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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 3, 1997.
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ALLIED HOLDINGS, INC. *
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
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Georgia 4213 58-0360550
(State or other jurisdiction of incorporation (PRIMARY STOCK AND INDUSTRIAL (I.R.S. Employer Identification No.)
or organization) CLASSIFICATION CODE NUMBER)
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160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
(404) 370-1100
(Address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
----------------------------
DANIEL H. POPKY
VICE PRESIDENT, FINANCE
ALLIED HOLDINGS, INC.
160 CLAIREMONT AVENUE, SUITE 510
DECATUR, GEORGIA 30030
(404) 370-1100
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------------
Copy to:
Thomas M. Duffy, Esq.
Troutman Sanders LLP
NationsBank Plaza, Suite 5200
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
(404) 885-3000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------------------------
If the 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. []
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CALCULATION OF REGISTRATION FEE
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==================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE AGGREGATE PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED SHARE (1) PRICE (1) REGISTRATION FEE
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8 5/8% Series B Senior Notes due 2007 $150,000,000 100% $150,000,000 $45,454
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Senior Guarantees (2) - - - -
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933.
(2) The 8 5/8% Senior Notes due 2007 are guaranteed by the Guarantors on a
senior basis. No separate consideration will be paid in respect of the
guarantees.
THE CO-REGISTRANTS HEREBY AMEND 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 THE
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
THE TOTAL NUMBER OF PAGES IN THIS DOCUMENT IS ________________.
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* TABLE OF ADDITIONAL REGISTRANTS
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STATE OR OTHER JURISDICTION OF PRIMARY STANDARD INDUSTRY I.R.S. EMPLOYER
NAME, ADDRESS AND TELEPHONE NUMBER INCORPORATION OR ORGANIZATION CLASSIFICATION CODE IDENTIFICATION NUMBER
- -------------------------------------- ------------------------------ -------------------------- ----------------------
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1. Allied Automotive Group, Inc. Georgia 4213 58-2201081
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
2. Allied Industries Incorporated Georgia 4213 58-1850174
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
3. Haul Risk Management Services, Inc. Georgia 4213 58-2204629
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
4. Link Information Systems, Inc. Georgia 4213 58-2253768
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
5. Allied Southwoods, Inc. Georgia 4213 58-2328035
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
6. Axis Group, Inc. Georgia 4731 58-2204628
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
7. Allied Systems, Ltd. (L.P.) Georgia 4213 58-1710028
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
8. Allied, Inc. Texas 4213 75-0121472
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
9. Inter Mobile, Inc. Georgia 4789 58-1859127
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
10. Legion Transportation, Inc. Georgia 4213 59-3041067
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
11. Innovative Car Carriers, Inc. Delaware 4213 59-3041519
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
12. Automotive Transport Services, Inc. Georgia 4213 58-1835655
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
13. Auto Haulaway, Inc. Ontario, Canada 4213 52-1952252
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
14. Axis International, Inc. Georgia 4731 58-2339087
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
15. Axis Truck Leasing, Inc. Georgia 4731 58-2272795
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
16. Axis North America, Inc. Georgia 4731 58-2273308
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
17. Auto Haulaway Releasing Services (1981)
Limited
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100 Ontario, Canada 4213 100347467
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18. Decatur Driver Exchange Company, Inc. Georgia 4213 58-2272793
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
19. Clairemont Driver Exchange Company, Georgia 4213 58-2273306
Inc.
