) if (A) neither the Exchange Registration Statement nor the
Initial Shelf Registration has been filed on or prior to (I) the Filing
Date, in the case of the Exchange Registration Statement or (II) the later
of the Filing Date or the 45th day after delivery of the Shelf Notice in
the case of the Initial Shelf Registration, as the case may be, or (B)
notwithstanding that the Issuers have consummated or will consummate an
Exchange Offer, the
<PAGE>
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Issuers are required to file a Shelf Registration and such Shelf
Registration is not filed on or prior to the 45th day after delivery of
the Shelf Notice, then, in the case of subclause (A), commencing (x) on
the day after the Filing Date, in the case of clause (I), or (y) on the
later of the day after the Filing Date or the 46th day after delivery of
the Shelf Notice in the case of clause II, as the case may be, or in the
case of subclause (B), commencing on the 46th day following delivery of
the Shelf Notice, Additional Interest shall accrue on the Registrable
Notes over and above the stated interest at a rate of 0.50% per annum
for the first 90 days immediately following the Filing Date or such 45th
day, as the case may be, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 90-day
period;
(ii) if (A) neither the Exchange Registration Statement nor the
Initial Shelf Registration is declared effective on or prior to the
Effectiveness Date or (B) the Issuers are required to file a Shelf
Registration and such Shelf Registration is not declared effective by the
Commission on or prior to the 90th day following the date such Shelf
Registration was filed, then, in the case of clause (A), commencing on the
day after the Effectiveness Date, or, in the case of clause (B), commencing
on the 91st day following the date such Shelf Registration was filed,
Additional Interest shall accrue on the Registrable Notes over and above
the stated interest at a rate of 0.50% per annum for the first 90 days
immediately following the day after the applicable Effectiveness Date, such
Additional Interest rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period; and
(iii) if (A) the Company has not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior to 225 days after the Issue Date, (B) the Exchange Registration
Statement ceases to be effective prior to consummation of the Exchange
Offer or (C) if applicable, a Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
during the Effectiveness Period, then Additional Interest shall accrue on
the Registrable Notes over and above the stated interest at a rate of 0.50%
per annum for the first 90 days commencing on the (x) 226th day after such
effective date in the case of (A) above or (y) the day such Exchange
Registration Statement or Shelf Registration ceases to be effective in
<PAGE>
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the case of (B) and (C) above, such Additional Interest rate increasing
by an additional 0.25% per annum at the beginning of each such
subsequent 90-day period;
PROVIDED, HOWEVER, that the Additional Interest rate on the Registrable Notes
may not exceed in the aggregate 2.0% per annum; PROVIDED FURTHER that (1) upon
the filing of the Exchange Registration Statement or each Shelf Registration (in
the case of (i) above), (2) upon the effectiveness of the Exchange Registration
Statement or each Shelf Registration, as the case may be (in the case of (ii)
above), or (3) upon the exchange of Exchange Notes for all Registrable Notes
tendered (in the case of (iii)(A) above) or upon the effectiveness of an
Exchange Registration Statement or Shelf Registration which had ceased to remain
effective (in the case of (iii)(B) and (C) above), Additional Interest on any
Registrable Notes then accruing Additional Interest as a result of such clause
(or the relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Issuers shall notify the Trustee within one business day
after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "EVENT DATE"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of this
Section 4 will be payable in cash semi-annually on each regular interest payment
date specified in the Indenture (to the Holders of Registrable Notes of record
on the regular record date therefor (as specified in the Indenture) immediately
preceding such dates), commencing with the first such regular interest payment
date occurring after any such Additional Interest commences to accrue. The
amount of Additional Interest will be determined by multiplying the applicable
Additional Interest rate by the principal amount of the Notes subject thereto,
multiplied by a fraction, the numerator of which is the number of days such
Additional Interest rate was applicable during such period (determined on the
basis of a 360-day year comprised of twelve 30-day months), and the denominator
of which is 360.
5. REGISTRATION PROCEDURES
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, each Issuer shall effect such registrations to permit
the sale of such securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by each Issuer hereunder, each Issuer
shall:
<PAGE>
-13-
(a) Prepare and file with the Commission prior to the Filing Date,
the Exchange Registration Statement or if the Exchange Registration Statement is
not filed or is unavailable, a Shelf Registration as prescribed by Section 2 or
3, and use its best efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; PROVIDED that, if (1) a Shelf
Registration is filed pursuant to Section 3, or (2) a Prospectus contained in an
Exchange Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period and has advised the Company
that it is a Participating Broker-Dealer, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the Issuers
shall, if requested, furnish to and afford the Holders of the Registrable Notes
to be registered pursuant to such Shelf Registration or 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
(in each case at least five Business Days prior to such filing). The Issuers
shall not file any such Registration Statement or Prospectus or any amendments
or supplements thereto if the Holders of a majority in aggregate principal
amount of the Registrable Notes covered by such Registration Statement, or any
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 Commission such amendments and
post-effective amendments to each Shelf Registration or Exchange Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the
Applicable Period, as the case may be; cause the related Prospectus to be
supplemented by any Prospectus supplement required by applicable law, and as
so supplemented to be filed pursuant to Rule 424 (or any similar provisions
then in force) under the Securities Act; and comply with the provisions of
the Securities Act and the Exchange Act applicable to it with respect to the
disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating
Broker-Dealer covered by any such Prospectus. The Issuers shall be deemed
not to have used their best efforts to keep a Registration Statement
effective during the Applicable Period if they
<PAGE>
-14-
voluntarily take any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking to
sell Exchange Notes not being able to sell such Registrable Notes or such
Exchange Notes during that period unless such action is required by
applicable law, rule or regulation (including reasonable and customary
periods preceding a material announcement) or unless the Issuers comply with
this Agreement, including, without limitation, the provisions of paragraph
5(k) hereof and the last paragraph of Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period from whom the Issuers have received written notice that it
will be a Participating Broker-Dealer, notify the selling Holders of
Registrable Notes, and each such Participating Broker-Dealer, their counsel
and the managing underwriters, if any, promptly (but in any event within two
Business Days), (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and
schedules, documents incorporated or deemed to be incorporated by reference
and exhibits), (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time when a
prospectus is required by the Securities Act to be delivered in connection
with sales of the Registrable Notes the representations and warranties of any
Issuer contained in any agreement (including any underwriting agreement
contemplated by Section 5(n) hereof) cease to be true and correct in any
material respect, (iv) of the receipt by any Issuer of any notification with
respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Notes or
the Exchange Notes to be sold by any Participating Broker-Dealer for offer or
sale in any jurisdiction, or the initiation or threatening of any proceeding
for such purpose, (v) of the happening of any event, the existence of any
condition or any information becoming known that makes any statement made in
such Registration Statement or related Prospectus or any
<PAGE>
-15-
document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in,
or amendments or supplements to, such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and (vi) of the Issuers' reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts to
obtain the withdrawal of any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Registrable Notes being sold in connection
with an underwritten offering, (i) as promptly as practicable incorporate in a
prospectus supplement or post-effective amendment such information or revisions
to information therein relating to such underwriters or selling Holders as the
managing underwriters, if any, or such Holders or their counsel reasonably
request to be included or made therein, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as practicable
after the Issuers have received notification of the matters to be incorporated
in such prospectus supplement or post-effective amendment, and (iii) supplement
or make amendments to such Registration Statement.
<PAGE>
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(f) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Registrable Notes and to
each such Participating Broker-Dealer who so requests and to counsel and each
managing underwriter, if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each post-effective
amendment thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer, deliver to each selling Holder of Registrable Notes
or each such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by reference
therein as such Persons may reasonably request; and, subject to the last
paragraph of this Section 5, the Issuers hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Registrable Notes and each Participating Broker-Dealer, and the
underwriters or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Notes covered by, or the sale by
Participating Broker-Dealers of the Exchange Notes pursuant to, such Prospectus
and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use its best efforts to register or qualify, and cooperate
with the selling Holders of Registrable Notes and each such Participating
Broker-Dealer, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Notes or Exchange Notes, as
the case may be, for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States as any selling Holder, Participating
Broker-Dealer, or the
<PAGE>
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managing underwriter or underwriters, if any, reasonably request in writing;
PROVIDED that where Exchange Notes held by Participating Broker-Dealers or
Registrable Notes are offered pursuant to an underwritten offering, counsel
to the underwriters shall, at the cost and expense of the Issuers, perform
the Blue Sky investigations and file registrations and qualifications
required to be filed pursuant to this Section 5(h); keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do
any and all other acts or things reasonably necessary or advisable to enable
the disposition in such jurisdictions of the Exchange Notes by Participating
Broker-Dealers or the Registrable Notes covered by the applicable
Registration Statement; PROVIDED that no Issuer shall be required to (A)
qualify generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service of
process in any such jurisdiction where it is not then so subject or (C)
subject itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Registrable Notes, any Participating Broker-Dealer
and the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes to be
sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may reasonably
request.
(j) Use its best efforts to cause the Registrable Notes covered by
the Registration Statement to be registered with or approved by such
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Notes, in which case the Issuers will cooperate in all
reasonable respects with the filing of such Registration Statement and the
granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event
<PAGE>
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contemplated by paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as
practicable prepare and (subject to Section 5(a) hereof) file with the
Commission, at the Issuers' sole expense, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein
by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Notes being sold thereunder or
to the purchasers of the Exchange Notes to whom such Prospectus will be
delivered by a Participating Broker-Dealer, any such Prospectus will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(l) Use its best efforts to cause the Registrable Notes covered by a
Registration Statement to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement or the managing
underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with printed
certificates for the Registrable Notes in a form eligible for deposit with The
Depository Trust Company and (ii) provide a CUSIP number for the Registrable
Notes.
(n) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of debt securities similar to the Notes and
take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or the disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to the underwriters, with respect to the
business of the Issuers and their subsidiaries 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 of debt securities similar to the Notes,
and confirm the same in writing if and when requested; (ii) obtain the opinion
of counsel to the Issuers and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
underwriters covering the matters customarily covered in
<PAGE>
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opinions requested in underwritten offerings of debt securities similar to
the Notes and such other matters as may be reasonably requested by
underwriters; (iii) obtain "cold comfort" letters and updates thereof in form
and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the Issuers
(and, if necessary, any other independent certified public accountants of any
subsidiary of any Issuer or of any business acquired by any Issuer for which
financial statements and financial data are, or are required to be, included
in the Registration Statement), addressed to each of the underwriters, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings
of debt securities similar to the Notes and such other matters as reasonably
requested by the managing underwriter or 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 7 hereof (or such other provisions and procedures acceptable
to Holders of a majority in aggregate principal amount of Registrable Notes
covered by such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified
pursuant to said Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3, or
(2) a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, make available for inspection by any selling Holder of such
Registrable Notes being sold, and each Participating Broker-Dealer, any
underwriter participating in any such disposition of Registrable Notes, if any,
and any attorney, accountant or other agent retained by any such selling Holder,
each 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 each Issuer and its subsidiaries (collectively, the
"RECORDS") as shall be customary and reasonably necessary to enable them to
exercise any applicable due diligence responsibilities, and cause the officers,
directors and employees of each Issuer and its subsidiaries to supply all
information reasonably requested by any such Inspector in connection with such
Registration Statement.
<PAGE>
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Records which an Issuer determines, in good faith, to be confidential and any
Records which it notifies 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 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, (iii) the information
in such Records has been made generally available to the public other than as
a result of a disclosure or failure to safeguard by such Inspector or (iv)
disclosure of such information is, in the opinion of counsel for any
Inspector, necessary or advisable in connection with any action, claim, suit
or proceeding, directly or indirectly, involving or potentially involving
such Inspector and arising out of, based upon, related to, or involving this
Agreement, or any transactions contemplated hereby or arising hereunder.
Each selling Holder of such Registrable Notes and each 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 any
Issuer unless and until such is made generally available to the public. Each
Inspector, each selling Holder of such Registrable Notes and each
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 pursuant to clauses (ii) or (iv) of the previous
sentence or otherwise, give notice to the Issuers and allow the Issuers to
undertake appropriate action to obtain a protective order or otherwise
prevent disclosure of the Records deemed confidential at its expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be qualified
under the TIA not later than the effective date of the Exchange Offer or the
first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture and
the Holders of the Registrable Notes, to effect such changes to such indenture
as may be required for such indenture to be so qualified in accordance with the
terms of the TIA; and execute, and use its best efforts to cause such 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 Commission to enable such
indenture to be so qualified in a timely manner.
<PAGE>
-21-
(q) Comply with all applicable rules and regulations of the
Commission and make generally available to its securityholders earnings
statements satisfying the provisions of 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 Notes 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 Company after the effective date of a
Registration Statement, which statements shall cover said 12-month periods.
(r) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Issuers (or to such
other Person as directed by the Company) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Issuers shall mark, or
caused to be marked, on such Registrable Notes that such Registrable Notes are
being cancelled in exchange for the Exchange Notes or the Private Exchange
Notes, as the case may be; in no event shall such Registrable Notes be marked as
paid or otherwise satisfied.
(s) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the NASD.
(t) Use its best efforts to take all other steps reasonably necessary
to effect the registration of the Registrable Notes covered by a Registration
Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude
from such registration the Registrable Notes of any seller who fails to furnish
such information within a reasonable time after receiving such request. Each
seller as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Issuers all information required to be disclosed in
order to make the information previously furnished to the Issuers by such seller
not materially misleading.
<PAGE>
-22-
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange
Notes to be sold by such Participating Broker-Dealer, as the case may be,
that, upon receipt of any notice from the Issuers of the happening of any
event of the kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or
5(c)(vi), such Holder will forthwith discontinue disposition of such
Registrable Notes covered by such Registration Statement or Prospectus or
Exchange Notes to be sold by such Holder or Participating Broker-Dealer, as
the case may be, and, in each case, dissemination of such Prospectus until
such Holder's or Participating Broker-Dealer's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(k), or until it
is advised in writing (the "ADVICE") by the Company that the use of the
applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto. In the event the Issuers shall give any
such notice, each of the Effectiveness Period and the Applicable Period shall
be extended by the number of days during such periods from and including the
date of the giving of such notice to and including the date when each seller
of Registrable Notes covered by such Registration Statement or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, shall
have received (x) the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) or (y) the Advice.
6. REGISTRATION EXPENSES
All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes (x) where the
holders of Registrable Notes are located, in the case of the Exchange Notes, or
(y) as provided in Section 5(h) hereof, in the case of Registrable Notes or
Exchange Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriter or
underwriters, if any, or by the Holders of a majority
<PAGE>
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in aggregate principal amount of the Registrable Notes included in any
Registration Statement or by any Participating Broker-Dealer, as the case may
be, (iii) reasonable messenger, telephone and delivery expenses incurred in
connection with the Exchange Registration Statement and any Shelf
Registration, (iv) fees and disbursements of counsel for the Issuers and fees
and disbursements of special counsel for the Initial Purchasers and the
sellers of Registrable Notes, (v) fees and disbursements of all independent
certified public accountants referred to in Section 5(n)(iii) (including,
without limitation, the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), (vi) rating agency
fees, (vii) Securities Act liability insurance, if any Issuer desires such
insurance, (viii) fees and expenses of all other Persons retained by the
Issuers, (ix) internal expenses of the Issuers (including, without
limitation, all salaries and expenses of officers and employees of the
Issuers performing legal or accounting duties), (x) the expense of any annual
or, if required, special audit, (xi) if required, the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange, (xii) the fees and disbursements of underwriters, if
any, customarily paid by issuers or sellers of securities (but not including
any underwriting discounts or commissions or transfer taxes, if any,
attributable to the sale of the Registrable Notes which discounts,
commissions or taxes shall be paid by Holders of such Registrable Notes) and
(xiii) the expenses relating to printing, word processing and distributing
all Registration Statements, underwriting agreements, securities sales
agreements, indentures and any other documents necessary in order to comply
with this Agreement.
7. INDEMNIFICATION
(a) Each of the Issuers jointly and severally agrees to indemnify
and hold harmless each Holder of Registrable Notes and each Participating
Broker-Dealer, the officers, directors, employees and agents of each such
Person, and each Person, if any, who controls any such Person within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each, a "PARTICIPANT"), from and against any and all losses,
claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other reasonable expenses actually incurred in
connection with any suit, action or proceeding or any claim asserted) caused
by, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (as amended or supplemented if the Issuers shall have furnished
any amendments or supplements thereto) or caused
<PAGE>
-24-
by, arising out of or based upon any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with
information relating to any Participant furnished to the Issuers in writing
by or on behalf of such Participant expressly for use therein; PROVIDED,
HOWEVER, that the Issuers shall not be liable if such untrue statement or
omission or alleged untrue statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus or any amendment or
supplement thereto and the Prospectus does not contain any other untrue
statement or omission or alleged untrue statement or omission of a material
fact that was the subject matter of the related proceeding and any such loss,
liability, claim, damage or expense suffered or incurred by the Participants
resulted from any action, claim or suit by any Person who purchased
Registrable Notes or Exchange Notes which are the subject thereof from such
Participant and it is established in the related proceeding that such
Participant failed to deliver or provide a copy of the Prospectus (as amended
or supplemented) to such Person with or prior to the confirmation of the sale
of such Registrable Notes or Exchange Notes sold to such Person if required
by applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Issuers with Section 5 of this Agreement.
(b) Each Participant agrees, or if not a party to this Agreement,
will be required to agree, severally and not jointly, to indemnify and hold
harmless each Issuer, its directors and officers and each Person who controls
each Issuer within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Issuers to each Participant, but only with reference to information relating to
such Participant furnished to the Issuers in writing by such Participant
expressly for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary prospectus. The liability of any
Participant under this paragraph shall in no event exceed the proceeds received
by such Participant from sales of Registrable Notes or Exchange Notes giving
rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of
<PAGE>
-25-
which indemnity may be sought pursuant to either of the two preceding
paragraphs, such Person (the "INDEMNIFIED PERSON") shall promptly notify the
Person against whom such indemnity may be sought (the "INDEMNIFYING PERSON")
in writing, and the Indemnifying Person, upon request of the Indemnified
Person, shall retain counsel reasonably satisfactory to the Indemnified
Person to represent the Indemnified Person and any others the Indemnifying
Person may reasonably designate in such proceeding and shall pay the
reasonable fees and expenses actually incurred by such counsel related to
such proceeding; PROVIDED, HOWEVER, that the failure to so notify the
Indemnifying Person shall not relieve it of any obligation or liability which
it may have hereunder or otherwise. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed in writing to the contrary, (ii) the Indemnifying Person has
failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and
the Indemnified Person and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm
for the Participants and such control Persons of Participants shall be
designated in writing by Participants who sold a majority in interest of
Registrable Notes sold by all such Participants and any such separate firm
for each Issuer, its directors, officers and such control Persons of each
Issuer shall be designated in writing by the Company. The Indemnifying
Person shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there is
a final non-appealable judgment for the plaintiff, the Indemnifying Person
agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested
an Indemnifying Person to reimburse the Indemnified Person for reasonable
fees and expenses actually incurred by counsel as contemplated by the third
sentence of this paragraph, the Indemnifying Person agrees that it shall be
liable for any settlement of any
<PAGE>
-26-
proceeding effected without its consent if (i) such settlement is entered
into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of
such settlement; PROVIDED, HOWEVER, that the Indemnifying Person shall not be
liable for any settlement effected without its consent pursuant to this
sentence if the Indemnifying Person is contesting, in good faith, the request
for reimbursement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (A) includes an unconditional
release of such Indemnified Person, in form and substance satisfactory to
such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of an
Indemnified Person.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is unavailable to, or insufficient to hold
harmless, an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraphs, in lieu of indemnifying such Indemnified Person thereunder and in
order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omissions (or alleged statements or omissions) that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative fault of the parties
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 on the
one hand or by the Participants or such other Indemnified Person, as the case
may be, on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission and
any other equitable considerations appropriate under the circumstances.
<PAGE>
-27-
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by PRO RATA allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant 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
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. RULES 144 AND 144A
Each of the Issuers covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Commission thereunder in a timely manner and, if
at any time it is not required to file such reports, it will, upon the request
of any Holder of Registrable Notes, make publicly available other information so
long as necessary to permit sales pursuant to Rule 144 and Rule 144A under the
Securities Act. Each of the Issuers further covenants, for so long as any Notes
remain "Restricted Securities" within the meaning of the Securities Act, to make
available to any Holder or beneficial owner of Registrable Notes in connection
with any sale thereof and any prospective purchaser of such Registrable Notes
from such Holder or beneficial owner, upon request, the information required by
Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Registrable Notes pursuant to Rule 144A.
<PAGE>
-28-
9. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registation hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and
(b) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by any Issuer of any of its
obligations under this Agreement, each Holder of Registrable Notes and each
Participating Broker-Dealer holding Exchange Notes, in addition to being
entitled to exercise all rights provided herein, in the Indenture or, in the
case of an Initial Purchaser, in the Purchase Agreement, or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. Each Issuer agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees that, in the
event of any action for specific performance in respect of such breach, it shall
waive the defense that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. None of the Issuers has entered, as
of the date hereof, and none of the Issuers shall enter, after the date of this
Agreement, into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. None of the
Issuers has entered and none of the issuers shall enter into any agreement with
respect to any of its securities which will grant to any Person piggy-back
rights with respect to a Registration Statement.
(c) ADJUSTMENTS AFFECTING REGISTRABLE NOTES. None of the Issuers
shall, directly or indirectly, take any action
<PAGE>
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with respect to the Registrable Notes as a class that would adversely affect
the ability of the Holders of Registrable Notes to include such Registrable
Notes in a registration undertaken pursuant to this Agreement.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement 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 (A) the Holders of not less than a majority in
aggregate principal amount of the then outstanding Registrable Notes and (B)
in circumstances that would adversely affect Participating Broker-Dealers,
the Participating Broker-Dealers holding not less than a majority in
aggregate principal amount of the Exchange Notes held by all Participating
Broker-Dealers; PROVIDED, HOWEVER, that Section 7 and this Section 10(d) may
not be amended, modified or supplemented without the prior written consent of
each Holder and each Participating Broker-Dealer (including any person who
was a Holder or Participating Broker-Dealer of Registrable Notes or Exchange
Notes, as the case may be, disposed of pursuant to any Registration
Statement). Notwithstanding the foregoing, a waiver or consent to depart
from the provisions hereof with respect to a matter that relates exclusively
to the rights of Holders of Registrable Notes whose securities are being
tendered pursuant to the Exchange Offer or sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the
Registrable Notes being tendered or being sold by such Holders pursuant to
such Registration Statement.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
1. if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as follows:
<PAGE>
-30-
CIBC WORLD MARKETS CORP.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
c/o CIBC World Markets Corp.
424 Lexington Avenue
3rd Floor
New York, New York 10017
Facsimile No.: 212-885-4998
Attention: Corporate Finance
Department
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
2. if to the Initial Purchasers, at the address specified in Section
10(e)(1);
3. if to the Issuers, as follows:
Transportation Manufacturing Operations, Inc.
10 East Golf Road
Des Plaines, IL 60016
Facsimile No.: 847-299-6773
Attention: Timothy J. Nalepka
with copies to:
Winston & Strawn
35 West Wacker Drive
Chicago, IL 60601
Facsimile No.: 312-558-5800
Attention: R. Cabell Morris, Jr.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving
<PAGE>
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the same to the Trustee under the Indenture at the address specified in such
Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto and the Holders; PROVIDED, HOWEVER, that this Agreement shall not inure
to the benefit of or be binding upon a successor or assign of a Holder unless
and to the extent such successor or assign holds Registrable Notes.
(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, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
<PAGE>
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(k) NOTES HELD BY ANY ISSUER OR ITS AFFILIATES. Whenever the consent
or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by any Issuer or its affiliates (as
such term is defined in Rule 405 under the Securities Act) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage.
(l) THIRD PARTY BENEFICIARIES. Holders of Registrable Notes and
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(m) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda among the Initial Purchasers on the
one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
(n) JOINT AND SEVERAL OBLIGATIONS. All of the obligations of the
Issuers hereunder shall be joint and several obligations of each of them.
<PAGE>
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
TRANSPORTATION MANUFACTURING
OPERATIONS, INC.
(to be renamed Motor Coach Industries
International, Inc.)
By:
----------------------------------
Name:
Title:
BUSLEASE, INC.
By:
----------------------------------
Name:
Title:
HAUSMAN BUS SALES, INC.
By:
----------------------------------
Name:
Title:
MOTOR COACH INDUSTRIES, INC.
By:
----------------------------------
Name:
Title:
<PAGE>
-34-
TRANSIT BUS INTERNATIONAL, INC.
By:
----------------------------------
Name:
Title:
UNIVERSAL COACH PARTS, INC.
By:
----------------------------------
Name:
Title:
CIBC WORLD MARKETS CORP.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By: CIBC World Markets Corp.
By:
----------------------------------
Name:
Title:
<PAGE>
Exhibit 5.1
July 22, 1999
Motor Coach Industries International, Inc.
10 East Golf Road
Des Plaines, IL 60016
Re: Registration Statement on Form S-1
Motor Coach Industries International, Inc.
and the Guarantors (as defined below)
--------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Motor Coach Industries
International, Inc., a Delaware corporation (the "Company"), and certain of
its subsidiaries (the "Guarantors") in connection with the preparation of the
Registration Statement on Form S-1 (the "Registration Statement") filed on
behalf of the Company and the Guarantors with the Securities and Exchange
Commission (the "Commission") relating to the registration of $152,250,000
aggregate principal amount of the Company's 11 1/4% Senior Subordinated Notes
due 2009 (the "New Notes") and the Guarantees (as hereinafter defined)
thereof by the Guarantors, which are to be offered in exchange for an
equivalent principal amount of the Company's currently outstanding 11 1/4%
Senior Subordinated Notes due 2009 (the "Old Notes"), all as more fully
described in the Registration Statement. The New Notes will be issued under
the Company's Indenture dated as of June 16, 1999 (the "Indenture") between
the Company, the Guarantors and IBJ Whitehall Bank & Trust Company, as
trustee. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the prospectus (the "Prospectus")
contained in the Registration Statement.
This opinion letter is delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Securities Act").
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction,
of (i) the Registration Statement, in the form filed with the Commission and
as amended through the date hereof; (ii) the Certificates of Incorporation of
the Company and each of the Guarantors, as currently in effect; (iii) the
By-laws of the Company and each of the Guarantors, as currently in effect;
(iv) the Indenture; (v) the form of the New Notes; and (vi) resolutions of
the Boards of Directors of the Company and each of the Guarantors relating
to, among other things, the issuance and exchange of the New Notes for the
Old Notes, the issuance of the Guarantees and the filing of the Registration
<PAGE>
Statement. We also have examined such other documents as we have deemed
necessary or appropriate as a basis for the opinions set forth below.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such latter documents. As to certain facts
material to this opinion, we have relied without independent verification
upon oral or written statements and representations of officers and other
representatives of the Company, the Guarantors and others.
Based upon and subject to the foregoing, we are of the opinion that:
1. The issuance and exchange of the New Notes for the Old Notes and
the issuance of the Guarantees have been duly authorized by requisite
corporate action on the part of the Company and the Guarantors, respectively.
2. The New Notes and the Guarantees will be valid and binding
obligations of the Company and the Guarantors, respectively, entitled to the
benefits of the Indenture and enforceable against the Company and the
Guarantors, respectively, in accordance with their terms, except to the
extent that the enforceability thereof may be limited by (x) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (y) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) when (i)
the Registration Statement, as finally amended (including all necessary
post-effective amendments), shall have become effective under the Securities
Act; (ii) the New Notes are duly executed and authenticated in accordance
with the provisions of the Indenture; and (iii) the New Notes shall have been
issued and delivered in exchange for the Old Notes pursuant to the terms set
forth in the Prospectus.
The foregoing opinions are limited to the laws of the United States, the
State of New York and the General Corporation Law of the State of Delaware.
We express no opinion as to the application of the securities or blue sky
laws of the various states to the issuance or exchange of the New Notes.
We hereby consent to the reference to our firm under the headings "Legal
Matters" in the Prospectus and to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. In giving such
consent, we do not concede that we are experts within the meaning of the
Securities Act or the rules and regulations thereunder or that this consent
is required by Section 7 of the Securities Act.
Very truly yours,
/s/ Winston & Strawn
<PAGE>
Exhibit 10.1
CREDIT AGREEMENT, dated as of June 16, 1999, among Motor Coach
Industries International, Inc., a Delaware corporation ("PARENT"),
Transportation Manufacturing Operations, Inc., a Delaware corporation (the
"BORROWER"), the several banks and other financial institutions or entities from
time to time parties to this Agreement (the "LENDERS"), The Bank of Nova Scotia,
as Syndication Agent (in such capacity, the "SYNDICATION AGENT"), General
Electric Capital Corporation, as Documentation Agent (in such capacity, the
"DOCUMENTATION AGENT"), and Canadian Imperial Bank of Commerce ("CIBC"), as
administrative agent.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this
Section 1.1.
"ABR": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate
in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: "PRIME RATE" shall mean the
rate of interest per annum publicly announced from time to time by the
Reference Lender as its prime rate in effect at its principal office in New
York City (the Prime Rate not being intended to be the lowest rate of
interest charged by the Reference Lender in connection with extensions of
credit to debtors). Any change in the ABR due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective as of the opening of
business on the effective day of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
"ABR LOANS": Loans the rate of interest applicable to which is based
upon the ABR.
"ACQUISITION": any acquisition, whether in a single transaction or
series of related transactions, by the Borrower or any one or more of its
Subsidiaries of (a) all or a substantial part of the assets, or of a business
unit or division, of any Person, whether through purchase of assets or
securities, by merger or otherwise; or (b) any Person that becomes a Subsidiary
after giving effect to such acquisition.
"ADJUSTMENT DATE": as defined in the Pricing Grid.
"ADMINISTRATIVE AGENT": CIBC, together with its affiliates, as the
arranger of the Commitments and as the administrative agent for the Lenders
under this Agreement and the other Loan Documents, together with any of its
successors.
"AFFILIATE": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
<PAGE>
2
"AGENTS": the collective reference to the Administrative Agent, the
Syndication Agent and the Documentation Agent.
"AGGREGATE EXPOSURE": with respect to any Lender at any time, an
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loans and (ii) the
amount of such Lender's Revolving Commitment then in effect or, if the Revolving
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit then outstanding.
"AGGREGATE EXPOSURE PERCENTAGE": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate Exposure
at such time to the Aggregate Exposure of all Lenders at such time.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"APPLICABLE MARGIN": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
<TABLE>
<CAPTION>
ABR Loans Eurodollar Loans
--------- ----------------
<S> <C> <C>
Revolving Loans and
Swingline Loans 1.75% 2.75%
Term Loans 2.25% 3.25%
</TABLE>
PROVIDED, that on and after the first Adjustment Date occurring after the
completion of two full fiscal quarters of the Borrower after the Closing Date
and so long as no Event of Default shall have occurred and is then continuing,
the Applicable Margin with respect to Revolving Loans, Swingline Loans and Term
Loans will be determined pursuant to the Pricing Grid.
"APPLICATION": an application, in such form as the Issuing Lender may
specify from time to time, requesting the Issuing Lender to open a Letter of
Credit.
"ASSET SALE": any Disposition of property or series of related
Dispositions of property (excluding any such Disposition permitted by Section
7.5 (other than clauses (f) and (j) thereof) that yields gross proceeds to
Parent, the Borrower or any of its Subsidiaries (valued at the initial principal
amount thereof in the case of non-cash proceeds consisting of notes or other
debt securities and valued at fair market value in the case of other non-cash
proceeds) in excess of $500,000.
"ASSIGNEE": as defined in Section 11.6(c).
"ASSIGNOR": as defined in Section 11.6(c).
<PAGE>
3
"AVAILABLE REVOLVING COMMITMENT": as to any Revolving Lender at any
time, an amount equal to the excess, if any, of (a) such Lender's Revolving
Commitment OVER (b) such Lender's Revolving Extensions of Credit; PROVIDED, that
in calculating any Lender's Revolving Extensions of Credit for the purpose of
determining such Lender's Available Revolving Commitment pursuant to Section
2.8(a), the aggregate principal amount of Swingline Loans then outstanding shall
be deemed to be zero.
"BASE CAPEX AMOUNT": as defined in Section 7.7.
"BOARD": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"BORROWING DATE": any Business Day specified by the Borrower as a
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"BUSINESS": as defined in Section 4.17.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close, PROVIDED, that with respect to notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, such day is
also a day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"CAPITAL EXPENDITURES": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP
and, for the purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency or instrumentality 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; (b) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state
<PAGE>
4
or any public instrumentality thereof maturing within one year from the date
of acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Ratings Services or
Moody's Investors Service, Inc.; (c) certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition thereof
issued by any bank organized under the laws of the United States of America
or any state thereof or the District of Columbia having at the date of
acquisition thereof combined capital and surplus of not less than
$250,000,000; (d) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of
at least A-1 by Standard & Poor's Ratings Services or P-1 by Moody's
Investors Service, Inc.; and (e) investments in money market funds which
invest substantially all their assets in securities of the types described in
clauses (a) through (d) above.
"CIBC": as defined in the preamble.
"CLOSING DATE": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date is June 16, 1999.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security
Document.
"COMMITMENT": as to any Lender, the sum of the Term Commitment and
the Revolving Commitment of such Lender.
"COMMITMENT FEE RATE": 1/2 of 1% per annum; PROVIDED, that on and
after the first Adjustment Date occurring after the completion of two full
fiscal quarters of the Borrower after the Closing Date and so long as no
Event of Default shall have occurred and is then continuing, the Commitment
Fee Rate will be determined pursuant to the Pricing Grid.
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
that is under common control with the Borrower within the meaning of Section
4001 of ERISA or is part of a group that includes the Borrower and that is
treated as a single employer under Section 414 of the Code.
"COMPLIANCE CERTIFICATE": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.
"CONFIDENTIAL INFORMATION MEMORANDUM": the Confidential Information
Memorandum dated May 1999 and furnished to the Lenders.
"CONSOLIDATED CURRENT ASSETS": at any date, all amounts (other than
cash and Cash Equivalents) that would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date.
<PAGE>
5
"CONSOLIDATED CURRENT LIABILITIES": at any date, all amounts that
would, in conformity with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of the Borrower and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving Loans
or Swingline Loans to the extent otherwise included therein.
"CONSOLIDATED EBITDA": for any period, Consolidated Net Income for
such period PLUS, without duplication and to the extent reflected as a charge
in the statement of such Consolidated Net Income for such period, the sum of
(a) income tax expense, (b) interest expense, amortization or writeoff of
debt discount and debt issuance costs and commissions, discounts and other
fees and charges associated with Indebtedness (including the Loans), (c)
depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any
extraordinary losses, non-recurring cumulative effects of accounting changes
(to the extent reflected as a charge in the statement of such Consolidated
Net Income) and, without duplication, non-recurring or unusual losses and all
restructuring charges (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such
period, non-cash losses on sales of assets outside of the ordinary course of
business), (f) any other non-cash charges (other than any non-cash item
requiring an accrual or reserve for cash disbursements in any future period)
and (g) any non-cash charges attributable to applying the purchase method of
accounting in accordance with GAAP, and MINUS, to the extent included in the
statement of such Consolidated Net Income for such period, the sum of (a)
interest income, (b) any extraordinary gains, non-recurring cumulative
effects of accounting changes (to the extent included as an addition to such
Consolidated Net Income for such period) and, without duplication,
non-recurring or unusual gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, gains on the sales of assets outside of the ordinary
course of business), (c) any other non-cash income (other than any non-cash
item which represents a reversal of an accrual or reserve initially recorded
in anticipation of a cash disbursement to be made in a future period), all as
determined on a consolidated basis and (d) the corporate overhead expenses of
Parent paid by the Borrower to Parent pursuant to Section 7.6(c)(i).
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO": for any period, the ratio
of (a) Consolidated EBITDA for such period less the aggregate amount actually
paid by the Borrower and its Subsidiaries in cash during such period on account
of Capital Expenditures to (b) Consolidated Fixed Charges for such period;
PROVIDED, that the Borrower shall have the option at one time during the term of
this Agreement to elect that during the Measurement Period Consolidated EBITDA
for purposes of determining compliance with the covenants contained in Section
7.1 be computed in accordance with the Covenant Smoothing Method.
"CONSOLIDATED FIXED CHARGES": for any period, the sum (without
duplication) of (a) Consolidated Interest Expense for such period and (b)
scheduled payments made during such period on account of principal of
Indebtedness of the Borrower or any of its Subsidiaries (including scheduled
principal payments in respect of the Term Loans).
<PAGE>
6
"CONSOLIDATED INTEREST COVERAGE RATIO": for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period; PROVIDED, that the Borrower shall have the option at one time
during the term of this Agreement to elect that during the Measurement Period
Consolidated EBITDA for purposes of determining compliance with the covenants
contained in Section 7.1 be computed in accordance with the Covenant Smoothing
Method.
"CONSOLIDATED INTEREST EXPENSE": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations) of the
Borrower and its Subsidiaries for such period with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries (including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing and net costs
under Interest Rate Protection Agreements to the extent such net costs are
allocable to such period in accordance with GAAP), minus net payments received
during such period under Interest Rate Protection Agreements and minus interest
income.
"CONSOLIDATED NET INCOME": for any period, the consolidated net
income (or loss) of Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; PROVIDED that there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries, (b) the income (or deficit) of any Person (other
than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.
"CONSOLIDATED SENIOR LEVERAGE RATIO": as at the last day of any
period, the ratio of (a) the difference between (i) (x) Consolidated Total Debt
on such day (other than the aggregate principal amount of Revolving Extensions
of Credit outstanding on such day) PLUS (y) the average daily principal amount
of the Revolving Extensions of Credit outstanding during the period of four
fiscal fiscal quarters ending on such day and (ii) the aggregate then
outstanding principal amount of Subordinated Indebtedness to (b) Consolidated
EBITDA for such period; PROVIDED, that the Borrower shall have the option at one
time during the term of this Agreement to elect that during the Measurement
Period Consolidated EBITDA for purposes of determining compliance with the
covenants contained in Section 7.1 be computed in accordance with the Covenant
Smoothing Method.
"CONSOLIDATED TOTAL DEBT": at any date, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries at such date,
determined on a consolidated basis in accordance with GAAP (other than
Indebtedness in respect of letters of credit backing obligations which do not
constitute Indebtedness).
<PAGE>
7
"CONSOLIDATED TOTAL LEVERAGE RATIO": as at the last day of any
period, the ratio of (a) (i) Consolidated Total Debt on such day (other than the
aggregate principal amount of Revolving Extensions of Credit outstanding on such
day) PLUS (ii) the average daily principal amount of the Revolving Extensions of
Credit outstanding during the period of four fiscal fiscal quarters ending on
such day to (b) Consolidated EBITDA for such period; PROVIDED, that the Borrower
shall have the option at one time during the term of this Agreement to elect
that during the Measurement Period Consolidated EBITDA for purposes of
determining compliance with the covenants contained in Section 7.1 be computed
in accordance with the Covenant Smoothing Method.
"CONSOLIDATED WORKING CAPITAL": at any date, the excess of
Consolidated Current Assets on such date OVER Consolidated Current Liabilities
on such date.
"CONTINUING DIRECTORS": during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Borrower (together with any new directors whose election by
such Board of Directors or whose nomination for election by the shareholders of
the Borrower has been approved by the Permitted Investors or a majority of the
directors then still in office who either were directors at the beginning of
such period or whose election or recommendation for election was previously so
approved).
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTROL INVESTMENT AFFILIATE": as to any Person, any other Person
that (a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
For purposes of this definition, "control" of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"COVENANT SMOOTHING DATE": the date selected by the Borrower as the
date on which Consolidated EBITDA shall begin, for purposes of determining
compliance with the covenants contained in Section 7.1, to be computed in
accordance with the Covenant Smoothing Method.
"COVENANT SMOOTHING METHOD": at any date of measurement of the
covenants contained in Section 7.1, the average of Consolidated EBITDA for each
of the consecutive non-overlapping four-fiscal quarter periods ended during the
Reference Period, with Consolidated EBITDA for any fiscal quarters ending prior
to the Closing Date being the amounts set forth on Schedule 1.1C.
"DEFAULT": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
<PAGE>
8
"DISPOSITION": with respect to any property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition thereof;
and the terms "DISPOSE" and "DISPOSED OF" shall have correlative meanings.
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States of America.
"ECF PERCENTAGE": 75%; PROVIDED, that, with respect to each fiscal
year of the Borrower ending on or after December 31, 2000, the ECF Percentage
shall be reduced to 50% if the Consolidated Total Leverage Ratio as of the last
day of such fiscal year is not greater than 3.75 to 1.0; PROVIDED, further that,
notwithstanding the foregoing, during the Measurement Period the ECF Percentage
shall be 100%.
"ENVIRONMENTAL LAWS": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System.
"EURODOLLAR BASE RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Dow Jones Markets screen as of 11:00 A.M., London time, two Business
Days prior to the beginning of such Interest Period. In the event that such
rate does not appear on Page 3750 of the Dow Jones Markets screen (or otherwise
on such screen), the "EURODOLLAR BASE RATE" shall be determined by reference to
such other comparable publicly available service for displaying eurodollar rates
as may be selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Administrative Agent is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
the number of days comprised therein.
<PAGE>
9
"EURODOLLAR LOANS": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):
EURODOLLAR BASE RATE
-----------------------------------
1.00 - Eurocurrency Reserve Requirements
"EURODOLLAR TRANCHE": the collective reference to Eurodollar Loans
the then current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall originally
have been made on the same day).
"EVENT OF DEFAULT": any of the events specified in Section 8,
PROVIDED that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"EXCEPTED GUARANTEE OBLIGATIONS": as defined in Section 7.2(e).
"EXCEPTED INDEBTEDNESS": as defined in Section 7.2(b).
"EXCEPTED INVESTMENTS": as defined in Section 7.8(e).
"EXCESS CASH FLOW": for any fiscal year of the Borrower, the excess,
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for
such fiscal year, (ii) an amount equal to the amount of all non-cash charges
(including depreciation and amortization) deducted in arriving at such
Consolidated Net Income, (iii) decreases in Consolidated Working Capital for
such fiscal year, and (iv) an amount equal to the aggregate net non-cash loss on
the Disposition of property by the Borrower and its Subsidiaries during such
fiscal year (other than sales of inventory in the ordinary course of business),
to the extent deducted in arriving at such Consolidated Net Income OVER (b) the
sum, without duplication, of (i) an amount equal to the amount of all non-cash
credits included in arriving at such Consolidated Net Income, (ii) the aggregate
amount actually paid by the Borrower and its Subsidiaries in cash during such
fiscal year on account of Capital Expenditures (excluding the principal amount
of Indebtedness Incurred in connection with such expenditures), (iii) the
aggregate amount of all prepayments of Revolving Loans and Swingline Loans
during such fiscal year to the extent accompanying permanent optional reductions
of the Revolving Commitments and all optional prepayments of the Term Loans
during such fiscal year, (iv) the aggregate amount of all regularly scheduled
principal payments of Funded Debt (including, without limitation, the Term
Loans) of the Borrower and its Subsidiaries made during such fiscal year (other
than in respect of any revolving credit facility to the extent there is not an
equivalent permanent reduction in commitments thereunder), (v) increases in
Consolidated Working Capital for such fiscal year, and (vi) an amount equal to
the aggregate net non-cash gain on the Disposition of property by the Borrower
and its Subsidiaries during such fiscal year (other than sales of inventory in
the ordinary course of business), to the extent included in arriving at such
Consolidated Net Income.
<PAGE>
10
"EXCESS CASH FLOW APPLICATION DATE": as defined in Section 2.11(b).
"EXCLUDED FOREIGN SUBSIDIARY": any Foreign Subsidiary in respect of
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.