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
20. Kar-Tainer International, Inc. Florida 4213 65-0252817
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
21. AH Acquisition Corp. Georgia 4213 58-2339469
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
22. Canadian Acquisition Corp. Georgia 4213 58-2339472
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
23. Axis National Incorporated Georgia 4731 58-2339474
160 Clairemont Avenue, Suite 510
Decatur, Georgia 30030
404/370-1100
24. RC Management Corp. Delaware 4731 65-071002
3600 N. W. 82nd Avenue
Miami, Florida 33166
404/370-1100
25. Ryder Automotive Carrier Services, Inc. Florida 4213 58-1953041
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
26. Ryder Automotive Acquisition LLC Georgia 4213 Applied for
160 Clairemont Avenue, Suite 510
Atlanta, Georgia 30030
404/370-1100
27. MCL Ryder Transport, Inc. Canada 4213 321235-1
770 Stevenson Road South, Suite 4400
Toronto, Ontario M5H3Y4
404/370-1100
28. Ryder Automotive Operations, Inc. Florida 4213 58-1944786
3600 N. W. 82nd Avenue
Miami, Florida 33166
404/370-1100
29. Ryder Freight Broker, Inc. Virginia 4731 59-2876864
10701 Middlebelt Road
Romulus, Michigan 48174
404/370-1100
30. QAT, Inc. Florida 4213 59-2876863
300 East Long lake Road, Suite 280
Bloomfield Hills, Michigan 48304
404/370-1100
31. OSHCO, Inc. Florida 4213 38-2853268
10701 Middlebelt Road
Romulus, Michigan 48174
404/370-1100
32. Terminal Service Co. Washington 4789 91-0847582
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
33. F.J. Boutell Driveaway Co., Inc. Michigan 4213 38-0365100
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
34. RMX, Inc. Delaware 4213 31-0961359
1450 West Long Lake Road
35. Transport Support, Inc.
1450 West Long Lake Road Delaware 4213 38-2349563
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36. Commercial Carriers, Inc. Michigan 4213 38-0436930
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
37. B&C, Inc. Michigan 4213 38-1377932
1450 West Long Lake Road
Troy, Michigan 48098
404/370-1100
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 3, 1997
PROSPECTUS
[ALLIED HOLDINGS, INC. LOGO]
OFFER TO EXCHANGE ALL OUTSTANDING
8 5/8% SERIES A SENIOR NOTES DUE 2007
FOR
8 5/8% SERIES B SENIOR NOTES DUE 2007
OF
ALLIED HOLDINGS, INC.
Allied Holdings, Inc., a Georgia Corporation (the "Company"), and the
Guarantors (as hereinafter defined) hereby offer, upon the terms and subject to
the conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer"), to exchange $1,000
principal amount of 8 5/8% Series B Senior Notes Due 2007 of the Company (the
"New Notes"), for each $1,000 principal amount of 8 5/8% Series A Senior Notes
Due 2007 of the Company (the "Old Notes"), of which an aggregate principal
amount of $150,000,000 is outstanding. The form and terms of the New Notes are
identical to the form and terms of the Old Notes except that (i) interest on the
New Notes shall accrue from the most recent date to which interest has been paid
on the Notes (as hereinafter defined) or, if no such interest has been paid,
from the date of issuance of the Old Notes and (ii) the New Notes are being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and will not bear any legends restricting their transfer. The New Notes will
evidence the same debt as the Old Notes and will be issued pursuant to, and
entitled to the benefits of, the indenture governing the Old Notes. The Exchange
Offer is being made in order to satisfy certain contractual obligations of the
Company. See "The Exchange Offer" and "Description of Notes." The New Notes and
the Old Notes are sometimes collectively referred to herein as the "Notes."
Prior to October 1, 2002, the New Notes will be redeemable, at the
option of the Company, in whole or in part, at the Make-Whole Price (as
defined), plus accrued and unpaid interest and Liquidated Damages (as defined),
if any, thereon to the redemption date. On and after October 1, 2002, the New
Notes will be redeemable, at the option of the Company, in whole or in part, at
the redemption prices set forth herein, plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date. In addition, at any time on
or prior to October 1, 2000, the Company may redeem up to 35% of the New Notes
at a redemption price equal to 108.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, with the net proceeds of one or more sales of Equity Interests
(as defined), other than Disqualified Stock (as defined), of the Company,
provided that at least $97.5 million of New Notes remain outstanding immediately
following each such redemption. In the event of a Change of Control (as
defined), the Company will be required to make an offer to each holder of New
Notes to repurchase all or any part of such holder's New Notes at a repurchase
price equal to 101% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the repurchase date. See
"Risk Factors -- Repurchase of Notes Upon Change of Control" and "Description of
Notes."
The New Notes will be general unsecured obligations of the Company,
ranking pari passu in right of payment with all other present or future senior
indebtedness of the Company, and senior in right of payment to all present or
future subordinated indebtedness of the Company. The New Notes will be
effectively subordinated, however, to all secured obligations of the Company,
including the Company's borrowings under the New Credit Facility as defined
herein, to the extent of the assets securing such obligations. As of June 30,
1997, after giving pro forma effect to the Offering (as defined herein) and the
Acquisition (as defined herein), the New Notes would have
<PAGE> 6
been effectively subordinated to approximately $41.8 million of secured
borrowings of the Company, including borrowings under the New Credit Facility.
In addition, the Company would have had $126.3 million of additional secured
borrowings available under the New Credit Facility. The Indenture (as defined
herein) will permit the Company to incur additional indebtedness, including
additional secured indebtedness subject to certain conditions. See "Risk Factors
- - Effective Subordination" and "Description of Notes - Certain Covenants -
Incurrence of Indebtedness and Issuance of Preferred Stock." The New Notes will
be jointly and severally guaranteed by all existing Domestic Restricted
Subsidiaries (as defined herein) and certain other subsidiaries of the Company
and by all Domestic Restricted Subsidiaries (as defined herein) of the Company
created or acquired in the future.
The net proceeds from the sale of the Old Notes (the "Original
Offering" or the "Offering") were used to fund the Acquisition, to pay related
fees and expenses, and to reduce borrowings.
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE NEW NOTES.
The Company and the Guarantors will accept for exchange any and all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time,
on ___________, 1997, unless extended (as so extended, the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to the Expiration Date.
The Exchange Offer is subject to certain customary conditions. See "The Exchange
Offer."
Each broker-dealer that receives New Notes for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of those New Notes. The Letter of Transmittal
accompanying this Prospectus (the "Letter of Transmittal") states that by so
acknowledging 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.
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 New Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities. The Company
has agreed, for a period of one year after the date of this Prospectus, to make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
The Old Notes were eligible for trading in the National Association of
Securities Dealers' Private Offering, Resales and Trading through Automated
Linkages ("PORTAL") Market. The Company and the Guarantors do not intend to list
the New Notes on any securities exchange or to seek approval for quotation
through any automated quotation system. The Company and the Guarantors will pay
all the expenses incident to the Exchange Offer.
The Exchange Offer is not conditioned upon any minimum principal amount
of Old Notes being tendered for exchange pursuant to the Exchange Offer.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
The date of this Prospectus is , 1997
2
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder, and in accordance therewith files periodic reports,
proxy and information statements, and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy and information
statements, and other information filed by the Company with the Commission may
be inspected at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements regarding registrants, such as the
Company, that file electronically with the Commission.
The Company has filed with the Commission a Registration Statement on
Form S-4 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the securities offered
hereby. This Prospectus does not include all the information set forth in the
Registration Statement and the exhibits thereto, to which reference is made for
further information with respect to the Company. Copies of the Registration
Statement and the exhibits thereto are on file at the office of the Commission
and may be obtained from the Commission upon payment of prescribed rates or may
be examined without charge at the public reference facilities of the Commission
as prescribed above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions thereof filed with the Commission are
incorporated into this Prospectus by reference.
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996, as amended on Form 10K/A on August 28, 1997;
2. The Company's quarterly Reports on Form 10-Q for the quarter ended
March 31, 1997. As amended on Form 10-Q/A on August 28, 1997, and for the
quarter ended June 30, 1997; and
3. The Company's Current Reports on Form 8-K filed May 1, 1997, June 3,
1997, July 22, 1997, August 13, 1997, August 29, 1997 and September 2, 1997.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Offering Memorandum.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered upon the written or oral request of such
person, a copy of any and all of the documents which have been or may be
incorporated by reference in this Prospectus, except that exhibits to such
documents will not be provided unless they are specifically incorporated by
reference into such documents. Requests for copies of any such documents should
be directed to Allied Holdings, Inc., 160 Clairemont Avenue, Suite 510, Decatur,
Georgia 30030, Attention: Daniel H. Popky, telephone: 404/370-1100
3
<PAGE> 8
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and financial
data, contained in this Prospectus, including information and financial data
incorporated herein by reference. The terms "Allied" and "Company" refer to
Allied Holdings, Inc. and its subsidiaries (including the Guarantors), unless
otherwise stated or indicated by the context and except in the section of this
Prospectus entitled "Description of Notes." References herein to 1996 pro forma
operating data are to the operating data of the Company for the year ended
December 31, 1996 after giving pro forma effect to the Original Offering and the
Acquisition as if they had occurred on January 1, 1996. See "Unaudited Pro Forma
Financial Information."