"EXPENDITURE USE AMOUNTS": at any date, the amount equal to the sum
of (a) the principal amount of Indebtedness Incurred by the Borrower and its
Subsidiaries in reliance on Section 7.2(h) as of such date, except to the extent
that the aggregate outstanding principal amount of such Indebtedness on such
date does not exceed $10,000,000, (b) the amount of all dividends paid by the
Borrower in reliance on Section 7.6(d), except to the extent that the aggregate
amount of all such dividends paid since the Closing Date does not exceed the
amounts set forth in clauses (i) and (ii) thereof, (c) all amounts utilized by
the Borrower or any of its Subsidiaries to finance Capital Expenditures, other
than Capital Expenditures which are not in excess of the Base CapEx Amount for
the relevant fiscal year and any permitted rollovers to such fiscal year of
unused amounts from the prior fiscal year and (d) all amounts utilized by the
Borrower and its Subsidiaries to finance Investments permitted pursuant to
Section 7.8(k), except to the extent that the aggregate amount of all such
Investments (valued at cost) made since the Closing Date does not exceed
$15,000,000.
"FACILITY": each of (a) the Term Commitments and the Term Loans made
thereunder (the "TERM FACILITY") and (b) the Revolving Commitments and the
extensions of credit made thereunder (the "REVOLVING FACILITY").
"FEDERAL FUNDS EFFECTIVE RATE": for any day, 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 on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Reference Lender
from three federal funds brokers of recognized standing selected by it.
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"FUNDED DEBT": as to any Person, all Indebtedness of such Person that
matures more than one year from the date of its creation or matures within one
year from such date but is renewable or extendible, at the option of such
Person, to a date more than one year from such date or arises under a revolving
credit or similar agreement that obligates the lender or lenders to extend
credit during a period of more than one year from such date, including, without
limitation, all current maturities and current sinking fund payments in respect
of such Indebtedness whether or not required to be paid within one year from the
date of its creation and, in the case of the Borrower, Indebtedness in respect
of the Loans.
"FUNDING OFFICE": the office of the Administrative Agent specified in
Section 11.2.
<PAGE>
11
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions
and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board and the rules and
regulations of the Securities and Exchange Commission, or in such other
statements by such other entity as may be in general use by significant
segments of the accounting profession, that are applicable to the
circumstances of the Borrower as of the date of determination, except that
for purposes of Section 7.1, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used in the
preparation of the most recent audited financial statements delivered
pursuant to Section 4.1(b). In the event that any "Accounting Change" (as
defined below) shall occur and such change results in a change in the method
of calculation of financial covenants, standards or terms in this Agreement,
then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been
made. Until such time as such an amendment shall have been executed and
delivered by the Borrower, the Administrative Agent and the Required Lenders,
all financial covenants, standards and terms in this Agreement shall continue
to be calculated or construed as if such Accounting Changes had not occurred.
"Accounting Changes" refers to changes in accounting principles required by
the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of Certified
Public Accountants or, if applicable, the Securities and Exchang Commission
(or successors thereto or agencies with similar functions).
"GOVERNMENTAL AUTHORITY": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government (including, without limitation, the National
Association of Insurance Commissioners).
"GRUPO DINA": Consorcio G Grupo Dina, S.A. de C.V., a Mexican
corporation.
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and Collateral
Agreement to be executed and delivered by the Borrower and each Subsidiary
Guarantor, substantially in the form of Exhibit A, as the same may be
amended, supplemented or otherwise modified from time to time.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the "PRIMARY OBLIGATIONS") of any other third Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any
<PAGE>
12
such primary obligation or (2) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof; PROVIDED,
HOWEVER, that the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.
The amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (a) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing
person may be liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum amount
for which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation shall be
such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by the Borrower in good faith.
"GUARANTORS": the collective reference to Parent and the
Subsidiary Guarantors.
"INACTIVE SUBSIDIARIES": the direct and indirect Subsidiaries of
Parent listed on Schedule 4.15 under the caption "Inactive Subsidiaries".
"INCUR": as defined in Section 7.2; and the terms "INCURRED" and
"INCURRENCE" shall have correlative meanings.
"INDEBTEDNESS": of any Person at any date, without duplication,
(a) all indebtedness of such Person for borrowed money, (b) all obligations
of such Person for the deferred purchase price of property or services (other
than current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though 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), (e) all Capital Lease
Obligations of such Person, (f) all obligations of such Person, contingent or
otherwise, as an account party under acceptance, letter of credit or similar
facilities, (g) all obligations of such Person, contingent or otherwise, to
purchase, redeem, retire or otherwise acquire for value any Capital Stock of
such Person, (h) all Guarantee Obligations of such Person in respect of
obligations of the kind referred to in clauses (a) through (g) above; (i) all
obligations of the kind referred to in clauses (a) through (h) above secured
by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person,
whether or not such Person has assumed or become liable for the payment of
such obligation; and (j) for the purposes of Section 8(e) only, all
obligations of such Person in respect of Interest Rate Protection Agreements.
"INSOLVENCY": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
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13
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.
"INTEREST PAYMENT DATE": (a) as to any ABR Loan, the last day of
each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any Eurodollar Loan having an Interest
Period longer than three months, each day that is three months, or a whole
multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period and (d) as to any Loan (other than any Revolving
Loan that is an ABR Loan and any Swingline Loan), the date of any repayment
or prepayment made in respect thereof.
"INTEREST PERIOD": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower in its notice of borrowing or notice
of conversion, as the case may be, given with respect thereto; and (b)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan and ending one, two, three
or six months thereafter, as selected by the Borrower by irrevocable notice
to the Administrative Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto; PROVIDED
that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Scheduled Revolving Termination Date or beyond the date final payment is
due on the Term Loans shall end on the Revolving Termination Date or such
due date, as applicable;
(iii) 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 end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an Interest
Period for such Loan.
<PAGE>
14
"INTEREST RATE PROTECTION AGREEMENT": any interest rate protection
agreement, interest rate futures contract, interest rate option, interest
rate cap or other interest rate hedge arrangement, to or under which the
Borrower or any of its Subsidiaries is a party or a beneficiary on the date
hereof or becomes a party or a beneficiary after the date hereof.
"INVESTMENT AGREEMENT": the Investment Agreement, dated as of June
16, 1999, among the Sponsor, certain other investors and Grupo Dina, pursuant
to which the Sponsor has agreed to make the Purchase.
"INVESTMENTS": as defined in Section 7.8.
"IPO": the initial underwritten public offering by MCII Holdings
of common stock of MCII Holdings pursuant to a registration statement filed
with the Securities and Exchange Commission in accordance with the Securities
Act of 1933, as amended.
"ISSUING LENDER": CIBC, in its capacity as issuer of any Letter of
Credit.
"L/C COMMITMENT": $40,000,000.
"L/C FEE PAYMENT DATE": the last day of each March, June,
September and December and the last day of the Revolving Commitment Period.
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters of
Credit that have not then been reimbursed pursuant to Section 3.5.
"L/C PARTICIPANTS": the collective reference to all the Revolving
Lenders other than the Issuing Lender.
"LETTERS OF CREDIT": as defined in Section 3.1(a).
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing).
"LOAN": any loan made by any Lender pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Security Documents and the
Notes.
"LOAN PARTIES": Parent, the Borrower and each Subsidiary of the
Borrower that is a party to a Loan Document.
<PAGE>
15
"MAJORITY FACILITY LENDERS": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the Term
Loans or the Total Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or, in the case of the Revolving Facility,
prior to any termination of the Revolving Commitments, the holders of more
than 50% of the Total Revolving Commitments).
"MAJORITY REVOLVING FACILITY LENDERS": the Majority Facility
Lenders in respect of the Revolving Facility.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
Restructuring, (b) the Refinancing, (c) the Purchase, (d) the business,
property, operations or condition (financial or otherwise) of the Borrower
and its Subsidiaries taken as a whole or (e) the validity or enforceability
of this Agreement or any of the other Loan Documents or the rights or
remedies of the Administrative Agent or the Lenders hereunder or thereunder.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"MCII HOLDINGS": MCII Holdings (USA), Inc., a Delaware corporation
and the parent company of Parent.
"MEASUREMENT PERIOD": the period commencing on the Covenant
Smoothing Date and ending on (and including) the date which is 18 months
thereafter or any earlier date specified by the Borrower.
"MORTGAGED PROPERTIES": the real properties listed on Schedule
1.1B, as to which the Administrative Agent for the benefit of the Lenders
shall be granted a Lien pursuant to the Mortgages.
"MORTGAGES": each of the mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Administrative Agent for
the benefit of the Lenders, substantially in the form of Exhibit D (with such
changes thereto as shall be advisable under the law of the jurisdiction in
which such mortgage or deed of trust is to be recorded), as the same may be
amended, supplemented or otherwise modified from time to time.
"MULTIEMPLOYER PLAN": a Plan that is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash Equivalents
(including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received) of such Asset Sale or
Recovery Event, net of attorneys' fees, accountants' fees, investment banking
fees, amounts required to be applied to the repayment of Indebtedness secured
by a Lien
<PAGE>
16
expressly permitted hereunder on any asset that is the subject of such Asset
Sale or Recovery Event (other than any Lien pursuant to a Security Document)
and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or
deductions attributable to the asset that is the subject of such Asset Sale
or Recovery Event) and (b) in connection with any issuance or sale of equity
securities or debt securities or instruments or the incurrence of loans, the
cash proceeds received from such issuance or incurrence, net of attorneys'
fees, investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
"NON-EXCLUDED TAXES": as defined in Section 2.19(a).
"NON-U.S. LENDER": as defined in Section 2.19(b).
"NOTES": the collective reference to any promissory note
evidencing Loans.
"OBLIGATIONS": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) the
Loans and all other obligations and liabilities of the Borrower to the
Administrative Agent or to any Lender (or, in the case of Interest Rate
Protection Agreements, any affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with,
this Agreement, any other Loan Document, the Letters of Credit, any Interest
Rate Protection Agreement entered into with any Lender or any affiliate of
any Lender or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.
"PAPER": leases, instruments and chattel paper received by the
Borrower or its Subsidiaries in consideration for the transfer or lease of
buses.
"PARTICIPANT": as defined in Section 11.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"PERMITTED ACQUISITIONS": as defined in Section 7.8(f).
"PERMITTED EXPENDITURE AMOUNT": at any date, the amount equal to
(a) the Qualified Net Cash Equity Proceeds of any issuance of Capital Stock
of the Borrower after the Closing Date MINUS (b) the aggregate amount of
Expenditure Use Amounts as of such date.
<PAGE>
17
"PERMITTED INVESTORS": the collective reference to the Sponsor,
its Control Investment Affiliates and any other holders of common stock of
MCII Holdings on the Closing Date.
"PERSON": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"PLAN": at a particular time, any employee benefit plan that is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"PLEDGE AGREEMENTS": the collective reference to (a) the Trust
Agreement, dated June 16, 1999, entered into by the Borrower, as pledgor, the
Administrative Agent, as beneficiary and Banco Inbursa, S.A., as trustee,
relating to the pledge of 65% of the Capital Stock of Dina Autobuses, S.A. de
C.V. and (b) the Pledge Agreement, dated June 16, 1999, by the Borrower, as
pledgor, in favor of the Administrative Agent, relating to the pledge of 65%
of the Capital Stock of MCIL Holdings, Ltd. and TMO Holdings of Canada, Ltd.
"PRICING GRID": the pricing grid attached hereto as Annex A.
"PRO FORMA BALANCE SHEET": as defined in Section 4.1(a).
"PROJECTIONS": as defined in Section 6.2(c).
"PROPERTIES": as defined in Section 4.17.
"PURCHASE": as defined in Section 5.1(b)(iii).
"PURCHASE PRICE": with respect to any Acquisition, the sum
(without duplication) of (a) the amount of cash paid by the Borrower and its
Subsidiaries in connection with such Acquisition (including, without
limitation or duplication, the Net Cash Proceeds from any Capital Stock
issued to finance such Acquisition), (b) the value (as determined for
purposes of such Acquisition in accordance with the applicable acquisition
agreement) of all Capital Stock of the Borrower issued or given as
consideration in connection with such Acquisition, (c) the principal amount
(or, if less, the accreted value) at the time of such Acquisition of all
Indebtedness incurred, assumed or acquired by Borrower and its Subsidiaries
in connection with such Acquisition, (d) all additional purchase price
amounts in connection with such Acquisition in the form of earnouts, deferred
purchase price and other contingent obligations that should be recorded as a
liability on the balance sheet of the Borrower and its Subsidiaries in
accordance with GAAP, Regulation S-X under the Securities Act of 1933, as
amended, or any other rule or regulation of the United States Securities and
Exchange Commission, (e) all amounts paid by the Borrower and its
Subsidiaries in respect of covenants not to compete, consulting agreements
and other affiliated contracts in connection with such Acquisition, and (f)
the aggregate fair market
<PAGE>
18
value of all other consideration given by the Borrower and its Subsidiaries
in connection with such Acquisition.
"QUALIFIED NET CASH EQUITY PROCEEDS": the Net Cash Proceeds of any
offering of, or capital contribution in respect of, Capital Stock of the
Borrower so long as such Capital Stock is not mandatorily redeemable prior to
the maturity of the Loans and does not provide for the mandatory payment of
any dividends or distributions thereon during the term of this Agreement.
"QUALIFIED SECURITIZATION TRANSACTION" means any transaction or
series of transactions that may be entered into by the Borrower or any of its
Subsidiaries pursuant to which the Borrower or any of its Subsidiaries may
sell, convey or otherwise transfer pursuant to customary terms to (a) a
Securitization Entity or to the Borrower which subsequently transfers to a
Securitization Entity (in the case of a transfer by the Borrower or any of
its Subsidiaries) and (b) any other Person (in the case of transfer by a
Securitization Entity), or may grant a security interest in any accounts
receivable (whether now existing or arising or acquired in the future) of the
Borrower or any of its Subsidiaries, and any assets related thereto
including, without limitation, all collateral securing such accounts
receivable, all contracts and contract rights and all guarantees or other
obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets (including contract rights) which are customarily
transferred or in respect of which security interests are customarily granted
in connection with asset securitization transactions involving accounts
receivable.
"RECOVERY EVENT": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding relating
to any asset of Parent, the Borrower or any of its Subsidiaries.
"REFERENCE LENDER": CIBC.
"REFERENCE PERIOD": with respect to any date, means the period of
three fiscal years of the Borrower ending on such date.
"REFINANCING": as defined in Section 5.1(b)(ii).
"REFUNDED SWINGLINE LOANS": as defined in Section 2.7.
"REFUNDING DATE": as defined in Section 2.7.
"REGISTER": as defined in Section 11.6(d).
"REGULATION U": Regulation U of the Board as in effect from time
to time.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"REINVESTMENT DEFERRED AMOUNT": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by Parent, the Borrower or
any of its Subsidiaries in
<PAGE>
19
connection therewith that are not applied to prepay the Term Loans or reduce
the Revolving Commitments pursuant to Section 2.11(a) as a result of the
delivery of a Reinvestment Notice.
"REINVESTMENT EVENT": any Asset Sale or Recovery Event in respect
of which the Borrower has delivered a Reinvestment Notice.
"REINVESTMENT NOTICE": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing and
that the Borrower (directly or indirectly through a Subsidiary) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an
Asset Sale or Recovery Event to acquire or repair assets useful in its
business.
"REINVESTMENT PREPAYMENT AMOUNT": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire assets
useful in the Borrower's or a Subsidiary's business.
"REINVESTMENT PREPAYMENT DATE": with respect to any Reinvestment
Event, the earlier of (a) the date occurring twelve months after such
Reinvestment Event and (b) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, acquire or cause its
Subsidiary to acquire assets useful in the Borrower's or such Subsidiary's
business with all or any portion of the relevant Reinvestment Deferred Amount.
"RELATED FUND": with respect to any Lender that is a fund that
invests in loans, any other fund that invests in loans and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC
Reg. Section 4043.
"REQUIRED LENDERS": the holders of more than 50% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of (i) the
aggregate unpaid principal amount of the Term Loans and (ii) the Total
Revolving Commitments or, if the Revolving Commitments have been terminated,
the Total Revolving Extensions of Credit.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, president,
chief financial officer or senior vice president of finance of the Borrower.
<PAGE>
20
"RESTRICTED PAYMENTS": as defined in Section 7.6.
"RESTRUCTURING": as defined in Section 5.1(b)(i).
"REVOLVING COMMITMENT": as to any Lender, the obligation of such
Lender, if any, to make Revolving Loans and participate in Swingline Loans
and Letters of Credit, in an aggregate principal and/or face amount not to
exceed the amount set forth under the heading "Revolving Commitment" opposite
such Lender's name on Schedule 1.1A, as the same may be changed from time to
time pursuant to the terms hereof. The original amount of the Total
Revolving Commitments is $112,000,000.
"REVOLVING COMMITMENT PERIOD": the period from and including the
Closing Date to the Revolving Termination Date.
"REVOLVING EXTENSIONS OF CREDIT": as to any Revolving Lender at
any time, an amount equal to the sum of (a) the aggregate principal amount of
all Revolving Loans made by such Lender then outstanding, (b) such Lender's
Revolving Percentage of the L/C Obligations then outstanding and (c) such
Lender's Revolving Percentage of the aggregate principal amount of Swingline
Loans then outstanding.
"REVOLVING LENDER": each Lender that has a Revolving Commitment or
that holds Revolving Loans.
"REVOLVING LOANS": as defined in Section 2.4.
"REVOLVING PERCENTAGE": as to any Revolving Lender at any time,
the percentage which such Lender's Revolving Commitment then constitutes of
the Total Revolving Commitments (or, at any time after the Revolving
Commitments shall have expired or terminated, the percentage which the
aggregate principal amount of such Lender's Revolving Loans then outstanding
constitutes of the aggregate principal amount of the Revolving Loans then
outstanding).
"REVOLVING TERMINATION DATE": the earlier of (a) the Scheduled
Revolving Termination Date and (b) the date on which the Revolving
Commitments shall terminate as provided herein.
"SCHEDULED REVOLVING TERMINATION DATE": June 16, 2005.
"SECURITIZATION ENTITY": a Wholly Owned Subsidiary of the Borrower
(or another Person in which the Borrower or any Subsidiary of the Borrower
makes an investment and to which the Borrower or any Subsidiary of the
Borrower transfers accounts receivable or equipment and related assets) which
engages in no activities other than in connection with the financing of
accounts receivable or equipment and which is designated by the Board of
Directors of the Borrower (as provided below) as a Securitization Entity (a)
no portion of the Indebtedness or any other obligations (contingent or
otherwise) of which (i) is guaranteed by the Borrower or
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any Subsidiary of the Borrower (other than the Securitization Entity)
(excluding guarantees of obligations (other than the principal of, and
interest on, Indebtedness)) other than pursuant to Standard Securitization
Undertakings, (ii) is recourse to or obligates the Borrower or any Subsidiary
of the Borrower (other than the Securitization Entity) in any way other than
pursuant to Standard Securitization Undertakings or (iii) subjects any
property or asset of the Borrower or any Subsidiary of the Borrower (other
than the Securitization Entity), directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings and other than any interest in the accounts
receivable or equipment and related assets being financed (whether in the
form of an equity interest in such assets or subordinated indebtedness
payable primarily from such financed assets) retained or acquired by the
Borrower or any Subsidiary of the Borrower, (b) with which neither the
Borrower nor any Subsidiary of the Borrower has any material contract,
agreement, arrangement or understanding other than on terms no less favorable
to the Borrower or such Subsidiary than those that might be obtained at the
time from Persons that are not Affiliates of the Borrower, other than fees
payable in the ordinary course of business in connection with servicing
receivables of such entity, and (c to which neither the Borrower nor any
Subsidiary of the Borrower has any obligation to maintain or preserve such
entity=s financial condition or cause such entity to achieve certain levels
of operating results. Any such designation by the Board of Directors of the
Borrower shall be evidenced to the Administrative Agent by delivering to the
Administrative Agent a certified copy of the resolution of the Board of
Directors of the Borrower giving effect to such designation and an officer=s
certificate certifying that such designation complied with the foregoing
conditions.
"SECURITY DOCUMENTS": the collective reference to the Guarantee
and Collateral Agreement, the Mortgages, the Pledge Agreements and all other
security documents hereafter delivered to the Administrative Agent granting a
Lien on any property of any Person to secure the obligations and liabilities
of any Loan Party under any Loan Document.
"SENIOR NOTE": as defined in Section 5.1(b)(iii).
"STANDARD SECURITIZATION UNDERTAKINGS": representations,
warranties, covenants and indemnities entered into by the Borrower or any
Subsidiary of the Borrower which are reasonably customary in an accounts
receivable securitization transaction.
"SENIOR SUBORDINATED NOTE INDENTURE": the Indenture entered into
by the Borrower and certain of its Subsidiaries in connection with the
issuance of the Senior Subordinated Notes, together with all instruments and
other agreements entered into by the Borrower or such Subsidiaries in
connection therewith, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with Section 7.9.
"SENIOR SUBORDINATED NOTES": the subordinated notes of the
Borrower issued pursuant to the Senior Subordinated Note Indenture.
"SINGLE EMPLOYER PLAN": any Plan that is covered by Title IV of
ERISA, but that is not a Multiemployer Plan.
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22
"SOLVENT": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the amount
of all "liabilities of such Person, contingent or otherwise", as of such
date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors,
(b) the present fair saleable value of the assets of such Person will, as of
such date, be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such
Person will be able to pay its debts as they mature. For purposes of this
definition, (i) "debt" means liability on a "claim", and (ii) "claim" means
any (x) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a
right to payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured or unmatured, disputed, undisputed,
secured or unsecured.
"SPECIFIED CHANGE OF CONTROL": a "Change of Control" as defined in
the Senior Subordinated Note Indenture.
"SPONSOR": Joseph Littlejohn & Levy, Inc..
"SUBORDINATED INDEBTEDNESS": the collective reference to the
Senior Subordinated Notes and any other Indebtedness of Parent or any of its
Subsidiaries which by its terms is subordinated to the Obligations and the
obligations of the Subsidiary Guarantors under the Guarantee and Collateral
Agreement, as the case may be, to at least the same extent as the Senior
Subordinated Notes are subordinated to the Obligations and the guarantees of
the Senior Subordinated Notes are subordinated to the obligations of the
Subsidiary Guarantors under the Guarantee and Collateral Agreement.
"SUBSIDIARY": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Borrower.
"SUBSIDIARY GUARANTOR": each Subsidiary of the Borrower other than
any Excluded Foreign Subsidiary and any Inactive Subsidiary.
"SUPERMAJORITY REVOLVING FACILITY LENDERS": the holders of more
than 75% of the aggregate unpaid principal amount of the Total Revolving
Extensions of Credit (or, prior to any termination of the Revolving
Commitments, the holders of more than 75% of the Total Revolving Commitments).
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23
"SWINGLINE COMMITMENT": the obligation of the Swingline Lender to
make Swingline Loans pursuant to Section 2.6 in an aggregate principal amount
at any one time outstanding not to exceed $5,000,000.
"SWINGLINE LENDER": CIBC, in its capacity as the lender of
Swingline Loans.
"SWINGLINE LOANS": as defined in Section 2.6.
"SWINGLINE PARTICIPATION AMOUNT": as defined in Section 2.7.
"TAX SHARING AGREEMENT": the Tax Sharing Agreement, dated as of
June 16, 1999, among Parent and the Borrower.
"TERM COMMITMENT": as to any Term Lender, the obligation of such
Lender, if any, to make a Term Loan to the Borrower hereunder in a principal
amount not to exceed the amount set forth under the heading "Term Commitment"
opposite such Lender's name on Schedule 1.1A. The original aggregate amount
of the Term Commitments is $333,000,000.
"TERM LENDER": each Lender that has a Term Commitment or that
holds a Term Loan.
"TERM LOAN": as defined in Section 2.1.
"TERM PERCENTAGE": as to any Lender at any time, the percentage
which such Lender's Term Commitment then constitutes of the aggregate Term
Commitments (or, at any time after the Closing Date, the percentage which the
aggregate principal amount of such Lender's Term Loans then outstanding
constitutes of the aggregate principal amount of the Term Loans then
outstanding).
"TOTAL REVOLVING COMMITMENTS": at any time, the aggregate amount
of the Revolving Commitments then in effect.
"TOTAL REVOLVING EXTENSIONS OF CREDIT": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Lenders
outstanding at such time.
"TRANSFEREE": any Assignee or Participant.
"TYPE": as to any Loan, its nature as an ABR Loan or a Eurodollar
Loan.
"U.S. TAXES": as defined in Section 11.6(d).
"WHOLLY OWNED SUBSIDIARY": as to any Person, any other Person all
of the Capital Stock of which (other than directors' qualifying shares
required by law or similar legal requirements) is owned by such Person
directly and/or through other Wholly Owned Subsidiaries.
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24
"WHOLLY OWNED SUBSIDIARY GUARANTOR": any Subsidiary Guarantor that
is a Wholly Owned Subsidiary of the Borrower.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
(i) accounting terms relating to Parent, the Borrower and its Subsidiaries
not defined in Section 1.1 and accounting terms partly defined in Section
1.1, to the extent not defined, shall have the respective meanings given to
them under GAAP and (ii) the words "asset" and "property" shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, Capital Stock, securities,
accounts and contract rights.
(c) For the purposes of calculating Consolidated EBITDA for any
period of four consecutive fiscal quarters (each, a "Determination Period")
pursuant to any determination of the Consolidated Total Leverage Ratio or the
Consolidated Senior Leverage Ratio, (i) if at any time during such
Determination Period the Borrower or any Subsidiary shall have made any
Material Disposition, the Consolidated EBITDA for such Determination Period
shall be reduced by an amount equal to the Consolidated EBITDA (if positive)
attributable to the property that is the subject of such Material Disposition
for such Determination Period or increased by an amount equal to the
Consolidated EBITDA (if negative) attributable thereto for such Determination
Period and (ii) if during such Determination Period the Borrower or any
Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for
such Determination Period shall be calculated after giving PRO FORMA effect
thereto as if such Material Acquisition occurred on the first day of such
Determination Period. As used in this paragraph, "Material Acquisition"
means any Acquisition that involves the payment of consideration by the
Borrower and its Subsidiaries in excess of $1,000,000; and "Material
Disposition" means any Disposition (other than any Disposition in the
ordinary course of business) of property or series of related Dispositions of
property that yields gross proceeds to the Borrower or any of its
Subsidiaries in excess of $1,000,000.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(e) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 TERM COMMITMENTS. Subject to the terms and conditions hereof,
each Term
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Lender severally agrees to make a term loan (a "TERM LOAN") to the Borrower
on the Closing Date in an amount equal to the amount of the Term Commitment
of such Lender. The Term Loans may from time to time be Eurodollar Loans or
ABR Loans, as determined by the Borrower and notified to the Administrative
Agent in accordance with Sections 2.2 and 2.12.
2.2 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 10:00 A.M., New York City time, one
Business Day prior to the anticipated Closing Date) requesting that the Term
Lenders make the Term Loans on the Closing Date. The Term Loans made on the
Closing Date shall initially be ABR Loans and, unless otherwise agreed by the
Administrative Agent in its sole discretion, no Term Loan may be converted
into or continued as a Eurodollar Loan prior to the date that is 60 days
after the Closing Date. Upon receipt of such notice the Administrative Agent
shall promptly notify each Term Lender thereof. Not later than 12:00 Noon,
New York City time, on the Closing Date each Term Lender shall make available
to the Administrative Agent at the Funding Office an amount in immediately
available funds equal to the Term Loan or Term Loans to be made by such
Lender. The Administrative Agent shall credit the account of the Borrower on
the books of such office of the Administrative Agent or another account
designated by the Borrower to the Administrative Agent with the aggregate of
the amounts made available to the Administrative Agent by the Term Lenders in
immediately available funds.
2.3 REPAYMENT OF TERM LOANS. The Term Loan of each Lender shall
mature in 28 consecutive quarterly installments payable on each September 30,
December 31, March 31 and June 30 of each year (other than the final
installment which shall be due on June 16, 2006), commencing on September 30,
1999 and concluding on June 16, 2006, each of which shall be in an amount
equal to such Lender's Term Percentage multiplied by $832,500, in the case of
the first 27 of such installments, and $310,522,500, in the case of the final
installment.
2.4 REVOLVING COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Revolving Lender severally agrees to make revolving
credit loans ("REVOLVING LOANS") to the Borrower from time to time during the
Revolving Commitment Period in an aggregate principal amount at any one time
outstanding which, when added to such Lender's Revolving Percentage of the
sum of (i) the L/C Obligations then outstanding and (ii) the aggregate
principal amount of the Swingline Loans then outstanding, does not exceed the
amount of such Lender's Revolving Commitment. During the Revolving
Commitment Period the Borrower may use the Revolving Commitments by
borrowing, prepaying the Revolving Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof. The
Revolving Loans may from time to time be Eurodollar Loans or ABR Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.5 and 2.12, PROVIDED that no Revolving Loan shall
be made as a Eurodollar Loan with an Interest Period which ends after the
Revolving Termination Date.
(b) The Borrower shall repay all outstanding Revolving Loans on
the Revolving Termination Date.
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26
2.5 PROCEDURE FOR REVOLVING LOAN BORROWING. The Borrower may
borrow under the Revolving Commitments during the Revolving Commitment Period
on any Business Day, PROVIDED that the Borrower shall give the Administrative
Agent irrevocable notice (which notice must be received by the Administrative
Agent prior to 12:00 Noon, New York City time, (a) three Business Days prior
to the requested Borrowing Date, in the case of Eurodollar Loans, or (b) one
Business Day prior to the requested Borrowing Date, in the case of ABR
Loans), specifying (i) the amount and Type of Revolving Loans to be borrowed,
(ii) the requested Borrowing Date and (iii) in the case of Eurodollar Loans,
the respective amounts of each such Type of Loan and the respective lengths
of the initial Interest Period therefor. No Revolving Loans shall be
required to be made on the Closing Date and, unless otherwise agreed by the
Administrative Agent in its sole discretion, no Revolving Loan may be made
as, converted into or continued as a Eurodollar Loan prior to the date that
is 60 days after the Closing Date. Each borrowing under the Revolving
Commitments shall be in an amount equal to (x) in the case of ABR Loans,
$1,000,000 or a whole multiple thereof (or, if the then aggregate Available
Revolving Commitments are less than $1,000,000, such lesser amount) and (y)
in the case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000
in excess thereof; PROVIDED, that the Swingline Lender may request, on behalf
of the Borrower, borrowings under the Revolving Commitments that are ABR
Loans in other amounts pursuant to Section 2.7. Upon receipt of any such
notice from the Borrower, the Administrative Agent shall promptly notify each
Revolving Lender thereof. Each Revolving Lender will make the amount of its
PRO RATA share of each borrowing available to the Administrative Agent for
the account of the Borrower at the Funding Office prior to 12:00 Noon, New
York City time, on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent. Such borrowing will then
be made available to the Borrower by the Administrative Agent crediting the
account of the Borrower on the books of such office or another account
designated by the Borrower to the Administrative Agent with the aggregate of
the amounts made available to the Administrative Agent by the Revolving
Lenders and in like funds as received by the Administrative Agent.
2.6 SWINGLINE COMMITMENT. (a) Subject to the terms and
conditions hereof, the Swingline Lender agrees to make a portion of the
credit otherwise available to the Borrower under the Revolving Commitments
from time to time during the Revolving Commitment Period by making swing line
loans ("SWINGLINE LOANS") to the Borrower; PROVIDED that (i) the aggregate
principal amount of Swingline Loans outstanding at any time shall not exceed
the Swingline Commitment then in effect (notwithstanding that the Swingline
Loans outstanding at any time, when aggregated with the Swingline Lender's
other outstanding Revolving Loans hereunder, may exceed the Swingline
Commitment then in effect) and (ii) the Borrower shall not request, and the
Swingline Lender shall not make, any Swingline Loan if, after giving effect
to the making of such Swingline Loan, the aggregate amount of the Available
Revolving Commitments would be less than zero. During the Revolving
Commitment Period, the Borrower may use the Swingline Commitment by
borrowing, repaying and reborrowing, all in accordance with the terms and
conditions hereof. Swingline Loans shall be ABR Loans only.
(b) The Borrower shall repay all outstanding Swingline Loans on
the Revolving Termination Date.
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2.7 PROCEDURE FOR SWINGLINE BORROWING; REFUNDING OF SWINGLINE
LOANS. (a) Whenever the Borrower desires that the Swingline Lender make
Swingline Loans it shall give the Swingline Lender irrevocable telephonic
notice confirmed promptly in writing (which telephonic notice must be
received by the Swingline Lender not later than 1:00 P.M., New York City
time, on the proposed Borrowing Date), specifying (i) the amount to be
borrowed and (ii) the requested Borrowing Date (which shall be a Business Day
during the Revolving Commitment Period). Each borrowing under the Swingline
Commitment shall be in an amount equal to $500,000 or a whole multiple of
$100,000 in excess thereof. Not later than 3:00 P.M., New York City time, on
the Borrowing Date specified in a notice in respect of Swingline Loans, the
Swingline Lender shall make available to the Administrative Agent at the
Funding Office an amount in immediately available funds equal to the amount
of the Swingline Loan to be made by the Swingline Lender. The Administrative
Agent shall make the proceeds of such Swingline Loan available to the
Borrower on such Borrowing Date by depositing such proceeds in the account of
the Borrower with the Administrative Agent or such other account designated
by the Borrower to the Administrative Agent on such Borrowing Date in
immediately available funds.
(b) The Swingline Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swingline Lender to act on its behalf), on one
Business Day's notice given by the Swingline Lender no later than 12:00 Noon,
New York City time, request each Revolving Lender to make, and each Revolving
Lender hereby agrees to make, a Revolving Loan, in an amount equal to such
Revolving Lender's Revolving Percentage of the aggregate amount of the
Swingline Loans (the "REFUNDED SWINGLINE LOANS") outstanding on the date of
such notice, to repay the Swingline Lender. Each Revolving Lender shall make
the amount of such Revolving Loan available to the Administrative Agent at
the Funding Office in immediately available funds, not later than 10:00 A.M.,
New York City time, one Business Day after the date of such notice. The
proceeds of such Revolving Loans shall be immediately made available by the
Administrative Agent to the Swingline Lender for application by the Swingline
Lender to the repayment of the Refunded Swingline Loans. The Borrower
irrevocably authorizes the Swingline Lender to charge the Borrower's accounts
with the Administrative Agent (up to the amount available in each such
account) in order to immediately pay the amount of such Refunded Swingline
Loans to the extent amounts received from the Revolving Lenders are not
sufficient to repay in full such Refunded Swingline Loans.
(c) If prior to the time a Revolving Loan would have otherwise
been made pursuant to Section 2.7(b), one of the events described in Section
8(f) shall have occurred and be continuing with respect to the Borrower or if
for any other reason, as determined by the Swingline Lender in its sole
discretion, Revolving Loans may not be made as contemplated by Section
2.7(b), each Revolving Lender shall, on the date such Revolving Loan was to
have been made pursuant to the notice referred to in Section 2.7(b) (the
"REFUNDING DATE"), purchase for cash an undivided participating interest in
the then outstanding Swingline Loans by paying to the Swingline Lender an
amount (the "SWINGLINE PARTICIPATION AMOUNT") equal to (i) such Revolving
Lender's Revolving Percentage TIMES (ii) the sum of the aggregate principal
amount of Swingline Loans then outstanding that were to have been repaid with
such Revolving Loans.
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(d) Whenever, at any time after the Swingline Lender has received
from any Revolving Lender such Lender's Swingline Participation Amount, the
Swingline Lender receives any payment on account of the Swingline Loans, the
Swingline Lender will distribute to such Lender its Swingline Participation
Amount (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Lender's participating interest was
outstanding and funded and, in the case of principal and interest payments,
to reflect such Lender's PRO RATA portion of such payment if such payment is
not sufficient to pay the principal of and interest on all Swingline Loans
then due); PROVIDED, HOWEVER, that in the event that such payment received by
the Swingline Lender is required to be returned, such Revolving Lender will
return to the Swingline Lender any portion thereof previously distributed to
it by the Swingline Lender.
(e) Each Revolving Lender's obligation to make the Loans referred
to in Section 2.7(b) and to purchase participating interests pursuant to
Section 2.7(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right that such Revolving Lender
or the Borrower may have against the Swingline Lender, the Borrower or any
other Person for any reason whatsoever; (ii) the occurrence or continuance of
a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement
or any other Loan Document by the Borrower, any other Loan Party or any other
Revolving Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
2.8 COMMITMENT FEES, ETC. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Revolving Lender a commitment
fee for the period from and including the Closing Date to the last day of the
Revolving Commitment Period, computed at the Commitment Fee Rate on the
average daily amount of the Available Revolving Commitment of such Lender
during the period for which payment is made, payable quarterly in arrears on
the last day of each March, June, September and December and on the Revolving
Termination Date, commencing on the first of such dates to occur after the
date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the
fees in the amounts and on the dates previously agreed to in writing by the
Borrower and the Administrative Agent.
2.9 TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS. The
Borrower shall have the right, upon not less than three Business Days' notice
to the Administrative Agent, to terminate the Revolving Commitments or, from
time to time, to reduce the amount of the Revolving Commitments; PROVIDED
that no such termination or reduction of Revolving Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Loans and Swingline Loans made on the effective date thereof, the
Total Revolving Extensions of Credit would exceed the Total Revolving
Commitments. Any such reduction shall be in an amount equal to $1,000,000,
or a whole multiple thereof, and shall reduce permanently the Revolving
Commitments then in effect.
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2.10 OPTIONAL PREPAYMENTS. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at
least three Business Days prior thereto in the case of Eurodollar Loans and
at least one Business Day prior thereto in the case of ABR Loans, which
notice shall specify the date and amount of prepayment and whether the
prepayment is of Eurodollar Loans or ABR Loans; PROVIDED, that if a
Eurodollar Loan is prepaid on any day other than the last day of the Interest
Period applicable thereto, the Borrower shall also pay any amounts owing
pursuant to Section 2.20. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof. If any such notice
is given, the amount specified in such notice shall be due and payable on the
date specified therein, together with (except in the case of Revolving Loans
that are ABR Loans and Swingline Loans) accrued interest to such date on the
amount prepaid. Partial prepayments of Term Loans and Revolving Loans shall
be in an aggregate principal amount of $1,000,000 or a whole multiple
thereof. Partial prepayments of Swingline Loans shall be in an aggregate
principal amount of $100,000 or a whole multiple thereof.
2.11 MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS. (a) If on
any date Parent, the Borrower or any of its Subsidiaries shall receive Net
Cash Proceeds from any Asset Sale or Recovery Event then, unless a
Reinvestment Notice shall be delivered in respect thereof, such Net Cash
Proceeds shall be applied on such date toward the prepayment of the Term
Loans and the reduction of the Revolving Commitments as set forth in Section
2.11(c); PROVIDED, that, notwithstanding the foregoing, on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans and the reduction of the Revolving Commitments
as set forth in Section 2.11(c); PROVIDED, FURTHER, that the aggregate amount
of mandatory prepayments under this paragraph (a) as a result of Asset Sales
permitted under Section 7.5(f) in respect of a Qualified Securitization
Transaction shall not exceed the maximum amount of outstanding receivables
subject to such Qualified Securitization Transaction on the date of testing
or any date prior thereto.
(b) If, for the period beginning on the Closing Date and ending
December 31, 1999 and for any fiscal year of the Borrower commencing
thereafter, there shall be Excess Cash Flow, the Borrower shall, on the
relevant Excess Cash Flow Application Date, apply the ECF Percentage of such
Excess Cash Flow toward the prepayment of the Term Loans and the reduction of
the Revolving Commitments as set forth in Section 2.11(c). Each such
prepayment and commitment reduction shall be made on a date (an "EXCESS CASH
FLOW APPLICATION DATE") no later than five Business Days after the earlier of
(i) the date on which the financial statements of the Borrower referred to in
Section 6.1(a), for the fiscal year with respect to which such prepayment is
made, are required to be delivered to the Lenders and (ii) the date such
financial statements are actually delivered.
(c) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to Section 2.11 shall be applied, FIRST,
to the prepayment of the Term Loans (in accordance with Section 2.17(b)) and,
SECOND, to reduce permanently the Revolving Commitments. Any such reduction
of the Revolving Commitments shall be accompanied by prepayment of the
Revolving Loans and/or Swingline Loans to the extent, if any, that the Total
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Revolving Extensions of Credit exceed the amount of the Total Revolving
Commitments as so reduced, PROVIDED that if the aggregate principal amount of
Revolving Loans and Swingline Loans then outstanding is less than the amount
of such excess (because L/C Obligations constitute a portion thereof), the
Borrower shall, to the extent of the balance of such excess, replace
outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Administrative Agent for the benefit
of the Lenders on terms and conditions satisfactory to the Administrative
Agent. The application of any prepayment pursuant to Section 2.11 shall be
made first to ABR Loans and second to Eurodollar Loans. Each prepayment of
the Loans under Section 2.11 (except in the case of Revolving Loans that are
ABR Loans and Swingline Loans) shall be accompanied by accrued interest to
the date of such prepayment on the amount prepaid.
(d) Notwithstanding anything to the contrary in Section 2.11(c) or
2.17, with respect to the amount of any mandatory prepayment described in
Section 2.11(b) that is allocated to Term Loans (such amounts, the
"PREPAYMENT AMOUNT"), the Borrower will, in lieu of applying such amount to
the prepayment of Term Loans as provided in paragraph (c) above, on the date
specified in Section 2.11 for such prepayment, give the Administrative Agent
telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Term Lender a notice (each,
a "PREPAYMENT OPTION NOTICE") as described below. As promptly as practicable
after receiving such notice from the Borrower, the Administrative Agent will
send to each Term Lender a Prepayment Option Notice, which shall be in the
form of Exhibit G, and shall include an offer by the Borrower to prepay on
the date (each a "MANDATORY PREPAYMENT DATE") that is 10 Business Days after
the date of the Prepayment Option Notice, the relevant Term Loans of such
Term Lender by an amount equal to the portion of the Prepayment Amount
indicated in such Term Lender=s Prepayment Option Notice as being applicable
to such Term Lender=s Term Loans. On the Mandatory Prepayment Date, (i) the
Borrower shall pay to the relevant Term Lenders the aggregate amount
necessary to prepay that portion of the outstanding relevant Term Loans in
respect of which such Term Lenders have accepted prepayment pursuant to the
Prepayment Option Notice and (ii) the Borrower shall be entitled to retain
the portion of the Prepayment Amount not accepted by the relevant Term
Lenders.
2.12 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may
elect from time to time to convert Eurodollar Loans to ABR Loans by giving
the Administrative Agent at least two Business Days' prior irrevocable notice
of such election, PROVIDED that any such conversion of Eurodollar Loans may
only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans
by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election (which notice shall specify the length of
the initial Interest Period therefor), PROVIDED that no ABR Loan under a
particular Facility may be converted into a Eurodollar Loan (i) when any
Event of Default has occurred and is continuing and the Administrative Agent
or the Majority Facility Lenders in respect of such Facility have determined
in its or their sole discretion not to permit such conversions or (ii) after
the date that is one month prior to the final scheduled termination or
maturity date of such Facility. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
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(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, PROVIDED
that no Eurodollar Loan under a particular Facility may be continued as such (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of such Facility, and PROVIDED, FURTHER, that if the Borrower
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Loans shall be automatically converted to ABR Loans on the last day of such then
expiring Interest Period. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.
2.13 LIMITATIONS ON EURODOLLAR TRANCHES. Notwithstanding anything to
the contrary in this Agreement, all borrowings, conversions, continuations and
optional prepayments of Eurodollar Loans hereunder and all selections of
Interest Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, (a) after giving effect thereto, the aggregate principal
amount of the Eurodollar Loans comprising each Eurodollar Tranche shall be equal
to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) no
more than ten Eurodollar Tranches shall be outstanding at any one time.
2.14 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b Each ABR Loan shall bear interest at a rate per annum equal to
the ABR plus the Applicable Margin.
(c (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) shall bear interest at a
rate per annum equal to (x) in the case of the Loans, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section 2.14 PLUS 2% or (y) in the case of Reimbursement Obligations, the
rate applicable to ABR Loans under the Revolving Facility PLUS 2%, and (ii)
if all or a portion of any interest payable on any Loan or Reimbursement
Obligation or any commitment fee or other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal
to the rate then applicable to ABR Loans under the relevant Facility PLUS 2%
(or, in the case of any such other amounts that do not relate to a particular
Facility, the rate then applicable to ABR Loans under the Revolving Facility
PLUS 2%), in each case, with respect to clauses (i) and (ii) above, from the
date of such non-payment until such amount is paid in full (as well after as
before judgment).
(d Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this Section
2.14 shall be payable from time to time on demand.
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2.15 COMPUTATION OF INTEREST AND FEES. (a) Interest and fees
payable pursuant hereto shall be calculated on the basis of a 360-day year for
the actual days elapsed, except that, with respect to ABR Loans the rate of
interest on which is calculated on the basis of the Prime Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of each determination
of a Eurodollar Rate. Any change in the interest rate on a Loan resulting from
a change in the ABR or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.14(a).
2.16 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day
of any Interest Period:
(a the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as ABR Loans,
(y) any Loans under the relevant Facility that were to have been converted on
the first day of such Interest Period to Eurodollar Loans shall be continued as
ABR Loans and (z) any outstanding Eurodollar Loans under the relevant Facility
shall be converted, on the first day of such Interest Period, to ABR Loans.
Until such notice has been withdrawn by the Administrative Agent, no further
Eurodollar Loans under the relevant Facility shall be made or continued as such,
nor shall the Borrower have the right to convert Loans under the relevant
Facility to Eurodollar Loans.
2.17 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made PRO RATA according to the
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33
respective Term Percentages or Revolving Percentages, as the case may be, of
the relevant Lenders.
(b Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made PRO RATA
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Lenders. The amount of each principal prepayment of the Term
Loans shall be applied to reduce the then remaining installments of the Term
Loans PRO RATA based upon the then remaining principal amount thereof; PROVIDED,
that, at the Borrower's election, any such prepayment may be applied to the
installments coming due within the 12-month period following the date of such
prepayment. Amounts prepaid on account of the Term Loans may not be reborrowed.
(c Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Loans shall be made PRO
RATA according to the respective outstanding principal amounts of the Revolving
Loans then held by the Revolving Lenders.
(d All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.
(e Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the daily average Federal Funds Effective
Rate for the period until such Lender makes such amount immediately available to
the Administrative Agent. A certificate of the Administrative Agent submitted
to any Lender with respect to any amounts owing under this Section 2.17(e) shall
be conclusive in the absence of manifest error. If such Lender's share of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to ABR Loans under the relevant Facility, on demand, from
the Borrower.
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34
(f Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective PRO RATA shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.18 REQUIREMENTS OF LAW. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurodollar Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.19 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender that is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.18, it shall
promptly notify the Borrower (with a copy to the Administrative Agent) of the
event by reason of which it has become so entitled.
(b If any Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the
effect of reducing the
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35
rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter
of Credit to a level below that which such Lender or such corporation could
have achieved but for such adoption, change or compliance (taking into
consideration such Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by such Lender to be material, then
from time to time, after submission by such Lender to the Borrower (with a
copy to the Administrative Agent) of a written request therefor, the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction; PROVIDED that the Borrower shall not be
required to compensate a Lender pursuant to this paragraph for any amounts
incurred more than six months prior to the date that such Lender notifies the
Borrower of such Lender's intention to claim compensation therefor; and
PROVIDED FURTHER that, if the circumstances giving rise to such claim have a
retroactive effect, then such six-month period shall be extended to include
the period of such retroactive effect.
(c A certificate as to any additional amounts payable pursuant to
this Section 2.18 submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section 2.18 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.19 TAXES. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and
franchise taxes (imposed in lieu of net income taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former
connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under,
or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("NON-EXCLUDED TAXES") are required to be withheld or deducted
from any amounts payable by the Borrower to the Administrative Agent or any
Lender hereunder (i) the Borrower shall make such deductions or withholdings,
(ii) the Borrower shall pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable law, (iii) as
promptly as possible after making such payment, the Borrower shall send to
the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of any original official receipt
received by the Borrower showing such payment and (iv) the amounts payable
hereunder to the Administrative Agent or such Lender shall be increased to
the extent necessary to yield to the Administrative Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement;
PROVIDED, HOWEVER, that the Borrower shall not be required to increase any
such amounts payable to any Lender with respect to U.S. withholding taxes
that (i) are imposed at the time the Lender becomes a party to this Agreement
or (ii) are attributable to the Lender's failure to comply with Section
2.19(b). If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent
the required receipts or other required
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36
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section 2.19 shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(b Each Lender (or Transferee) that is not a citizen or resident of
the United States of America, a corporation, partnership or other entity created
or organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a "NON-U.S. LENDER") shall
deliver to the Borrower and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form
4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest", a Form W-8, or any subsequent versions thereof
or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, an
annual certificate representing that such Non-U.S. Lender is not a "bank" for
purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within
the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code)), properly completed and duly executed by such
Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S.
federal withholding tax on all payments by the Borrower under this Agreement and
the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender
on or before the date it becomes a party to this Agreement (or, in the case of
any Participant, on or before the date such Participant purchases the related
participation). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower
at any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 2.19(b), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.19(b) that
such Non-U.S. Lender is not legally able to deliver.
2.20 INDEMNITY. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense that such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of a Eurodollar
Loan after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (c) the making of a prepayment of Eurodollar
Loans on a day that is not the last day of an Interest Period with respect
thereto. Such indemnification may include an amount equal to the excess, if
any, of (i) the amount of interest that would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such
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Loans provided for herein (excluding, however, the Applicable Margin included
therein, if any) OVER (ii) the amount of interest (as reasonably determined
by such Lender) that would have accrued to such Lender on such amount by
placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. A certificate as to any amounts payable
pursuant to this Section 2.20 submitted to the Borrower by any Lender shall
be conclusive in the absence of manifest error. This covenant shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.21 CHANGE OF LENDING OFFICE. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.18 or 2.19(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; PROVIDED, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and PROVIDED, FURTHER, that nothing in this Section 2.21 shall
affect or postpone any of the obligations of any Borrower or the rights of any
Lender pursuant to Section 2.18 or 2.19(a).
2.22 REPLACEMENT OF LENDERS. The Borrower shall be permitted to
replace any Lender that (a) requests reimbursement for amounts owing pursuant to
Section 2.18 or 2.19 or (b) defaults in its obligation to make Loans hereunder,
with a replacement financial institution; PROVIDED that (i) such replacement
does not conflict with any Requirement of Law, (ii) prior to any such
replacement, such Lender shall have taken no action under Section 2.21 so as to
eliminate the continued need for payment of amounts owing pursuant to Section
2.18 or 2.19, (iii) the replacement financial institution shall purchase, at
par, all Loans and other amounts owing to such replaced Lender on or prior to
the date of replacement, (iv) the Borrower shall be liable to such replaced
Lender under Section 2.20 if any Eurodollar Loan owing to such replaced Lender
shall be purchased other than on the last day of the Interest Period relating
thereto, (v) the replacement financial institution, if not already a Lender,
shall be reasonably satisfactory to the Administrative Agent, (vi) the replaced
Lender shall be obligated to make such replacement in accordance with the
provisions of Section 11.6 (provided that the Borrower shall be obligated to pay
the registration and processing fee referred to therein), (vii) until such time
as such replacement shall be consummated, the Borrower shall pay all additional
amounts (if any) required pursuant to Section 2.18 or 2.19, as the case may be,
and (viii) any such replacement shall not be deemed to be a waiver of any rights
that the Borrower, the Administrative Agent or any other Lender shall have
against the replaced Lender.
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SECTION 3. LETTERS OF CREDIT
3.1 L/C COMMITMENT. (a) Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Revolving Lenders
set forth in Section 3.4(a), agrees to issue letters of credit ("LETTERS OF
CREDIT") for the account of the Borrower on any Business Day during the
Revolving Commitment Period in such form as may be approved from time to time by
the Issuing Lender; PROVIDED that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the
Available Revolving Commitments would be less than zero. Each Letter of Credit
shall (i) be denominated in Dollars and (ii) expire no later than the earlier of
(x) the first anniversary of its date of issuance and (y) the date that is five
Business Days prior to the Scheduled Revolving Termination Date, PROVIDED that
any Letter of Credit with a one-year term may provide for the renewal thereof
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (y) above).
(b The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT. The Borrower may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrower promptly following the issuance thereof.
The Issuing Lender shall promptly furnish to the Administrative Agent, which
shall in turn promptly furnish to the Lenders, notice of the issuance of each
Letter of Credit (including the amount thereof).
3.3 FEES AND OTHER CHARGES. (a) The Borrower will pay a fee on all
outstanding Letters of Credit at a per annum rate equal to the Applicable Margin
then in effect with respect to Eurodollar Loans under the Revolving Facility,
shared ratably among the Revolving Lenders and payable quarterly in arrears on
each L/C Fee Payment Date after the issuance date. In addition, the Borrower
shall pay to the Issuing Lender for its own account a fronting fee of 1/4 of 1%
per annum, payable quarterly in arrears on each L/C Fee Payment Date after the
Issuance Date.
(b In addition to the foregoing fees, the Borrower shall pay or
reimburse the Issuing Lender for such normal and customary costs and expenses as
are incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.
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3.4 L/C PARTICIPATIONS. (a) The Issuing Lender irrevocably agrees
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Percentage in the Issuing Lender's obligations and
rights under each Letter of Credit issued hereunder and the amount of each draft
paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Issuing Lender upon demand at the Issuing Lender's address for
notices specified herein an amount equal to such L/C Participant's Revolving
Percentage of the amount of such draft, or any part thereof, that is not so
reimbursed.
(b If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to ABR Loans under the Revolving Facility. A certificate of the
Issuing Lender submitted to any L/C Participant with respect to any amounts
owing under this Section shall be conclusive in the absence of manifest error.
(c Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its PRO
RATA share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrower or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its PRO RATA share thereof;
PROVIDED, HOWEVER, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. (a) The Borrower
agrees to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft
so paid and (b) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Each such payment shall be
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40
made to the Issuing Lender at its address for notices specified herein in lawful
money of the United States of America and in immediately available funds.
Interest shall be payable on any and all amounts remaining unpaid by the
Borrower under this Section from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full at the
rate set forth in (i) until the second Business Day following the date of the
applicable drawing, Section 2.14(b) and (ii) thereafter, Section 2.14(c).
(b Each drawing under any Letter of Credit shall constitute a
request by the Borrower to the Administrative Agent for a borrowing pursuant to
Section 2.5 of ABR Loans in the amount of such drawing (but without any
requirement for compliance with the prior notice or minimum borrowing amount
provisions of Section 2.5 or the conditions set forth in Section 5.2). The
Borrowing Date with respect to such borrowing shall be the date of such drawing
and each Lender shall make its Revolving Percentage of such borrowing available
to the Administrative Agent on such date to be used to repay the Reimbursement
Obligation created by such drawing. The application of such Loans shall satisfy
the Borrower's obligations under Section 3.5(a) in the amount thereof.
3.6 OBLIGATIONS ABSOLUTE. The Borrower's obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment that the
Borrower may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lender that the Borrower's Reimbursement Obligations under Section 3.5 shall not
be affected by, among other things, the validity or genuineness of documents or
of any endorsements thereon, even though such documents shall in fact prove to
be invalid, fraudulent or forged, or any dispute between or among the Borrower
and any beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or any claims whatsoever of the Borrower
against any beneficiary of such Letter of Credit or any such transferee. The
Issuing Lender shall not be liable for any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards or care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.
3.7 LETTER OF CREDIT PAYMENTS. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
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41
3.8 APPLICATIONS. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and issue or participate in the Letters of
Credit, Parent and the Borrower hereby jointly and severally represent and
warrant to the Administrative Agent and each Lender that:
4.1 FINANCIAL CONDITION. (a) The unaudited PRO FORMA consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at March 31,
1999 (including the notes thereto) (the "PRO FORMA BALANCE SHEET"), copies of
which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Restructuring, the Refinancing and the Purchase, (ii) the Loans to be made
and the Senior Subordinated Notes to be issued on the Closing Date and the use
of proceeds thereof and (iii) the payment of fees and expenses in connection
with the foregoing. The Pro Forma Balance Sheet has been prepared in accordance
with Regulation S-X under the Securities Act of 1933 based on the best
information available to the Borrower as of the date of delivery thereof, and
presents fairly on a PRO FORMA basis the estimated financial position of
Borrower and its consolidated Subsidiaries as at March 31, 1999, assuming that
the events specified in the preceding sentence had actually occurred at such
date.
(b The audited combined consolidated balance sheets of the Borrower
and Dina Autobuses, S.A. de C.V. as at December 31, 1996, December 31, 1997 and
December 31, 1998, and the related consolidated statements of income and of cash
flows for the fiscal years ended on such dates, reported on by and accompanied
by an unqualified report (other than with respect to the financial statements
for the fiscal year ended December 31, 1998 as set forth in such report) from
Arthur Andersen LLP, present fairly the combined consolidated financial
condition of the Borrower and Dina Autobuses, S.A. de C.V. as at such date, and
the combined consolidated results of its operations and its combined
consolidated cash flows for the respective fiscal years then ended. The
unaudited combined consolidated balance sheet of the Borrower and Dina
Autobuses, S.A. de C.V. as at March 31, 1999, and the related unaudited combined
consolidated statements of income and cash flows for the three-month period
ended on such date, present fairly the combined consolidated financial condition
of the Borrower as at such date, and the combined consolidated results of its
operations and its consolidated cash flows for the three-month period then ended
(subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the aforementioned firm of accountants and disclosed
therein). Except as set forth on Schedule 4.1(b), Parent, the Borrower and its
Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including, without limitation, any interest
rate or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, that are not reflected in the most recent financial
statements referred to in this paragraph. Except as set forth on Schedule
4.1(b),
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42
during the period from December 31, 1998 to and including the date hereof
there has been no Disposition by Parent or the Borrower or any of its
Subsidiaries of any material part of its business or property other than
pursuant to the Restructuring.
4.2 NO CHANGE. Since December 31, 1998 there has been no development
or event that has had or could reasonably be expected to have a Material Adverse
Effect.
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of Parent, the
Borrower and its Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification except where the failure to obtain such
qualifications could not reasonably be expected to have a Material Adverse
Effect and (d) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrower, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrower, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the Restructuring, the Refinancing, the Purchase and the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i)
consents, authorizations, filings and notices described in Schedule 4.4, which
consents, authorizations, filings and notices have been obtained or made and are
in full force and effect and (ii) the filings referred to in Section 4.19. Each
Loan Document has been duly executed and delivered on behalf of each Loan Party
party thereto. This Agreement constitutes, and each other Loan Document upon
execution will constitute, a legal, valid and binding obligation of each Loan
Party party thereto, enforceable against each such Loan Party in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 NO LEGAL BAR. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of Parent, the Borrower or any
of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents). No Requirement of Law or
Contractual Obligation applicable to the
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43
Borrower or any of its Subsidiaries could reasonably be expected to have a
Material Adverse Effect.
4.6 LITIGATION. Except as set forth on Schedule 4.6, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of Parent or the Borrower, threatened
by or against Parent, the Borrower or any of its Subsidiaries or against any of
their respective properties or revenues (a) with respect to any of the Loan
Documents or any of the transactions contemplated hereby or thereby, or (b) that
could reasonably be expected to have a Material Adverse Effect.
4.7 NO DEFAULT. Neither Parent, the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect that could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8 OWNERSHIP OF PROPERTY; LIENS. Each of Parent, the Borrower and
its Subsidiaries has title in fee simple to, or a valid leasehold interest in,
all its real property, and good title to, or a valid leasehold interest in, all
its other property, and none of such property or leasehold interest is subject
to any Lien except as permitted by Section 7.3.
4.9 INTELLECTUAL PROPERTY. Parent, the Borrower and each of its
Subsidiaries owns, or has the right to use, all Intellectual Property necessary
for the conduct of its business as currently conducted. Except as set forth on
Schedule 4.9, no material claim has been asserted against Parent, the Borrower
or any of its Subsidiaries or to the best of the Borrower's knowledge any other
Person and is pending by any Person challenging or questioning the use of any
Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does Parent or the Borrower know of any valid basis for any such
claim. The use of Intellectual Property by Parent, the Borrower and its
Subsidiaries to such entities' best knowledge does not infringe on the rights of
any Person in any material respect.
4.10 TAXES. Each of Parent, the Borrower and each of its
Subsidiaries has filed or caused to be filed all Federal, state and other
material tax returns that are required to be filed and has paid all taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on it or
any of its property by any Governmental Authority (other than any the amount or
validity of that are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of Parent, the Borrower or its Subsidiaries, as the case
may be); no tax Lien has been filed, and, to the knowledge of Parent and the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.
4.11 FEDERAL REGULATIONS. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose that violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each
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44
Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.
4.12 LABOR MATTERS. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against Parent, the Borrower or any of its
Subsidiaries pending or, to the knowledge of Parent or the Borrower, threatened;
(b) hours worked by and payment made to employees of Parent, the Borrower and
its Subsidiaries have not been in violation of the Fair Labor Standards Act or
any other applicable Requirement of Law dealing with such matters; (c) all
material payments due from Parent, the Borrower or any of its Subsidiaries on
account of employee health and welfare insurance have been paid or accrued as a
liability on the books of Parent, the Borrower or the relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan that
has resulted or could reasonably be expected to result in a material liability
under ERISA that has not been satisfied in full, and neither the Borrower nor
any Commonly Controlled Entity would become subject to any material liability
under ERISA if the Borrower or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made.
No such Multiemployer Plan is in Reorganization or Insolvent.
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law that limits its
ability to incur Indebtedness.
4.15 SUBSIDIARIES. The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of the Borrower at the date hereof. The only
Subsidiaries of the Parent are the Borrower and its Subsidiaries and MCI
Flexible, Inc.
4.16 USE OF PROCEEDS. The proceeds of the Term Loans shall be used
to finance a portion of the Refinancing and to pay related fees and expenses.
The proceeds of the Revolving Loans and the Swingline Loans, and the Letters of
Credit, shall be used for general corporate purposes, including Permitted
Acquisitions.
4.17 ENVIRONMENTAL MATTERS. Except as, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect:
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45
(a) neither Parent, the Borrower nor any of its Subsidiaries, and to
the best of their knowledge, no other Person, has stored or disposed of any
Materials of Environmental Concern on, beneath or adjacent to the
facilities and properties owned, leased or operated by Parent, the Borrower
or any of its Subsidiaries (the "PROPERTIES"), except for inventories of
such materials to be used, and wastes generated therefrom, in the ordinary
course of business of Parent, the Borrower or any of its Subsidiaries
(which inventories and wastes, if any, were and are stored or disposed of
in accordance with applicable Environmental Laws and in a manner such that
there has been no release of any such Materials of Environmental Concern
into the environment);
(b) neither Parent, the Borrower nor any of its Subsidiaries has
received or is aware of any written notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental
matters or compliance with Environmental Laws with regard to any of the
Properties or the business operated by Parent, the Borrower or any of its
Subsidiaries (the "BUSINESS"), nor does Parent or the Borrower have
knowledge or reason to believe that any such notice will be received or is
being threatened;
(c) Materials of Environmental Concern have not been transported or
disposed of from, or generated, treated or stored at, the Properties in
violation of, or in a manner or to a location that could give rise to
liability under, any Environmental Law;
(d) no judicial proceeding or governmental or administrative action
is pending or, to the knowledge of Parent and the Borrower, threatened,
under any Environmental Law to which Parent, the Borrower or any Subsidiary
is or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect
to the Properties or the Business;
(e) there has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related
to the operations of Parent, the Borrower or any Subsidiary in connection
with the Properties or otherwise in connection with the Business, in
violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws;
(f) the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or
about the Properties or violation of any Environmental Law with respect to
the Properties or the Business; and
(g) neither Parent, the Borrower nor any of its Subsidiaries has
assumed any liability of any other Person under Environmental Laws.
4.18 ACCURACY OF INFORMATION, ETC. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other written document, certificate or statement
furnished to the Administrative Agent or the Lenders or
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46
any of them, by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished (or, in the case of the Confidential Information Memorandum,
as of the Closing Date), any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements contained herein or
therein not misleading. The projections and PRO FORMA financial information
contained in the materials referenced above are based upon good faith
estimates and assumptions believed by management of the Borrower to be
reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as
fact and that actual results during the period or periods covered by such
financial information may differ from the projected results set forth therein
by a material amount. As of the date hereof, the representations and
warranties contained in the Investment Agreement are true and correct in all
material respects. There is no fact known to any Loan Party that could
reasonably be expected to have a Material Adverse Effect that has not been
expressly disclosed herein, in the other Loan Documents, in the Confidential
Information Memorandum or in any other documents, certificates and statements
furnished to the Administrative Agent and the Lenders for use in connection
with the transactions contemplated hereby and by the other Loan Documents.
4.19 SECURITY DOCUMENTS. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, and
in the case of the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements in appropriate form are filed in the
offices specified on Schedule 4.19(a), the Guarantee and Collateral Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Guarantee and
Collateral Agreement), in each case prior and superior in right to any other
Person, except for the Liens set forth on Schedule 7.3(f); PROVIDED, however
that, additional filings and recordations may be necessary with respect to
Collateral consisting of Intellectual Property (i) acquired after the date
hereof, and (ii) Intellectual Property which is registered or pending for
registration in any foreign intellectual property registry, and the registration
of all unregistered copyrights, along with appropriate recordation of Lenders'
security interest in the U.S. Copyright Office may also be required to make the
security interest effective against subsequent transferees of such copyright.
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on
Schedule 4.19(b), each such Mortgage shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the Loan Parties in
the Mortgaged Properties and the proceeds thereof, as security for the
Obligations (as defined in the relevant Mortgage), in each case prior and
superior in right to any other Person.
(c) Each of the Pledge Agreements is effective to create in favor of
the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and proceeds
thereof. When the actions specified in
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each Pledge Agreement are taken, each Pledge Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and
interest of the pledgors thereunder in such Collateral and the proceeds
thereof, as security for the Obligations, in each case prior and superior in
right to any other Person.
4.20 SOLVENCY. Each Loan Party is, and after giving effect to the
Restructuring, the Refinancing, the Purchase and the incurrence of all
Indebtedness and obligations being incurred in connection herewith and therewith
(including, without limitation, the Senior Subordinated Notes) will be Solvent.
4.21 SENIOR INDEBTEDNESS. The Obligations constitute "Senior
Indebtedness" of the Borrower under and as defined in the Senior Subordinated
Note Indenture. The obligations of each Subsidiary Guarantor under the
Guarantee and Collateral Agreement constitute "Guarantor Senior Indebtedness" of
such Subsidiary Guarantor under and as defined in the Senior Subordinated Note
Indenture.
4.22 REGULATION H. No Mortgage encumbers improved real property that
is located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act
of 1968.
4.23 YEAR 2000 MATTERS. Any reprogramming required to permit the
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by Parent, the Borrower or any of
its Subsidiaries or used or relied upon in the conduct of their business
(including any such systems and other equipment supplied by others or with which
the computer systems of Parent, the Borrower or any of its Subsidiaries
interface), and the testing of all such systems and other equipment as so
reprogrammed, will be completed in all material respects by October 1, 1999;
PROVIDED, that, with respect to any such computer systems with which the
computer systems of Parent, the Borrower or any of its Subsidiaries interface,
the Borrower shall only be required to make prudent investigation of the year
2000 compliance of such systems inasmuch as such compliance affects the systems
of Parent, Borrower or any of its Subsidiaries and shall be required to take
reasonable steps to ensure that any failure to be in such compliance will not
adversely affect in any material respect Parent, Borrower or any of its
Subsidiaries. The costs to Parent, the Borrower and its Subsidiaries that have
not been incurred as of the date hereof for such reprogramming and testing and
for the other reasonably foreseeable consequences to them of any improper
functioning of other computer systems and equipment containing embedded
microchips due to the occurrence of the year 2000 could not reasonably be
expected to result in a Default or Event of Default or to have a Material
Adverse Effect. Except for any reprogramming referred to above, the computer
systems of Parent, the Borrower and its Subsidiaries are and, with ordinary
course upgrading and maintenance, will continue for the term of this Agreement
to be, sufficient for the conduct of their business as currently conducted.
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4.24 INACTIVE SUBSIDIARIES. The aggregate amount of assets owned by
Inactive Subsidiaries and the aggregate amount of annual revenues of Inactive
Subsidiaries, in each case, is not in excess of $100,000.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) CREDIT AGREEMENT; GUARANTEE AND COLLATERAL AGREEMENT; PLEDGE
AGREEMENTS. The Administrative Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of Parent
and the Borrower, (ii) the Guarantee and Collateral Agreement, executed and
delivered by a duly authorized officer of the Borrower and each Subsidiary
Guarantor and (iii) each of the Pledge Agreements, duly executed and
delivered by the parties thereto.
(b) CONSUMMATION OF TRANSACTIONS, ETC. The following transactions
shall have been consummated, in each case on terms and conditions
reasonably satisfactory to the Lenders:
(i) The corporate restructuring of Grupo Dina comprised of the
transactions set forth on Schedule 5.1(b)(i) (the "RESTRUCTURING")
shall have been consummated in accordance with applicable law and on
terms and conditions consistent with the information previously
provided to the Administrative Agent and the Lenders. The
capitalization and structure of Grupo Dina and each Loan Party after
the Restructuring shall be consistent with the information previously
provided to the Administrative Agent and the Lenders.
(ii) Certain existing Indebtedness of Grupo Dina set forth on
Schedule 5.1(b)(ii) shall have been repaid in full and retired, the
Borrower's existing credit facility with The First National Bank of
Chicago shall have been repaid in full and the commitments thereunder
terminated, the Borrower's Senior Notes held by Prudential and certain
other holders shall have been repaid in full and retired, and all the
existing Indebtedness of Dina Autobuses, S.A. de C.V. shall have been
repaid in full and the commitments thereunder terminated
(collectively, the "REFINANCING"). Any indebtedness of Grupo Dina,
Parent, the Borrower or any of their Subsidiaries to remain
outstanding after the Closing Date shall be satisfactory to the
Administrative Agent.
(iii) Parent shall have received at least $175,000,000 from the
proceeds of a capital contribution to Parent by MCII Holdings with the
proceeds of the issuance by MCII Holdings to funds managed by the
Sponsor and certain other investors satisfactory to the Administrative
Agent of $125,000,000 of common
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49
equity and a $50,000,000 senior note (the "SENIOR NOTE") and all of
such proceeds shall have been contributed by Parent to the common
equity of the Borrower (the "PURCHASE").
(iv) the Borrower shall have received at least $150,000,000 in
gross cash proceeds from the issuance of the Senior Subordinated
Notes.
(c) PRO FORMA BALANCE SHEET; FINANCIAL STATEMENTS. The Lenders shall
have received (i) the Pro Forma Balance Sheet, (ii) audited consolidated
financial statements of the Borrower for the 1996, 1997 and 1998 fiscal
years and (iii) unaudited interim consolidated financial statements of the
Borrower for each quarterly period ended subsequent to the date of the
latest applicable financial statements delivered pursuant to clause (ii) of
this paragraph as to which such financial statements are available, and
such financial statements shall not reflect any material adverse change in
the consolidated financial condition of the Borrower or Grupo Dina, as
reflected in the financial statements or projections contained in the
Confidential Information Memorandum.
(d) APPROVALS. All governmental and third party approvals (including
landlords' and other consents) necessary in connection with the
Restructuring, the Refinancing, except as set forth on Schedule 4.4, the
Purchase, the continuing operations of Parent, the Borrower and its
Subsidiaries and the transactions contemplated hereby shall have been
obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by
any competent authority that would restrain, prevent or otherwise impose
adverse conditions on the Restructuring, the Refinancing, the Purchase or
the financing contemplated hereby.
(e) LIEN SEARCHES. The Administrative Agent shall have received the
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located, and such search shall reveal no Liens on
any of the assets of the Borrower or its Subsidiaries except for Liens
permitted by Section 7.3 and those Liens which will be released on the
Closing Date.
(f) CLOSING CERTIFICATE. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit C, with
appropriate insertions and attachments.
(g) LEGAL OPINIONS. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of Skadden, Arps, Slate, Meagher & Flom
LLP, counsel to the Borrower and its Subsidiaries, substantially in
the form of Exhibit F-1;
(ii) the legal opinion of Timothy Nalepka, general counsel of
the Borrower and its Subsidiaries, substantially in the form of
Exhibit F-2;
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50
(iii) to the extent consented to by the relevant counsel, each
legal opinion, if any, delivered in connection with the Investment
Agreement or in connection with the Restructuring, accompanied by a
reliance letter in favor of the Lenders; and
(iv) the legal opinion of such other special and local counsel
as may be required by the Administrative Agent including, without
limitation, in any jurisdiction where any Mortgaged Property is
located.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(h) PLEDGED STOCK; STOCK POWERS. The Administrative Agent shall have
received the certificates representing the shares of Capital Stock pledged
pursuant to the Guarantee and Collateral Agreement and, if relevant, the
Pledge Agreements, together, if relevant, with an undated stock power for
each such certificate executed in blank by a duly authorized officer of the
pledgor thereof.
(i) FILINGS, REGISTRATIONS AND RECORDINGS. Each document (including,
without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 7.3), shall be in proper form for filing,
registration or recordation.
(j) MORTGAGES, ETC. (i) The Administrative Agent shall have
received a Mortgage with respect to each Mortgaged Property, executed and
delivered by a duly authorized officer of each party thereto.
(ii) If requested by the Administrative Agent, the Administrative
Agent shall have received, and the title insurance company issuing the
policy referred to in clause (iii) below (the "TITLE INSURANCE COMPANY")
shall have received, maps or plats of an as-built survey of the sites of
the Mortgaged Properties certified to the Administrative Agent and the
Title Insurance Company in a manner satisfactory to them, dated a date
satisfactory to the Administrative Agent and the Title Insurance Company by
an independent professional licensed land surveyor satisfactory to the
Administrative Agent and the Title Insurance Company, which maps or plats
and the surveys on which they are based shall be made in accordance with
the Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992, and, without limiting
the generality of the foregoing, there shall be surveyed and shown on such
maps, plats or surveys the following: (A) the locations on such sites of
all the buildings, structures and other improvements and the established
building setback lines; (B) the lines of streets abutting the sites and
width thereof; (C) all access and other easements appurtenant to the sites;
(D) all roadways, paths, driveways, easements, encroachments and
overhanging
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51
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the sites or otherwise known to the
surveyor; (E) any encroachments on any adjoining property by the building
structures and improvements on the sites; (F) if the site is described as
being on a filed map, a legend relating the survey to said map; and (G) the
flood zone designations, if any, in which the Mortgaged Properties are
located.
(iii) The Administrative Agent shall have received in respect of each
Mortgaged Property a mortgagee's title insurance policy (or policies) or
marked up unconditional binder for such insurance. Each such policy shall
(A) be in an amount satisfactory to the Administrative Agent; (B) be issued
at ordinary rates; (C) insure that the Mortgage insured thereby creates a
valid first Lien on such Mortgaged Property free and clear of all defects
and encumbrances, except as disclosed therein; (D) name the Administrative
Agent for the benefit of the Lenders as the insured thereunder; (E) be in
the form of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or
equivalent policies); (F) contain such endorsements and affirmative
coverage as the Administrative Agent may reasonably request and (G) be
issued by title companies satisfactory to the Administrative Agent
(including any such title companies acting as co-insurers or reinsurers, at
the option of the Administrative Agent). The Administrative Agent shall
have received evidence satisfactory to it that all premiums in respect of
each such policy, all charges for mortgage recording tax, and all related
expenses, if any, have been paid.
(iv) If requested by the Administrative Agent, the Administrative
Agent shall have received (A) a policy of flood insurance that (1) covers
any parcel of improved real property that is encumbered by any Mortgage (2)
is written in an amount not less than the outstanding principal amount of
the indebtedness secured by such Mortgage that is reasonably allocable to
such real property or the maximum limit of coverage made available with
respect to the particular type of property under the National Flood
Insurance Act of 1968, whichever is less, and (3) has a term ending not
later than the maturity of the Indebtedness secured by such Mortgage and
(B) confirmation that the Borrower has received the notice required
pursuant to Section 208(e)(3) of Regulation H of the Board.
(v) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in clause (iii) above and a copy of
all other material documents affecting the Mortgaged Properties.
(k) SOLVENCY CERTIFICATE. The Administrative Agent shall have
received a solvency certificate from the chief accounting officer of the
Borrower.
(l) INSURANCE. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.2 of the
Guarantee and Collateral Agreement.
(m) CONSOLIDATED EBITDA. The Borrower shall have provided evidence,
including supporting calculations, satisfactory to the Administrative Agent
that Consolidated EBITDA of the Borrower for the latest twelve month period
prior to the
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52
Closing Date for which financial information is available shall equal
at least $105,000,000 (it being understood that the information provided
in the Offering Memorandum for the Senior Subordinated Notes shall be
sufficient to satisfy this requirement).
(n) BUSINESS PLAN. The Lenders shall have received a satisfactory
business plan for fiscal years 1999-2006 and a satisfactory written
analysis of the business and prospects of the Borrower and its Subsidiaries
for the period from the Closing Date through the final maturity of the Term
Loans (it being understood that the information provided in the
Confidential Information Memorandum shall be sufficient to satisfy this
requirement).
(o) PAYMENT OF FEES. The Lenders and the Administrative Agent
shall have received all fees required to be paid, and all expenses for
which invoices have been presented, on or before the Closing Date.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct on and as of such date as if made on and as of
such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Parent and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each of Parent and the Borrower shall and shall
cause each of its Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to the Administrative Agent and
each Lender:
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53
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in comparative
form the figures for the previous year, reported on without a "going
concern" or like qualification or exception, or qualification arising out
of the scope of the audit, by Arthur Andersen LLP or other independent
certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Administrative
Agent and each Lender (or, in the case of clause (h), to the relevant Lender):
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default under Section 7.1, except as specified in such
certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that, to the best of each such Responsible Officer's knowledge, each Loan
Party during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) in the case of quarterly or annual
financial statements, (x) a Compliance Certificate containing all
information necessary for determining compliance by Parent, the Borrower
and its Subsidiaries with the provisions of this Agreement referred to
therein as of the last day of the fiscal quarter or fiscal year of the
Borrower, as the case may be, and (y) to the extent not previously
disclosed to the Administrative Agent, a listing of any county or state
within the United States where any Loan Party keeps inventory or equipment
and of any Intellectual Property acquired by any Loan Party since the date
of the most recent list
<PAGE>
54
delivered pursuant to this clause (y) (or, in the case of the first such
list so delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 45 days
after the end of each fiscal year of the Borrower, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of the
following fiscal year, and the related consolidated statements of projected
cash flow, projected changes in financial position and projected income)
(collectively, the "PROJECTIONS"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such
Projections are based on reasonable estimates, information and assumptions;
(d) within 45 days after the end of each fiscal quarter of the
Borrower, a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the portion
of the Projections covering such periods and to the comparable periods of
the previous year;
(e) no later than 5 Business Days prior to the effectiveness thereof,
copies of substantially final drafts of any proposed amendment, supplement,
waiver or other modification with respect to the Senior Subordinated Note
Indenture or the Investment Agreement;
(f) within five days after the same are sent, copies of all financial
statements and reports that Parent or the Borrower sends to the holders of
any class of its debt securities or public equity securities and, within
five days after the same are filed, copies of all financial statements and
reports that Parent or the Borrower may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(g) promptly upon receipt thereof, copies of all management letters
received by Parent, the Borrower or any of their Subsidiaries from its
independent certified public accountants; and
(h) promptly, such additional financial and other information with
respect to Parent, Borrower and its Subsidiaries as any Lender may from
time to time reasonably request.
6.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
Parent, the Borrower or its Subsidiaries, as the case may be, except to the
extent that the failure to so pay, discharge or otherwise satisfy could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
<PAGE>
55
6.4 MAINTENANCE OF EXISTENCE; COMPLIANCE. (a)(i) Continue to
engage in business of the same general type as now conducted by it, (ii)
preserve, renew and keep in full force and effect its corporate existence and
(iii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise permitted by Section 7.4 and except, in the case of
clause (iii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted and (b) maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts with self-insurance and against at least such risks (but including in
any event public liability, product liability and business interruption) as are
usually insured against in the same general area by companies engaged in the
same or a similar business.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. (a)
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of any Lender to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of Parent,
the Borrower and its Subsidiaries with officers and employees of Parent, the
Borrower and its Subsidiaries and with its independent certified public
accountants; PROVIDED, that the Borrower shall be given reasonable opportunity
to participate in such discussions.
6.7 NOTICES. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of Parent, the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding that may exist at any time between
Parent, the Borrower or any of its Subsidiaries and any Governmental
Authority, that in either case, if not cured or if adversely determined, as
the case may be, could reasonably be expected to have a Material Adverse
Effect;
(c) any litigation or proceeding affecting Parent, the Borrower or
any of its Subsidiaries in which the amount involved is $5,000,000 or more
and not covered by insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to
make any required contribution to a Plan, the
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56
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking
of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of,
any Plan; and
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action Parent, the Borrower or the relevant Subsidiary
proposes to take with respect thereto.
6.8 ENVIRONMENTAL LAWS. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and use their best efforts to ensure that
all tenants and subtenants obtain and comply in all material respects with and
maintain, any and all material licenses, approvals, notifications, registrations
or permits required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 ADDITIONAL COLLATERAL, ETC. (a) With respect to any property
acquired after the Closing Date by Parent, the Borrower or any of its
Subsidiaries (other than (x) any property described in paragraph (b), (c) or (d)
below, (y) any property subject to a Lien expressly permitted by Section 7.3(g)
and (z) property acquired by any Excluded Foreign Subsidiary) as to which the
Administrative Agent, for the benefit of the Lenders, does not have a perfected
Lien, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or such other documents as
the Administrative Agent deems necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such property and (ii) take all actions reasonably necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in such property, including without limitation,
the filing of Uniform Commercial Code financing statements in such jurisdictions
as may be reasonably required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $1,000,000 acquired after
the Closing Date by Parent, the Borrower or any of its Domestic Subsidiaries and
with respect to either of the properties described in Section 7.2(h) upon the
repayment of the Indebtedness owing with respect thereto as described in Section
7.2(h) (other than (y) any such real property subject to a Lien expressly
permitted by Section 7.3(g) and (z) real property acquired by any Excluded
Foreign Subsidiary), promptly (i) execute and deliver a first priority Mortgage,
in favor of the Administrative Agent, for the benefit
<PAGE>
57
of the Lenders, covering such real property, (ii) if requested by the
Administrative Agent, provide the Lenders with (x) title and extended
coverage insurance covering such real property in an amount at least equal to
the purchase price of such real property (or such other amount as shall be
reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents
or estoppels reasonably deemed necessary or advisable by the Administrative
Agent in connection with such mortgage or deed of trust, each of the
foregoing in form and substance reasonably satisfactory to the Administrative
Agent and (iii) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Foreign Subsidiary) created or acquired after the Closing Date by Parent (which,
for the purposes of this paragraph (c), shall include any existing Subsidiary
that ceases to be an Excluded Foreign Subsidiary), the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary that is owned by Parent, the Borrower or
any of its Subsidiaries, (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of Parent,
the Borrower or such Subsidiary, as the case may be, (iii) cause such new
Subsidiary (A) to become a party to the Guarantee and Collateral Agreement and
(B) to take such actions reasonably necessary or advisable to grant to the
Administrative Agent for the benefit of the Lenders a perfected first priority
security interest in the Collateral described in the Guarantee and Collateral
Agreement with respect to such new Subsidiary, including, without limitation,
the filing of Uniform Commercial Code financing statements in such jurisdictions
as may be required by the Guarantee and Collateral Agreement or by law or as may
be reasonably requested by the Administrative Agent, and (iv) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by Parent, the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement or deliver a pledge
agreement under the laws of the jurisdiction of organization of such Excluded
Foreign Subsidiary as the Administrative Agent deems necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in the Capital Stock of such new Excluded
Foreign Subsidiary that is owned by Parent, the Borrower or any of its
Subsidiaries other than Excluded Foreign Subsidiaries (provided that in no event
shall more than 65% of the total outstanding voting Capital Stock of any such
new Excluded Foreign Subsidiary be required to be so pledged), (ii) deliver to
the Administrative Agent the certificates representing such Capital Stock, if
any, together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of Parent, the Borrower or such Subsidiary, as the case
may be, and/or take such other action as may be reasonably necessary or, in the
reasonable opinion of the Administrative Agent, desirable to perfect the
Administrative Agent's
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58
security interest therein, and (iii) if requested by the Administrative
Agent, deliver to the Administrative Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and
from counsel, reasonably satisfactory to the Administrative Agent.
6.10 PERMITTED ACQUISITIONS. With respect to any such Acquisition
involving a Purchase Price greater than or equal to $10,000,000, deliver to the
Administrative Agent, not less than 10 Business Days prior to the closing of any
proposed Acquisition, each of the following, in form and substance satisfactory
to the Administrative Agent: (i) a description of the property, assets and/or
equity interest being purchased, in reasonable detail; (ii) a term sheet or
other description setting forth the essential terms and the basic structure of
the proposed Acquisition (including, Purchase Price and method and structure of
payment; in this regard, if the Purchase Price includes a note or other right to
payment the Borrower shall detail the economic terms thereof and state in
writing the balance sheet amount that will be required to be recorded in
connection with such consideration; if the proposed Acquisition is approved, the
amount of such consideration for purposes of the restrictions set forth in
Section 7.8(f) shall be such balance sheet amount); (iii) a summary of the due
diligence materials reviewed by the Borrower in connection with such proposed
Acquisition and the results of such due diligence investigation; (iv) projected
statements of income for the entity that is being acquired (or the assets, if an
asset Acquisition) for at least a two-year period following such Acquisition
(including a summary of assumptions or pro forma adjustments for such
projections); (v) historical financial statements for the entity that is being
acquired (or the assets, if an asset Acquisition) (including balance sheets and
statements of income, retained earnings and cash flows for at least a two-year
period prior to such Acquisition); and (vi) confirmation, supported by detailed
calculations, that the Borrower and its Subsidiaries would have been in
compliance with all the covenants in Section 7.1 for the fiscal quarter ending
immediately prior to the consummation of such Permitted Acquisition, with such
compliance determined on a pro forma basis as if such Permitted Acquisition had
been consummated on the first day of the applicable financial covenant testing
period ending on the last day of such fiscal quarter.
SECTION 7. NEGATIVE COVENANTS
Parent and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit remains
outstanding or any Loan or other amount is owing to any Lender or the
Administrative Agent hereunder, each of Parent and the Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly:
7.1 FINANCIAL CONDITION COVENANTS.
(a) CONSOLIDATED TOTAL LEVERAGE RATIO. Permit the Consolidated Total
Leverage Ratio as at the last day of any period of four consecutive fiscal
quarters of the Borrower (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending during any period set forth below to
exceed the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
CONSOLIDATED TOTAL
PERIOD LEVERAGE RATIO
------ ------------------
<S> <C>
<PAGE>
59
September 30, 1999 through December 31, 2000 5.25 to 1.0
March 31, 2001 through September 30, 2001 5.00 to 1.0
December 31, 2001 through September 30, 2002 4.75 to 1.0
December 31, 2002 through September 30, 2003 4.50 to 1.0
December 31, 2003 through June 30, 2004 4.25 to 1.0
September 30, 2004 and thereafter 4.00 to 1.0
</TABLE>
; PROVIDED, that for the purposes of determining the ratio described above,
for the fiscal quarters of the Borrower ending prior to the Closing Date
Consolidated EBITDA shall be as set forth on Schedule 1.1C.