THE COMPANY
The Company, as a result of its acquisition of Ryder Automotive Carrier
Services, Inc. and RC Management Corp. (collectively "Ryder") from Ryder System,
Inc. ("Ryder System") on September 30, 1997 (the "Acquisition), is the largest
motor carrier of automobiles and light trucks in North America. The Company
offers a full range of automotive delivery services including transporting new,
used and off-lease vehicles to dealers from plants, rail ramps, ports and
auctions, and providing vehicle rail-car loading and unloading services. The
Company also provides logistics solutions and other services to the new and used
vehicle distribution market and other segments of the automotive industry,
including the rapidly growing used car superstore market. The Company and Ryder
together hauled approximately 65% of the new vehicles sold in the United States
and Canada in 1996 and had pro forma 1996 revenues nearly five times greater
than the Company's closest competitor. For the year ended December 31, 1996,
after giving pro forma effect to the Acquisition, revenues and EBITDA (as
defined herein) of the Company would have been approximately $960.7 million and
$98.9 million, respectively.
The Company operates primarily in the short-haul segment of the
automotive transportation industry with an average length of haul of less than
200 miles. The Company delivers new and used vehicles throughout the United
States and Canada for all of the major domestic and foreign manufacturers of
automobiles and light trucks and certain of the used car superstores. General
Motors, Ford and Chrysler represent the Company's largest customers, accounting
for approximately 35%, 26% and 14%, respectively, of 1996 pro forma revenues.
The Company also provides services to all of the major foreign manufacturers,
including Honda, Mazda, Nissan, Toyota, Isuzu, Volkswagen and Mitsubishi.
The Company also provides logistics solutions that complement its new
and used vehicle distribution services operations and is pursuing additional
opportunities in the growing remarketed vehicle sector, which includes the
delivery of used and previously leased vehicles and vehicles sold through the
automotive auction process. For example, in early 1997 Ryder entered into
agreements with AutoNation and DriversMart to provide transportation logistics
services for the movement of vehicles to their reconditioning centers and
stores, and in August 1997 the Company entered into a contract with Aucnet to
provide transportation logistics services relating to the movement of vehicles
sold through live interactive auctions and bulletin board sales on the Internet.
The Company's executive offices are located at 160 Clairemont Avenue,
Decatur, Georgia 30030, and its telephone number is (404) 370-1100.
THE EXCHANGE OFFER
The Exchange Offer applies to $150 million aggregate principal amount
of the Old Notes. The form and terms of the New Notes are the same as the form
and terms of the Old Notes except that (i) interest on the New Notes will accrue
from the most recent date to which interest has been paid on the Notes or, if no
such interest has been paid, from the date of issuance of the Old Notes, and
(ii) the New Notes are being registered under the Securities Act and will not
bear legends restricting their transfer. The New Notes will evidence the same
debt as the
<PAGE> 9
Old Notes and will be issued pursuant to, and entitled to the benefits of, the
Indenture pursuant to which the Old Notes were issued. See "Description of
Notes." The Old Notes and the New Notes are sometimes referred to collectively
herein as the "Notes."
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The Exchange Offer..........................$1,000 principal amount of New Notes in exchange for each $1,000
principal amount of Old Notes. As of the date hereof, Old Notes
representing $150 million aggregate principal amount are outstanding.