(b) CONSOLIDATED SENIOR LEVERAGE RATIO. Permit the Consolidated
Senior Leverage Ratio as at the last day of any period of four consecutive
fiscal quarters of the Borrower (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending during any period set forth below to
exceed the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
CONSOLIDATED SENIOR
PERIOD LEVERAGE RATIO
------ -------------------
<S> <C>
September 30, 1999 through December 31, 2000 3.50 to 1.0
March 31, 2001 through September 30, 2002 3.25 to 1.0
December 31, 2002 through September 30, 2003 3.00 to 1.0
December 31, 2003 through September 30, 2004 2.75 to 1.0
December 31, 2004 and thereafter 2.50 to 1.0
</TABLE>
; PROVIDED, that for the purposes of determining the ratio described above, for
the fiscal quarters of the Borrower ending prior to the Closing Date
Consolidated EBITDA shall be as set forth on Schedule 1.1C.
(c) CONSOLIDATED INTEREST COVERAGE RATIO. Permit the Consolidated
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending during any period set forth below to be less than the ratio
set forth below opposite such period:
<TABLE>
<CAPTION>
CONSOLIDATED INTEREST
PERIOD COVERAGE RATIO
------ -------------------
<S> <C>
September 30, 1999 through September 30, 2000 2.00 to 1.0
December 31, 2000 through September 30, 2001 2.15 to 1.0
December 31, 2001 through September 30, 2002 2.25 to 1.0
December 31, 2002 through September 30, 2003 2.35 to 1.0
December 31, 2003 and thereafter 2.50 to 1.0
</TABLE>
; PROVIDED, that for the purposes of determining the ratio described above, for
the fiscal quarters of the Borrower ending prior to the Closing Date
Consolidated EBITDA and Consolidated Interest Expense shall be as set forth on
Schedule 1.1C.
<PAGE>
60
(d) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending during any period set forth below to be
less than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
CONSOLIDATED FIXED
PERIOD CHARGE COVERAGE RATIO
------ ---------------------
<S> <C>
September 30, 1999 through December 31, 2000 1.10 to 1.0
March 31, 2001 through September 30, 2002 1.15 to 1.0
December 31, 2002 through June 30, 2003 1.30 to 1.0
September 30, 2003 and thereafter 1.50 to 1.0
</TABLE>
; PROVIDED, that for the purposes of determining the ratio described above,
for the fiscal quarters of the Borrower ending prior to the Closing Date
Consolidated EBITDA, Consolidated Fixed Charges and Capital Expenditures
shall be as set forth on Schedule 1.1C.
7.2 INDEBTEDNESS. Create, incur, assume or suffer to exist (in each
case, to "INCUR") any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any Wholly
Owned Subsidiary to the Borrower or any other Subsidiary; PROVIDED, that on
the date of Incurrence thereof the aggregate amount of Indebtedness of any
Wholly Owned Subsidiary which is not a Wholly Owned Subsidiary Guarantor to
the Borrower or any other Subsidiary (any such Indebtedness, "EXCEPTED
INDEBTEDNESS"), when combined (but without duplication) with the aggregate
then outstanding amount of Excepted Guarantee Obligations and the aggregate
then outstanding amount of Excepted Investments, shall not exceed 15% of
consolidated total assets of the Borrower (as determined in accordance with
GAAP) as shown on the most recent financial statements delivered pursuant
to Section 6.1; PROVIDED, FURTHER that no such Indebtedness may be Incurred
by any Inactive Subsidiary;
(c) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $10,000,000 at any one time outstanding;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions
thereof (without shortening the maturity or increasing the principal amount
thereof, including accrued and unpaid interest thereon and customary fees,
expenses and costs incurred in connection with such refinancing
indebtedness);
<PAGE>
61
(e) Guarantee Obligations Incurred in the ordinary course of business
by the Borrower or any of its Subsidiaries of obligations of any Wholly
Owned Subsidiary; PROVIDED, that on the date of Incurrence thereof the
aggregate amount of any such Guarantee Obligations Incurred by the Borrower
or a Wholly Owned Subsidiary Guarantor in respect of the obligations of any
Wholly Owned Subsidiary which is not a Wholly Owned Subsidiary Guarantor
(any such Guarantees, "EXCEPTED GUARANTEE OBLIGATIONS"), when combined (but
without duplication) with the aggregate then outstanding amount of Excepted
Indebtedness and the aggregate then outstanding amount of Excepted
Investments, shall not exceed 15% of consolidated total assets of the
Borrower (as determined in accordance with GAAP) as shown on the most
recent financial statements delivered pursuant to Section 6.1;
(f) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes and (ii) Guarantee Obligations of any Subsidiary
Guarantor in respect of such Indebtedness, PROVIDED that such Guarantee
Obligations are subordinated to the same extent as the obligations of the
Borrower in respect of the Senior Subordinated Notes;
(g) Indebtedness of the Borrower to any of its Subsidiaries incurred
in connection with the purchase of accounts receivable and related assets
by the Borrower from any such Subsidiary which assets are subsequently
conveyed by the Borrower to a Securitization Entity in a Qualified
Securitization Transaction and which Indebtedness is pledged to the
Administrative Agent for the benefit of the Lenders to secure the
Obligations;
(h) Indebtedness in an aggregate principal amount not exceeding
$12,000,000 Incurred to construct facilities in Louisville, Kentucky and
Indebtedness in an aggregate principal amount not exceeding $6,000,000
Incurred to construct facilities in Orlando, Florida; and
(i) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and all
Subsidiaries) at any one time outstanding not to exceed the sum of (i)
$10,000,000 and (ii) the then unused Permitted Expenditure Amount.
7.3 LIENS. Create, incur, assume or suffer to exist any Lien upon
any of its property or revenues, whether now owned or hereafter acquired, except
for:
(a) Liens for taxes not yet due or that are being contested in good
faith by appropriate proceedings, PROVIDED that adequate reserves with
respect thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business that are not
overdue for a period of more than 30 days or that are being contested in
good faith by appropriate proceedings;
<PAGE>
62
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the
aggregate, are not substantial in amount and that do not in any case
materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(d), PROVIDED that no such
Lien is spread to cover any additional property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) to finance the acquisition
of fixed or capital assets, PROVIDED that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any property other than
the property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into by
the Borrower or any other Subsidiary in the ordinary course of its business
and covering only the assets so leased;
(j) interests in accounts receivable and related assets conveyed by
the Borrower or any of its Subsidiaries in connection with any Qualified
Securitization Transaction; and
(k) Liens securing the Indebtedness described in Section 7.2(h) only
on the facilities described therein.
7.4 FUNDAMENTAL CHANGES. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of, all or substantially all of its
property or business, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving corporation) or with or into any Wholly Owned Subsidiary
Guarantor (PROVIDED that the Wholly Owned Subsidiary Guarantor shall be the
continuing or surviving corporation);
<PAGE>
63
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Wholly Owned Subsidiary Guarantor;
(c) any Disposition expressly permitted pursuant to Section 7.5; and
(d) in consummating any Permitted Acquisition, any Person may be
merged or consolidated with or into the Borrower (PROVIDED that the
Borrower shall be the continuing or surviving corporation) or with or into
any Wholly Owned Subsidiary Guarantor (PROVIDED that either the Wholly
Owned Subsidiary Guarantor shall be the continuing or surviving corporation
or such Person shall be the continuing or surviving corporation and
contemporaneously therewith such Person shall comply with the requirements
set forth in Section 6.9(c)).
7.5 DISPOSITION OF PROPERTY. Dispose of any of its property
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person, except:
(a) the Disposition of obsolete or worn out property or assets no
longer useful in the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 7.4(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor;
(e) sales of Cash Equivalents;
(f) sales of accounts receivable and related assets (including
contract rights) of the type specified in the definition of "Qualified
Securitization Transaction" to a Securitization Entity for the fair market
value thereof in connection with a Qualified Securitization Transaction;
(g) the licensing of intellectual property in the ordinary course of
business;
(h) leases or subleases of buses to third persons in the ordinary
course of business and consistent with past practice that do not interfere
in any material respect with the business of the Borrower or any of its
Subsidiaries;
(i) sales of Paper in the ordinary course of business and consistent
(including with respect to amount) with past practice; and
<PAGE>
64
(j) the Disposition of other property having a fair market value not
to exceed $5,000,000 in the aggregate for any fiscal year of the Borrower.
7.6 RESTRICTED PAYMENTS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of Parent, the Borrower or any Subsidiary,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Parent, the Borrower or any Subsidiary (collectively, "Restricted
Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the Borrower or
any Wholly Owned Subsidiary Guarantor;
(b) so long as no Default or Event of Default shall have occurred and
be continuing, the Borrower may pay dividends to Parent to permit Parent to
(i) purchase Parent's common stock or common stock options from present or
former officers or employees of Parent, the Borrower or any Subsidiary upon
the death, disability or termination of employment of such officer or
employee, PROVIDED, that the aggregate amount of payments under this clause
(i) (net of any proceeds received by Parent and contributed to the Borrower
after the Closing Date in connection with resales of any common stock or
common stock options so purchased) shall not exceed $1,000,000 in any
fiscal year of the Borrower and (ii) pay management fees expressly
permitted by Section 7.10;
(c) the Borrower may pay dividends to Parent to permit Parent to (i)
pay corporate overhead expenses incurred in the ordinary course of business
and (ii) pay any taxes that are due and payable by Parent and the Borrower
as part of a consolidated group and make payments under the Tax Sharing
Agreement; and
(d) so long as no Default or Event of Default shall have occurred and
is continuing, in addition to the foregoing Restricted Payments, the
Borrower may pay dividends to Parent in an aggregate amount during the term
of this Agreement not to exceed the sum of (i) $3,500,000, (ii) any portion
of the Excess Cash Flow of the Borrower for fiscal years completed since
the Closing Date (including the 1999 fiscal year) which was not required to
be applied to the prepayment of the Term Loans and the reduction of the
Revolving Commitments pursuant to the provisions of Section 2.11(b) and
(iii) the then unused Permitted Expenditure Amount.
7.7 CAPITAL EXPENDITURES. Make or commit to make any Capital
Expenditure, except Capital Expenditures of the Borrower and its Subsidiaries in
the ordinary course of business not exceeding for any fiscal year of the
Borrower the amount set forth opposite such fiscal year below (the "BASE CAPEX
AMOUNT") PLUS the then unused Permitted Expenditure Amount:
<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
----------- ------
<S> <C>
<PAGE>
65
1999 $40,200,000
2000 $20,700,000
2001 $16,600,000
2002 $16,500,000
2003 $16,500,000
2004 $16,500,000
2005 $16,500,000
2006 $16,500,000
</TABLE>
; PROVIDED, that (i) any such amount of the Base CapEx Amount referred to above,
if not so expended in the fiscal year for which it is permitted, may be carried
over for expenditure in the next succeeding fiscal year and (ii) Capital
Expenditures made during any fiscal year shall be deemed made, FIRST, in respect
of the Base CapEx Amount permitted for such fiscal year as provided above and,
SECOND, in respect of any portion of the Base CapEx Amount carried over from the
prior fiscal year pursuant to subclause (i) above.
7.8 INVESTMENTS. Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other securities of, or any assets
constituting all or a material part of a business unit of, or make any other
investment in, any Person (all of the foregoing, "INVESTMENTS"), except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of Parent, the Borrower or any of
its Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses) in an
aggregate amount for Parent, the Borrower and its Subsidiaries not to
exceed $5,000,000 at any one time outstanding;
(e) Investments by Parent, the Borrower or any of its Subsidiaries in
the Borrower or any Person that, prior to such investment, is a Wholly
Owned Subsidiary; PROVIDED, that on the date of making such Investment the
aggregate amount of such Investments which may be made in any Wholly Owned
Subsidiary which is not a Wholly Owned Subsidiary Guarantor (any such
Investments, "EXCEPTED INVESTMENTS"), when combined (but without
duplication) with the aggregate then outstanding amount of Excepted
Indebtedness and the aggregate then outstanding amount of Excepted
Guarantee Obligations, shall not exceed 15% of consolidated total assets of
the Borrower (as determined in accordance with GAAP) as shown on the most
recent financial statements delivered pursuant to Section 6.1; PROVIDED,
FURTHER that no such Investments may be made in any Inactive Subsidiary;
(f) any Acquisition of any Person or business, either through the
purchase of the assets (including the goodwill) of such Person or business
or the purchase of 51% of the
<PAGE>
66
Capital Stock of such Person, if each of the following conditions is
satisfied: (i) the requirements of Section 6.10 have been satisfied with
respect to such Acquisition and the Borrower shall be in pro forma
compliance with Section 7.1 both before and after giving effect to such
Acquisition; (ii) no Default or Event of Default has occurred and is
continuing, or would occur after giving effect to such Acquisition;
(iii) the aggregate Purchase Prices of all such Acquisitions shall not
exceed $50,000,000; (iv) any such Acquisition shall have been approved
by the Board of Directors or such comparable governing body of the
Person or business being acquired and (v) if any such Acquisition is
structured as a merger with the Borrower or any of its Subsidiaries, the
Borrower or such Subsidiary shall be the continuing or surviving entity
(all such Acquisitions, "PERMITTED ACQUISITIONS");
(g) Investments in securities of trade debtors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade debtors or customers or in good
faith settlement of delinquent obligations of such trade debtors or
customers;
(h) Investments in Paper received by the Borrower or any of its
Subsidiaries as consideration in the ordinary course of business for the
sale or lease of buses permitted pursuant to this Agreement;
(i) Investments made by the Borrower or any of its Subsidiaries in
the form of any Capital Stock, bonds, notes, debentures, partnership or
joint venture interests or other securities that are issued by a third
party to the Borrower or any Subsidiary solely as partial consideration for
the consummation of a Disposition that is permitted pursuant to Section
7.5;
(j) any Indebtedness of the Borrower to any of its Subsidiaries
incurred in connection with the purchase of accounts receivable and related
assets by the Borrower from any such Subsidiary which assets are
subsequently conveyed by the Borrower to a Securitization Entity in a
Qualified Securitization Transaction so long as the Borrower complies with
the requirements of Section 7.2(g); and
(k) in addition to Investments otherwise expressly permitted by this
Section, Investments by the Borrower or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed during the term of this
Agreement the sum of $15,000,000 and the then unused Permitted Expenditure
Amount on the date upon which such Investment is made.
7.9 OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT INSTRUMENTS, ETC.
(a) Make or offer to make any payment, prepayment, repurchase or redemption of
or otherwise defease or segregate funds with respect to the Senior Subordinated
Notes (other than scheduled interest payments required to be made in cash), (b)
amend, modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the Senior
Subordinated Notes in a manner that would in the reasonable judgment of the
Administrative Agent be adverse to the interests of the Lenders, (c) designate
any Indebtedness (other than obligations of the Loan Parties pursuant to the
Loan Documents) as "Designated
<PAGE>
67
Senior Indebtedness" for the purposes of the Senior Subordinated Note
Indenture or (d) enter into any derivative transaction or similar transaction
obligating Parent, the Borrower or any of its Subsidiaries to make payments
to any other Person as a result of a change in market value of the Senior
Subordinated Notes.
7.10 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate (other than Parent, the Borrower or
any Wholly Owned Subsidiary Guarantor) unless such transaction is (a) otherwise
permitted under this Agreement and (b) upon fair and reasonable terms no less
favorable to Parent, the Borrower or such Subsidiary, as the case may be, than
it would obtain in a comparable arm's length transaction with a Person that is
not an Affiliate. Notwithstanding the foregoing, (a) transactions between or
among any of the Borrower, any of its Subsidiaries and any Securitization Entity
in connection with a Qualified Securitization Transaction shall be permitted,
provided that such transactions are not otherwise prohibited hereby, (b) so long
as no Default or Event of Default shall have occurred and is then continuing,
the Borrower and its Subsidiaries may pay to the Sponsor and its Control
Investment Affiliates or other Persons involved in the management of the
Borrower on the Closing Date fees and expenses pursuant to a management
agreement approved by the board of directors of the Borrower in an aggregate
amount not to exceed $2,000,000 in any fiscal year of the Borrower, (c)
transfers of component parts by the Borrower or any of its Domestic Subsidiaries
at such transferor's cost to Foreign Subsidiaries in the ordinary course of
business and consistent with past practice shall be permitted so long as such
transfers do not interfere in any material respect with the business of the
Borrower or any of such Domestic Subsidiaries, (d) the Borrower or any of its
Domestic Subsidiaries shall be permitted to perform certain services for or on
behalf of Foreign Subsidiaries in the ordinary course of business and consistent
with past practice, (e) transactions which do not satisfy the requirements of
the first sentence of this Section 7.10 and which result in de minimis losses to
the Borrower or the relevant Subsidiary shall be permitted and (f) the
transactions described on Schedule 7.10 shall be permitted.
7.11 SALES AND LEASEBACKS. Enter into any arrangement with any
Person providing for the leasing by Parent, the Borrower or any Subsidiary of
real or personal property that has been or is to be sold or transferred by
Parent, the Borrower or such Subsidiary to such Person or to any other Person to
whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of Parent, the Borrower or such Subsidiary,
except to the extent such sale or transfer is permitted by Section 7.5.
7.12 CHANGES IN FISCAL PERIODS. Permit the fiscal year of Parent or
the Borrower to end on a day other than December 31 or change Parent's or the
Borrower's method of determining fiscal quarters.
7.13 NEGATIVE PLEDGE CLAUSES. Enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of Parent,
the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property or revenues, whether now owned or
hereafter acquired, which constitutes collateral securing its obligations under
the Loan Documents to which it is a party other than (a) this Agreement and the
other Loan
<PAGE>
68
Documents, (b) any agreements governing any purchase money Liens or Capital
Lease Obligations otherwise permitted hereby (in which case, any prohibition
or limitation shall only be effective against the assets financed thereby),
(c) contracts to which any Person which is acquired pursuant to a Permitted
Acquisition is a party, including any instrument governing Indebtedness
acquired by the Borrower and its Subsidiaries in connection with such
Permitted Acquisition, which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person (including any Subsidiary of the
Person), so acquired and (d) customary restrictions with respect to a
Subsidiary of the Borrower pursuant to an agreement that has been entered
into for the sale or disposition of any Capital Stock or assets of such
Subsidiary, but only to the extent such encumbrance or restriction applies
only to the Capital Stock or assets being sold or otherwise disposed of.
7.14 CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS. Enter into or
suffer to exist or become effective any consensual encumbrance or restriction on
the ability of any Subsidiary of the Borrower to (a) pay dividends or make any
other distributions in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to the Borrower or any other Subsidiary of
the Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant
to an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary,
(iii) customary non-assignment provisions in leases or other agreements entered
into in the ordinary course of business and consistent with past practices, (iv)
customary restrictions in Capital Lease Obligations, security agreements or
mortgages securing Indebtedness of the Borrower or any of its Subsidiaries to
the extent such restrictions restrict the transfer of the property subject to
such Capital Lease Obligations, security agreements and mortgages, (v) customary
restrictions with respect to a Subsidiary of the Borrower pursuant to an
agreement that has been entered into for the sale or disposition of any Capital
Stock or assets of such Subsidiary, but only to the extent such encumbrance or
restriction applies only to the Capital Stock or assets being sold or otherwise
disposed of and (vi) contracts to which any Person which is acquired pursuant to
a Permitted Acquisition is a party, including any instrument governing
Indebtedness acquired by the Borrower and its Subsidiaries in connection with
such Permitted Acquisition, which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person (including any Subsidiary of the
Person), so acquired.
7.15 LINES OF BUSINESS. Enter into any business, either directly or
through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement or that are
reasonably related, reasonably similar or ancillary thereto.
7.16 AMENDMENTS TO INVESTMENT AGREEMENT. (a) Amend, supplement or
otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of
the indemnities and licenses furnished to the Borrower or any of its
Subsidiaries pursuant to the Investment Agreement or any other document
delivered by the Sponsor or any of its affiliates in connection therewith such
that after giving effect thereto such indemnities or licenses shall be
materially less
<PAGE>
69
favorable to the interests of the Loan Parties or the Lenders with respect
thereto or (b) otherwise amend, supplement or otherwise modify the terms and
conditions of the Investment Agreement or any such other documents except to
the extent that any such amendment, supplement or modification could not
reasonably be expected to have a Material Adverse Effect.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section
6.4(a) (with respect to Parent and the Borrower only), Section 6.7(a) or
Section 7 of this Agreement or (ii) an "Event of Default" under and as
defined in any Mortgage shall have occurred and be continuing; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days; or
(e) Parent, the Borrower or any of its Subsidiaries shall (i) default
in making any payment of any principal of any Indebtedness (including,
without limitation, any Guarantee Obligation, but excluding the Loans) on
the scheduled or original due date beyond the period of grace with respect
thereto; or (ii) default in making any payment of any interest on any such
Indebtedness beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in
the observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or (in the case of any such Indebtedness constituting a
Guarantee Obligation) to become payable; PROVIDED, that a default, event or
condition described in clause (i), (ii) or
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(iii) of this paragraph (e) shall not at any time constitute an Event of
Default unless, at such time, one or more defaults, events or conditions
of the type described in clauses (i), (ii) and (iii) of this paragraph
(e) shall have occurred and be continuing with respect to Indebtedness
the outstanding principal amount of which exceeds in the aggregate
$5,000,000; or
(f) (i) Parent, the Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or Parent, the
Borrower or any of its Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against Parent,
the Borrower or any of its Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above that (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall be commenced against Parent, the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets that results in the entry of an order
for any such relief that shall not have been vacated, discharged, or stayed
or bonded pending appeal within 60 days from the entry thereof; or (iv)
Parent, the Borrower or any of its Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
Parent, the Borrower or any of its Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
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(h) one or more judgments or decrees shall be entered against Parent,
the Borrower or any of its Subsidiaries involving in the aggregate a
liability (not paid or covered by insurance or indemnities as to which the
relevant insurance company or indemnitor has acknowledged coverage) of
$5,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from
the entry thereof; or
(i) any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and priority purported
to be created thereby; or
(j) the guarantee contained in Section 10 hereof or in Section 2 of
the Guarantee and Collateral Agreement shall cease, for any reason, to be
in full force and effect or any Loan Party or any Affiliate of any Loan
Party shall so assert; or
(k) (i) prior to an IPO, either (x) the Permitted Investors shall
cease to have the power to vote or direct the voting of securities having
at least 30% of the ordinary voting power for the election of directors of
MCII Holdings (determined on a fully diluted basis), (y) any "person" or
"group" (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) shall
become, or obtain rights (whether by means or warrants, options or
otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3
and 13(d)-5 under the Exchange Act), directly or indirectly, of a greater
percentage of the outstanding common stock of MCII Holdings than the
Permitted Investors or (z) the Permitted Investors shall, directly or
indirectly, Dispose of more than 25% of the aggregate amount of the Capital
Stock of MCII Holdings owned by the Permitted Investors on the Closing
Date; (ii) after consummation of an IPO, either (x) any "person" or "group"
shall become, or obtain rights (whether by means or warrants, options or
otherwise) to become, the "beneficial owner", directly or indirectly, of a
greater percentage of the outstanding common stock of MCII Holdings than
the Permitted Investors or (y) the Permitted Investors shall cease to have
the power to vote or direct the voting of securities having at least 20% of
the ordinary voting power for the election of directors of MCII Holdings
(determined on a fully diluted basis); (iii) the board of directors of MCII
Holdings shall cease to consist of a majority of Continuing Directors; (iv)
MCII Holdings shall cease to own and control, of record and beneficially,
directly, 100% of each class of outstanding Capital Stock of Parent free
and clear of all Liens; (v) Parent shall cease to own and control, of
record and beneficially, directly, 100% of each class of outstanding
Capital Stock of the Borrower free and clear of all Liens; or (vi) a
Specified Change of Control shall occur; or
(l) Parent shall (i) conduct, transact or otherwise engage in, or
commit to conduct, transact or otherwise engage in, any business or
operations other than those incidental to its ownership of the Capital
Stock of the Borrower and MCI Flexible, Inc. and the issuance of stock
options to management and directors in the ordinary course of business,
(ii) incur, create, assume or suffer to exist any Indebtedness or other
liabilities or financial
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72
obligations, except (w) nonconsensual obligations imposed by operation
of law, (x) pursuant to the Loan Documents to which it is a party, (y)
obligations with respect to its Capital Stock and (z) guarantees of the
Borrower=s obligations on the Closing Date under transactions permitted
under Section 7.5(i), or (iii) own, lease, manage or otherwise operate
any properties or assets (including cash (other than cash received in
connection with dividends made by the Borrower in accordance with
Section 7.6 pending application in the manner contemplated by said
Section) and Cash Equivalents) other than the ownership of shares of
Capital Stock of the Borrower and MCI Flexible, Inc.; or
(m) the Senior Subordinated Notes or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or the
obligations of the Subsidiary Guarantors under the Guarantee and Collateral
Agreement, as the case may be, as provided in the Senior Subordinated Note
Indenture, or any Loan Party, any Affiliate of any Loan Party shall so
assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Supermajority Revolving Facility Lenders,
the Administrative Agent may, or upon the request of the Supermajority Revolving
Facility Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Revolving Commitments to be terminated forthwith, whereupon the
Revolving Commitments shall immediately terminate; and (ii) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. With respect to all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cashcollateral account shall be applied
by the Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents. After
all such Letters of Credit shall have expired or been fully drawn upon, all
Reimbursement Obligations shall have been satisfied and all other obligations of
the Borrower hereunder and under the other Loan Documents shall have been paid
in full, the balance, if any, in such cash collateral account shall be returned
to the Borrower (or such other Person as may be lawfully entitled thereto).
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Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by the Borrower.
SECTION 9. THE AGENTS
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.
9.2 DELEGATION OF DUTIES. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys in-fact selected by it with reasonable care.
9.3 EXCULPATORY PROVISIONS. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any
instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel
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(including, without limitation, counsel to Parent or the Borrower),
independent accountants and other experts selected by the Administrative
Agent. The Administrative Agent may deem and treat the payee of any Note as
the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative
Agent. The Administrative Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required
Lenders (or, if so specified by this Agreement, all Lenders) as it deems
appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it
by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by
this Agreement, all Lenders), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
9.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender,
Parent or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); PROVIDED that unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
9.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property,
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condition (financial or otherwise), prospects or creditworthiness of any Loan
Party or any affiliate of a Loan Party that may come into the possession of
the Administrative Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
9.7 INDEMNIFICATION. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by Parent or the Borrower and
without limiting the obligation of Parent or the Borrower to do so), ratably
according to their respective Aggregate Exposure Percentages in effect on the
date on which indemnification is sought under this Section 9.7 (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (including, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such Agent under or in connection with
any of the foregoing; PROVIDED that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements that are found by a
final and nonappealable decision of a court of competent jurisdiction to have
resulted from such Agent's gross negligence or willful misconduct. The
Administrative Agent shall have the right to deduct any amount owed to it by any
Lender under this Section from any payment made by it to such Lender hereunder.
The agreements in this Section 9.7 shall survive the payment of the Loans and
all other amounts payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent was not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Administrative
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Agent by the date that is 10 days following a retiring Administrative Agent's
notice of resignation, the retiring Administrative Agent's resignation shall
nevertheless thereupon become effective and the Lenders shall assume and
perform all of the duties of the Administrative Agent hereunder until such
time, if any, as the Required Lenders appoint a successor agent as provided
for above. After any retiring Administrative Agent's resignation as
Administrative Agent, 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 and the other Loan Documents.
9.10 AUTHORIZATION TO RELEASE LIENS. The Administrative Agent is
hereby irrevocably authorized by each of the Lenders to release any Lien
covering any property of the Borrower or any of its Subsidiaries that is the
subject of a Disposition that is permitted by this Agreement or that has been
consented to in accordance with Section 11.1.
9.11 SYNDICATION AGENT AND DOCUMENTATION AGENT. Neither of the
Syndication Agents nor the Documentation Agent shall have any duties or
responsibilities hereunder in their capacities as such.
SECTION 10. GUARANTEE
10.1 GUARANTEE. In order to induce the Administrative Agent and the
Lenders to execute and deliver this Agreement and to make or maintain the Loans
hereunder, and in consideration thereof, Parent hereby unconditionally and
irrevocably guarantees to the Administrative Agent, for the ratable benefit of
the Lenders, the prompt and complete payment and performance by the Borrower
when due (whether at stated maturity, by acceleration or otherwise) of the
Obligations, and Parent further agrees to pay any and all expenses (including,
without limitation, all reasonable fees, charges and disbursements of counsel)
that may be paid or incurred by the Administrative Agent or by the Lenders in
enforcing, or obtaining advice of counsel in respect of, any of their rights
under the guarantee contained in this Section 10. The guarantee contained in
this Section 10, subject to Section 10.5, shall remain in full force and effect
until the Obligations are paid in full, the Commitments are terminated and no
Letters of Credit are outstanding, notwithstanding that from time to time prior
thereto the Borrower may be free from any Obligations.
Parent agrees that whenever, at any time, or from time to time, it
shall make any payment to the Administrative Agent or any Lender on account of
its liability under this Section 10, it will notify the Administrative Agent and
such Lender in writing that such payment is made under the guarantee contained
in this Section 10 for such purpose. No payment or payments made by the Borrower
or any other Person or received or collected by the Administrative Agent or any
Lender from the Borrower or any other Person by virtue of any action or
proceeding or any setoff or appropriation or application, at any time or from
time to time, in reduction of or in payment of the Obligations shall be deemed
to modify, reduce, release or otherwise affect the liability of Parent under
this Section 10 which, notwithstanding any such payment or payments, shall
remain liable for the Obligations until, subject to Section 10.5, the
Obligations are paid in full, the Commitments are terminated and no Letters of
Credit are outstanding.
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10.2 NO SUBROGATION, CONTRIBUTION, REIMBURSEMENT OR INDEMNITY.
Notwithstanding anything to the contrary in this Section 10, Parent hereby
irrevocably waives all rights that may have arisen in connection with the
guarantee contained in this Section 10 to be subrogated to any of the rights
(whether contractual, under the United States Bankruptcy Code (or similar action
under any successor law or under any comparable law), including Section 509
thereof, under common law or otherwise) of the Administrative Agent or any
Lender against the Borrower or against the Administrative Agent or any Lender
for the payment of the Obligations, until the Obligations shall have been paid
in full, no Letters of Credit shall be outstanding and the Commitments shall
have been terminated. Parent hereby further irrevocably waives all contractual,
common law, statutory and other rights of reimbursement, contribution,
exoneration or indemnity (or any similar right) from or against the Borrower or
any other Person that may have arisen in connection with the guarantee contained
in this Section 10, until the Obligations shall have been paid in full, no
Letters of Credit shall be outstanding and the Commitments shall have been
terminated. So long as the Obligations remain outstanding, if any amount shall
be paid by or on behalf of the Borrower to Parent on account of any of the
rights waived in this Section 10.2, such amount shall be held by Parent in
trust, segregated from other funds of Parent, and shall, forthwith upon receipt
by Parent, be turned over to the Administrative Agent in the exact form received
by Parent (duly indorsed by Parent to the Administrative Agent, if required), to
be applied against the Obligations, whether matured or unmatured, in such order
as the Administrative Agent may determine. The provisions of this Section 10.2
shall survive the term of the guarantee contained in this Section 10 and the
payment in full of the Obligations and the termination of the Commitments.
10.3 AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. Parent shall
remain obligated under this Section 10 notwithstanding that, without any
reservation of rights against Parent, and without notice to or further assent by
Parent, any demand for payment of or reduction in the principal amount of any of
the Obligations made by the Administrative Agent or any Lender may be rescinded
by the Administrative Agent or such Lender, and any of the Obligations
continued, and the Obligations, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and this
Agreement, any other Loan Document, and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Lenders (or the Required Lenders, as the
case may be) may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by the Administrative Agent or any
Lender for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent nor any Lender shall
have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Obligations or for the guarantee contained in
this Section 10 or any property subject thereto.
10.4 GUARANTEE ABSOLUTE AND UNCONDITIONAL. Parent waives any and all
notice of the creation, renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Administrative Agent or any Lender
upon the guarantee contained in this Section 10 or acceptance of the guarantee
contained in this Section 10; the Obligations, and any of them,
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shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 10; and all dealings between the Borrower or
Parent, on the one hand, and the Administrative Agent and the Lenders, on the
other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 10.
Parent waives diligence, presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Borrower or Parent with respect to
the Obligations. The guarantee contained in this Section 10 shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity or enforceability of this Agreement or any
other Loan Document, any of the Obligations or any collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agent or any Lender, (b) any
defense, setoff or counterclaim (other than a defense of payment or
performance) that may at any time be available to or be asserted by the
Borrower against the Administrative Agent or any Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the
Borrower or Parent) that constitutes, or might be construed to constitute, an
equitable or legal discharge of the Borrower for the Obligations, or of
Parent under the guarantee contained in this Section 10, in bankruptcy or in
any other instance. When the Administrative Agent or any Lender is pursuing
its rights and remedies under this Section 10 against Parent, the
Administrative Agent or any Lendr may, but shall be under no obligation to,
pursue such rights and remedies as it may have against the Borrower or any
other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure by
the Administrative Agent or any Lender to pursue such other rights or
remedies or to collect any payments from the Borrower or any such other
Person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower or any such
other Person or of any such collateral security, guarantee or right of
offset, shall not relieve Parent of any liability under this Section 10, and
shall not impair or affect the rights and remedies, whether express, implied
or available as a matter of law, of the Administrative Agent and the Lenders
against Parent.
10.5 REINSTATEMENT. The guarantee contained in this Section 10 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Administrative Agent or any Lender upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
10.6 PAYMENTS. Parent hereby agrees that any payments in respect of
the Obligations pursuant to this Section 10 will be paid to the Administrative
Agent without setoff or counterclaim in Dollars at the Funding Office.
SECTION 11. MISCELLANEOUS
<PAGE>
79
11.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 11.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may,
or, with the written consent of the Required Lenders, the Administrative Agent
and each Loan Party party to the relevant Loan Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Required Lenders or the Administrative Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; PROVIDED, HOWEVER, that no such waiver and no such amendment,
supplement or modification shall (i) forgive the principal amount or extend the
final scheduled date of maturity of any Loan, extend the scheduled date of any
amortization payment in respect of any Term Loan, reduce the stated rate of any
interest or fee payable hereunder or extend the scheduled date of any payment
thereof, or increase the amount or extend the expiration date of any Lender's
Revolving Commitment, in each case without the consent of each Lender directly
affected thereby; (ii) amend, modify or waive any provision of this Section 11.1
or reduce any percentage specified in the definition of Required Lenders,
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, release all or
substantially all of the Collateral or release all or substantially all of the
Subsidiary Guarantors from their obligations under the Guarantee and Collateral
Agreement, in each case without the written consent of all Lenders; (iii) reduce
the percentage specified in the definition of Majority Facility Lenders with
respect to any Facility without the written consent of all Lenders under such
Facility, or reduce the percentage specified in the definition of Supermajority
Revolving Facility Lenders without the written consent of all Revolving Lenders;
(iv) amend, modify or waive any condition precedent to any extension of credit
under the Revolving Facility set forth in Section 5.2 (including in connection
with any waiver of an existing Default or Event of Default) without the consent
of the Majority Facility Lenders in respect of the Revolving Facility; (v)
amend, modify or waive any provision of Section 9 without the written consent of
the Administrative Agent; (vi) amend, modify or waive any provision of Section
2.6 or 2.7 without the written consent of the Swingline Lender; or (vii) amend,
modify or waive any provision of Section 3 without the written consent of the
Issuing Lender. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Loan Parties, the Lenders, the Administrative Agent and all future
holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders
and the Administrative Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequen or other Default or Event of Default, or
impair any right consequent thereon.
11.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of Parent, the Borrower and the
<PAGE>
80
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:
Parent: Motor Coach Industries International, Inc.,
10 East Golf Road
Des Plaines, Illinois 60016
Attention: Michael Graham
Telecopy: (847) 299-7843
Telephone: (847) 375-1227
The Borrower: Transportation Manufacturing Operations, Inc.
10 East Golf Road
Des Plaines, Illinois 60016
Attention: Michael Graham
Telecopy: (847) 299-7843
Telephone: (847) 375-1227
with a copy to: Joseph Littlejohn & Levy, Inc.
450 Lexington Avenue, Suite 3350
New York, New York 10017
Attention: Frank Rodriguez
Telecopy: (212) 286-8626
Telephone: (212) 286-8600
The Administrative Agent: Canadian Imperial Bank of Commerce
425 Lexington Avenue
7th Floor
New York, New York 10017
Attention: Marybeth Ross
Telecopy: (212) 856-3763
Telephone: (212) 856-3691
with a copy to: Canadian Imperial Bank of Commerce
425 Lexington Avenue
7th Floor
New York, New York 10017
Attention: John Burke
Telecopy: (212) 885-4911
Telephone: (212) 856-3919
PROVIDED that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
11.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Lender, any
right, remedy, power or
<PAGE>
81
privilege hereunder or under the other Loan Documents shall operate as a
waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
11.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
11.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay
or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent and filing and
recording fees and expenses, with statements with respect to the foregoing to be
submitted to the Borrower prior to the Closing Date (in the case of amounts to
be paid on the Closing Date) and from time to time thereafter on a quarterly
basis or such other periodic basis as the Administrative Agent shall deem
appropriate, (b) to pay or reimburse each Lender and the Administrative Agent
for all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the fees and
disbursements of counsel (including the allocated fees and expenses of in-house
counsel) to each Lender and of counsel to the Administrative Agent, (c) to pay,
indemnify, and hold each Lender and the Administrative Agent harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any,
that may be payable or determined to be payable in connection with the execution
and delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify, and hold each Lender and
the Administrative Agent and their respective officers, directors, trustees,
employees, affiliates, agents and controlling persons (each, an "INDEMNITEE")
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including, without limitation, any of
the foregoing relating to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of Parent, the Borrower any of its Subsidiaries or any of the
Properties (all the foregoing in this clause (d), collectively, the "INDEMNIFIED
LIABILITIES"), PROVIDED, that the Borrower shall have no obligation hereunder to
any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee. Without limiting the foregoing, and to
the extent permitted by
<PAGE>
82
applicable law, the Borrower agrees not to assert and to cause its
Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to so waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee. All amounts due under this Section 11.5
shall be payable promptly after written demand therefor. The agreements in
this Section 11.5 shall survive repayment of the Loans and all other amounts
payable hereunder.
11.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a)
This Agreement shall be binding upon and inure to the benefit of Parent, the
Borrower, the Lenders, the Administrative Agent, all future holders of the Loans
and their respective successors and assigns, except that the Borrower may not
assign or transfer any of its rights or obligations under this Agreement without
the prior written consent of each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "PARTICIPANT") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. In no event shall any Participant
under any such participation have any right to approve any amendment or waiver
of any provision of any Loan Document, or any consent to any departure by any
Loan Party therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, the Loans or any fees
payable hereunder, or postpone the date of the final maturity of the Loans, in
each case to the extent subject to such participation. The Borrower agrees that
if amounts outstanding under this Agreement and the Loans are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall, to the maximum extent
permitted by applicable law, be deemed to have the right of setoff in respect of
its participating interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were owing directly to it
as a Lender under this Agreement, PROVIDED that, in purchasing such
participating interest, such Participant shall be deemed to have agreed to share
with the Lenders the proceeds thereof as provided in Section 11.7(a) as fully as
if it were a Lender hereunder. The Borrower also agrees that each Participant
shall be entitled to the benefits of Sections 2.18, 2.19 and 2.20 with respect
to its participation in the Commitments and the Loans outstanding from time to
time as if it was a Lender; PROVIDED that, in the case of Section 2.19, such
Participant shall have complied with the requirements of said Section and
PROVIDED, FURTHER, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
<PAGE>
83
(c) Any Lender (an "ASSIGNOR") may, in accordance with applicable
law, at any time and from time to time assign to any Lender, any affiliate
thereof or any Related Fund thereof (any such party a "RELATED PARTY"), in each
case, which purchases an aggregate amount of $10,000,000 or less or, with the
consent of the Borrower and the Administrative Agent (which, in each case, shall
not be unreasonably withheld or delayed), to a Related Party which purchases an
aggregate amount in excess of $10,000,000 or to an additional bank, financial
institution or other entity (an "ASSIGNEE") all or any part of its rights and
obligations under this Agreement pursuant to an Assignment and Acceptance,
substantially in the form of Exhibit E, executed by such Assignee, such Assignor
and any other Person whose consent is required pursuant to this Section 11.6(c),
and delivered to the Administrative Agent for its acceptance and recording in
the Register; PROVIDED that no such assignment to an Assignee (other than any
Lender, any affiliate thereof or any Related Fund thereof) shall be in an
aggregate principal amount of less than $5,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent. Any such
assignment need not be ratable as among the Facilities. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder with a Commitment and/or
Loans as set forth therein, and (y) the Assignor thereunder shall, to the extent
provided in such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of an Assignor's rights and obligations under this Agreement, such Assignor
shall cease to be a party hereto). Notwithstanding any provision of this
Section 11.6, the consent of the Borrower shall not be required for any
assignment that occurs when an Event of Default pursuant to Section 8(f) shall
have occurred and be continuing with respect to the Borrower.
(d) The Administrative Agent shall maintain at its address referred
to in Section 11.2 a copy of each Assignment and Acceptance delivered to it and
a register (the "REGISTER") for the recordation of the names and addresses of
the Lenders and the Commitment of, and the principal amount of the Loans owing
to, each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, each other Loan
Party, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loans and any Notes
evidencing the Loans recorded therein for all purposes of this Agreement. Any
assignment of any Loan, whether or not evidenced by a Note, shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all
or part of a Loan evidenced by a Note shall be registered on the Register only
upon surrender for registration of assignment or transfer of the Note evidencing
such Loan, accompanied by a duly executed Assignment and Acceptance, and
thereupon one or more new Notes shall be issued to the designated Assignee.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by Section
11.6(c), together with payment to the Administrative Agent of a registration and
processing fee of $4,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) record
<PAGE>
84
the information contained therein in the Register on the effective date
determined pursuant thereto.
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section 11.6 concerning assignments of Loans and
Notes relate only to absolute assignments and that such provisions do not
prohibit assignments creating security interests, including, without limitation,
any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve
Bank in accordance with applicable law.
(g) The Borrower agrees to issue Notes to any Lender requiring Notes
to facilitate transactions of the type described in paragraph (f) above.
11.7 ADJUSTMENTS; SET-OFF. (a) Except to the extent that this
Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "BENEFITTED LENDER") shall at any time
receive any payment of all or part of the Obligations owing to it, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, pursuant to events or proceedings of the nature referred to in Section
8(f), or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of the Obligations
owing to such other Lender, such Benefitted Lender shall purchase for cash from
the other Lenders a participating interest in such portion of the Obligations
owing to each such other Lender, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; PROVIDED, HOWEVER, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to Parent or the
Borrower, any such notice being expressly waived by Parent and the Borrower to
the extent permitted by applicable law, upon any amount becoming due and payable
by Parent or the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of Parent or the Borrower, as
the case may be. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such setoff and application made by such Lender,
PROVIDED that the failure to give such notice shall not affect the validity of
such setoff and application.
11.8 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
<PAGE>
85
11.9 SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
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.
11.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of Parent, the Borrower, the Administrative Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11.12 SUBMISSION TO JURISDICTION; WAIVERS. Each of Parent and the
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Parent or
the Borrower, as the case may be at its address set forth in Section 11.2
or at such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section 11.12 any special, exemplary, punitive or consequential
damages.
<PAGE>
86
11.13 ACKNOWLEDGEMENTS. Each of Parent and the Borrower hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to Parent or the Borrower arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and
Parent and the Borrower, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among Parent, the Borrower and the Lenders.
11.14 WAIVERS OF JURY TRIAL. PARENT, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.15 CONFIDENTIALITY. Each of the Administrative Agent and each
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement; PROVIDED that nothing herein shall
prevent the Administrative Agent or any Lender from disclosing any such
information (a) to the Administrative Agent, any other Lender or any affiliate
of any Lender, (b) to any Transferee or prospective Transferee that agrees to
comply with the provisions of this Section 11.15, (c) to its employees,
directors, trustees, agents, attorneys, accountants and other professional
advisors or those of any of its affiliates, (d) in response to any request,
demand or order of any court or other Governmental Authority or as may otherwise
be required pursuant to any Requirement of Law, (e) if requested or required to
do so in connection with any litigation or similar proceeding, (f) that has been
publicly disclosed, (g) to the National Association of Insurance Commissioners
or any similar organization or any nationally recognized rating agency that
requires access to information about a Lender's investment portfolio in
connection with ratings issued with respect to such Lender, (h) to any direct or
indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty agrees to be bound by the
provisions of this Section 11.15) or (i) in connection with the exercise of any
remedy hereunder or under any other Loan Document.
<PAGE>
87
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
MOTOR COACH INDUSTRIES
INTERNATIONAL, INC.
By:
-----------------------------------
Name:
Title:
TRANSPORTATION MANUFACTURING
OPERATIONS, INC.
By:
-----------------------------------
Name:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as Administrative Agent and as
a Lender
By:
-----------------------------------
Name:
Title:
<PAGE>
THE BANK OF NOVA SCOTIA, as Syndication
Agent and as a Lender
By:
-----------------------------------
Name:
Title:
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION, as Documentation Agent and
as a Lender
By:
-----------------------------------
Name:
Title:
<PAGE>
LASALLE BANK N.A.
By:
-----------------------------------
Name:
Title:
<PAGE>
ANNEX A
PRICING GRID FOR REVOLVING LOANS,
SWINGLINE LOANS, TERM LOANS AND COMMITMENT FEES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Applicable Applicable
Margin for Margin Applicable
Revolving for Margin
Loans which Revolving Applicable for Term
Consolidated are ABR Loans Margin for Loans
Total Loans and which are Term Loans which are
Leverage Swingline Eurodollar which are Eurodollar Commitment
Ratio Loans Loans ABR Loans Loans Fee Rate
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
> or equal to
$4.00 to 1.0 1.75% 2.75% 2.25% 3.25% 0.50%
- ----------------------------------------------------------------------------------------------
< 4.00 to 1.25% 2.25% 2.25% 3.25% 0.425%
1.0 and > or equal to
3.75 to 1.0
- ----------------------------------------------------------------------------------------------
< 3.75 to 1.25% 2.25% 2.00% 3.00% 0.425%
1.0 and > or equal to
3.50 to 1.0
- ----------------------------------------------------------------------------------------------
< 3.50 to 0.75% 1.75% 2.00% 3.00% 0.375%
1.0 and > or equal to
3.25 to 1.0
- ----------------------------------------------------------------------------------------------
< 3.25 to 1.0 0.50% 1.50% 2.00% 3.00% 0.375%
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
Changes in the Applicable Margin or in the Commitment Fee Rate resulting from
changes in the Consolidated Total Leverage Ratio shall become effective on the
date (the "ADJUSTMENT DATE") on which financial statements are delivered to the
Lenders pursuant to Section 6.1 (but in any event not later than the 45th day
after the end of each of the first three quarterly periods of each fiscal year
or the 90th day after the end of each fiscal year, as the case may be) and shall
remain in effect until the next change to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified above, then, until such financial statements
are delivered, the Consolidated Total Leverage Ratio as at the end of the fiscal
period that would have been covered thereby shall for the purposes of this
definition be deemed to be greater than 4.00 to 1, respectively. In addition,
at all times while an Event of Default shall have occurred and be continuing,
the Consolidated Total Leverage Ratio shall for the purposes of this definition
be deemed to be greater than 4.00 to 1, respectively. Each determination of the
Consolidated Total Leverage Ratio pursuant to this definition shall be made
<PAGE>
with respect to the period of four consecutive fiscal quarters of the
Borrower ending at the end of the period covered by the relevant financial
statements.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$445,000,000
CREDIT AGREEMENT
among
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.,
TRANSPORTATION MANUFACTURING OPERATIONS, INC.,
as Borrower,
The Several Lenders
from Time to Time Parties Hereto,
THE BANK OF NOVA SCOTIA,
as Syndication Agent,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Documentation Agent
and
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
Dated as of June 16, 1999
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER DEFINITIONAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS. . . . . . . . . . . . . . . . . . . . 24
2.1 TERM COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.2 PROCEDURE FOR TERM LOAN BORROWING. . . . . . . . . . . . . . . . . . . . . 25
2.3 REPAYMENT OF TERM LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.4 REVOLVING COMMITMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.5 PROCEDURE FOR REVOLVING LOAN BORROWING . . . . . . . . . . . . . . . . . . 26
2.6 SWINGLINE COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.7 PROCEDURE FOR SWINGLINE BORROWING; REFUNDING OF SWINGLINE LOANS. . . . . . 27
2.8 COMMITMENT FEES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.9 TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS. . . . . . . . . . . . . 28
2.10 OPTIONAL PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.11 MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS . . . . . . . . . . . . . 29
2.12 CONVERSION AND CONTINUATION OPTIONS . . . . . . . . . . . . . . . . . . . 30
2.13 LIMITATIONS ON EURODOLLAR TRANCHES. . . . . . . . . . . . . . . . . . . . 31
2.14 INTEREST RATES AND PAYMENT DATES. . . . . . . . . . . . . . . . . . . . . 31
2.15 COMPUTATION OF INTEREST AND FEES. . . . . . . . . . . . . . . . . . . . . 32
2.16 INABILITY TO DETERMINE INTEREST RATE. . . . . . . . . . . . . . . . . . . 32
2.17 PRO RATA TREATMENT AND PAYMENTS . . . . . . . . . . . . . . . . . . . . . 33
2.18 REQUIREMENTS OF LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.19 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.20 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.21 CHANGE OF LENDING OFFICE. . . . . . . . . . . . . . . . . . . . . . . . . 37
2.22 REPLACEMENT OF LENDERS. . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.1 L/C COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.2 PROCEDURE FOR ISSUANCE OF LETTER OF CREDIT . . . . . . . . . . . . . . . . 38
3.3 FEES AND OTHER CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.4 L/C PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER . . . . . . . . . . . . . . . . . 39
3.6 OBLIGATIONS ABSOLUTE . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.7 LETTER OF CREDIT PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 40
3.8 APPLICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . 41
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4.1 FINANCIAL CONDITION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.2 NO CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . 42
4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. . . . . . . . . . 42
4.5 NO LEGAL BAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.6 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.7 NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.8 OWNERSHIP OF PROPERTY; LIENS . . . . . . . . . . . . . . . . . . . . . . . 43
4.9 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.10 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.11 FEDERAL REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.12 LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.14 INVESTMENT COMPANY ACT; OTHER REGULATIONS . . . . . . . . . . . . . . . . 44
4.15 SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.16 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.17 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.18 ACCURACY OF INFORMATION, ETC. . . . . . . . . . . . . . . . . . . . . . . 45
4.19 SECURITY DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.20 SOLVENCY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.21 SENIOR INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.22 REGULATION H. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.23 YEAR 2000 MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.24 INACTIVE SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT. . . . . . . . . . . . . . . . . 48
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT . . . . . . . . . . . . . . . . . . 52
SECTION 6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.2 CERTIFICATES; OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . 53
6.3 PAYMENT OF OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.4 MAINTENANCE OF EXISTENCE; COMPLIANCE. . . . . . . . . . . . . . . . . . . 54
6.5 MAINTENANCE OF PROPERTY; INSURANCE . . . . . . . . . . . . . . . . . . . . 54
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS . . . . . . . . . . 55
6.7 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.8 ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.9 ADDITIONAL COLLATERAL, ETC . . . . . . . . . . . . . . . . . . . . . . . . 56
6.10 PERMITTED ACQUISITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.1 FINANCIAL CONDITION COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 58
7.2 INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.3 LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
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7.4 FUNDAMENTAL CHANGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.5 DISPOSITION OF PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.6 RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.7 CAPITAL EXPENDITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.8 INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.9 OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT INSTRUMENTS, ETC. . . . . . . 66
7.10 TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . . . . . . . . . . . 66
7.11 SALES AND LEASEBACKS. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.12 CHANGES IN FISCAL PERIODS . . . . . . . . . . . . . . . . . . . . . . . . 67
7.13 NEGATIVE PLEDGE CLAUSES . . . . . . . . . . . . . . . . . . . . . . . . . 67
7.14 CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS. . . . . . . . . . . . . . . 67
7.15 LINES OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.16 AMENDMENTS TO INVESTMENT AGREEMENT. . . . . . . . . . . . . . . . . . . . 68
SECTION 8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.1 APPOINTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.2 DELEGATION OF DUTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.3 EXCULPATORY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 73
9.4 RELIANCE BY ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . 73
9.5 NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.6 NON-RELIANCE ON AGENTS AND OTHER LENDERS . . . . . . . . . . . . . . . . . 74
9.7 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9.8 AGENT IN ITS INDIVIDUAL CAPACITY . . . . . . . . . . . . . . . . . . . . . 75
9.9 SUCCESSOR ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . . 75
9.10 AUTHORIZATION TO RELEASE LIENS. . . . . . . . . . . . . . . . . . . . . . 75
9.11 SYNDICATION AGENT AND DOCUMENTATION AGENT . . . . . . . . . . . . . . . . 76
SECTION 10. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.1 GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.2 NO SUBROGATION, CONTRIBUTION, REIMBURSEMENT OR INDEMNITY. . . . . . . . . 76
10.3 AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS. . . . . . . . . . . . . 77
10.4 GUARANTEE ABSOLUTE AND UNCONDITIONAL. . . . . . . . . . . . . . . . . . . 77
10.5 REINSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.6 PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.1 AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.3 NO WAIVER; CUMULATIVE REMEDIES. . . . . . . . . . . . . . . . . . . . . . 80
11.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 80
11.5 PAYMENT OF EXPENSES AND TAXES . . . . . . . . . . . . . . . . . . . . . . 80
11.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. . . . . . . . . . 81
11.7 ADJUSTMENTS; SET-OFF. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
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11.8 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.9 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.10 INTEGRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.11 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.12 SUBMISSION TO JURISDICTION; WAIVERS. . . . . . . . . . . . . . . . . . . 85
11.13 ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.14 WAIVERS OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.15 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
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ANNEX:
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A Pricing Grid
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SCHEDULES:
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1.1A Commitments
1.1B Mortgaged Property
1.1C Financial Covenant Components Prior to the Closing Date
4.1(b) Undisclosed Liabilities and Dispositions
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.9 Intellectual Property
4.15 Subsidiaries
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
5.1(b)(i) Description of Restructuring
5.1(b)(ii) Grupo Dina Indebtedness to be Repaid
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.10 Intercompany Agreements and Arrangements
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EXHIBITS:
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A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of Skadden, Arp, Slate, Meagher & Flom
F-2 Form of Legal Opinion of Timothy Nalepka
G Form of Prepayment Option Notice
H Form of Notes
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EXHIBIT 10.2
STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT ("Agreement"), dated as ofJune 16,
1999, is by and among MCII Holdings (USA), Inc., a Delaware corporation (the
"Company"), Joseph Littlejohn & Levy Fund III, L.P. ("JLL"), CIBC WG Argosy
Merchant Fund 2, L.L.C., ("CIBC Argosy"), Co-Investment Merchant Fund 3, LLC
("CMF" and, together with CIBC Argosy, "CIBC"), Consorcio G Grupo Dina, S.A. de
C.V., a corporation organized under the laws of the United Mexican States
("Dina"), and Mr. Rafael Gomez Flores (JLL, Dina, CIBC Argosy, CMF and Mr.
Rafael Gomez Flores being referred to herein as a "Stockholder" and collectively
being referred to herein as the "Stockholders").
W I T N E S S E T H
WHEREAS, pursuant to the Investment Agreement (the "Investment
Agreement") dated as of June 11, 1999, by and among JLL, CIBC and Dina, JLL and
CIBC, collectively acquired, among other things, an aggregate of 610,000 shares
of voting common stock, par value $0.01 per share (the "Voting Common Stock") of
the Company and convertible non-voting common stock, par value $0.01 per shares
(the "Non-Voting Common Stock" and, together with the Voting Common Stock, the
"Common Stock") of the Company (collectively, the "Investment") and,
simultaneously therewith, the Company repurchased from Dina 610,000 shares of
Voting Common Stock in exchange for cash and certain other consideration
(capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Investment Agreement);
WHEREAS, upon consummation of the Investment, JLL and CIBC
collectively will own approximately 61% of the outstanding Common Stock and Dina
will own approximately 39% of the outstanding Common Stock, in each case,
without giving effect to the adoption of the Stock Option Plan or the issuance
of the Warrants; and
WHEREAS, in connection with the transactions contemplated by
the Investment Agreement, the Company and each Stockholder desire to enter into
this Agreement to memorialize certain agreements of the Stockholders as to the
corporate governance of the Company, all in accordance with the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
of
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which is hereby acknowledged, and intending to be legally bound, the parties
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have
the following meanings:
(a) The term "APPLICABLE PERCENTAGE" shall mean, with respect
to any Stockholder, at the time of any issuance and sale of Common Stock by the
Company, a number equal to the quotient of (i) the total number of shares of
Common Stock held by such Stockholder immediately prior to such issuance and
sale, divided by (ii) the aggregate number of shares of Common Stock outstanding
immediately prior to such issuance and sale.
(b) The term "COMMISSION" shall mean the United States
Securities and Exchange Commission or any successor agency.
(c) The term "EXCHANGE ACT" shall mean the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(d) The term "INITIAL PUBLIC OFFERING" shall mean the first
Public Offering (as hereinafter defined) of shares of Common Stock.
(e) The term "PERMITTED TRANSFEREE" shall mean, with respect
to each Stockholder bound by the terms of this Agreement, (i) any other
Stockholder; (ii) any descendant, Affiliate or Associate (each, as defined in
Rule 405 of the Securities Act (as hereinafter defined)) of such Stockholder or
any Permitted Transferee of such Affiliate; (iii) the Company; (iv) in the event
of the dissolution, liquidation or winding up of any such Stockholder that is a
corporation or a partnership, the partners of a partnership that is such
Stockholder, the stockholders of a corporation that is such Stockholder or a
successor partnership all of the partners of which or a successor corporation
all of the stockholders of which are the Persons (as hereinafter defined) who
were the partners of such partnership or the stockholders of such corporation
immediately prior to the dissolution, liquidation or winding up of such
Stockholder; (v) a transferee by testamentary or intestate disposition; (vi) a
transferee by INTER VIVOS transfer to the transferring Person's spouse, children
and/or other lineal descendants; (vii) a trust transferee by INTER VIVOS
transfer, the beneficiaries of which are the transferring Person, spouse,
children and/or other lineal descendants; or (viii) a successor nominee or
trustee for the beneficial owner of the Shares
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(as hereinafter defined) for which such Person acts as nominee or trustee, as
the case may be.
(f) The term "PERSON" shall mean any individual, firm,
corporation, partnership, limited liability company or other entity, and shall
include any successor (by merger or otherwise) of such entity.
(g) The term "PUBLIC OFFERING" shall mean a public offering of
equity securities of the Company pursuant to an effective registration statement
under the Securities Act.
(h) The term "REGISTRABLE SECURITIES" shall mean (i) the
Shares and (ii) additional shares of Common Stock acquired by one or more
Stockholders after the date hereof. As to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when (i) a registration
statement registering such securities under the Securities Act has been declared
effective and such securities have been sold or otherwise transferred by the
holder thereof pursuant to such effective registration statement, (ii) such
securities are sold in accordance with Rule 144 (or any successor provision)
promulgated under the Securities Act or (iii) such securities are transferred
under circumstances in which any legend borne by the certificates for such
securities relating to restrictions on transferability thereof, under the
Securities Act or otherwise, is removed by the Company.
(i) The term "SECURITIES ACT" shall mean the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
(j) The term "SHARES" shall mean the shares of Common Stock
owned by each Stockholder on the date hereof, as set forth opposite each
Stockholder's name on Annex I hereto, and all shares of Common Stock acquired by
any Stockholder after the date of this Agreement.
(k) The term "TRANSFER" shall mean any voluntary or
involuntary attempt to, directly or indirectly through the transfer of interests
in controlled Affiliates or otherwise, offer, sell, assign, transfer, grant a
participation in, pledge or otherwise dispose of any Shares, or the consummation
of any such transactions, or the soliciting of any offers to purchase or
otherwise acquire, or taking a pledge of, any of the Shares; PROVIDED, HOWEVER,
that the transfer of an interest in any of the Stockholders shall not be deemed
to be a transfer.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
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Section 1.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to each Stockholder as follows:
(1) CORPORATE AUTHORITY. The Company has full corporate power
and authority to execute, deliver and perform this Agreement;
(2) DUE AUTHORIZATION. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms;
(3) NO CONFLICT. The execution, delivery and performance of
this Agreement by the Company do not violate or conflict with or constitute a
default under (i) the Company's certificate of incorporation or by-laws, (ii)
any judgment, order or decree or statute, law, ordinance, rule or regulation of
any governmental entity applicable to the Company or (iii) any material
agreement to which the Company is a party or by which it or its property is
bound;
(4) REGISTRATION RIGHTS. Except as provided herein, no other
party is entitled to any registration or similar right with respect to any
securities of the Company; and
(5) VOTING AGREEMENTS. Except as set forth herein, the Company
is not aware of any voting trust, voting agreement or arrangement with respect
to any of its voting securities.
Section 1.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
Each Stockholder individually represents and warrants to each other Stockholder
and the Company as follows:
(1) AUTHORITY. Such Stockholder has full power, capacity and
authority to execute, deliver and perform this Agreement;
(2) DUE AUTHORIZATION. This Agreement has been duly authorized,
executed and delivered by such Stockholder and constitutes a valid and binding
obligation of such Stockholder, enforceable against such Stockholder in
accordance with its terms; and (1)
(3) NO CONFLICT. The execution, delivery and performance of
this Agreement by such Stockholder do not violate or conflict with or constitute
a default under (i) such Stockholder's organizational documents, (ii) any
judgment, order or decree or statute, law, ordinance, rule or regulation of any
governmental entity applicable to such Stockholder or (iii) any material
agreement to which such Stockholder is a party or by which it or its property is
bound.
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Section 1.3 COVENANTS OF THE COMPANY. The Company covenants to
each Stockholder that it will afford to each Stockholder and its respective
officers, employees, financial advisors, legal counsel, accountants, consultants
and other representatives (except to the extent not permitted under applicable
law as advised by counsel to the Company and except as may be limited by any
confidentiality obligations contained in any contract with a third party)
reasonable access during normal business hours during the term of this Agreement
to all of its books and records and its properties and facilities and, during
such period, shall furnish promptly to each Stockholder periodic financial and
other information provided to the Board. The Company further covenants to
promptly provide to each Stockholder, copies of all monthly, quarterly and
annual financial information prepared for any directors, creditors or
stockholders of the Company. Unless otherwise required by law, each Stockholder
agrees that it shall (a) hold in confidence all non-public information so
acquired and (b) not use any such information as the basis for any market
transaction in the securities of the Company unless and until such information
is made generally available to the public.
ARTICLE III
BOARD OF DIRECTORS
Section 1.4 COMPOSITION.
(1) MEMBERS. During the term of this Agreement and unless
otherwise agreed by the holders of 66 2/3% of the shares of Common Stock
outstanding as of the date hereof, each party hereto shall use its best efforts
to cause the Board to consist of seven members, of which: (i) four members shall
be designees of JLL (the "JLL Designees"), who shall initially be Messrs. Paul
Levy, Jeffrey Lightcap, Frank Rodriguez and David Ying, and (ii) three members
shall be designees of Dina and shall include the Chief Executive Officer of the
Company (the "Dina Designees"), who shall initially be Messrs. Rafael Gomez
Flores, Gamaliel Garcia Cortes and James Bernacchi, the current Chief Executive
Officer of the Company. Any successor JLL Designee must be reasonably acceptable
to Dina and any successor Dina Designee must be reasonably acceptable to JLL.
For so long as Mr. Gomez Flores serves as a director of the Company, he shall
also serve as the Chairman of the Board.
(2) REMOVAL. No Stockholder shall take any action to cause the
removal of any director designated by any other Stockholder other than "for
cause."
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(3) VACANCIES. If at any time a vacancy is created on the Board
by reason of the death, removal or resignation of any director who was nominated
and elected as a director pursuant to Section 3.01(a) above or this Section
3.01(c), the Stockholders shall, as soon as practicable, cause their designees
on the Board, to the extent not inconsistent with their fiduciary duties under
applicable law, to elect the individual designated to fill such vacancy or
vacancies by JLL or Dina, as the case may be, to fill such vacancy for the
unexpired term of the director whom such individual is replacing.
(a) DECREASE IN SHARES HELD. Notwithstanding anything to the
contrary in this Section 3.01, in the event that JLL, on the one hand, and Dina,
on the other hand, shall, together with their Affiliates or Associates (as such
terms are defined in Rule 405 of the Securities Act), cease to own at least 30%
of the Shares owned by JLL or Dina, as the case may be, on the date hereof, then
JLL or Dina, as the case may be, shall no longer have any right pursuant to this
Section 3.01 to designate any nominees for election to the Board.
(4) VOTING AGREEMENT.
(1) Each Stockholder agrees that, during the term of
this Agreement, (A) it will be present, in person or
represented by proxy, at all stockholder meetings of the
Company for the election of directors, so that all shares of
Voting Common Stock beneficially owned by it shall be
counted for the purpose of determining the presence of a
quorum for the election of directors at such meetings, and
(B) it shall vote, or act by consent with respect to, all
shares of Voting Common Stock beneficially owned by it for
the election of the nominees for the Board nominated by the
Board so long as such nominees consist of individuals
meeting the requirements of this Section 3.01.
(2) Except as specifically set forth in this
Section 3.01(e), each Stockholder shall be entitled to vote
its Shares on all other matters as it deems fit. (1)
Section 1.5 SUPERMAJORITY VOTE REQUIREMENT. JLL and Dina agree
to cause the JLL Designees or the Dina Designees, as the case may be, not to
take or permit the Company to take any of the actions set forth below without
the affirmative vote of at least six (6) members of the Board:
(a) increase the number of members constituting the Board
to greater than seven (7);
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(b) incur any indebtedness in excess of $48.3 million, in
connection with (i) any extraordinary expansion of the Business, or (ii) the
development of a new line of Business;
(c) amend or modify any provision of this Agreement;
(d) amend or modify the Amended and Restated Certificate
of Incorporation, other than to amend Article IV thereof to increase the
authorized shares of capital stock as contemplated by Article VI of this
Agreement (which amendment will only require the affirmative vote of a majority
of the members of the Board);
(e) amend the By-Laws of the Company;
(f) appoint or remove any executive officer of the
Company (as defined in Rule 405 promulgated under the Securities Act) or make
any determination with respect to the compensation payable to such senior
executive officer, PROVIDED, HOWEVER, that, such restrictions shall not be
applicable to the appointment or removal of or the compensation payable to the
Chief Executive Officer or Chief Financial Officer of the Company, which shall
require approval by the affirmative vote of only a majority of the members of
the Board;
(g) approve or modify the annual budget of the Company;
(h) approve any capital expenditures in excess of $10
million per annum;
(i) declare or pay, directly or indirectly, any dividend
or distribution, whether in cash, property or securities or a combination
thereof, other than any dividend or distribution declared or paid with the
proceeds of indebtedness or the issuance of securities;
(j) approve any transactions with JLL, Dina, or Mr.
Rafael Gomez Flores or any of their respective affiliates (as defined in Rule
12b-2 promulgated under the Exchange Act);
(k) amend or modify the Stock Option Plan; or
(l) consummate any acquisition by the Company or any of
its subsidiaries of a business or assets, outside of the ordinary course of
business, whether by merger, consolidation or other business combination;
PROVIDED, HOWEVER, that only the affirmative vote of a majority of the members
of the Board shall be required to approve any sale of the Company or its assets,
whether by merger, consolidation or other business combination.
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Section 1.6 INITIAL PUBLIC OFFERING. The parties acknowledge
and agree that the provisions of this Article III may not be appropriate
following the Initial Public Offering. Accordingly, JLL and Dina agree to use
their reasonable best efforts to reach an agreement with respect to the
appropriate composition of the Board and supermajority voting requirements
following the Initial Public Offering and amend this Agreement accordingly.
ARTICLE IV
RESTRICTIONS ON TRANSFER
Section IV.1 GENERAL RESTRICTIONS. Neither Dina, Mr. Rafael
Gomez Flores, CIBC Argosy nor CMF nor any of their respective Permitted
Transferees may Transfer any Shares prior to the fifth anniversary of the date
hereof except for Transfers (a) to any of their Permitted Transferees; PROVIDED,
HOWEVER, that prior to any Transfer of Shares, such Permitted Transferee shall
agree in writing to take such Shares subject to, and to comply with, all of the
provisions of this Agreement, a copy of which agreement shall be on file with
the Secretary of the Company and shall include the address of such Permitted
Transferee to which notices hereunder shall be sent, (b) pursuant to the
provisions of Section 4.04 (but only with respect to Shares Transferred as a
Notice Recipient (as defined herein)) or 4.05 hereof or (c) pursuant to any
corporate transaction requiring the approval of the holders of a majority of the
shares of Common Stock outstanding and as to which the requisite approval of the
stockholders shall have been obtained. Notwithstanding the foregoing, Dina may
pledge up to an aggregate of 214,500 of its Shares (i) to a trust established
for the benefit of holders of new indebtedness of Dina to be issued in exchange
for Dina's 8% Convertible Subordinated Debentures due August 8, 2004, or (ii) to
a bank, reasonably satisfactory to JLL; PROVIDED, HOWEVER, that the trust or the
bank, as the case may be, shall take the Shares subject to, and shall be bound
by, the provisions of this Agreement and the Company shall have no obligation to
file a registration statement with respect to such Shares, other than pursuant
to Article V hereof. The foregoing restrictions of this Section 4.01 shall also
apply to any transfer of the Warrant and the Warrant Shares.
Section 1.7 COMPLIANCE WITH SECURITIES LAWS. Each Stockholder
agrees that every Transfer of its Shares shall comply with all federal, state,
local and foreign securities laws applicable to such transaction. At the request
of the Company, the transferring Stockholder shall deliver to the Company an
opinion of counsel, which counsel and opinion shall be reasonably satisfactory
to the Company, to the effect that the sale, transfer or other disposition
satisfies this Section 4.02.
Section 1.8 TRANSFERS NOT IN COMPLIANCE. In the event of any
purported or attempted Transfer of Shares by a Stockholder that does not comply
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with this Agreement, the purported transferee or successor by operation of law
shall not be deemed to be a stockholder of the Company for any purpose and shall
not be entitled to any of the rights of a stockholder, including, without
limitation, the right to vote the Shares or to receive a certificate for the
Shares or any dividends or other distributions on or with respect to the Shares.
Section 1.9 TAG-ALONG RIGHTS. Except as provided below, if, at
any time during the term of this Agreement and subject to the provisions of
Section 4.01 hereof, any Stockholder proposes to directly or indirectly Transfer
its Shares to a Person (other than Transfers to Permitted Transferees, except in
the case of a transfer by JLL to Dina or any Permitted Transferee of Dina),
including pursuant to a Public Offering, such Stockholder (the "Transferring
Stockholder") shall provide the other Stockholders (the "Notice Recipients") and
the Company with not less than thirty (30) days' prior written notice (the ASale
Notice@) of such proposed Transfer, which notice shall include all of the terms
and conditions of such proposed Transfer and which shall identify such
purchaser; and each Notice Recipient shall have the option, exercisable by
written notice to the Transferring Stockholder within fifteen (15) days after
the receipt of the Sale Notice, to require the Transferring Stockholder to
arrange for such purchaser or purchasers to purchase the same percentage (the
"Percentage") of the Shares then owned by such Notice Recipient as the ratio of
the total number of Shares which are to be Transferred by the Transferring
Stockholder pursuant to the proposed Transfer to the total number of Shares
owned by the Transferring Stockholder immediately prior to such Transfer, or any
lesser amount of Shares as such Notice Recipient shall desire, together with the
Transferring Stockholder's Shares at the same time as, and upon the same terms
and conditions (including all direct or indirect consideration or compensation)
at which, the Transferring Stockholder sells its Shares. If a Notice Recipient
shall so elect, the Transferring Stockholder agrees that it shall either (a)
arrange for the proposed purchaser or purchasers to purchase all or a portion
(as such Notice Recipient shall specify) of the same Percentage of the Shares
then owned by such Notice Recipient at the same time as and upon the same terms
and conditions at which the Transferring Stockholder sells its Shares, and
PROVIDED that if such purchaser or purchasers shall elect to purchase only such
aggregate number of Shares as originally agreed with the Transferring
Stockholder, then the number of Shares to be sold by the Transferring
Stockholder and all Notice Recipients electing to participate in the proposed
Transfer shall be reduced pro rata to such aggregate number or (b) not effect
the proposed Transfer to such purchaser or purchasers. In the event that a
Notice Recipient does not exercise its right to participate in such Transfer or
declines to so participate, the Transferring Stockholder shall have 120 days
from the date of such Sale Notice to consummate the transaction on the terms set
forth therein without being required to provide an additional Sale Notice to the
remaining Stockholders. Notwithstanding the foregoing, the provisions of this
Section 4.04 shall not apply to the Transfer by JLL of a maximum of 10,000
Shares to Coaches, LLC which shall occur within thirty days of the date hereof.
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Section 1.10 RIGHT OF FIRST OFFER.
(1) In the event that JLL desires to effect a sale of
all of its Shares, directly or indirectly, through a sale of the Company or all
or substantially all of the Company's assets (a "Company Sale"), JLL shall give
notice in writing (the "Company Sale Notice") to Dina of such intention and
shall provide to Dina a right of first offer to purchase all of the Shares owned
by the Investors for the Investor Sale Amount (as hereinafter defined). The
Company Sale Notice shall set forth the Company Value (as hereinafter defined)
and the corresponding amount in cash sought by JLL for all of the Shares owned
by the Investors (the "Investor Sale Amount"). The Investor Sale Amount shall be
based on an enterprise valuation of the Company as a whole (the "Company
Value"), as determined by JLL in its sole discretion. Upon receipt of the
Company Sale Notice, Dina shall have 20 business days (the "Purchase Notice
Period") within which to offer by written notice (the "Purchase Notice") to
purchase such Shares for the Investor Sale Amount. On or before the later to
occur of (i) 40 business days after delivery of the Purchase Notice to JLL and
(ii) the receipt of any required governmental consent or approval (the "Purchase
Period"), Dina shall consummate its purchase of the Shares from the Investors by
delivering to the Investors the Investor Sale Amount. In the event that Dina
notifies JLL that it does not wish to purchase the Investors' Shares or fails to
give the Purchase Notice in the manner set forth herein within the Purchase
Notice Period, then JLL may, for a period of nine months following the end of
the Purchase Notice Period or, in the event that Dina does not consummate the
purchase of the Investors' Shares within the Purchase Period, for a period of
nine months following the end of the Purchase Period (the "Company Sale
Period"), pursue a Company Sale to any third party for consideration equal to at
least 85% of the Company Value set forth in the Company Sale Notice. In the
event that JLL proposes to enter into an agreement with a third party with
respect to a Company Sale, all of the Stockholders shall be required to consent
to such Company Sale and to take all steps necessary to consummate such
transaction, including, if applicable, selling its Shares to such third party.
It is expressly understood that each Stockholder will receive the same per share
consideration in connection with any Company Sale. In the event that JLL fails
to consummate a Company Sale within the Company Sale Period, then the Company
Sale Notice shall expire and JLL may not effect a Company Sale without again
complying with the terms of this Section 4.05, including giving a new notice to
Dina.
(2) JLL represents and warrants that, as of the date
hereof, it does not have any agreement with a third party to consummate a
Company Sale.
Section 1.11 EFFECT OF NOTICES. Notwithstanding any provision
hereof to the contrary, the giving to Dina of any Sale Notice shall not obligate
JLL to consummate or effect any transaction referred to therein.
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Section 1.12 NON-COMPETE. In the event that a Company Sale is
consummated, until the third anniversary of the consummation of the Company
Sale, Dina shall not, directly or indirectly, (a) participate in the ownership,
management, operation or control of, or be connected with or employed by, or act
as a consultant for, or have any financial interest in or aid or knowingly
assist any other Person in the conduct of, any business or entity which (i)
engages in any aspect of the Business, (ii) is contemplating engaging in such
Business or (iii) provides any services that compete with those services
provided by the Company or the Company Subsidiaries, in the case of (i), (ii)
and (iii), anywhere within the Territory or (b) hire any officer or other
employee of the Company or any Company Subsidiary or solicit or direct anyone
else to solicit any officer or other employee of the Company or any Company
Subsidiary (i) to terminate his or her employment or other relationship with the
Company or any Company Subsidiary; or (ii) to seek or accept employment or other
affiliation with any other entity (other than any solicitation directed at the
public in general in publications available to the public in general).
ARTICLE V
REGISTRATION RIGHTS
Section 1.13 PIGGYBACK REGISTRATIONS.
(1) RIGHT TO PIGGYBACK. Following an Initial Public
Offering of the Common Stock and subject the provisions of Section 4.01,
whenever the Company proposes to register any of its equity securities or
securities convertible or exchangeable into or exercisable for its equity
securities under the Securities Act (other than a registration relating to the
Company employee benefit plans, exchange offers by the Company or a merger or
acquisition of a business or assets by the Company including, without
limitation, a registration on Form S-4 or Form S-8 or any successor form) (a
"Piggyback Registration"), the Company shall give all Stockholders prompt
written notice thereof (but not less than ten (10) days prior to the filing by
the Company with the Commission of any registration statement with respect
thereto). Such notice (a "Piggyback Notice") shall specify, at a minimum, the
number of securities proposed to be registered, the proposed date of filing of
such registration statement with the Commission, the proposed means of
distribution, the proposed managing underwriter or underwriters (if any and if
known), and a good faith estimate by the Company of the proposed minimum
offering price of such securities. Upon the written request of a Stockholder
given within ten (10) business days of such Stockholder's receipt of the
Piggyback Notice (which written request shall specify the number of Registrable
Securi-
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ties intended to be disposed of by such Stockholder and the intended method
of distribution thereof), the Company shall include, subject to Section
5.01(b) below, in such registration all Registrable Securities with respect
to which the Company has received such written requests for inclusion.
(2) PRIORITY ON PIGGYBACK REGISTRATIONS. If, in connection
with a Piggyback Registration, any managing underwriter (or, if such
Piggyback Registration is not an underwritten offering, a nationally
recognized independent investment banking firm selected by the Company (and
reasonably acceptable to the holders of a majority of the Registrable
Securities sought to be included in such Piggyback Registration and whose
fees and expenses shall be borne solely by the Company)) advises the Company
and the holders of the Registrable Securities to be included in such
Piggyback Registration, that, in its opinion, the inclusion of all the
securities sought to be included in such Piggyback Registration by the
Company, any holders of Registrable Securities seeking to sell such
securities in such Piggyback Registration ("Piggyback Sellers") and any other
proposed sellers, in each case, if any, would adversely affect the
marketability of the securities sought to be sold pursuant thereto, then the
Company shall include in the registration statement applicable to such
Piggyback Registration only such securities as the Company and the Piggyback
Sellers are so advised by such underwriter can be sold without such an effect
(the "Maximum Piggyback Number"), as follows and in the following order of
priority:
(1) first, such number of securities to be sold by the
Company as the Company, in its reasonable judgment and acting in
good faith and in accordance with sound financial practice, shall
have determined; and
(2) second, if the number of securities to be included
under clause (i) above is less than the Maximum Piggyback Number,
pro rata in proportion to the Registrable Securities sought to
be registered by all the Piggyback Sellers and all other proposed
sellers, which, in the aggregate, when added to the number of
securities to be registered under clause (i) above, equals the
Maximum Piggyback Number.
(3) WITHDRAWAL BY THE COMPANY. If, at any time after
giving written notice of its intention to register any of its securities as
set forth in this Section 5.01 and prior to the time the registration statement
filed in connection with such registration is declared effective, the Company
shall determine for any reason not to register such securities, the Company may,
at its election, give written notice of such determination to each Stockholder
and thereupon shall be relieved of its obligation to register any Registrable
Securities in connection with such particular withdrawn or abandoned
registration (but not from its obligation to pay the Registration Expenses (as
hereinafter defined) in connection therewith as provided herein).
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Section 1.14 WITHDRAWAL RIGHTS. Any Stockholder having
notified or directed the Company to include any or all of its Registrable
Securities in a registration statement under the Securities Act shall have
the right to withdraw any such notice or direction with respect to any or all
of the Registrable Securities designated for registration thereby by giving
written notice to such effect to the Company prior to the effective date of
such registration statement. In the event of any such withdrawal, the Company
shall not include such Registrable Securities in the applicable registration
and such Registrable Securities shall continue to be Registrable Securities
hereunder. No such withdrawal shall affect the obligations of the Company
with respect to the Registrable Securities not so withdrawn.
Section 1.15 HOLDBACK AGREEMENTS. Each Stockholder agrees not
to effect any public sale or distribution (including sales pursuant to Rule 144
under the Securities Act) of equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, during the
ten (10) day period prior to the date which the Company has notified the
Stockholders that it intends to commence a Public Offering through the 180-day
period immediately following the effective date of any Piggyback Registration
(in each case, except as part of such registration), or, in each case, if later,
the date of any underwriting agreement with respect thereto; PROVIDED, HOWEVER,
that the Stockholders shall not be obligated to comply with this Section 5.03 on
more than one (1) occasion in any nine (9) month period.
Section 1.16 REGISTRATION PROCEDURES.
(1) Whenever the Stockholders have requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
(subject to its right to withdraw such registration as contemplated by
Section 5.01(c)) shall use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended
method of disposition thereof and, in connection therewith, the Company shall
as expeditiously as possible:
(1) prepare and file with the Commission a registration
statement with respect to such Registrable Securities on any form
for which the Company then qualifies and is available for the sale
of Registrable Securities to be registered thereunder in accordance
with the intended method of distribution and use its best efforts to
cause such registration statement to become effective within ninety
(90) days of the date of the Piggyback Notice;
(2) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a continuous period of
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not less than ninety (90) days (or, if earlier, until all Registrable
Securities included in such registration statement have been sold
thereunder in accordance with the manner of distribution set forth
therein) and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof as set forth
in such registration statement (including, without limitation, by
incorporating in a prospectus supplement or post-effective
amendment, at the request of a seller of Registrable Securities, the
terms of the sale of such Registrable Securities);
(3) promptly (A) notify each seller of Registrable
Securities of each of (1) the filing and effectiveness of the
registration statement and prospectus and any amendment or supplements
thereto, (2) the receipt of any comments from the Commission or any
state securities law authorities or any other governmental authorities
with respect to any such registration statement or prospectus or any
amendments or supplements thereto and (3) any oral or written stop
order with respect to such registration, any suspension of the
registration or qualification of the sale of such Registrable
Securities in any jurisdiction or any initiation or threatening of any
proceedings with respect to any of the foregoing and (B) use its best
efforts to obtain the withdrawal of any order suspending the
registration or qualification (or the effectiveness thereof) or
suspending or preventing the use of any related prospectus in any
jurisdiction with respect thereto;
(4) furnish to each seller of Registrable Securities,
the underwriters and the sales or placement agent, if any, and counsel
for each of the foregoing, a conformed copy of such registration
statement and each amendment and supplement thereto (in each case,
including all exhibits thereto and documents incorporated by reference
therein) and such additional number of copies of such registration
statement, each amendment and supplement thereto (in such case without
such exhibits and documents), the prospectus (including each
preliminary prospectus) included in such registration statement and
prospectus supplements and all exhibits thereto and documents
incorporated by reference therein and such other documents as such
seller, underwriter, agent or counsel may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by
such Seller;
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(5) if requested by the managing underwriter or
underwriters of any registration, subject to approval of counsel to the
Company in its reasonable judgment, promptly incorporate in a
prospectus, supplement or post-effective amendment to the registration
statement such information concerning underwriters and the plan of
distribution of the Registrable Securities as such managing underwriter
or underwriters or such holders reasonably shall furnish to the Company
in writing and request be included therein, including, without
limitation, with respect to the number of Registrable Securities being
sold by such holders to such underwriter or underwriters, the purchase
price being paid therefor by such underwriter or underwriters and with
respect to any other terms of the underwritten offering of the
Registrable Securities to be sold in such offering; and make all
required filings of such prospectus, supplement or post-effective
amendment as soon as possible after being notified of the matters to be
incorporated in such prospectus, supplement or post-effective
amendment;
(6) use its best efforts to register or qualify such
Registrable Securities under such securities or "blue sky" laws of such
jurisdictions as the holders of a majority of Registrable Securities
sought to be registered reasonably request and do any and all other
acts and things which may be reasonably necessary or advisable to
enable the holders of a majority of Registrable Securities sought to be
registered to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such holders and keep such registration
or qualification in effect for so long as the registration statement
remains effective under the Securities Act; PROVIDED that the Company
shall not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this paragraph, (B) subject itself to taxation in any such
jurisdiction where it would not otherwise be subject to taxation but
for this paragraph or (C) consent to the general service of process in
any jurisdiction where it would not otherwise be subject to general
service of process but for this paragraph;
(7) notify each seller of such Registrable Securities,
at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon the discovery that, or of
the happening of any event as a result of which, the registration
statement covering such Registrable Securities, as then in effect,
contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or any fact
necessary to make the statements therein not misleading, and
promptly prepare and
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furnish to each such seller a supplement or amendment to the
prospectus contained in such registration statement so that such
registration statement shall not, and such prospectus as thereafter
delivered to the purchasers of such Registrable Securities shall
not, contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or any fact
necessary to make the statements therein not misleading;
(8) cause all such Registrable Securities to be listed
on any securities exchange or established over-the-counter market on
which or through which similar securities of the Company are listed
or traded and, if not so listed or traded, to be listed on the
National Association of Securities Dealers automated quotation
system ("Nasdaq") and if listed on Nasdaq, use its reasonable
efforts to secure designation of all such Registrable Securities
covered by such registration statement as a Nasdaq "national market
system security" within the meaning of Rule 11Aa2-1 under the
Exchange Act or, failing that, to secure Nasdaq authorization for
such Registrable Securities;
(9) make available for inspection by any seller of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter
all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors,
employees, attorneys and independent accountants to supply all
information reasonably requested by any such sellers, underwriters,
attorneys, accountants or agents in connection with such registration
statement. Information which the Company determines, in good faith, to
be confidential shall not be disclosed by such persons unless (A) the
disclosure of such information is necessary to avoid or correct a
misstatement or omission in such registration statement, or (B) the
release of such information is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction. Each seller of
Registrable Securities agrees, on its own behalf and on behalf of all
its underwriters, accountants, attorneys and agents, that the
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 Company unless and until
such is made generally available to the public. Each seller of
Registrable Securities further agrees, on its own behalf and on behalf
of all its underwriters, accountants, attorneys and agents, that it
will, upon learning that disclosure of such information is sought in a
court of competent
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jurisdiction, give notice to the Company and allow the Company, at
its expense, to undertake appropriate action to prevent disclosure
of the information deemed confidential;
(10) use its best efforts to comply with all applicable
laws related to such registration statement and offering and sale of
securities and all applicable rules and regulations of governmental
authorities in connection therewith (including, without limitation,
the Securities Act and the Exchange Act) and make generally
available to its security holders as soon as practicable (but in any
event not later than fifteen (15) months after the effectiveness of
such registration statement) an earnings statement of the Company
and its subsidiaries complying with Section 11(a) of the Securities
Act;
(11) permit any Stockholder, which Stockholder, in its
sole and exclusive judgment, might be deemed to be an underwriter or
controlling person of the Company, to participate in the preparation
of such registration statement and to require the insertion therein
of material, furnished to the Company in writing, which in the
reasonable judgment of such holder and such holder's counsel should
be included;
(12) use reasonable best efforts to furnish to each
seller of Registrable Securities a signed counterpart of (A) an opinion
of counsel for the Company and (B) a "comfort" letter signed by the
independent public accountants who have certified the Company's
financial statements included or incorporated by reference in such
registration statement, covering such matters with respect to such
registration statement and, in the case of the accountants' comfort
letter, with respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's counsel
and in accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities for the account of, or on
behalf of, an issuer of common stock, such opinion and comfort letters
to be dated the date such opinions and comfort letters are customarily
dated in such transactions, and covering in the case of such legal
opinion, such other legal matters and, in the case of such comfort
letter, such other financial matters, as the holders of a majority of
the Registrable Securities being sold may reasonably request; and
(13) take all such other actions as the holders of a
majority of the Registrable Securities being sold or the underwrit-
17
<PAGE>
ers, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities.
(2) UNDERWRITING. Without limiting any of the foregoing, in
the event that the offering of Registrable Securities is to be made
by or through an underwriter, the Company shall enter into an
underwriting agreement with a managing underwriter or underwriters
containing representations, warranties, indemnities and agreements
customarily included (but not inconsistent with the agreements
contained herein) by an issuer of common stock in underwriting
agreements with respect to offerings of common stock for the account
of, or on behalf of, such issuers. In connection with the sale of
Registrable Securities hereunder, any seller of such Registrable
Securities may, at its option, require that any and all
representations and warranties by, and indemnities and agreements
of, the Company to or for the benefit of such underwriter or
underwriters (or which would be made to or for the benefit of such
an underwriter or underwriters if such sale of Registrable
Securities were pursuant to a customary underwritten offering) be
made to and for the benefit of such seller and that any or all of
the conditions precedent to the obligations of such underwriter or
underwriters (or which would be so for the benefit of such
underwriter or underwriters under a customary underwriting
agreement) be conditions precedent to the obligations of such seller
in connection with the disposition of its securities pursuant to the
terms hereof. In connection with any offering of Registrable
Securities registered pursuant to this Agreement, the Company shall
(i) furnish to the underwriter, if any (or, if no underwriter, the
sellers of such Registrable Securities), unlegended certificates
representing ownership of the Registrable Securities being sold, in
such denominations as requested and (ii) instruct any transfer agent
and registrar of the Registrable Securities to release any stop
transfer order with respect thereto.
(3) RETURN OF PROSPECTUSES. Each seller of Registrable
Securities hereunder agrees that upon receipt of any notice from the
Company of the happening of any event of the kind described in
Section 5.04(a)(vii), such seller shall forthwith discontinue such
seller's disposition of Registrable Securities pursuant to the
applicable registration statement and prospectus relating thereto
until such seller's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5.04(a)(vii) and, if so
directed by the Company, deliver to the Company all copies, other
than permanent file copies, then in such seller's possession of the
prospectus current at the time of receipt of such notice relating to
such Registrable Securities. In the event the Company shall give
such notice, the ninety (90) day period during which such
registration statement must remain effective pursuant to this
Agreement shall be extended by the number of days during the period
from the date of giving of a notice regarding the happening of an
event of the kind described in Section 5.04(a)(vii) to the date when
all such sellers shall receive such a supplemented or amended
prospectus and such prospectus shall have been filed with the
Commission.
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<PAGE>
Section 1.17 REGISTRATION EXPENSES. All expenses incident to
the Company's performance of, or compliance with, its obligations under this
Agreement including, without limitation, all registration and filing fees, all
fees and expenses of compliance with securities and "blue sky" laws (including,
without limitation, the fees and expenses of counsel for underwriters or
placement or sales agents in connection therewith), all printing and copying
expenses, all messenger and delivery expenses, all fees and expenses of
underwriters and sales and placement agents in connection therewith, all fees
and expenses of the Company's independent certified public accountants and
counsel (including, without limitation, with respect to "comfort" letters and
opinions) (collectively, the "Registration Expenses") shall be borne by the
Company; PROVIDED, HOWEVER, that all incremental costs resulting from applicable
federal and blue sky registration and filing fees, National Association of
Securities Dealers filing fees, and underwriting discounts and commissions
allocable to each Stockholder selling Registrable Securities shall be borne by
such Stockholder. The Company shall be responsible for the fees and expenses of
one legal counsel retained by the holders of a majority of the Registrable
Securities included in such registration. Notwithstanding the foregoing, the
Company shall not be responsible for the fees and expenses of any additional
counsel, or any of the accountants, agents or experts retained by the
Stockholders in connection with the sale of Registrable Securities. The Company
will pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties,
the expense of any annual audit and the expense of any liability insurance)
(collectively, "Internal Expenses") and the expenses and fees for listing the
securities to be registered on each securities exchange and included in each
established over-the-counter market on which similar securities issued by the
Company are then listed or traded or for listing on Nasdaq.
Section 1.18 INDEMNIFICATION.
(1) BY THE COMPANY. The Company agrees to indemnify,
to the fullest extent permitted by law, each holder of Registrable Securities
being sold, its officers, directors, employees and agents and each Person who
controls (within the meaning of the Securities Act) such holder or such other
indemnified Person against all losses, claims, damages, liabilities and expenses
(collectively, the "Losses") caused by, resulting from or relating to any untrue
or alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or a fact necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished to the Company by or on behalf of such holder expressly
for use therein or by such holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after the Company has furnished such holder with a sufficient number of
19
<PAGE>
copies of the same. In connection with an underwritten offering and without
limiting any of the Company's other obligations under this Agreement, the
Company shall indemnify such underwriters, their officers, directors,
employees and agents and each Person who controls (within the meaning of the
Securities Act) such underwriters or such other indemnified Person to the
same extent as provided above with respect to the indemnification of the
holders of Registrable Securities being sold.
(2) BY STOCKHOLDERS. In connection with any
registration statement in which a holder of Registrable Securities is
participating, each such holder will furnish to the Company in writing
information regarding such holder's ownership of Registrable Securities and
its intended method of distribution thereof and, to the extent permitted by
law, shall indemnify the Company, its directors, officers, employees and
agents and each Person who controls (within the meaning of the Securities
Act) the Company or such other indemnified Person against all Losses caused
by, resulting from or relating to any untrue or alleged untrue statement of
material fact contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only to the
extent that such untrue statement or omission is caused by or contained in
such information so furnished in writing by or on behalf of such holder;
PROVIDED, HOWEVER, that each holder's obligation to indemnify the Company
hereunder shall be apportioned between each holder based upon the net amount
received by each holder from the sale of Registrable Securities, as compared
to the total net amount received by all of the holders of Registrable
Securities sold pursuant to such registration statement, no such holder being
liable to the Company in excess of such apportionment.
(3) NOTICE. Any Person entitled to indemnification
hereunder shall give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification; PROVIDED, HOWEVER, that
the failure to give such notice shall not release the indemnifying party from
its obligation, except to the extent that the indemnifying party has been
materially prejudiced by such failure to provide such notice.
(4) DEFENSE OF ACTIONS. In any case in which any such
action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not (so long as it shall continue to have the right to defend, contest,
litigate and settle the matter in question in accordance with this paragraph)
be liable to such indemnified party hereunder for any legal or other expense
subsequently incurred by
20
<PAGE>
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, supervision and monitoring (unless such
indemnified party reasonably objects to such assumption on the grounds that
there may be defenses available to it which are different from or in addition
to the defenses available to such indemnifying party, in which event the
indemnified party shall be reimbursed by the indemnifying party for the
expenses incurred in connection with retaining separate legal counsel). An
indemnifying party shall not be liable for any settlement of an action or
claim effected without its consent. The indemnifying party shall lose its
right to defend, contest, litigate and settle a matter if it shall fail to
diligently contest such matter (except to the extent settled in accordance
with the next following sentence). No matter shall be settled by an
indemnifying party without the consent of the indemnified party (which
consent shall not be unreasonably withheld).
(5) SURVIVAL. The indemnification provided for under
this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified Person and will survive
the transfer of the Registrable Securities and the termination of this
Agreement.
(6) CONTRIBUTION. If recovery is not available under
the foregoing indemnification provisions for any reason or reasons other than
as specified therein, any Person who would otherwise be entitled to
indemnification by the terms thereof shall nevertheless be entitled to
contribution with respect to any Losses with respect to which such Person
would be entitled to such indemnification but for such reason or reasons. In
determining the amount of contribution to which the respective Persons are
entitled, there shall be considered the Persons' relative knowledge and
access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or
omission, and other equitable considerations appropriate under the
circumstances. It is hereby agreed that it would not necessarily be equitable
if the amount of such contribution were determined by pro rata or per capita
allocation. 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 who was not found guilty of such fraudulent
misrepresentation. Notwithstanding the foregoing, no Stockholder shall be
required to make a contribution in excess of the net amount received by such
holder from the sale of Registrable Securities.
ARTICLE VI
PREEMPTIVE RIGHTS
Section 1.19 PREEMPTIVE RIGHTS.
21
<PAGE>
(1) If, at any time during the term of this Agreement
and prior to the consummation of the Initial Public Offering, the Company
proposes to issue and sell shares of Common Stock to any Person (other than
pursuant to the Stock Option Plan), each Stockholder shall have the right to
purchase from the Company (at the same price per share paid by the Investors
pursuant to the Investment) a number of shares of Common Stock equal to such
Stockholders' Applicable Percentage of the total number of shares of Common
Stock proposed to be issued and sold by the Company. Each Stockholder hereby
agrees that the Company may undertake one or more issuances of Common Stock
at the price of $204.918 per share, subject to the Stockholders' rights under
this Section 6.01. Each Stockholder further hereby acknowledges and agrees
that the payment of $204.918 per share shall be conclusive and binding as
evidence of the fair market value of the Common Stock at such time. The per
share price of $204.918 established by this Section 6.01(a) shall be subject
to the provisions of Section 7.13 hereof.
(2) If the Company proposes to issue and sell shares of
Common Stock, it shall give each Stockholder written notice of such issuance,
describing the price and terms upon which the Company intends to issue the
same, the total number of shares to be sold and the amount of Common Stock
eligible to be purchased by each Stockholder pursuant to Section 6.01(a)
above. Any revision of the terms of such intended issuance shall require
renotification to the Stockholders and a restarting of the ten (10) business
day period provided in Section 6.01(c) below.
(3) Upon receipt by each Stockholder of the written
notice of the Company pursuant to Section 6.01(b) above, each Stockholder
shall have ten (10) business days during which to exercise its right to
purchase its proportionate share of Common Stock for the price and upon the
terms specified in the aforesaid notice at the price set forth in Section
6.01(a) above. If any Stockholder fails to notify the Company of its exercise
of the rights granted by this Section 6.01 within such ten (10) business day
period, such Stockholder shall have no further rights with regard to the
purchase of any shares of Common Stock at such price and upon the terms
specified in the notice to such Stockholder, subject to Section 6.01(d) below.
(4) If the Company has not sold the shares of Common
Stock included in the notice issued pursuant to Section 6.01(b) above within
sixty (60) days following the expiration of the ten (10) business day period
referred to above, the Company shall not thereafter issue or sell any shares
of Common Stock without also offering the same to the Stockholders in the
manner provided above.
(5) Each share of Common Stock issued and sold to a
Stockholder pursuant to the rights set forth in this Section 6.01 shall be
subject to this Agreement and each certificate representing such shares of
Common Stock shall bear substantially the legend set forth in Section 7.01
hereof.
22
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 1.20 LEGENDS. Each of the Stockholders agrees that
substantially the following legend shall be placed on the certificates
representing any Shares owned by them:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF ("TRANSFERRED") EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS OF THE STOCKHOLDERS AGREEMENT DATED AS OF JUNE 16, 1999
AND MAY NOT BE TRANSFERRED UNLESS SUCH TRANSFER COMPLIES WITH THE
PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT. A COPY OF SUCH STOCKHOLDERS
AGREEMENT IS ON FILE WITH THE SECRETARY OF MCII HOLDINGS (USA), INC.
AND IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR. THE
HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES
TO BE BOUND BY ALL OF THE PROVISIONS OF THE AFORESAID AGREEMENT.
From and after the date of this Agreement, any reference in any legend on any
certificate representing any Shares to the Stockholders Agreement shall be
deemed for all purposes to refer to this Agreement.
Section 1.21 SPECIFIC PERFORMANCE. Each of the Stockholders
acknowledges and agrees that in the event of any breach of this Agreement, the
non-breaching party or parties would be irreparably harmed and could not be made
whole by monetary damages. The Stockholders hereby agree that in addition to any
other remedy to which they may be entitled at law or in equity, they shall be
entitled to compel specific performance of this Agreement in any action
instituted in any court of the United States or any state thereof having subject
matter jurisdiction for such action.
23
<PAGE>
Section 1.22 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
Section 1.23 ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement and understanding of the parties hereto with respect to the
subject matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants, conditions or undertakings with respect
to the subject matter hereof, other than those expressly set forth or referred
to herein. This Agreement supersedes all prior agreements and understandings
between the parties hereto with respect to the subject matter hereof.
Section 1.24 PROXY. For so long as this Agreement is in
effect, if any Stockholder fails or refuses to vote that Stockholder's Shares
pursuant to this Agreement, then, without further action by such Stockholder,
the other Stockholder shall have an irrevocable proxy coupled with an interest
to vote such Stockholder's Shares in accordance with this Agreement, and each
Stockholder hereby grants to the other Stockholder such irrevocable proxy
coupled with an interest.
Section 1.25 NOTICES. All notices and other communications
hereunder shall be in writing and shall be delivered personally or by next-day
courier or telecopied, with confirmation of receipt, to the parties at the
addresses specified below (or at such other address for a party as shall be
specified by like notice; PROVIDED that notices of change of address shall be
effective only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered or telecopied, or one day after delivery to a
courier for next-day delivery.
If to the Company, to:
MCII Holdings (USA), Inc.
c/o Motor Coach Industries International, Inc.
10 East Golf Road
Des Plaines, Illinois 60016
Attention: Timothy J. Nalepka, Esquire
Facsimile: (847) 299-6773
If to JLL, to:
Joseph Littlejohn & Levy Fund III LP
450 Lexington Avenue, Suite 3350
New York, New York 10017
Attention: Mr. Jeffrey C. Lightcap
Facsimile: (212) 286-8626
24
<PAGE>
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Attention: Robert B. Pincus, Esquire
Facsimile: (302) 651-3001
If to CIBC Argosy or CMF, to:
c/o CIBC World Markets Corp.
425 Lexington Avenue
New York, New York 10017
Attention: Mr. Jay Levine
Facsimile: (212) 885-4998
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005-1702
Attention: Roger Meltzer, Esquire
Facsimile: (212) 269-5420
If to Dina, to:
Consorcio G Grupo Dina, S.A. de C.V.
Tlacoquemecatl No. 41
Colonia Del Valle
03100, Mexico D.F., Mexico
Attention: Mr. Rafael Gomez Flores
Facsimile: 011-525-420-3977
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: M. Finley Maxson, Esquire
Facsimile: (312) 558-5700
If to Mr. Rafael Gomez Flores, to:
Rafael Gomez Flores
25
<PAGE>
c/o Consorcio G Grupo Dina, S.A. de C.V.
Tlacoquemecatl 41
Colonia Del Valle
03100 Mexico D.F., Mexico
Facsimile: 011-525-420-3977
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: M. Finley Maxson, Esquire
Facsimile: (312) 558-5700
Section 1.26 APPLICABLE LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
giving effect to the principles and conflicts of law thereof. THE PARTIES HERETO
WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO DISPUTES HEREUNDER; ALL SUCH
DISPUTES SHALL BE SETTLED BY BINDING ARBITRATION PURSUANT TO THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION IN NEW YORK, NEW YORK AND THE ORDER OF SUCH
ARBITRATORS SHALL BE FINAL AND BINDING ON ALL PARTIES HERETO AND MAY BE ENTERED
AS A JUDGMENT IN A COURT HAVING JURISDICTION OVER THE PARTIES. Each Stockholder
hereby agrees and consents to the jurisdiction of the Chancery Court of and for
New Castle County, Delaware (the "Court"). Dina and Mr. Gomez Flores hereby
irrevocably consent to the service of any and all process in any such suit,
action or proceeding by the delivery of such process to such party at the
address and in the manner provided in Section 7.06. Dina has appointed The
Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801, as
its authorized agent (the "Dina Authorized Agent") and Mr. Gomez Flores has
appointed The Corporation Trust Company, 1209 Orange Street, Wilmington,
Delaware 19801, as his authorized agent (the "Gomez Flores Authorized Agent"),
in each case, upon which process may be served in any suit, action or proceeding
based on this Agreement which may be instituted in any Court, by any Stockholder
or the Company, and Dina and Mr. Gomez Flores expressly accept the jurisdiction
of any such Court in respect of any such suit, action or proceeding. Such
appointment shall be irrevocable. Dina represents and warrants that the Dina
Authorized Agent, and Mr. Rafael Gomez Flores represents and warrants that the
Gomez Flores Authorized Agent, in each case, has agreed to act as said agent,
respectively, for service of process, and Dina and Mr. Gomez Flores agree to
take any and all action, including the filing of any and all documents and
instruments, which may be necessary to continue such appointment in full force
and effect. Service of process upon the Dina Authorized Agent and written notice
of such service to Dina shall be deemed, in every respect, effective service of
process
26
<PAGE>
upon Dina and the same shall be true with respect to Mr. Gomez Flores and the
Gomez Flores Authorized Agent.
Section 1.27 SEVERABILITY. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any other
jurisdiction, it being intended that all rights and obligations of the parties
hereunder shall be enforceable to the fullest extent permitted by law.
Section 1.28 SUCCESSORS; ASSIGNS. The provisions of this
Agreement shall be binding upon the parties hereto and their respective heirs,
successors and permitted assigns. Neither this Agreement nor the rights or
obligations of any Stockholder hereunder may be assigned, except in connection
with the transfer by a Stockholder of shares of Common Stock to a Permitted
Transferee. Any such attempted assignment in contravention of this Agreement
shall be void and of no effect.
Section 1.29 AMENDMENTS. This Agreement may not be amended,
modified or supplemented unless such modification is in writing and signed by
the Company and Stockholders owning at least 66 2/3% of the outstanding
Shares as of the date hereof; PROVIDED, HOWEVER, that no such amendment shall
be effective against any party that does not consent to such amendment, if
such party would be materially and adversely affected thereby.
Section 1.30 WAIVER. Any waiver (express or implied) of any
default or breach of this Agreement shall not constitute a waiver of any other
or subsequent default or breach.
Section 1.31 COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement.
Section 1.32 RECAPITALIZATION. In the event that any capital
stock or other securities are issued with respect to, in exchange for or in
substitution of any shares of Common Stock (other than upon the conversion
thereof) by reason of any reorganization, recapitalization, reclassification,
merger, consolidation, spin-off, partial or complete liquidation, stock
dividend, split-up, sale of assets, distribution to stockholders or combination
of the shares of Common Stock (other than upon the conversion thereof) or any
other change in the Company's capital structure, appropriate adjustments shall
be made to the terms hereof if necessary to fairly and equitably preserve the
original rights and obligations of the parties hereto under this Agreement.
27
<PAGE>
Section 1.33 CERTAIN TRANSFERS. The parties acknowledge and
agree that JLL intends to Transfer up to a maximum of 10,000 Shares (the "JLL
Transferred Shares") to Coaches, LLC within thirty days of the date hereof. The
parties agree that, following such Transfer, the provisions of Sections 4.04,
4.05, 4.06, Article V and Section 6.01 shall apply to the JLL Transferred Shares
and the holders thereof as if such Shares continued to be owned by JLL.
Section 1.34 TERMINATION. Unless earlier terminated, this
Agreement shall terminate on the seventh anniversary of the date hereof;
PROVIDED, HOWEVER, that the provisions of Article V shall survive any such
termination.
[SIGNATURE PAGES FOLLOW]
28
<PAGE>
IN WITNESS WHEREOF, the undersigned hereby agree to be bound
by the terms and provisions of this Stockholders Agreement as of the date first
above written.
MCII HOLDINGS (USA), INC.
By:
-----------------------------------
Name:
-----------------------------
Title:
-----------------------------
JOSEPH LITTLEJOHN & LEVY FUND III, L.P.
By: JLL ASSOCIATES III, LLC,
-----------------------------------
its General Partner
By:
-----------------------------------
Managing Member
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
By:
-----------------------------------
Jay Levine, authorized signatory
CO-INVESTMENT MERCHANT FUND 3, LLC
By:
-----------------------------------
Jay Levine, authorized signatory
CONSORCIO G GRUPO DINA, S.A. de C.V.
By:
-----------------------------------
Name:
-----------------------------
Title:
-----------------------------
<PAGE>
----------------------------------
RAFAEL GOMEZ FLORES
<PAGE>
ANNEX I
<TABLE>
SHARES OF
NAME OF COMMON STOCK
STOCKHOLDER OWNED (#)
----------- ------------
<S> <C>
Joseph Littlejohn & Levy Fund III, L.P. 522,855.4
Consorcio G Grupo Dina, S.A. de C.V. 390,000
CIBC WG ArgosyMerchant Fund 2, L.L.C. 78,430.14(1)
Co-InvestmentMerchant Fund 3, LLC 8,714.46(1)
Rafael Gomez Flores --(2)
</TABLE>
- --------
(1) Includes shares of Nonvoting Common Stock.
(2) Mr. Gomez Flores has been granted option to purchase an aggregate of
214,285 shares of Common Stock pursuant to the Stock Option Plan.
<PAGE>
Exhibit 10.3
LICENSE AGREEMENT
LICENSE AGREEMENT, dated as of June 16 , 1999 (the "License
Agreement"), by and between Consorcio G Grupo Dina, S.A. de C.V., a corporation
organized under the laws of the United Mexican States ("Licensor"), and MCII
Holdings (USA), Inc., a Delaware corporation ("Licensee").
W I T N E S S E T H
WHEREAS, Licensor is the owner of the trademark, trade name
and service mark "Dina", including the registrations therefor, set forth on
SCHEDULE A hereto (the "Name");
WHEREAS, Licensor is the owner of the Patents (as hereinafter
defined);
WHEREAS, the Licensor has been utilizing the Name and the
Patents in connection with the Business (as hereinafter defined);
WHEREAS, pursuant to the Investment Agreement (the "Investment
Agreement") dated as of June 11, 1999 by and among Joseph Littlejohn & Levy Fund
III, L.P. ("JLL"), CIBC WG Argosy Merchant Fund 2, L.L.C. ("CIBC Argosy"),
Co-Investment Merchant Fund 3, LLC ("CMF") and Licensor, JLL, CIBC Argosy and
CMF, among other things, purchased certain securities of the Licensee (the
"Investment") and, simultaneously therewith, the Licensee repurchased from
Licensor certain outstanding securities of the Licensee owned by the Licensor;
WHEREAS, pursuant to the Investment Agreement, Licensor agreed
to grant to Licensee a license to utilize the Name and the Patent in connection
with the Business upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants, agreements and conditions contained
herein, and intending to be legally bound hereby, the parties agree as set forth
below.
<PAGE>
1. DEFINITIONS.
All capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in the Investment
Agreement.
2. GRANT OF LICENSES.
(a) Upon the terms and subject to the conditions
set forth herein, Licensor hereby grants to Licensee a perpetual, exclusive
and royalty-free right and license in each of the United States of America,
Mexico, Canada, Argentina and Brazil (collectively, the "Territory") and in
each other jurisdiction in which the Licensor has or acquires the right to
use the Name, with right of sublicense to affiliates, to use the Name in
connection with the Business; PROVIDED, HOWEVER, that in the event of a sale
of Licensee to a competitor of Dina Camiones, S.A. de C.V., the right to use
the Name in connection with the operation of the Business in Mexico shall
terminate.
(b) Upon the terms and subject to the conditions set
forth herein, Licensor hereby grants to Licensee a perpetual, exclusive and
royalty-free right and license, with right of sublicense to affiliates, to make,
use, offer to sell or sell any patented invention or import any patented
invention during the term therefor as set forth on SCHEDULE B, including any
continuation, divisional, reissue or continuation in part thereof (the
"Patents") in each of the United States and Canada, and in each other
jurisdiction in which the Licensor has or acquires rights to the Patents.
(c) Upon the request of Licensee, Licensor shall use
commercially reasonable efforts to register the Name and/or the Patents in each
jurisdiction identified by the Licensee.
3. USE OF NAME.
Licensee shall use the Name in substantially the same form and
manner that the Name currently is used in connection with the Business. Licensee
undertakes to comply with all laws, rules and regulations pertaining to the use
of the Name, and agrees to apply appropriate statutory notice of registration
where applicable. In the event Licensee desires to use the Name in a
substantially different form or manner than the Name is currently used in
connection with the Business, Licensee may request Licensor's consent to such
use, which consent shall not be unreasonably withheld or delayed.
4. INFRINGEMENT AND MAINTENANCE.
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<PAGE>
Licensee shall notify Licensor of any threatened or actual
unauthorized use, infringement or dilution of the Name or the Patents which may
come to Licensee's attention. Licensor shall have the sole initial right to
determine whether or not any action shall be taken with respect to such
unauthorized use, infringement or dilution, and the nature of the action to be
taken. In the event that Licensor determines that litigation should not be
commenced, or Licensor fails to commence litigation within a reasonable time
after notice by Licensee, Licensee or any sublicensee may commence, but shall
not be obligated to commence, such litigation. Each party agrees to cooperate
fully with the other in the conduct of any such litigation. Any recovery
obtained as a result of any lawsuit for infringement, unauthorized use or
dilution of the Name or the Patents shall belong to the party commencing such
action, net of reimbursement to the other party hereto for its reasonable
expenses, if any, incurred in connection with such suit.
5. OWNERSHIP.
(a) Licensor represents and warrants that it is
the owner of the Name in the Territory, and that it has the right to grant an
exclusive license in the Territory pursuant to Section 2(a) of this License
Agreement.
(b) Licensor represents and warrants that it is
the owner of the Patents, and that it has the right to grant an exclusive
license pursuant to Section 2(b) of this License Agreement.
(c) Licensee acknowledges that Licensor is the
owner of the Name and the Patents, that use of the Name or the Patents by
Licensee shall not create in Licensee's favor any ownership interest therein.
6. NOTICES.
All notices, requests, demands, waivers and other
communications required or permitted to be given under this License Agreement
shall be in writing and shall be deemed to have been duly given if delivered
personally, by mail (certified or registered mail, return receipt requested) or
by facsimile transmission (receipt of which is confirmed):
If to Licensee, to:
MCII Holdings (USA), Inc.
c/o Motor Coach Industries International, Inc.
3
<PAGE>
10 East Golf Road
Des Plaines, Illinois 60016
Attention: Timothy J. Nalepka, Esq.
Facsimile No.:(847) 299-6773
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Attention: Robert B. Pincus, Esq.
Facsimile No.: (302) 651-3001
If to Licensor, to:
Consorcio G Grupo Dina, S.A. de C.V.
Tlacoquemecatl No. 41
Colonia Del Valle
03100, Mexico D.F., Mexico
Attention: Mr. Rafael Gomez Flores
Facsimile No.: 011-525-420-3977
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: M. Finley Maxson, Esq.
Facsimile No.: (312) 558-5700
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date on which so
hand delivered, on the third business day following the date on which so mailed
and on the date on which faxed and confirmed, except for a notice of change of
address, which shall be effective only upon receipt thereof.
7. ENTIRE AGREEMENT.
This License Agreement, including SCHEDULES A and B hereto and
other documents referred to herein which form a part hereof, contain the entire
4
<PAGE>
understanding of the parties hereto with respect to its subject matter. This
License Agreement supersedes all prior agreements and understandings, oral and
written, with respect to its subject matter.
8. BINDING EFFECT; ASSIGNMENT.
This License Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, successors and permitted assigns, but, except as
contemplated herein, neither this License Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, directly or indirectly, by
Licensor or Licensee without the prior written consent of the other party
hereto; PROVIDED, HOWEVER, that Licensee may assign this License Agreement, on
one or more occasions, to (a) any Affiliate of Licensee or (b) any lender or
other financing party of Licensee or any Affiliate of Licensee provided that no
such assignment shall release Licensee from any of its obligations hereunder.
9. COUNTERPARTS.
This License Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10. INTERPRETATION.
The article and section headings contained in this License
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this License Agreement.
11. GOVERNING LAW.
This License Agreement shall be governed by the laws of the
State of New York, without regard to the principles of conflicts of law thereof.
The parties hereto waive their right to a jury trial with respect to disputes
hereunder; all such disputes shall be settled by binding arbitration pursuant to
the rules of the American Arbitration Association in New York, New York and the
order of such arbitrators shall be final and binding on all parties hereto and
may be entered as a judgment in a court having jurisdiction over the parties.
The Company and Dina hereby agree and consent to be subject to the jurisdiction
of the United States District Court for the Southern District of New York and
the jurisdiction of the courts of the State of New
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York located in the Borough of Manhattan in the City of New York
(collectively, the "Courts") in any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby. The
Company and Dina hereby irrevocably consent to the service of any and all
process in any such suit, action or proceeding by the delivery of such
process to such party at the address and in the manner provided in Section 6.
Dina has appointed The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801, as its authorized agent (the "Dina Authorized
Agent"), upon which process may be served in any suit, action or proceeding
based on this Agreement which may be instituted in any court, by the Company,
and Dina expressly accepts the jurisdiction of any such court in respect of
any such suit, action or proceeding. Such appointment shall be irrevocable.
Dina represents and warrants that the Dina Authorized Agent has agreed to act
as said agent for service of process, and Dina agrees to take any and all
action, including the filing of any and all documents and instruments, which
may be necessary to continue such appointment in full force and effect.
Service of process upon the Dina Authorized Agent and written notice of such
service to Dina shall be deemed, in every respect, effective service of
process upon Dina.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this
License Agreement as of the day and year first above written.
MCII HOLDINGS (USA), INC.
By:
-------------------------------------
Name:
Title:
CONSORCIO G GRUPO DINA, S.A. de C.V.
By:
-------------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
NAME
See attached.
A-1
<PAGE>
SCHEDULE B
PATENTS
See attached.
B-1
<PAGE>
Exhibit 10.4
MCII HOLDINGS (USA), INC.
MANAGEMENT STOCK OPTION PLAN
1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION.
The purpose of the MCII Holdings (USA), Inc. Management Stock
Option Plan (the "Plan") is to afford an incentive to selected directors,
officers, employees and consultants of MCII Holdings (USA), Inc. (the
"Company"), or any Subsidiary or affiliate thereof which now exists or hereafter
is organized or acquired, to acquire a proprietary interest in the Company, to
continue as employees, to increase their efforts on behalf of the Company and to
promote the success of the Company's business through the grant of options
("Options") pursuant to Section 6 hereof, which Options may be non-qualified
stock options or "incentive stock options" in accordance with Section 422 of the
Code.
2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as
set forth below:
(a) "affiliate" means any Person that directly or indirectly
controls, is controlled by, or is under common control with, another Person.
(b) "Beneficial Owner" has the meaning ascribed to it in Rule
13d-3 promulgated under the Exchange Act, except that a Person shall 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.
(c) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Optionee in his most recent written beneficiary
designation filed with the Company to receive the benefits specified under the
Plan upon his or her death, or, if there is no designated Beneficiary or
surviving designated Beneficiary, then the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive such
benefits.
(d) "Board" means the Board of Directors of the Company.
<PAGE>
(e) "Cause" means the determination, in good faith, by the Board,
after notice to the Optionee and a reasonable opportunity to cure, that one or
more of the following events has occurred: (i) the Optionee has failed to
perform his material duties in a reasonably satisfactory manner; (ii) any
reckless or grossly negligent act by the Optionee having the effect of injuring
the interest, business or reputation of the Company, or any of its Subsidiaries
or affiliates in any material respect; (iii) the Optionee's commission of any
felony (including entry of a NOLO CONTENDERE plea); or (iv) any misappropriation
or embezzlement by the Optionee of the property of the Company, or any of its
Subsidiaries or affiliates.
(f) "Change of Control" means the occurrence of any of the
following events: (i) (a) any Person or group of related Persons for purposes of
Section 13(d) Exchange Act (a "Group"), other than JLL, CIBC or Dina or any of
their respective affiliates, becomes the Beneficial Owner of 50% or more of the
total voting or economic power of the Company's outstanding securities and (b)
JLL, CIBC or Dina or any of their respective affiliates no longer have the power
to elect a majority of the directors of the Board; (ii) the occurrence of any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company
to any Person or Group other than JLL, CIBC or Dina or any of their respective
affiliates; (iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board (together with any new
directors whose election by such Board or whose nomination for election by the
stockholders of the Company has been approved by JLL, CIBC or Dina or a majority
of the directors then still in office who either were directors at the beginning
of such period or whose election or recommendation for election was previously
so approved) cease to constitute a majority of the Board; or (iv) the approval
by the holders of securities of the Company of any plan or proposal for the
liquidation or dissolution of the Company.
(g) "CIBC" means CIBC WG Argosy Merchant Fund 2, L.L.C., ("CIBC
Argosy") and Co-Investment Merchant Fund 3, LLC ("CMF").
(h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(i) "Company" means MCII Holdings (USA), Inc., a corporation
organized under the laws of the State of Delaware, or any successor corporation.
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<PAGE>
(j) "Dina" means Consorcio G. Grupo Dina, S.A. de C.V., a
corporation organized under the laws of the United Mexican States, or any
successor corporation.
(k) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and as now or hereafter construed,
interpreted and applied by regulations, rulings and cases.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted and
applied by regulations, rulings and cases.
(m) "Fair Market Value" means, with respect to Stock or other
property, the fair market value of such Stock or other property determined by
such methods or procedures as shall be established from time to time by the
Board in its sole discretion.
(n) "Incentive Stock Option" means any Option intended to be and
designated as an incentive stock option within the meaning of Section 422 of the
Code.
(o) "JLL" means Joseph Littlejohn & Levy Fund III, L.P. or any of
its affiliates.
(p) "Option" means a right, granted to a Optionee under Section 6,
to purchase shares of Stock.
(q) "Option Agreement" means any written agreement, contract, or
other instrument or document evidencing an Option.
(r) "Optionee" means a person who, as a director, officer,
employee or consultant of the Company or any Subsidiary or affiliate thereof,
has been granted an Option under the Plan.
(s) "Person" has the meaning ascribed to it in Section 13(d)(3) or
14(d)(2) of the Exchange Act.
(t) "Plan" means this MCII Holdings (USA), Inc. Management Stock
Option Plan, as amended from time to time.
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<PAGE>
(u) "Recapitalization Dividend" means a dividend or distribution
declared or paid with the proceeds of indebtedness or the issuance of
securities.
(v) "Securities Act" means the Securities Act of 1933, as amended
from time to time, and as now or hereafter construed, interpreted and applied by
regulations, rulings and cases.
(w) "Stock" means shares of the voting common stock, par value
$.01 per share, of the Company.
(x) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of granting of an
Option, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
3. ADMINISTRATION.
The Plan shall be administered by the Board. The Board shall have
the authority, in its reasonable discretion, subject to and not inconsistent
with the express provisions of the Plan, to administer the Plan and to exercise
all the powers and authorities either specifically granted to it under the Plan
or as may be reasonably necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Options; subject to
the provisions of Section 4 hereof, to determine the persons to whom and the
time or times at which Options shall be granted; to determine the type and
number of Options to be granted, the number of shares of Stock to which an
Option may relate and the terms, conditions, restrictions and performance
criteria relating to any Option (including, without limitation, acceleration of
such Option's exercisability in the event of a change in control of the
Company); and to determine whether, to what extent, and under what circumstances
an Option may be settled, cancelled, forfeited, exchanged, or surrendered; to
make adjustments in the terms and conditions of, and the criteria and
performance objectives (if any) included in, Options in recognition of unusual
or non-recurring events affecting the Company or any Subsidiary or affiliate
thereof or the financial statements of the Company or any Subsidiary or
affiliate thereof, or in response to changes in applicable laws, regulations, or
accounting principles; to construe and interpret the Plan and any Option; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the Option Agreements (which need not be
identical for each Optionee); and to make all other determinations deemed
necessary or advisable for the administration of the Plan;
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<PAGE>
PROVIDED, HOWEVER, that no such amendment, modification or adjustment shall
adversely affect any then outstanding Option without the prior written
consent of the holder thereof.
The Board may delegate any of its duties or responsibilities
hereunder to a committee thereof or to a committee consisting of members of
senior management of the Company, as the Board shall designate in writing from
time to time. To the extent the Board so delegates any of its duties or
responsibilities hereunder, unless otherwise provided in writing by the Board,
such committee shall have powers and authority with respect to its delegated
duties and responsibilities equivalent to those of the Board.
Neither the Board, any member of the Board, nor any officer or
employee of the Company designated to administer the Plan, shall be liable for
any action taken or determination made in good faith with respect to the Plan or
any Option granted hereunder and the members of the Board and such employees
shall be entitled to indemnification and reimbursement by the Company to the
maximum extent permitted by law in respect of any claim, loss, damage or expense
(including attorney's fees) arising from the acts, omissions and conduct in
their official capacity with respect to the Plan (other than acts of willful
misconduct).
4. ELIGIBILITY.
Options may be granted to selected directors, officers, employees
or consultants of the Company and its present or future Subsidiaries and
affiliates in the discretion of the Board. In determining the persons to whom
Options shall be granted, the Board shall take into account such factors as the
Board shall deem relevant in connection with accomplishing the purposes of the
Plan; PROVIDED, HOWEVER, that no person shall be granted an Incentive Stock
Option unless he or she is a director, officer, employee or consultant of the
Company or a Subsidiary at the time the Incentive Stock Option is granted.
5. STOCK SUBJECT TO THE PLAN.
The maximum number of shares of Stock reserved for the grant of
Options under the Plan shall be 285,714 subject to adjustment as provided
herein; PROVIDED, HOWEVER, that the maximum number of allotted shares that any
Optionee may receive during the term of the Plan may not exceed 215,000 subject
to adjustment as provided herein. Such shares may, in whole or in part, be
authorized but unissued shares or shares that shall have been or may be
reacquired by the
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<PAGE>
Company in the open market, in private transactions or otherwise. If any
shares subject to an Option are forfeited, cancelled, exchanged or
surrendered or if an Option otherwise terminates or expires without a
distribution of shares to the Optionee, the shares of Stock with respect to
such Option shall, to the extent of any such forfeiture, cancellation,
exchange, surrender, termination or expiration, again be available for
Options under the Plan.
In the event that any dividend or other distribution (whether in
the form of cash, Stock, or other property), recapitalization, Stock split,
reverse split, reorganization, merger, consolidation, spin-off, combination,
repurchase, or share exchange, or other similar corporate transaction or event
shall occur after the date hereof which the Board, in its reasonable discretion,
determines affects the Stock such that an adjustment is appropriate in order to
prevent dilution or enlargement of the rights of Optionees or the value of the
Options under the Plan, then the Board shall make such equitable changes or
adjustments as it deems necessary or appropriate to any or all of (i) the number
and kind of shares of capital stock which may thereafter be issued upon exercise
of Options, (ii) the number and kind of shares of capital stock issued or
issuable in respect of outstanding Options and (iii) the exercise price, grant
price, or purchase price relating to any Option; PROVIDED, that, with respect to
Incentive Stock Options, such adjustment shall be made in accordance with the
provisions of Section 424(h) of the Code (or any successor thereto); and FURTHER
PROVIDED, that no such change or adjustment shall be made in the event that (x)
capital stock is issued by the Company in exchange for cash or property or
pursuant to any employee benefit plan (as defined in Section 3(3) of ERISA) of
the Company and (y) no change or adjustment is made for the benefit of holders
of the outstanding Stock as a result thereof.
6. TERMS OF OPTIONS.
Options may be granted on such terms as may be determined by the
Board in its sole discretion, provided that such terms and conditions are
consistent with the following:
(a) EXERCISE PRICE. The exercise price per share of Stock
purchasable under an Option shall be determined by the Board; PROVIDED, HOWEVER,
that in the case of an Incentive Stock Option, such exercise price shall be not
less than the Fair Market Value of a share of stock as determined by the Board
on the date of grant of such Option.
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<PAGE>
(b) PAYMENT. The exercise price for Stock subject to the Plan
shall be in a manner set forth in an Option Agreement.
(c) TERM OF OPTIONS. An Option granted under the Plan shall expire
no later than ten (10) years from the date of grant.
7. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LOCAL AND EXCHANGE REQUIREMENTS. The
Plan, the granting and exercising of Options thereunder, and the other
obligations of the Company under the Plan and any Option Agreement or other
agreement shall be subject to, and the Company shall take all reasonable steps
to comply with, all applicable federal and state laws, rules and regulations,
and to such approvals by any regulatory or governmental agency as may be
required. The Company, in its discretion, may postpone the issuance or delivery
of Stock under any Option until completion of such stock exchange listing or
registration or qualification of such Stock or other required action under any
state, federal or foreign law, rule or regulation as the Company may consider
appropriate, and may require any Optionee to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of Stock in compliance with applicable laws, rules and
regulations.
(b) NONTRANSFERABILITY OF OPTIONS. Options shall not be
transferable by an Optionee except by will or the laws of descent and
distribution, and shall be exercisable during the lifetime of a Optionee only by
such Optionee or his guardian or legal representative and after the death of an
Optionee, by his beneficiaries.
(c) NO RIGHT TO CONTINUED EMPLOYMENT, ETC. Nothing in the
Plan or in any Option granted or any Option Agreement or other agreement entered
into pursuant hereto shall be construed as a contract of employment with any
Optionee or confer upon any Optionee the right to continue in the employ of the
Company, any Subsidiary or any affiliate thereof or to be entitled to any
remuneration or benefits not set forth in the Plan or such Option Agreement or
other agreement or to interfere with or limit in any way the right of the
Company or any such Subsidiary or affiliate thereof to terminate such Optionee's
employment.
(d) TAXES. The Company or any Subsidiary or affiliate
thereof is authorized to withhold from any payment relating to an Option under
the Plan, including from a distribution of Stock, or any other payment to a
Optionee, amounts
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<PAGE>
of withholding and other taxes due in connection with any transaction
involving an Option, and to take such other action as the Board may deem
advisable to enable the Company and Optionees to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any
Option. This authority shall include authority to withhold or receive Stock
or other property and to make cash payments in respect thereof in
satisfaction of an Optionee's tax obligations.
(e) AMENDMENT AND TERMINATION OF THE PLAN. The Board may at
any time and from time to time alter, amend, suspend, or terminate the Plan in
whole or in part. Notwithstanding the foregoing, no amendment shall affect
adversely any of the rights of any Optionee, without such Optionee's consent,
under any Option previously granted under the Plan.
(f) NO RIGHTS TO OPTIONS; NO STOCKHOLDER RIGHTS. No Optionee
shall have any claim to be granted any Option under the Plan, and there is no
obligation for uniformity of treatment of Optionees. Except as provided
specifically herein, Optionee or a transferee of an Option shall have no rights
as a stockholder with respect to any shares covered by the Option until the date
of the issuance of a stock certificate to him for such shares.
(g) NO FRACTIONAL SHARES. No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any Option. The Board shall
determine whether cash, other Options, or other property shall be issued or paid
in lieu of such fractional shares.
(h) GOVERNING LAW. The Plan and all determinations made and
actions taken pursuant hereto shall be governed by the laws of the State of
Delaware without giving effect to the conflict of laws principles thereof. The
Company and each Optionee shall submit to the jurisdiction of the Chancery Court
of and for New Castle County, Delaware with respect to any claim hereunder.
(i) EFFECTIVE DATE; PLAN TERMINATION. The Plan shall take
effect upon the date hereof.
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<PAGE>
Exhibit 10.5
MCII Holdings (USA), Inc.
Management Stock Option Plan
NON-QUALIFIED
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, entered into as of June 16, 1999,
pursuant to the MCII Holdings (USA), Inc. Management Stock Option Plan (the
"Plan"), between MCII Holdings (USA), Inc., a Delaware corporation (the
"Company"), and Rafael Gomez Flores (the "Optionee"), a director, officer,
employee or consultant of the Company or a Subsidiary. Capitalized terms used
but not defined herein shall have the meaning ascribed to such terms in the
Plan.
WHEREAS, pursuant to the Investment Agreement (the "Investment
Agreement") dated as of June 11, 1999 by and among JLL, CIBC Argosy, CMF, and
Dina, JLL, CIBC Argosy and CMF, among other things, purchased certain securities
of the Company (the "Investment") and, simultaneously therewith, the Company
repurchased from Dina certain outstanding securities of the Company owned by
Dina; and
WHEREAS, as an incentive to the Optionee to assist the Company
in the management of the business of the Company, the Company desires to afford
the Optionee an opportunity to purchase shares of its Stock as hereinafter
provided and subject to the terms and conditions hereof in accordance with the
purpose of the Plan.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the parties
hereto have agreed and do hereby agree as follows:
1. NUMBER OF SHARES. The Company hereby grants to the
Optionee an option (the "Option") to purchase an aggregate of 214,285 shares of
Stock, subject to adjustment as provided in Section 5 of the Plan, on the terms
and conditions herein set forth.
<PAGE>
2. EXERCISE PRICE. The purchase price of the Stock
subject to the Option shall be $204.918 per share, subject to adjustment as
provided in Section 5 of the Plan.
3. TERM AND EXERCISABILITY OF OPTION.
(a) Unless the Option is previously cancelled
pursuant to this Agreement, the term of the Option and of this Agreement shall
commence on the date hereof (the "Date of Grant") and shall terminate on the
tenth anniversary of the Date of Grant. Upon the termination of the Option, all
rights of the Optionee hereunder shall cease.
(b) EXERCISABILITY OF OPTION. The Option will
become exercisable with respect to 20 percent of the shares of Stock subject
hereto commencing on the first anniversary of the Date of Grant and will become
exercisable with respect to an additional 20 percent of the shares of Stock
subject hereto on each of the second, third, fourth and fifth anniversaries of
the Date of Grant; PROVIDED, HOWEVER, that (i) in the event of a Change of
Control, all Options shall immediately become exercisable and (ii) upon the
declaration by the Company of a Recapitalization Dividend, for a period of sixty
(60) days from the date of notice of such declaration, all Options shall become
exercisable; FURTHER, PROVIDED that with respect to this clause (ii), (x) if the
Optionee does not fully exercise the Option, the Option shall be exercised first
with respect to the shares of Stock that were exercisable prior to the
declaration of a Recapitalization Dividend and then with respect to the shares
of Stock that became exercisable as a result of such declaration; and (y) the
vesting period for any Options that would not have been exercisable prior to the
declaration of a Recapitalization Dividend and are not exercised prior to the
expiration of the sixty (60) day period shall remain unaffected.
(c) Subject to Section 5 hereof, the right of
the Optionee to purchase shares with respect to which this Option has become
exercisable as herein provided may be exercised in whole or in part at any time
or from time to time, prior to the tenth anniversary of the Date of Grant.
4. PAYMENT. The exercise price for Stock subject to an
Option shall be paid in cash or by certified check.
5. TERMINATION OF EMPLOYMENT.
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(a) Except as provided in this Section 5, the
Option may not be exercised after the Optionee has ceased to be a director,
officer, employee or consultant of the Company or any Subsidiary.
(b) If the Optionee is terminated by the Company
or a Subsidiary for Cause, the Option shall be cancelled as of the date of such
termination.
(c) If the Optionee is terminated for any reason
other than for Cause, the Optionee shall have the right to exercise this Option,
to the extent exercisable as of the date of such termination, within one hundred
and twenty (120) days following the date of such termination. If the Optionee is
terminated because of the Optionee's death, this Option shall immediately become
exercisable in full and the Optionee's Beneficiary or representative shall have
the right to exercise this Option in full at any time prior to the tenth
anniversary of the Date of Grant.
(d) Notwithstanding anything to the contrary in
this Section 5, the Option shall not be exercisable later than the tenth
anniversary of the Date of Grant.
(e) Notwithstanding the foregoing provisions of
this Section 5, the Board may, in connection with the termination of the
Optionee, extend the exercisability of the Option, subject to subsection (d) of
this Section 5.
(f) For purposes of this Section 5, the transfer
of employment or service as a director, officer, employee or consultant of an
Optionee between the Company and any one of its Subsidiaries (or between
Subsidiaries) shall not be deemed a termination of employment or service as a
director, officer, employee or consultant.
6. RIGHTS OF OPTIONEE.
(a) The Optionee shall have none of the rights
of a stockholder with respect to the shares covered by the Option until the
shares are issued or transferred to such Optionee upon exercise of the Option.
(b) The Option shall not interfere with or limit
in any way the right of the Company to terminate the Optionee's employment with
or service as a director, officer, employee or consultant at any time, nor
confer upon the Optionee any right to continue as a director, officer, employee
or consultant to the Company or any Subsidiary.
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7. NONTRANSFERABILITY OF OPTION. The Option shall not be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution and shall be
exercisable during the Optionee's lifetime only by such Optionee or his legal
representative.
8. NOTIFICATION.
(a) The Option shall be exercised by written
notification of exercise substantially in the form of Exhibit A hereto and
delivered to the Secretary of the Company in accordance with subsection (b) of
this Section 8. Such notification shall specify the number of shares of Stock to
be purchased and the manner in which payment is to be made.
(b) Any notification required or permitted
hereunder shall be in writing and shall be deemed to have been given when
personally delivered, or when sent if sent via facsimile (with receipt
confirmed) or on the first business day after sent by reputable overnight
courier or on the third business day after sent registered or certified
first-class mail (with receipt confirmed). Such notice shall be addressed to the
Company at:
MCII Holdings (USA), Inc.
c/o Motor Coach Industries International, Inc.
10 East Golf Road
Des Plaines, Illinois 60016
Facsimile: (847) 299-6773
Attention: Timothy J. Nalepka, Esquire
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 639
Wilmington, Delaware 19899
Facsimile: (302) 651-3001
Attention: Robert B. Pincus, Esquire
or to the Optionee at the address set forth below, as the case may be, and
deposited, postage prepaid, in the United States mail; PROVIDED, HOWEVER, that a
notification of exercise pursuant to subsection (a) of this Section 8 shall be
effective only upon re-
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<PAGE>
ceipt by the Secretary of the Company of such notification and all
necessary documentation, including full payment for the Option. Either party
may, by notification to the other given in the manner aforesaid, change the
address for future notices.
9. TAX WITHHOLDING. The Company shall have the power and
the right to deduct or withhold, or require a Optionee to remit to the Company,
an amount sufficient to satisfy any Federal, state, and local taxes (including
the Optionee's FICA obligation) required by law to be withheld as a result of
any taxable event arising in connection with the Option, in accordance with the
terms of the Plan.
10. RESTRICTIONS ON TRANSFER. Optionee acknowledges and
agrees that all shares of Stock issued upon exercise of the Option granted
hereunder shall be subject to the restrictions set forth in Sections 4.01, 4.02,
4.03, 4.04, 7.01 and Article V of the Stockholders Agreement dated as of June
16, 1999, among the Company, JLL, CIBC Argosy, CMF, Dina and Mr. Rafael Gomez
Flores, attached hereto as EXHIBIT A, as if the Optionee was a party thereto.
11. CONDITIONS TO ISSUANCE; RESTRICTIONS ON
TRANSFERABILITY.
(a) Shares of Stock sold pursuant to the Plan
are "restricted securities," as such term is defined in Rule 144 promulgated
under the Securities Act, and any resale of such Stock must be in compliance
with the registration requirements of the Securities Act or an exemption
therefrom.
(b) The obligation of the Company to issue
shares of Stock pursuant to the Plan shall be subject to all applicable laws,
rules and regulations (domestic or foreign), including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the Board.
Under no circumstances shall the Company have any obligation to issue shares of
Stock under the Plan in the event that it is determined that issuance of stock
under the Plan fails to qualify for exemption from registration requirements
under the Securities Act.
12. CANCELLATION AND REISSUANCE. The Board shall have the
authority to provide for the cancellation of the Option and the reissuance of a
replacement Option upon such terms as the Board, in its sole discretion, deems
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appropriate, provided that such terms shall not adversely affect the Optionee
in any material way.
13. INCORPORATION OF PLAN; GOVERNING LAW; INTERPRETATION.
(a) The Plan is hereby incorporated by reference
and made a part hereof, and the Option and this Agreement are subject to all
terms and conditions of the Plan. To the extent that any provision in this
Agreement is inconsistent with the Plan, the provisions of the Plan shall
control.
(b) This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
(c) The Board shall have final authority to
interpret and construe the Plan and this Agreement and to make any and all
determinations under them, and its determination and decisions shall be final,
conclusive and binding upon the Optionee and his legal representative in respect
of any questions arising under the Plan or this Agreement.
14 MISCELLANEOUS.
(a) This Agreement shall bind and inure to the
benefit of the Company, its successors and assigns, and the Optionee and his
personal representatives.
(b) The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.
15 AMENDMENT. This Agreement may be amended or modified
at any time by an instrument in writing signed by the parties hereto.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed by its officer thereunder duly authorized and the Optionee has
hereunto set his hand, all as of the day and year set forth above.
MCII HOLDINGS (USA), INC.
BY
-----------------------------
Name:
Title:
ACCEPTED:
- --------------------------
RAFAEL GOMEZ FLORES
- --------------------------
- --------------------------
Address
Date: June 16, 1999
<PAGE>
Exhibit 10.6
OMNIBUS AGREEMENT
OMNIBUS AGREEMENT (this "Agreement"), dated as of June 16,
1999, by and among MCII Holdings (USA), Inc., a Delaware corporation
("Holdings"), Consorcio G Grupo Dina, S.A. de C.V., a corporation organized
under the laws of the United Mexican States ("Dina"), Joseph Littlejohn & Levy
Fund III, L.P. ("JLL"), CIBC WG Argosy Merchant Fund 2, LLC ("CIBC Argosy") and
Co-Investment Merchant Fund 3, LLC ("CMF" and, together with JLL and CIBC
Argosy, the "Investors").
RECITALS
WHEREAS, pursuant to the Investment Agreement (the "Investment
Agreement"), dated as of June 11, 1999, by and among JLL, CIBC Argosy WG
Merchant Fund 2, L.L.C. ("CIBC Argosy"), Co-Investment Merchant Fund 3, LLC
("CMF" and, together with JLL and CIBC Argosy, the "Investors") and Dina, the
Investors acquired, among other things, certain securities of Holdings, and
simultaneously therewith, Holdings repurchased from Dina certain securities of
Holdings owned by Dina; and
WHEREAS, as a condition to the consummation of the Investment
Agreement, the Investors have required that Dina and Holdings enter into an
agreement with respect to (i) the Latin American Rights (as hereinafter
defined), (ii) the Dina Distribution Rights (as hereinafter defined), (iii) St.
Matthews Equipment Disposition Rights (as hereinafter defined) and the MME Offer
(as hereinafter defined); and
WHEREAS, capitalized terms used herein and not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Investment Agreement; and
WHEREAS, the parties desire to enter into such agreements, on
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein, and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
<PAGE>
ARTICLE I
ST. MATTHEWS EQUIPMENT DISPOSITION
Section 1.1 Holdings shall, and shall cause Motor Coach
Industries Limited ("MCIL"), a wholly owned subsidiary of Holdings to sell to
Dina or one of its affiliates, all of the equipment set forth in Schedule I
hereto (the "Equipment") located at MCIL's manufacturing facility at 1149 St.
Matthews Avenue, Winnipeg, Manitoba, Canada (the "St. Matthews Facility") on an
"AS IS WHERE IS" basis for aggregate consideration of $1.00 (the "St. Matthews
Equipment Disposition").
Section 1.2 It is the intention of Holdings to discontinue
its parts operations at the St. Matthews Facility as promptly as possible and
to transfer the production of such parts and the Equipment to MME (as
hereinafter defined). The consummation of the St. Matthews Equipment
Disposition shall occur at the Closing; PROVIDED, HOWEVER, that following
such sale, Dina shall lease the Equipment to MCIL for a term of up to 3 years
for an annual rental of $1.00. Notwithstanding the foregoing, the parties
agree to use their reasonable efforts to cause the Equipment to be delivered
to Dina as promptly as practicable following the Closing; PROVIDED, FURTHER,
that such transfer shall not occur until Holdings' determination, in its
reasonable judgment, that the manufacturing facilities of Mexicana de
Manufacturas Especiales, S.A. de C.V. ("MME") and the products manufactured
at such facility comply with the quality and delivery standards established
by Holdings for such products.
ARTICLE II
LATIN AMERICAN RIGHTS
Section 1.3 In the event that Holdings determines not to
manufacture, distribute or sell its products (the "Holdings Products") or
otherwise engage in the Business in any country situated in Latin America and
that such business should be conducted by a third party, Holdings shall give
notice (of such intention to Dina (the "License Notice") and, to the extent
permitted by
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applicable law, shall offer (the "License Offer") to Dina the right to
license (the "License") from Holdings the right to manufacture, distribute
and sell the Holdings products in such country (the "Latin American Right").
Section 1.4 The License shall be a royalty bearing license on
such commercially reasonable terms relating to the manufacture, distribution and
sale of the Holdings products as are mutually agreeable to Holdings and Dina and
shall be effective with respect to those countries in Latin America in which
Holdings has determined not to sell or distribute the Holdings Products.
Section 1.5 Dina shall have 60 business days (the "License
Response Period") within which to accept the License Offer. In the event that
(i) Dina notifies Holdings that it does not wish to accept the License Offer,
(ii) fails to notify Holdings within the Response Period or (iii) the parties
are unable to agree on the terms of the License, Holdings shall have the right
to offer the License to a third party on terms no less favorable to Holdings
than those offered by Dina.
ARTICLE III
DINA DISTRIBUTION RIGHTS
Section 1.6 In the event that Dina determines to
distribute or sell any of its body-on-chassis bus products (the "Dina
Products") through an unaffiliated third party in the United States and/or
Canada, Dina shall give notice in writing (the "Distribution Notice") to
Holdings of such intention and shall provide to Holdings a right of first
refusal with respect to the right to distribute the Dina Products in the
United States and/or Canada (the "Dina Distribution Rights").
Section 1.7 The Distribution Rights shall be on such terms
and conditions as are mutually agreeable to Dina and Holdings, but in no
event less favorable to
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Holdings than any other distribution rights granted by Dina with respect to
its products.
Section 1.8 Holdings shall have 60 business days within which
to exercise its right to distribute the Dina Products (the "Acceptance Period").
In the event that (i) Holdings notifies Dina that it does not wish to exercise
such right, (ii) fails to give notice within the Acceptance Period or (iii) the
parties are unable to agree on the terms of the Distribution Rights, Dina may
offer the Distribution Rights to a third party on terms no less favorable to
Dina than those offered to Holdings.
Section 1.9 Notwithstanding the foregoing, the parties
acknowledge and agree that this section shall be inapplicable, and Holdings
shall have no rights, in the event that Dina determines to distribute or sell
the Dina Products directly, without the use of a third party.
ARTICLE IV
MME INVESTMENT
Section 1.10 Promptly after the Closing, Dina shall offer
the Investors the right to purchase collectively twenty (20%) percent of MME
on a pro-rata basis in accordance with their respective ownership of Holdings
for a price and on other terms to be mutually agreed upon ("Initial MME
Offer"). Upon receipt of such offer, each Investor shall have 180 days to
accept such offer. An Investor's failure to accept such offer shall be deemed
to be a rejection of such offer and the other Investors shall have the right
to acquire such Investor's proportionate share on a pro-rata basis.
Section 1.11 In the event that Holdings or its affiliates
acquire Bluebird Corporation (the "Acquisition"), Dina shall offer the Investors
the right to acquire collectively an additional thirty (30%) percent of MME on a
pro-rata basis in accordance with their respective ownership of Holdings for a
price and on other terms to be mutually agreed upon ("Additional MME
4
<PAGE>
Offer" and, together with the Initial MME Offer, the "MME Offer"). In the
event that the Acquisition occurs prior to the Initial MME Offer, the
Investors shall have the right to acquire an aggregate of fifty (50%) percent
of MME and Dina shall not be required to make the Initial MME Offer. Such
offer shall be made to the Investors by Dina within twenty business days
following the consummation of the acquisition of Bluebird and each Investor
shall have twenty business days to accept such offer. An Investor's failure
to accept such offer shall be deemed to be a rejection of such offer and the
other Investors shall have the right to acquire such Investor's proportionate
share on a pro-rata basis.
Section 1.12 Dina and the Investors agree to use their
reasonable best efforts to agree on the price and terms on which any interest
in MME is to be acquired.
ARTICLE V
INSURANCE
Section 1.13 Holdings agrees to use commercially reasonable
efforts to assist Dina in obtaining favorable rates for directors and officers
liability insurance.
ARTICLE VI
MISCELLANEOUS
Section 1.14 FURTHER ASSURANCES. From time to time after
the date hereof, at the request of a party hereto and at the expense of the
party so requesting, the other party hereto shall execute and deliver to such
requesting party such documents and take such other action as such requesting
party may reasonably request in order to consummate the transactions
contemplated hereby.
Section 1.15 NOTICES. Unless otherwise provided in this
Agreement, all notices and other communications required or permitted to be
given hereunder
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shall be in writing and shall be (a) delivered by hand, (b) delivered by a
nationally recognized, commercial overnight delivery service, (c) mailed
postage prepaid by certified mail, return receipt requested, or (d)
transmitted by facsimile:
If to Dina, to: Consorcio G Grupo
Dina, S.A. de C.V.
Tlacoquemecatl No. 41
Colonia Del Valle
03100, Mexico D.F., Mexico
Facsimile: 011-525-420-3977
Attention: Rafael Gomez Flores
Copies to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois
Facsimile: 312-558-5700
Attention: M. Finley Maxson, Esq.
If to Holdings, to: MCII Holdings (USA), Inc.
c/o Motor Coach Industries
International, Inc.
10 East Golf Road
Des Plaines, Illinois 60016
Facsimile: 847-299-9900
Attention: Tim Nalepka, Esq.
If to JLL, to: Joseph Littlejohn & Levy
450 Lexington Avenue
New York, New York 10017
Facsimile: 212-286-8626
Attention: Mr. Jeffrey C. Lightcap
Copies to: Skadden, Arps, Slate, Meagher &
Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Facsimile: 302-651-3001
Attention: Robert B. Pincus, Esq.
6
<PAGE>
If to CIBC Argosy c/o CIBC World Market Corp.
or CMF, to: 425 Lexington Avenue, 3rd Floor
New York, New York 10017
Facsimile: 212-885-4998
Attention: Mr. Jay Levine
Copies to: Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Facsimile: 212-269-5420
Attention: Roger Meltzer, Esq.
Such notices shall be deemed given: (i) in the case of hand deliveries, when
received; (ii) in the case of an overnight delivery service, on the next
business day after being placed in the possession of such delivery service, with
delivery charges prepaid; (iii) in the case of mail, five days after deposit in
the United States postal system, certified mail, return receipt requested,
postage prepaid; and (iv) in the case of facsimile notices, when electronic
confirmation of receipt is received by the sender. Any party may change its
addressee, address or facsimile number by written notice to the other party
given in accordance with this Section 6.2, PROVIDED that any such notice shall
be effective only upon receipt.
Section 1.16 ENTIRE AGREEMENT. This Agreement constitutes
the entire understanding of the parties hereto with respect to the subject
matter hereof. This Agreement supersedes all prior agreements and
understandings, oral and written, with respect to its subject matter.
Section 1.17 BINDING EFFECT; ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns; PROVIDED, HOWEVER, that
neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned, directly or indirectly, by a party hereto without
the prior written consent of the other party, except that any party may
assign its rights to any of its respective affiliates; and, PROVIDED FURTHER,
that no such assignment shall relieve any party hereto from its obligations
under this Agreement.
Section 1.18 NO THIRD-PARTY BENEFICIARIES. Except as
specifically contemplated herein, this Agreement is not intended and shall not
be deemed to confer
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<PAGE>
upon or give any person or entity except the parties hereto and their
respective successors and permitted assigns any remedy, claim, liability,
reimbursement, cause of action or other right under or by reason of this
Agreement.
Section 1.19 COUNTERPARTS. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 1.20 INTERPRETATION. The headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, the term
"including" shall mean including without limitation. As used in this
Agreement, the term "person" shall mean and include an individual, a
partnership, a limited liability company, a joint venture, a corporation, a
trust, an unincorporated organization or association and a government or any
department or agency thereof. As used in this Agreement, the term "affiliate"
shall have the meaning set forth in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
Section 1.21 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware, without giving effect to conflicts of law principles. The parties
hereto waive their right to a jury trial with respect to disputes hereunder;
all such disputes shall be settled by binding arbitration pursuant to the
rules of the American Arbitration Association in New York, New York and the
order of such arbitrators shall be final and binding on all parties hereto
and may be entered as a judgment in a court having jurisdiction over the
parties. Each Investor, the Company and Dina hereby agree and consent to the
jurisdiction of the Chancery Court of and for New Castle County, Delaware
(the "Court"). Dina hereby irrevocably consents to the service of any and all
process in any such suit, action or proceeding by the delivery of such
process to such party at the address and in the manner provided in Section
6.2. Dina has appointed The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801, as its authorized agent (the "Dina Authorized
Agent") upon which process may be served in any suit, action or proceeding
based on this Agreement which may be instituted in any Court, by Holdings or
Dina, and Dina expressly accepts the juris-
8
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diction of any such Court in respect of any such suit, action or
proceeding. Such appointment shall be irrevocable. Dina represents and
warrants that the Dina Authorized Agent has agreed to act as said agent for
service of process, and Dina agrees to take any and all action, including the
filing of any and all documents and instruments, which may be necessary to
continue such appointment in full force and effect. Service of process upon
the Dina Authorized Agent and written notice of such service to Dina shall be
deemed, in every respect, effective service of process upon Dina.
[SIGNATURE PAGES FOLLOW]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Omnibus Agreement as of the day and year first above written.
CONSORCIO G GRUPO DINA, S.A. DE C.V.
By:
-------------------------------------
Name:
Title:
MCII HOLDINGS (USA), INC.
By:
-------------------------------------
Name:
Title:
JOSEPH LITTLEJOHN & LEVY FUND III, LP.
By: JLL ASSOCIATES III, L.L.C.
Its general partner
By:
-------------------------------------
Managing member
<PAGE>
CIBC WG ARGOSY MERCHANT FUND 2, L.L.C.
By:
-------------------------------------
Jay Levine, authorized signatory
CO-INVESTMENT MERCHANT FUND 3, LLC
By:
-------------------------------------
Jay Levine, authorized signatory
<PAGE>
Exhibit 10.7
EMPLOYMENT AGREEMENT
AGREEMENT made as of June 16, 1999, between Motor Coach
Industries International, Inc. (formerly, Transportation Manufacturing
Operations, Inc.), a Delaware corporation (the "Company"), and Rafael Gomez
Flores (the "Executive").
WHEREAS, pursuant to the Investment Agreement (the "Investment
Agreement") dated as of June 11, 1999, among Joseph Littlejohn & Levy Fund III,
L.P. ("JLL"), CIBC WG Argosy Merchant Fund 2, L.L.C., ("CIBC Argosy"),
Co-investment Merchant Fund 3, LLC ("CMF" and, together with JLL and CIBC
Argosy, the "Investors") and Consorcio G Grupo Dina, S.A. de C.V., ("Dina"), the
Investors, purchased certain securities of the Company (the "Investment") and,
simultaneously therewith, the Company repurchased from Dina certain of its
securities; and
WHEREAS, the Executive has experience in (a) the designing,
manufacturing, assembling and marketing of coaches of monocoque or unitized
construction configuration, (b) the distribution of replacement parts to the
intercity coach and transit bus markets (the "Business") and (c) the
manufacturing of products in Mexico; and
WHEREAS, the Executive has extensive experience and
relationships that are beneficial to the Company in Mexico and Latin America,
which he has agreed to utilize for the benefit of the Company; and
WHEREAS, in connection with the Investment, the Company
desires that the Executive serve as Chairman (the "Chairman") of the Board of
Directors of each of (a) the Company, (b) the Company's subsidiaries (the
"Subsidiaries"), and (c) MCII Holdings (USA), Inc., (together with the Company
and the Subsidiaries, the "Company Parties"), to assist in the management of the
Business and the Executive desires to hold such positions under the terms and
conditions of this Agreement; and
WHEREAS, the parties desire to enter into this Agreement
setting forth the terms and conditions of the employment relationship of the
Executive with the Company Parties.
<PAGE>
NOW, THEREFORE, intending to be legally bound hereby, the
parties agree as follows:
1. EMPLOYMENT. Each of the Company Parties hereby
employs the Executive, and the Executive hereby accepts employment with the
Company Parties, upon the terms and subject to the conditions set forth herein.
2. TERM.
(a) Subject to Section 9 hereof, the term of the
employment by the Company Parties of the Executive pursuant to this Agreement
(the "Term") is for an initial period commencing on the date hereof and
terminating on the fifth anniversary hereof (the "Initial Term").
(b) Commencing on the fifth anniversary hereof
and each anniversary of such date thereafter (each, an "Anniversary Date"), the
Term shall automatically be extended for an additional year unless, not later
than sixty (60) days immediately preceding an Anniversary Date, the Executive
gives notice to the Company Parties that he does not wish to extend the Term.
3. POSITION. During the Term, the Executive shall serve
as the Chairman of the Board of Directors of each of the Company Parties and
shall report only to each respective Board of Directors.
4. DUTIES. During the Term, the Executive shall devote
sufficient time and attention to the business and affairs of each of the Company
Parties as are commensurate with his responsibilities as Chairman of each such
entity. During the Term, the Executive shall, among other things, assist the
Company in relocating and overseeing the Company's operations in Mexico, assist
the Company in entering new markets in Latin America for new and used coach
sales, oversee the Company's purchasing program and reduce material costs.
5. SALARY. During the Term, the Company shall pay to the
Executive a base salary at the rate of $1,500,000 per year (the "Base Salary").
The Base Salary shall be payable to the Executive in substantially equal
installments in accordance with the Company's normal payroll practices.
6. BUSINESS EXPENSES. The Executive shall be reimbursed
by the Company, on behalf of all of the Company Parties, for all reasonable and
necessary business expenses incurred by him in connection with his employment
(including,
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<PAGE>
without limitation, expenses for travel and entertainment incurred in
conducting or promoting business for the Company Parties) upon timely
submission by the Executive of receipts and other documentation as required
by the Internal Revenue Code of 1986, as amended (the "Code"), and in
accordance with the Company's normal expense reimbursement policies.
7. OTHER BENEFITS. During the Term, the Executive
shall be eligible to participate fully in all health and other employee
benefit arrangements available to senior executive officers of the Company
generally.
8. OWNERSHIP OF INTELLECTUAL PROPERTY. All intellectual
property conceived or developed by the Executive during the Term which relate to
any of the Company Parties shall belong to and constitute property of the
Company Parties.
9. TERMINATION OF AGREEMENT. The employment by the
Company of the Executive pursuant to this Agreement shall not be terminated
prior to the end of the then current Term hereof except as set forth in this
Section 9.
(a) If the Executive's employment with the
Company Parties is terminated (x) by mutual written agreement of the Company and
the Executive, (y) by the Executive's death or Disability (as defined herein),
or (z) by the Company for Cause (as defined herein), the Executive (or the
Executive's beneficiaries or representatives) shall be entitled to receive all
Base Salary to be paid or provided to the Executive under this Agreement through
the Date of Termination (as defined in Section 9(c)).
(i) DISABILITY. The Executive's
employment by the Company Parties pursuant to this Agreement may be
terminated by written notice to the Executive by the Company or to the
Company by the Executive in the event that (A) the Executive becomes
unable to perform his normal duties by reason of physical or mental
illness or accident for any six (6) consecutive month period, or (B)
the Company receives written opinions from both a physician for the
Company and a physician for the Executive that the Executive will be so
disabled.
(ii) CAUSE. This Agreement may be
terminated by the Company by written notice ("Notice of Termination")
to the Executive for Cause which means the determination, in good
faith, by the Board of Directors of the Company, after Notice of
Termination to the Executive and a reasonable opportunity to cure, that
one or more of the following events has occurred: (A) the Executive has
failed to perform his material duties in a
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<PAGE>
reasonably satisfactory manner; (B) any reckless or grossly negligent
act by the Executive having the effect of injuring the interest,
business or reputation of any of the Company Parties in any material
respect; (C) the Executive's commission of any felony (including entry
of a NOLO CONTENDERE plea); or (D) any misappropriation or
embezzlement by the Executive of the property of any of the Company
Parties.
(b) CHANGE OF CONTROL. This Agreement shall
terminate upon the consummation of a Change of Control, in which event, the
Executive shall be entitled to a lump sum payment of $6,000,000 and no more. For
purposes of this Agreement, a "Change of Control" means the occurrence of any of
the following events:
(i) (a) any Person or group of related
Persons for purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Group"), other than the
Investors and Dina or any of their respective affiliates, becomes the
beneficial owner (as defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act, except that a Person
shall 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) of 50% or more of the
total voting or economic power of MCII Holding's outstanding securities
and (b) the Investors and Dina or any of their respective affiliates no
longer have the power to elect a majority of the directors of the Board
of Directors of MCII Holdings;
(ii) the occurrence of any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all of the assets of MCII
Holdings to any Person or Group other than the Investors and Dina or
any of their respective affiliates;
(iii) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of MCII Holdings (together with any
new directors whose election by the Board of Directors of MCII Holdings
or whose nomination for election by the stockholders of MCII Holdings
has been approved by the Investors and Dina or a majority of the
directors then still in office who either were directors at the
beginning of such period or whose election or recommendation for
election was previously so approved) cease to constitute a majority of
the Board of Directors of MCII Holdings; or
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(iv) the approval by the holders of
securities of MCII Holdings of any plan or proposal for the liquidation
or dissolution of the MCII Holdings.
(c) DATE OF TERMINATION. The Executive's Date of
Termination shall be (i) the date agreed upon in the mutual written agreement of
the parties, (ii) in the case of the Executive's death, the date of the
Executive's death, (ii) in the event of Executive's Disability, the last day the
Executive worked at the Company or (iii) if the Executive's employment is
terminated for Cause, the date on which a Notice of Termination is given.
10. REPRESENTATIONS.
(a) The Company represents and warrants that
this Agreement has been authorized by all necessary corporate action of the
Company and is a valid and binding agreement of the Company enforceable against
both in accordance with its terms.
(b) The Executive represents and warrants that
he is not a party to any agreement or instrument which would prevent him from
entering into or performing his duties in any way under this Agreement.
11. ASSIGNMENT; BINDING AGREEMENT. This Agreement is a
personal contract and the rights and interests of the Executive hereunder may
not be sold, transferred, assigned, pledged, encumbered, or hypothecated by him,
except as otherwise expressly permitted by the provisions of this Agreement.
This Agreement shall inure to the benefit of and be enforceable by the Executive
and his personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amount would still be payable to him hereunder had the Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to his devisee, legatee or
other designee or, if there is no such designee, to his estate.
12. NON-COMPETITION COVENANTS. During the Term and until
the third anniversary of the expiration thereof, or in the event of a Change of
Control, until the third anniversary of the consummation of the Change of
Control, the Executive shall not, directly or indirectly, (a) participate in the
ownership, management, operation or control of, or be connected with or employed
by, or act as a consultant for, or have any financial interest in or aid or
knowingly assist any other Person in the conduct of, any business or entity
which (i) engages in any aspect of
5
<PAGE>
the Business, (ii) is contemplating engaging in such Business or (iii)
provides any services that compete with those services provided by any of the
Company Parties, in the case of (i), (ii) and (iii), anywhere within the
Western Hemisphere or (b) hire any officer or other employee of the Company
Parties or solicit or direct anyone else to solicit any officer or other
employee of the Company Parties (i) to terminate his or her employment or
other relationship with the Company Parties or (ii) to seek or accept
employment or other affiliation with any other entity (other than any
solicitation directed at the public in general in publications available to
the public in general).
13. CONFIDENTIALITY COVENANT. The Executive agrees that
he will not at any time during the Term or at any time thereafter, directly or
indirectly, use for his own account, or disclose to any person, firm or
corporation, other than authorized officers, directors and employees of the
Company Parties, Confidential Information (as hereinafter defined) of the
Company. As used herein, "Confidential Information" of the Company Parties means
information of any kind, nature or description which is disclosed to or
otherwise known to the Executive as a direct or indirect consequence of his
association with any of the Company Parties, which information is not generally
known to the public or in the businesses in which the Company Parties are
engaged or which information relates to specific investment opportunities within
the scope of the business of the Company Parties which were considered by any of
the Company Parties during the Term.
14. ENTIRE AGREEMENT. This Agreement contains all the
understandings between the parties hereto pertaining to the matters referred to
herein, and supersedes any other undertakings and agreements, whether oral or in
writing, previously entered into by them with respect thereto. The Executive
represents that, in executing this Agreement, he does not rely and has not
relied upon any representation or statement not set forth herein made by any of
the Company Parties with regard to the subject matter or effect of this
Agreement or otherwise.
15 AMENDMENT OR MODIFICATION; WAIVER. No provision of
this Agreement may be amended or waived, unless such amendment or waiver is
agreed to in writing, signed by the Executive and by a duly authorized officer
of the Company. No waiver by any party hereto of any breach by another party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same time, any prior time or any subsequent time.
16 NOTICES. Any notice to be given hereunder shall be in
writing and shall be deemed given when delivered personally, sent by courier or
facsimile or
6
<PAGE>
registered or certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such
other address as such party may subsequently give notice hereunder in writing:
To the Executive at:
Rafael Gomez Flores
Consorcio G Grupo Dina, S.A. de C.V.
Tlacoquemecatl No. 41
Colonia Del Valle
03100, Mexico D.F., Mexico
Facsimile: 011-525-420-3977
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: M. Finley Maxson, Esquire
Facsimile: (312) 538-5700
To the Company at:
Motor Coach Industries International, Inc.
10 East Golf Road
Des Plaines, Illinois 60016
Facsimile: (847) 299-6773
Attention: Timothy J. Nalepka, Esquire
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
Facsimile: (302) 651-3001
Attention: Robert B. Pincus, Esquire
Any notice delivered personally or by courier under this
Section 16 shall be deemed given on the date delivered and any notice sent by
facsimile or registered or certified mail, postage prepaid, return receipt
requested, shall be
7
<PAGE>
deemed given on the date transmitted by facsimile or mailed.
17 SEVERABILITY. If any provision of this Agreement or
the application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable, shall not be affected thereby,
and each provision hereof shall be validated and shall be enforced to the
fullest extent permitted by law. Moreover, if any one or more of the provisions
contained in this Agreement shall be held to be excessively broad as to
duration, activity or subject, such provisions shall be construed by limiting
and reducing them so as to be enforceable to the fullest extent permitted by
law.
18 SURVIVORSHIP. The respective rights and obligations
or the parties hereunder shall survive any termination of this Agreement to the
extent necessary to the intended preservation of such rights and obligations.
19 GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its conflicts of laws principles.
20 HEADINGS. All descriptive headings of sections and
paragraphs in this Agreement are intended solely for convenience, and no
provision of this Agreement is to be construed by reference to the heading of
any section or paragraph.
21 WITHHOLDING. All payments to the Executive under this
Agreement shall be reduced by all applicable withholding required by federal,
state or local law.
22 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first above written.
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
By:
---------------------------------------
Name:
Title:
---------------------------------------
Rafael Gomez Flores
<PAGE>
Exhibit 12.1
MOTOR COACH INDUSTRIES INTERNATIONAL ,INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Three Months
Year Ended December 31, Ended March 31,
--------------------------------------- -----------------
1995 1996 1997 1998 1998 1999
-------- ------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
WITH PUSH-DOWN
Income from continuing operations before
provision for income taxes $ 10,441 $26,598 $ 37,794 $ 46,439 $ 14,908 $ 8,941
Add:
Interest expense, including amortization 49,973 35,579 43,494 45,179 10,521 12,020
Rent expense (one-third) 1,035 1,147 1,128 1,366 309 314
Finance interest 2,658 3,605 2,394 2,765 677 690
-------- ------- ------- -------- -------- -------
Earnings, as adjusted $ 64,107 $66,929 $84,810 $ 95,739 $ 26,415 $21,965
-------- ------- ------- -------- -------- -------
-------- ------- ------- -------- -------- -------
Fixed Charges:
Interest expense, including amortization 49,973 35,579 43,494 45,179 10,521 12,020
Rent expense (one-third) 1,035 1,147 1,128 1,356 309 314
Finance interest 2,658 3,605 2,394 2,765 677 690
-------- ------- ------- -------- -------- -------
Fixed charges $ 53,666 $40,331 $47,016 $ 49,300 $ 11,507 $13,024
-------- ------- ------- -------- -------- -------
-------- ------- ------- -------- -------- -------
Ratio of earnings to fixed charges 1.2 1.7 1.8 1.9 2.3 1.7
-------- ------- ------- -------- -------- -------
-------- ------- ------- -------- -------- -------
WITHOUT PUSH-DOWN
Income from continuing operations before
provision for income taxes $25,460 $46,148 $59,429 $71,633 $20,737 $15,314
Add:
Interest expense, including amortization 34,954 16,029 21,859 19,985 4,692 5,647
Rent expense (one-third) 1,035 1,147 1,128 1,356 308 314
Finance interest 2,658 3,605 2,394 2,765 677 690
------- ------- ------- -------- ------- -------
Earnings, as adjusted $64,107 $66,929 $84,810 $95,739 $26,415 $21,965
------- ------- ------- -------- ------- -------
------- ------- ------- -------- ------- -------
Fixed Charges:
Interest expense, including amortization 34,954 16,029 21,859 19,985 4,692 5,647
Rent expense (one-third) 1,035 1,147 1,128 1,356 309 314
Finance interest 2,658 3,605 2,394 2,765 677 690
------- ------- ------- -------- ------- -------
Fixed charges $38,647 $20,781 $25,381 $24,106 5,678 6,651
------- ------- ------- -------- ------- -------
------- ------- ------- -------- ------- -------
Ratio of earnings to fixed charges 1.7 3.2 3.3 4.0 4.7 3.3
------- ------- ------- -------- ------- -------
------- ------- ------- -------- ------- -------
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
100% OWNED SUBSIDIARIES
1. BusLease, Inc.
2. MCIL Holdings, Ltd.
3. Hausman Bus Sales, Inc.
4. Motor Coach Industries, Inc.
5. Transit Bus International, Inc.
6. TMO Holdings of Canada, Ltd.
7. Motor Coach Industries-China, Inc.
8. Universal Coach Parts, Inc.
9 Motor Coach Industries Limited
10. Frank Fair Industries Ltd.
11. Custom Assets Corp.
12. Greyhound Overseas Services, Inc.
13. Transport Technology Corporation
14. Universal Coach Parts Mexico, S.A. de C.V.*
15. Dina Autobuses, S.A. de C.V.
OTHER SUBSIDIARY
16. MCII Financial Services, Inc., 25% ownership by the Company.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
registration statement of our report dated July 22, 1999 included herein
and to all references to our Firm included in this registration statement.
July 22, 1999 /s/ Arthur Andersen, LLP
Chicago, Illinois
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 (file
no. x-xxxxx) of our report dated February 28, 1997 (except with respect to
the information in Notes 1, 2 and 14 related to the June 16, 1999
reorganization, as to which the date is June 16, 1999) on our audit of the
consolidated statements of income, changes in stockholder's equity and cash
flows for the year ended December 31, 1996 of Motorcoach Industries
International, Inc. We also consent to the reference to our firm under the
caption "Experts" and "Selected Consolidated Historical Financial Data."
PricewaterhouseCoopers LLP
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
July 22, 1999
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
The undersigned directors and officers of Motor Coach Industries
International, Inc. do hereby constitute and appoint James P. Bernacchi, with
full power of substitution, our true and lawful attorney-in-fact and agent to
do any and all acts and things in our name and behalf in our capacities as
directors and officers, and to execute any and all instruments for us and in
our names in the capacities indicated below which such person may deem
necessary or advisable to enable Motor Coach Industries International, Inc.
to comply with the Securities Act of 1933 (the "Act"), as amended, and any
rules, regulations and requirements of the Securities and Exchange
Commission, in connection with this Registration Statement, including
specifically, but not limited to, power and authority to sign for us, or any
of us, in the capacities indicated below and any and all amendments
(including pre-effective and post-effective amendments or any other
registration statement filed pursuant to the provisions of Rule 462(b) under
the Act) hereto; and we do hereby ratify and confirm all that such person
shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Rafael Gomez Flores Chairman of the Board July 23, 1999
- ------------------------------ and Director
Rafael Gomez Flores
/s/ Gamaliel Garcia Cortes Director July 23, 1999
- ------------------------------
Gamaliel Garcia Cortes
/s/ Paul S. Levy Director July 23, 1999
- ------------------------------
Paul S. Levy
/s/ Jeffrey Lightcap Director July 23, 1999
- ------------------------------
Jeffrey Lightcap
/s/ David Ying Director July 23, 1999
- ------------------------------
David Ying
/s/ Frank Rodriguez Director July 23, 1999
- ------------------------------
Frank Rodriguez
</TABLE>
<PAGE>
Exhibit 24.2
POWER OF ATTORNEY
The undersigned directors and officers of BusLease, Inc. do hereby
constitute and appoint James P. Bernacchi, with full power of substitution,
our true and lawful attorney-in-fact and agent to do any and all acts and
things in our name and behalf in our capacities as directors and officers,
and to execute any and all instruments for us and in our names in the
capacities indicated below which such person may deem necessary or advisable
to enable BusLease, Inc. to comply with the Securities Act of 1933 (the
"Act"), as amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this Registration
Statement, including specifically, but not limited to, power and authority to
sign for us, or any of us, in the capacities indicated below and any and all
amendments (including pre-effective and post-effective amendments or any
other registration statement filed pursuant to the provisions of Rule 462(b)
under the Act) hereto; and we do hereby ratify and confirm all that such
person shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Rafael Gomez Flores Chairman of the Board July 23, 1999
- ------------------------------ and Director
Rafael Gomez Flores
/s/ Gamaliel Garcia Cortes Director July 23, 1999
- ------------------------------
Gamaliel Garcia Cortes
/s/ Paul S. Levy Director July 23, 1999
- ------------------------------
Paul S. Levy
/s/ Jeffrey Lightcap Director July 23, 1999
- ------------------------------
Jeffrey Lightcap
/s/ David Ying Director July 23, 1999
- ------------------------------
David Ying
/s/ Frank Rodriguez Director July 23, 1999
- ------------------------------
Frank Rodriguez
</TABLE>
<PAGE>
Exhibit 24.3
POWER OF ATTORNEY
The undersigned directors and officers of Transit Bus International,
Inc. do hereby constitute and appoint James P. Bernacchi, with full power of
substitution, our true and lawful attorney-in-fact and agent to do any and
all acts and things in our name and behalf in our capacities as directors and
officers, and to execute any and all instruments for us and in our names in
the capacities indicated below which such person may deem necessary or
advisable to enable Transit Bus International, Inc. to comply with the
Securities Act of 1933 (the "Act"), as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection
with this Registration Statement, including specifically, but not limited to,
power and authority to sign for us, or any of us, in the capacities indicated
below and any and all amendments (including pre-effective and post-effective
amendments or any other registration statement filed pursuant to the
provisions of Rule 462(b) under the Act) hereto; and we do hereby ratify and
confirm all that such person shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Rafael Gomez Flores Chairman of the Board July 23, 1999
- ------------------------------ and Director
Rafael Gomez Flores
/s/ Gamaliel Garcia Cortes Director July 23, 1999
- ------------------------------
Gamaliel Garcia Cortes
/s/ Paul S. Levy Director July 23, 1999
- ------------------------------
Paul S. Levy
/s/ Jeffrey Lightcap Director July 23, 1999
- ------------------------------
Jeffrey Lightcap
/s/ David Ying Director July 23, 1999
- ------------------------------
David Ying
/s/ Frank Rodriguez Director July 23, 1999
- ------------------------------
Frank Rodriguez
</TABLE>
<PAGE>
Exhibit 24.4
POWER OF ATTORNEY
The undersigned directors and officers of Hausman Bus Sales, Inc. do
hereby constitute and appoint James P. Bernacchi, with full power of
substitution, our true and lawful attorney-in-fact and agent to do any and
all acts and things in our name and behalf in our capacities as directors and
officers, and to execute any and all instruments for us and in our names in
the capacities indicated below which such person may deem necessary or
advisable to enable Hausman Bus Sales, Inc. to comply with the Securities Act
of 1933 (the "Act"), as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but not limited to, power and
authority to sign for us, or any of us, in the capacities indicated below and
any and all amendments (including pre-effective and post-effective amendments
or any other registration statement filed pursuant to the provisions of Rule
462(b) under the Act) hereto; and we do hereby ratify and confirm all that
such person shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Rafael Gomez Flores Chairman of the Board July 23, 1999
- ------------------------------ and Director
Rafael Gomez Flores
/s/ Gamaliel Garcia Cortes Director July 23, 1999
- ------------------------------
Gamaliel Garcia Cortes
/s/ Paul S. Levy Director July 23, 1999
- ------------------------------
Paul S. Levy
/s/ Jeffrey Lightcap Director July 23, 1999
- ------------------------------
Jeffrey Lightcap
/s/ David Ying Director July 23, 1999
- ------------------------------
David Ying
/s/ Frank Rodriguez Director July 23, 1999
- ------------------------------
Frank Rodriguez
</TABLE>
<PAGE>
Exhibit 24.5
POWER OF ATTORNEY
The undersigned directors and officers of Motor Coach Industries, Inc.
do hereby constitute and appoint James P. Bernacchi, with full power of
substitution, our true and lawful attorney-in-fact and agent to do any and
all acts and things in our name and behalf in our capacities as directors and
officers, and to execute any and all instruments for us and in our names in
the capacities indicated below which such person may deem necessary or
advisable to enable Motor Coach Industries, Inc. to comply with the
Securities Act of 1933 (the "Act"), as amended, and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection
with this Registration Statement, including specifically, but not limited to,
power and authority to sign for us, or any of us, in the capacities indicated
below and any and all amendments (including pre-effective and post-effective
amendments or any other registration statement filed pursuant to the
provisions of Rule 462(b) under the Act) hereto; and we do hereby ratify and
confirm all that such person shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Rafael Gomez Flores Chairman of the Board July 23, 1999
- ------------------------------ and Director
Rafael Gomez Flores
/s/ Gamaliel Garcia Cortes Director July 23, 1999
- ------------------------------
Gamaliel Garcia Cortes
/s/ Paul S. Levy Director July 23, 1999
- ------------------------------
Paul S. Levy
/s/ Jeffrey Lightcap Director July 23, 1999
- ------------------------------
Jeffrey Lightcap
/s/ David Ying Director July 23, 1999
- ------------------------------
David Ying
/s/ Frank Rodriguez Director July 23, 1999
- ------------------------------
Frank Rodriguez
</TABLE>
<PAGE>
Exhibit 24.6
POWER OF ATTORNEY
The undersigned directors and officers of Universal Coach Parts, Inc. do
hereby constitute and appoint James P. Bernacchi, with full power of
substitution, our true and lawful attorney-in-fact and agent to do any and
all acts and things in our name and behalf in our capacities as directors and
officers, and to execute any and all instruments for us and in our names in
the capacities indicated below which such person may deem necessary or
advisable to enable Universal Coach Parts, Inc. to comply with the Securities
Act of 1933 (the "Act"), as amended, and any rules, regulations and
requirements of the Securities and Exchange Commission, in connection with
this Registration Statement, including specifically, but not limited to,
power and authority to sign for us, or any of us, in the capacities indicated
below and any and all amendments (including pre-effective and post-effective
amendments or any other registration statement filed pursuant to the
provisions of Rule 462(b) under the Act) hereto; and we do hereby ratify and
confirm all that such person shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Rafael Gomez Flores Chairman of the Board July 23, 1999
- ------------------------------ and Director
Rafael Gomez Flores
/s/ Gamaliel Garcia Cortes Director July 23, 1999
- ------------------------------
Gamaliel Garcia Cortes
/s/ Paul S. Levy Director July 23, 1999
- ------------------------------
Paul S. Levy
/s/ Jeffrey Lightcap Director July 23, 1999
- ------------------------------
Jeffrey Lightcap
/s/ David Ying Director July 23, 1999
- ------------------------------
David Ying
/s/ Frank Rodriguez Director July 23, 1999
- ------------------------------
Frank Rodriguez
</TABLE>
<PAGE>
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
---------------
IBJ WHITEHALL BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-6022258
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
LUIS PEREZ, ASSISTANT VICE PRESIDENT
IBJ WHITEHALL BANK & TRUST COMPANY
One State Street
New York, New York 10004
(212) 858-2000
(Name, address and telephone number of agent for service)
Transportation Manufacturing Operations, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 86-0706940
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
10 East Gold Road
Des Plaines, Illinois 60016
(Address of principal executive officers) (Zip code)
11 1/4% Senior Subordinated Notes Due 2009
(Title of indenture securities)
<PAGE>
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
Two Rector Street
New York, New York
Federal Deposit Insurance
Corporation
Washington, D.C.
Federal Reserve Bank of New York
Second District,
33 Liberty Street
New York, New York
(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.
The obligor is not an affiliate of the trustee.
Item 13. (a) State whether there is or has been a default with respect
to the securities under this indenture. Explain the nature
of any such default.
None
2
<PAGE>
(b) If the trustee is a trustee under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the obligors are
outstanding, or is trustee for more than one outstanding
series of securities under the indenture, state whether
there has been a default under any such indenture or series
affected, and explain the nature of any such default.
None
Item 16. List of exhibits.
List below all exhibits filed as part of this statement of
eligibility.
*1. A copy of the Charter of IBJ Whitehall Bank & Trust Company
as amended to date. (See Exhibit 1A to Form T-1, Securities
and Exchange Commission File No 22-18460 and Exhibit 25.1 to
Form T-1, Securities and Exchange Commission File No.
333-46849).
*2. A copy of the Certificate of Authority of the trustee to
Commence Business (Included in Exhibit 1 above).
*3. A copy of the authorization of the trustee to exercise
corporate trust powers, as amended to date (See Exhibit 4
to Form T-1, Securities and Exchange Commission File No.
22-19146).
*4. A copy of the existing By-Laws of the trustee, as amended
to date (See Exhibit 25.1 to Form T-1, Securities and
Exchange Commission File No. 333-46849).
5. Not Applicable
6. The consent of United States institutional trustee required
by Section 321(b) of the Act.
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.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the
Securities and Exchange Commission, to which there have been no
amendments or changes.
3
<PAGE>
NOTE
In answering any item in this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor and its directors or
officers, the trustee has relied upon information furnished to it by the
obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the trustee
of all facts on which to base responsive answers to Item 2, the answer to
said Item is based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an amendment
to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items 1, 2
and 16 of this form since to the best knowledge of the trustee as indicated
in Item 13,the obligor is not in default under any indenture under which the
application is trustee.
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, IBJ Whitehall Bank & Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility & qualification 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 15th Day of July, 1999.
IBJ WHITEHALL BANK & TRUST COMPANY
By: /s/ Luis Perez
--------------------------
Luis Perez
Assistant Vice President
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the issuance by Transportation
Manufacturing Operations, Inc., it is 11 1/4% Senior Subordinated Notes due
2009, we hereby consent that reports of examinations by Federal, State,
Territorial, or District authorities may be furnished by such authorities to
the Securities and Exchange Commission upon request therefor.
IBJ WHITEHALL BANK & TRUST COMPANY
By: /s/ Luis Perez
---------------------------
Luis Perez
Assistant Vice President
Dated: July 15, 1999
6
<PAGE>
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ WHITEHALL BANK & TRUST COMPANY
of New York, New York
And Foreign and Domestic Subsidiaries
Report as of March 31, 1999
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
---------------
<S> <C> <C>
ASSETS
1. Cash and balance due from depository institutions:
a. Non-interest-bearing balances and currency and coin...................................... $ 21,794
b. Interest-bearing balances................................................................. $ 24,039
2. Securities:
a. Held-to-maturity securities............................................................... $ -0-
b. Available-for-sale securities............................................................. $ 192,664
3. 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 IBFs
Federal Funds sold and Securities purchased under agreements to resell........................ $ 90,207
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income.................................... $2,045,440
b. LESS: Allowance for loan and lease losses................................... $ 64,777
c. LESS: Allocated transfer risk reserve....................................... $ -0-
d. Loans and leases, net of unearned income, allowance, and reserve.......................... $1,980,663
5. Trading assets held in trading accounts....................................................... $ 783
6. Premises and fixed assets (including capitalized leases)...................................... $ 6,188
7. Other real estate owned....................................................................... $ -0-
8. Investments in unconsolidated subsidiaries and associated companies........................... $ -0-
9. Customers' liability to this bank on acceptance outstanding................................... $ 615
10. Intangible assets............................................................................. $ 12,786
11. Other assets.................................................................................. $ 61,758
12. TOTAL ASSETS.................................................................................. $2,391,497
7
<PAGE>
LIABILITIES
13. Deposits:
a. In domestic offices....................................................................... $ 722,967
(1) Noninterest-bearing......................................................... $ 155,445
(2) Interest-bearing............................................................ $ 567,522
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs............................. $1,111,757
(1) Noninterest-bearing......................................................... $ 14,819
(2) Interest-bearing............................................................ $1,096,938
14. Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries,
and in IBFs:
Federal Funds purchased and Securities sold under agreements to repurchase.................... $ 105,000
15. a. Demand notes issued to the U.S. Treasury.................................................. $ 3,000
b. Trading Liabilities....................................................................... $ 468
16. Other borrowed money:
a. With a remaining maturity of one year or less............................................. $ 25,002
b. With a remaining maturity of more than one year........................................... $ 1,375
c. With a remaining maturity of more than three years........................................ $ 3,550
17. Not applicable.
18. Bank's liability on acceptance executed and outstanding....................................... $ 615
19. Subordinated notes and debentures............................................................. $ 100,000
20. Other liabilities............................................................................. $ 68,528
21. TOTAL LIABILITIES............................................................................. $2,142,262
22. Limited-life preferred stock and related surplus.............................................. $ N/A
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus................................................. $ -0-
24. Common stock.................................................................................. $ 28,958
25. Surplus (exclude all surplus related to preferred stock)...................................... $ 210,319
26. a. Undivided profits and capital reserves.................................................... $ 9,707
b. Net unrealized gains (losses) on available-for-sale securities............................ $ 251
c. Accumulated net gains (losses) on cash flow hedges........................................ $ -0-
27. Cumulative foreign currency translation adjustments........................................... $ -0-
28. TOTAL EQUITY CAPITAL.......................................................................... $ 249,236
29. TOTAL LIABILITIES AND EQUITY CAPITAL.......................................................... $2,391,497
</TABLE>
8
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
OFFER TO EXCHANGE ITS
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
PURSUANT TO THE PROSPECTUS DATED , 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON ______, 1999, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE WITHDRAWN
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: FACSIMILE TRANSMISSIONS:
IBJ Whitehall Bank & Trust Company (Eligible Institutions Only)
One State Street (212) 425-0542
New York, New York 10004
Attention:
BY HAND OR OVERNIGHT DELIVERY: TO CONFIRM BY TELEPHONE
IBJ Whitehall Bank & Trust Company OR FOR INFORMATION CALL:
One State Street
New York, New York 10286 (212) 858-2000
Attention:
</TABLE>
------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed either if (a) certificates are
to be forwarded herewith or (b) tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth under "The Exchange
Offer-- Procedures for Tendering Outstanding Notes" in the Prospectus and an
Agent's Message (as defined below) is not delivered. Certificates, or book-entry
confirmation of a book-entry transfer of such Outstanding Debt (as defined
below) into the Exchange Agent's account at The Depository Trust Company
("DTC"), as well as this Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein on or prior to the Expiration
Date (as defined in the Prospectus). Tenders by book-entry transfer also may be
made by delivering an Agent's Message in lieu of this Letter of Transmittal. The
term "book-entry confirmation" means a confirmation of a book-entry transfer of
Outstanding Debt into the Exchange Agent's account at DTC. The term "Agent's
Message" means a message, transmitted by DTC to and received by the Exchange
Agent and forming a part of a book-entry confirmation, which states that DTC has
received an express acknowledgment from the tendering participant, which
acknowledgment states that such participant has received and agrees to be bound
by this Letter of Transmittal and that Motor Coach Industries International,
Inc., a Delaware corporation (the "Company") may enforce this Letter of
Transmittal against such participant.
Holders (as defined below) of Outstanding Debt whose certificates (the
"Certificates") for such Outstanding Debt are not immediately available or who
cannot deliver their Certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their
Outstanding Debt according to the guaranteed delivery procedures set forth in
"The Exchange Offer--Procedures for Tendering Outstanding Debt" in the
Prospectus.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING DEBT
----------------------------------------------------------------------------------------------------
IF BLANK, PLEASE PRINT NAME AND OUTSTANDING DEBT
ADDRESS OF REGISTERED HOLDER(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PRINCIPAL
AGGREGATE AMOUNT
PRINCIPAL OF OUTSTANDING
AMOUNT OF DEBT TENDERED
CERTIFICATE OUTSTANDING (IF LESS THAN
NUMBER(S)* DEBT ALL)**
- ----------------------------------------------------------------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
Total:
- ----------------------------------------------------------------------------------------------------
* Need not be completed by book-entry Holders.
** Outstanding Debt may be tendered in whole or in part in multiples of $1,000. All Outstanding Debt
held shall be deemed tendered unless a lesser number is specified in this column. See Instruction
4.
-----------------------------------------------------------------------------------------------------
</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED OUTSTANDING DEBT IS BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
DTC Account Number _______________ Transaction Code Number _________________
/ / CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OUTSTANDING DEBT IS BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (SEE INSTRUCTION 1):
Name(s) of Registered Holder(s) ____________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed Delivery ______________________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution ______________________________________________
DTC Account Number _______________ Transaction Code Number _________________
/ / CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OUTSTANDING
DEBT IS TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE.
/ / 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: __________________________________________________________________________
2
<PAGE>
Address: _______________________________________________________________________
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Motor Coach Industries International,
Inc., a Delaware corporation (the "Company"), the above described principal
amount of the Company's 11 1/4% Senior Subordinated Notes due 2009 (the
"Outstanding Debt") in exchange for an equivalent amount of the Company's
11 1/4% Senior Subordinated Notes due 2009 (the "Exchange Debt"), which have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), upon the terms and subject to the conditions set forth in the Prospectus
dated , 1999 (as the same may be amended or supplemented from time to
time, the "Prospectus"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with the Prospectus, constitute the
"Exchange Offer").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Outstanding Debt tendered herewith in accordance with the terms
and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Outstanding
Debt as is being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company in connection with the Exchange Offer) with respect to the tendered
Outstanding Debt, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) subject only to the
right of withdrawal described in the Prospectus, to (i) deliver Certificates for
Outstanding Debt to the Company together with all accompanying evidences of
transfer and authenticity to, or upon the order of, the Company, upon receipt by
the Exchange Agent, as the undersigned's agent, of the Exchange Debt to be
issued in exchange for such Outstanding Debt, (ii) present Certificates for such
Outstanding Debt for transfer, and to transfer the Outstanding Debt on the books
of the Company, and (iii) receive for the account of the Company all benefits
and otherwise exercise all rights of beneficial ownership of such Outstanding
Debt, all in accordance with the terms and conditions of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, sell, assign and transfer the
Outstanding Debt tendered hereby and that, when the same is accepted for
exchange, the Company will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
and that the Outstanding Debt tendered hereby is not subject to any adverse
claims or proxies. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Company or the Exchange Agent to be necessary
or desirable to complete the exchange, assignment and transfer of the
Outstanding Debt tendered hereby, and the undersigned will comply with its
obligations under the Registration Rights Agreement. The undersigned has read
and agrees to all of the terms of the Exchange Offer.
The name(s) and address(es) of the registered Holder(s) of the Outstanding
Debt tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Outstanding Debt.
The Certificate number(s) and the Outstanding Debt that the undersigned wishes
to tender should be indicated in the appropriate boxes above.
If any tendered Outstanding Debt is not exchanged pursuant to the Exchange
Offer for any reason, or if Certificates are submitted for more Outstanding Debt
than are tendered or accepted for exchange, Certificates for such nonexchanged
or nontendered Outstanding Debt will be returned (or, in the case of Outstanding
Debt tendered by book-entry transfer, such Outstanding Debt will be credited to
an account maintained at DTC), without expense to the tendering Holder, promptly
following the expiration or termination of the Exchange Offer.
The undersigned understands that tenders of Outstanding Debt pursuant to any
one of the procedures described in "The Exchange Offer--Procedures for Tendering
Outstanding Notes" in the Prospectus and in the instructions attached hereto
will, upon the Company's acceptance for exchange of such tendered Outstanding
Debt, constitute a binding agreement between the undersigned and the Company
upon the terms and subject to the conditions of the Exchange Offer. The
undersigned recognizes that, under certain circumstances set forth in the
Prospectus, the Company may not be required to accept for exchange any of the
Outstanding Debt tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Debt be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Outstanding Debt, that such Exchange Debt be credited to the account
indicated above maintained at DTC. If applicable, substitute Certificates
representing Outstanding Debt not exchanged or not accepted for exchange will be
issued to the undersigned or, in the case of a book-entry transfer of
Outstanding Debt, will be credited to the
4
<PAGE>
account indicated above maintained at DTC. Similarly, unless otherwise indicated
under "Special Delivery Instructions," please deliver Exchange Debt to the
undersigned at the address shown below the undersigned's signature.
By tendering Outstanding Debt and executing this Letter of Transmittal or
effecting delivery of an Agent's Message in lieu thereof, the undersigned hereby
represents and agrees that (i) the undersigned is not an "affiliate" of the
Company, (ii) any Exchange Debt to be received by the undersigned is being
acquired in the ordinary course of its business, (iii) the undersigned has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of Exchange Debt to be received in
the Exchange Offer, and (iv) if the undersigned is not a broker-dealer, the
undersigned is not engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such Exchange Debt. The Company
may require the undersigned, as a condition to the undersigned's eligibility to
participate in the Exchange Offer, to furnish to the Company (or an agent
thereof) in writing information as to the number of "beneficial owners" within
the meaning of Rule 13d-3 under the Exchange Act on behalf of whom the
undersigned holds the Outstanding Debt to be exchanged in the Exchange Offer. If
the undersigned is a broker-dealer that will receive Exchange Debt for its own
account in exchange for Outstanding Debt, it represents that the Outstanding
Debt to be exchanged for Exchange Debt was acquired by it as a result of
market-making activities or other trading activities and acknowledges that it
will deliver a Prospectus in connection with any resale of such Exchange Debt;
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 Company has agreed that, subject to the provisions of the Registration
Rights Agreement, the Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer (as defined below) in
connection with resales of Exchange Debt received in exchange for Outstanding
Debt, where such Outstanding Debt was acquired by such Participating
Broker-Dealer for its own account as a result of market-making activities or
other trading activities, for a period ending 180 days after the effective date
of the registration statement relating to the Exchange Debt (the "Effective
Date") (subject to extension under certain limited circumstances described in
the Prospectus) or, if earlier, when all such Exchange Debt has been disposed of
by such Participating Broker-Dealer. In that regard, each broker-dealer who
acquired Outstanding Debt for its own account as a result of market-making or
other trading activities (a "Participating Broker-Dealer"), by tendering such
Outstanding Debt and executing this Letter of Transmittal or effecting delivery
of an Agent's Message in lieu thereof, agrees that, upon receipt of notice from
the Company of the occurrence of any event or the discovery of any fact which
makes any statement contained or incorporated by reference in the Prospectus
untrue in any material respect or which causes the Prospectus to omit to state a
material fact necessary in order to make the statements contained or
incorporated by reference therein, in light of the circumstances under which
they were made, not misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such Participating Broker-Dealer
will suspend the sale of Exchange Debt pursuant to the Prospectus until the
Company has amended or supplemented the Prospectus to correct such misstatement
or omission and has furnished copies of the amended or supplemented Prospectus
to the Participating Broker-Dealer or the Company has given notice that the sale
of the Exchange Debt may be resumed, as the case may be. If the Company gives
such notice to suspend the sale of the Exchange Debt, it shall extend the
180-day period referred to above during which Participating Broker-Dealers are
entitled to use the Prospectus in connection with the resale of Exchange Debt by
the number of days during the period from and including the date of the giving
of such notice to and including the date when Participating Broker-Dealers shall
have received copies of the supplemented or amended Prospectus necessary to
permit resales of the Exchange Debt or to and including the date on which the
Company has given notice that the sale of Exchange Debt may be resumed, as the
case may be.
As a result, a Participating Broker-Dealer who intends to use the Prospectus
in connection with resales of Exchange Debt received in exchange for Outstanding
Debt pursuant to the Exchange Offer must notify the Company, or cause the
Company to be notified, on or prior to the Expiration Date, that it is a
Participating Broker-Dealer. Such notice may be given in the space provided
above or may be delivered to the Exchange Agent at the address set forth in the
Prospectus under "The Exchange Offer--Exchange Agent."
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Outstanding Debt tendered hereby. All
authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
The undersigned, by completing the box entitled "Description of Outstanding
Debt" above and signing this letter, will be deemed to have tendered the
Outstanding Debt as set forth in such box.
5
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
HOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN)
______________________________________________________________________________
______________________________________________________________________________
SIGNATURE(S) OF HOLDERS(S)
Date: ________________________
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on Certificate(s) for the Outstanding Debt hereby tendered or on a security
position listing or by person(s) authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by trustee,
executor, administrator, guardian, attorney-in-fact, officer of corporation or
other person acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 2 below.)
Name(s): _____________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(PLEASE PRINT)
Capacity (full title): _______________________________________________________
______________________________________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _________________________________________________
(SEE SUBSTITUTE FORM W-9 HEREIN)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTION 2 BELOW)
Authorized Signature: ________________________________________________________
Name: ________________________________________________________________________
______________________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: _______________________________________________________________________
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _________________________________________________
Date: ________________________
- --------------------------------------------------------------------------------
6
<PAGE>
- ------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SIGNATURE GUARANTEE REQUIRED--
SEE INSTRUCTION 2)
TO BE COMPLETED ONLY if Exchange Debt or Outstanding Debt not tendered is to
be issued in the name of someone other than the registered Holder of the
Outstanding Debt whose name(s) appear(s) above.
/ / Outstanding Debt not tendered to:
/ / Exchange Debt to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
_________________________________________________________________________
(TAX IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
- ------------------------------------------------------------
- ------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SIGNATURE GUARANTEE REQUIRED--
SEE INSTRUCTION 2)
TO BE COMPLETED ONLY if Exchange Debt or Outstanding Debt not tendered is to
be sent to someone other than the registered Holder of the Outstanding Debt
whose name(s) appear(s) above, or such registered Holder at an address other
than that shown above.
/ / Outstanding Debt not tendered to:
/ / Exchange Debt to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
- -----------------------------------------------------
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed either if (a)
Certificates are to be forwarded herewith or (b) tenders are to be made pursuant
to the procedures for tender by book-entry transfer set forth in "The Exchange
Offer--Procedures for Tendering Outstanding Notes" in the Prospectus and an
Agent's Message is not delivered. Certificates, or timely confirmation of a
book-entry transfer of such Outstanding Debt into the Exchange Agent's account
at DTC, as well as this Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein on or prior to the Expiration
Date. Tenders by book-entry transfer may also be made by delivering an Agent's
Message in lieu thereof. Outstanding Debt may be tendered in whole or in part in
integral multiples of $1,000.
Holders who wish to tender their Outstanding Debt and (i) whose Outstanding
Debt is not immediately available or (ii) who cannot deliver their Outstanding
Debt, this Letter of Transmittal and all other required documents to the
Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete
the procedures for delivery by book-entry transfer on a timely basis, may tender
their Outstanding Debt by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in
"The Exchange Offer-- Procedures for Tendering Outstanding Notes" in the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution (as defined below); (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by the Company, must be received by the Exchange Agent on or prior to
the Expiration Date; and (iii) the Certificates (or a book-entry confirmation)
representing all tendered Outstanding Debt, in proper form for transfer,
together with a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent within three New York Stock Exchange trading days after the date
of execution of such Notice of Guaranteed Delivery, all as provided in "The
Exchange Offer-- Procedures for Tendering Outstanding Notes" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice of Guaranteed
Delivery. For Outstanding Debt to be properly tendered pursuant to the
guaranteed delivery procedure, the Exchange Agent must receive a Notice of
Guaranteed Delivery on or prior to the Expiration Date. As used herein and in
the Prospectus, "Eligible Institution" means a firm or other entity identified
in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor institution,"
including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer,
municipal securities broker or dealer or government securities broker or dealer;
(iii) a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER,
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering Holder, by execution of a Letter of Transmittal (or
facsimile thereof), waives any right to receive any notice of the acceptance of
such tender.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
i. this Letter of Transmittal is signed by the registered Holder (which
term, for purposes of this document, shall include any participant in
DTC whose name appears on a security position listing as the owner of
the Outstanding Debt (the "Holder")) of Outstanding Debt tendered
herewith, unless such Holder(s) has completed either the box entitled
"Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" above, or
ii. such Outstanding Debt is tendered for the account of a firm that is an
Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
8
<PAGE>
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Outstanding Debt" is inadequate, the Certificate number(s)
and/or the principal amount of Outstanding Debt and any other required
information should be listed on a separate signed schedule which is attached to
this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Outstanding Debt will
be accepted only in integral multiples of $1,000. If less than all the
Outstanding Debt evidenced by any Certificate submitted is to be tendered, fill
in the principal amount of Outstanding Debt which is to be tendered in the box
entitled "Principal Amount of Outstanding Debt Tendered." In such case, new
Certificate(s) for the remainder of the Outstanding Debt that was evidenced by
your old Certificate(s) will only be sent to the Holder of the Outstanding Debt,
promptly after the Expiration Date. All Outstanding Debt represented by
Certificates delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
Except as otherwise provided herein, tenders of Outstanding Debt may be
withdrawn at any time on or prior to the Expiration Date. In order for a
withdrawal to be effective on or prior to that time, a written or facsimile
transmission of such notice of withdrawal must be timely received by the
Exchange Agent at one of its addresses set forth above or in the Prospectus on
or prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Outstanding Debt to be withdrawn, the
aggregate principal amount of Outstanding Debt to be withdrawn, and (if
Certificates for Outstanding Debt have been tendered) the name of the registered
Holder of the Outstanding Debt as set forth on the Certificate for the
Outstanding Debt, if different from that of the person who tendered such
Outstanding Debt. If Certificates for the Outstanding Debt have been delivered
or otherwise identified to the Exchange Agent, then prior to the physical
release of such Certificates for the Outstanding Debt, the tendering Holder must
submit the serial numbers shown on the particular Certificates for the
Outstanding Debt to be withdrawn and the signature on the notice of withdrawal
must be guaranteed by an Eligible Institution, except in the case of Outstanding
Debt tendered for the account of an Eligible Institution. If Outstanding Debt
has been tendered pursuant to the procedures for book-entry transfer set forth
in the Prospectus under "The Exchange Offer--Procedures for Tendering
Outstanding Notes," the notice of withdrawal must specify the name and number of
the account at DTC to be credited with the withdrawal of Outstanding Debt, in
which case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of
tenders of Outstanding Debt may not be rescinded. Outstanding Debt properly
withdrawn will not be deemed validly tendered for purposes of the Exchange
Offer, but may be retendered at any subsequent time on or prior to the
Expiration Date by following any of the procedures described in the Prospectus
under "The Exchange Offer--Procedures for Tendering Outstanding Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, in its
sole discretion, whose determination shall be final and binding on all parties.
The Company, any affiliates or assigns of the Company, the Exchange Agent or any
other person shall not be under any duty to give any notification of any
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification. Any Outstanding Debt which has been tendered but
which is withdrawn will be returned to the Holder thereof without cost to such
Holder promptly after withdrawal.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered Holder(s) of the
Outstanding Debt tendered hereby, the signature(s) must correspond exactly with
the name(s) as written on the face of the Certificate(s) without alteration,
enlargement or any change whatsoever.
If any Outstanding Debt tendered hereby is owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Outstanding Debt is registered in different name(s) on
several Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of Certificates.
If this Letter of Transmittal or any Certificates 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, must
submit proper evidence satisfactory to the Company, in its sole discretion, of
each such person's authority to so act.
When this Letter of Transmittal is signed by the registered owner(s) of the
Outstanding Debt listed and transmitted hereby, no endorsement(s) of
Certificate(s) or separate bond power(s) is required unless Exchange Debt is to
be issued in the name of a person other than the registered Holder(s).
Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an
Eligible Institution.
9
<PAGE>
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Outstanding Debt listed, the Certificates must be
endorsed or accompanied by appropriate bond powers, signed exactly as the name
or names of the registered owner(s) appear(s) on the Certificates, and also must
be accompanied by such opinions of counsel, certifications and other information
as the Company or the Trustee for the Outstanding Debt may require in accordance
with the restrictions on transfer applicable to the Outstanding Debt. Signatures
on such Certificates or bond powers must be guaranteed by an Eligible
Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Debt is to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Debt is to be sent to someone other than the signer
of this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Outstanding Debt not exchanged will be returned by mail or, if
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion, all
questions as to the form of documents, validity, eligibility (including time of
receipt) and acceptance for exchange of any tender of Outstanding Debt, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance of which, or exchange for which, may, in the view
of counsel to the Company be unlawful. The Company also reserves the absolute
right, subject to applicable law, to waive any of the conditions of the Exchange
Offer set forth in the Prospectus under "The Exchange Offer-- Conditions to the
Exchange Offer" or any conditions or irregularities in any tender of Outstanding
Debt of any particular Holder whether or not similar conditions or
irregularities are waived in the case of other Holders. The Company's
interpretation of the terms and conditions of the Exchange Offer (including this
Letter of Transmittal and the instructions hereto) will be final and binding. No
tender of Outstanding Debt will be deemed to have been validly made until all
irregularities with respect to such tender have been cured or waived. The
Company, any affiliates or assigns of the Company, the Exchange Agent, or any
other person shall not be under any duty to give notification of any
irregularities in tenders or incur any liability for failure to give such
notification.
8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address and
telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under the U.S. Federal
income tax law, a Holder whose tendered Outstanding Debt is accepted for
exchange is required to provide the Exchange Agent with such Holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If the
Exchange Agent is not provided with the correct TIN, the Internal Revenue
Service (the "IRS") may subject the Holder or other payee to a $50 penalty. In
addition, payments to such Holders or other payees with respect to Outstanding
Debt exchanged pursuant to the Exchange Offer may be subject to 31% backup
withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the tendering
Holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 2 is checked, the Holder or
other payee must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 2 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Exchange Agent will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Exchange Agent. The Exchange Agent will retain such amounts
withheld during the 60-day period following the date of the Substitute Form W-9.
If the Holder furnishes the Exchange Agent with its TIN within 60 days after the
date of the Substitute Form W-9, the amounts retained during the 60-day period
will be remitted to the Holder and no further amounts shall be retained or
withheld from payments made to the Holder thereafter. If, however, the Holder
has not provided the Exchange Agent with its TIN within such 60-day period,
amounts withheld will be remitted to the IRS as backup withholding. In addition,
31% of all payments made thereafter will be withheld and remitted to the IRS
until a correct TIN is provided.
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered owner of
the Outstanding Debt or of the last transferee appearing on the transfers
attached to, or endorsed on, the Outstanding Debt. If the Outstanding Debt is
registered in more than one name or is not in the name of the actual owner,
consult the enclosed "Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9" for additional guidance on which number to
report.
10
<PAGE>
Certain Holders (including, among others, corporations, financial
institutions and certain foreign persons) may not be subject to the backup
withholding and reporting requirements. Such Holders should nevertheless
complete the attached Substitute Form W-9 below, and write "exempt" on the face
thereof, to avoid possible erroneous backup withholding. A foreign person may
qualify as an exempt recipient by submitting a properly completed IRS Form W-8,
signed under penalties of perjury, attesting to that Holder's exempt status.
Please consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
Holders are exempt from backup withholding.
Backup withholding is not an additional U.S. Federal income tax. Rather, the
U.S. Federal income tax liability of a person 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.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the Prospectus.
11. NO CONDITIONAL TENDERS. No alternative, conditional or contingent
tenders will be accepted. All tendering Holders of Outstanding Debt, by
execution of this Letter of Transmittal, shall waive any right to receive notice
of the acceptance of Outstanding Debt for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of
Outstanding Debt nor shall any of them incur any liability for failure to give
any such notice.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s)
representing Outstanding Debt have been lost, destroyed or stolen, the Holder
should promptly notify the Exchange Agent. The Holder will then be instructed as
to the steps that must be taken in order to replace the Certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen Certificate(s) have been
followed.
13. SECURITY TRANSFER TAXES. Holders who tender their Outstanding Debt for
exchange will not be obligated to pay any transfer taxes in connection
therewith. If, however, Exchange Debt is to be delivered to, or is to be issued
in the name of, any person other than the registered Holder of the Outstanding
Debt tendered, or if a transfer tax is imposed for any reason other than the
exchange of Outstanding Debt in connection with the Exchange Offer, then the
amount of any such transfer tax (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.
11
<PAGE>
<TABLE>
<S> <C> <C> <C>
PAYER'S NAME: THE BANK OF NEW YORK
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN TIN: ------------------------
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY Social Security Number
DEPARTMENT OF THE TREASURY BY SIGNING AND DATING BELOW. or Employer Identification Number
INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR PART 2--TIN Applied For / /
TAXPAYER
IDENTIFICATION NUMBER
("TIN ")
CERTIFICATION: Under penalties of perjury, I certify that:
(1) the number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a
number to be issued to me); and
(2) I am not subject to backup withholding either because: (a) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (b) the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS
that you are subject to backup withholding because of underreporting of interest or dividends on your
tax return. However, if after being notified by the IRS that you were subject to backup withholding,
you received another notification from the IRS that you were no longer subject to backup withholding,
do not cross out item (2). (Also see instructions in the enclosed GUIDELINES.)
Signature: ------------------------------------------------ Date: ------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU IN CONNECTION WITH THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL SOON
APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER 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 by
the time of the exchange, thirty-one (31%) percent of all reportable
payments made to me thereafter will be withheld until I provide a
number.
Signature
------------------------------------------------------ Date
------------------
12
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
OFFER TO EXCHANGE ITS
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
PURSUANT TO THE PROSPECTUS DATED , 1999
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for Motor Coach Industries International, Inc.'s, a Delaware
corporation (the "Company") 11 1/4% Senior Subordinated Notes due 2009 (the
"Outstanding Debt") are not immediately available, (ii) Outstanding Debt, the
Letter of Transmittal and all other required documents cannot be delivered to
IBJ Whitehall Bank & Trust Company (the "Exchange Agent") on or prior to the
Expiration Date or (iii) the procedures for delivery by book-entry transfer
cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand, overnight courier or mail, or transmitted by facsimile
transmission, to the Exchange Agent. See "The Exchange Offer--Procedures for
Tendering Outstanding Debt" in the Prospectus. In addition, in order to utilize
the guaranteed delivery procedure to tender Outstanding Debt pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal relating to
the Outstanding Debt (or facsimile thereof) must also be received by the
Exchange Agent on or prior to the Expiration Date. Capitalized terms not defined
herein have the meanings assigned to them in the Prospectus.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: FACSIMILE TRANSMISSIONS:
IBJ Whitehall Bank & Trust Company (Eligible Institutions Only)
One State Street (212) 425-0542
New York, New York 10004
Attention:
BY HAND OR OVERNIGHT DELIVERY: TO CONFIRM BY TELEPHONE
IBJ Whitehall Bank & Trust Company OR FOR INFORMATION CALL:
One State Street (212) 858-2000
New York, New York 10004
Attention:
</TABLE>
------------------------
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA
FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Motor Coach Industries International,
Inc., a Delaware corporation (the "Company"), upon the terms and subject to the
conditions set forth in the Prospectus dated , 1999 (as the same may be
amended or supplemented from time to time, the "Prospectus"), and the related
Letter of Transmittal (which together constitute the "Exchange Offer"), receipt
of which is hereby acknowledged, the aggregate principal amount of Outstanding
Debt set forth below pursuant to the guaranteed delivery procedures set forth in
the Prospectus under the caption "The Exchange Offer-- Procedures for Tendering
Outstanding Notes."
Aggregate Principal Amount Name(s) of Registered
Holder(s): ________________________
Amount Tendered: $ ________________________* __________________________________
Certificate No(s) (if available): ______________________________________________
________________________________________________________________________________
$ ______________________________________________________________________________
(Total Principal Amount Represented by Outstanding Debt Certificate(s))
If Outstanding Debt will be tendered by book-entry transfer, provide the
following information:
DTC Account Number: ____________________________________________________________
Date: __________________________________________________________________________
* Must be in integral multiples of $1,000.
- --------------------------------------------------------------------------------
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
Signature(s) of Owner(s) or Authorized Date
Signatory
</TABLE>
Area Code and Telephone Number: ________________________________________________
Must be signed by the holder(s) of the Outstanding Debt as their name(s)
appear(s) on certificates for Outstanding Debt 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
and, unless waived by the Company, provide proper evidence satisfactory to the
Company of such person's authority to so act.
<PAGE>
PLEASE PRINT NAME(S) AND ADDRESS(ES)
<TABLE>
<S> <C>
Name(s):
Capacity:
Address(es):
</TABLE>
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm or other entity identified in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, as an "eligible guarantor
institution," including (as such terms are defined therein): (i) a bank; (ii) a
broker, dealer, municipal securities broker, government securities broker or
government securities dealer; (iii) a credit union; (iv) a national securities
exchange, registered securities association or clearing agency; or (v) a savings
association that is a participant in a Securities Transfer Association (each of
the foregoing being referred to as an "Eligible Institution"), hereby guarantees
to deliver to the Exchange Agent, at one of its addresses set forth above,
either the Outstanding Debt tendered hereby in proper form for transfer, or
confirmation of the book-entry transfer of such Outstanding Debt to the Exchange
Agent's account at The Depository Trust Company ("DTC"), pursuant to the
procedures for book-entry transfer set forth in the Prospectus, in either case
together with one or more properly completed and duly executed Letter(s) of
Transmittal (or facsimile thereof) and any other required documents within three
New York Stock Exchange trading days after the date of execution of this Notice
of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal (or facsimile thereof) and the Outstanding Debt tendered hereby to
the Exchange Agent within the time period set forth above and that failure to do
so could result in a financial loss to the undersigned.
<TABLE>
<S> <C>
Name of Firm Authorized Signature
Address Title
(Please Type or Print)
Zip Code
</TABLE>
Area Code and Telephone Number: ____________________ Date: ____________________
NOTE: DO NOT SEND CERTIFICATES FOR OUTSTANDING DEBT WITH THIS FORM. CERTIFICATES
FOR OUTSTANDING DEBT SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99.3
MOTOR COACH INDUSTRIES INTERNATIONAL, INC.
INSTRUCTION TO REGISTERED HOLDER AND/OR DEPOSITORY
TRUST COMPANY PARTICIPANT FROM BENEFICIAL OWNER
FOR
OFFER TO EXCHANGE ITS
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
11 1/4% SENIOR SUBORDINATED NOTES DUE 2009
THAT WERE ISSUED AND SOLD IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1999, UNLESS THE OFFER IS EXTENDED. TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
To Registered Holder and/or Depository Trust Company Participant:
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1999 (the "Prospectus") of Motor Coach Industries International,
Inc., a Delaware corporation (the "Company"), and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), that together constitute the
Company's offer (the "Exchange Offer") to exchange its 11 1/4% Senior
Subordinated Notes due 2009 (the "Exchange Debt"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), for all of
its outstanding 11 1/4% Senior Subordinated Notes due 2009 (the "Outstanding
Debt"). Capitalized terms used but not defined herein have the meanings ascribed
to them in the Prospectus.
This will instruct you, the registered holder and/or Depository Trust
Company Participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Outstanding Debt held by you for the account
of the undersigned.
The aggregate face amount of the Outstanding Debt held by you for the
account of the undersigned is (FILL IN AMOUNT):
$ ___________________ of the 11 1/4% Senior Subordinated Notes due 2009.
With respect to the Exchange Offer, the undersigned hereby instructs you
(CHECK APPROPRIATE BOX):
/ / To TENDER the following Outstanding Debt held by you for the amount of
the undersigned (INSERT PRINCIPAL AMOUNT OF OUTSTANDING DEBT TO BE
TENDERED (IF LESS THAN ALL)):
$ ___________________
/ / NOT to TENDER any Outstanding Debt held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Outstanding Debt held by you
for the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
undersigned is not an "affiliate" of the Company, (ii) any Exchange Debt to be
received by the undersigned is being acquired in the ordinary course of its
business, (iii) the undersigned has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the Securities
Act) of Exchange Debt to be received in
<PAGE>
the Exchange Offer, and (iv) if the undersigned is not a broker-dealer, the
undersigned is not engaged in, and does not intend to engage in, a distribution
(within the meaning of the Securities Act) of such Exchange Debt. The Company
may require the undersigned, as a condition to the undersigned's eligibility to
participate in the Exchange Offer, to furnish to the Company (or an agent
thereof) in writing information as to the number of "beneficial owners" within
the meaning of Rule 13d-3 under the Exchange Act on behalf of whom the
undersigned holds the Outstanding Debt to be exchanged in the Exchange Offer. If
the undersigned is a broker-dealer that will receive Exchange Debt for its own
account in exchange for Outstanding Debt, it represents that the Outstanding
Debt to be exchanged for Exchange Debt was acquired by it as a result of
market-making activities or other trading activities and acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Debt;
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.
- --------------------------------------------------------------------------------
SIGN HERE
______________________________________________________________________________
NAME OF BENEFICIAL OWNER(S)
______________________________________________________________________________
______________________________________________________________________________
SIGNATURE
______________________________________________________________________________
______________________________________________________________________________
NAME(S) (PLEASE PRINT)
______________________________________________________________________________
______________________________________________________________________________
(ADDRESS)
______________________________________________________________________________
(TELEPHONE NUMBER)
______________________________________________________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
______________________________________________________________________________
DATE
- --------------------------------------------------------------------------------
2