The terms of the New Notes and the Old Notes are substantially
identical. Based on an interpretation by the Commission's staff set
forth in no-action letters issued to third parties unrelated to the
Company and the Guarantors and subject to the two immediately
following sentences, the Company and the Guarantors believe that New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes
generally may be offered for resale, resold and otherwise transferred by
any person receiving the New Notes, whether or not that person is the
holder (other than any such holder or such other person that is an
"affiliate" of the Company or any Guarantors within the meaning of
Rule 405 under the Securities Act), without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that (i) the New Notes are acquired in the ordinary course of
business of that holder or such other person, (ii) neither the holder nor
such other person is engaging in or intends to engage in a distribution
of the New Notes, and (iii) neither the holder nor such other person has
an arrangement or understanding with any person to participate in the
distribution of the New Notes. See "The Exchange Offer - Purpose and
Effect." Notwithstanding the foregoing, any holder of Old Notes who
is an "affiliate" of the Company or who intends to participate in the
Exchange Offer for the purpose of distributing the New Notes or any
broker-dealer who purchased the Old Notes from the Company for
resale pursuant to Rule 144A or any other available exemption under
the Securities Act, (a) will not be able to rely on the interpretations of
the staff of the Division of Corporation Finance of the Commission set
forth in the above-mentioned interpretive letters, (b) will not be
permitted or entitled to tender such Old Notes in the Exchange Offer
and (c) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or other
transfer of such Old Notes unless such sale is made pursuant to an
exemption from such requirements. In addition, each broker-dealer that
receives New Notes for its own account in exchange for Old Notes,
where those Old Notes were acquired by the broker-dealer as a result of
its market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any
resale of the New Notes. See "Plan of Distribution."
Registration Rights
Agreement...................................The Old Notes were sold by the Company on September 30, 1997, in a
private placement. In connection with the sale, the Company entered
into a Registration Rights Agreement with the purchasers (the
"Registration Rights Agreement") providing for the Exchange Offer.
See "The Exchange Offer - Purpose and Effect."
Expiration Date.............................The Exchange Offer will expire at 5:00 p.m., New York City time, __________,
1997, or such later date and time to which it is extended.
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Withdrawal..................................The tender of Old Notes pursuant to the Exchange Offer may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. Any Old Notes not
accepted for exchange for any reason will be returned without expense to the tendering
holder thereof as promptly as practicable after the expiration or termination of the
Exchange Offer.
Interest on the New
Notes.......................................Interest on each New Note will accrue from the most recent date to which interest has
been paid on the Notes or, if no interest has been paid, from __________, 1997.
Conditions to the Exchange
Offer.......................................The Exchange Offer is subject to certain customary conditions, certain of which may be
waived by the Company. See "The Exchange Offer - Conditions to Exchange Offer."
Procedures for Tendering
Old Notes...................................Each holder of Old Notes wishing to accept the Exchange Offer must complete, sign and
date the Letter of Transmittal, or a copy thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise deliver the Letter of Transmittal,
or the copy, together with the Old Notes and any other required documentation, to the
Exchange Agent at the address set forth in the Letter of Transmittal. Persons holding
Old Notes through the Depository Trust Company ("DTC") and wishing to accept the
Exchange Offer must do so pursuant to the DTC's Automated Tender Offer Program, by
which each tendering Participant will agree to be bound by the Letter of Transmittal.
By executing or agreeing to be bound by the Letter of Transmittal, each holder will
represent to the Company that, among other things, (i) the New Notes acquired pursuant
to the Exchange Offer are being obtained in the ordinary course of business of the
person receiving such New Notes, whether or not such person is the holder of the Old
Notes, (ii) neither the holder nor any such other person is engaging in or intends to
engage in a distribution of such New Notes, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) neither the holder nor any such other person
is an "affiliate," as defined under Rule 405 promulgated under the Securities Act, of
the Company. Pursuant to the Registration Rights Agreement, the Company and each of
the Guarantors are required to use their reasonable best efforts to file a "shelf"
registration statement for a continuous offering pursuant to Rule 415 under the
Securities Act in respect of the Old Notes (and cause such shelf registration statement
to be declared effective by the Commission and keep it continuously effective,
supplemented and amended for prescribed periods) if (i) the Company is not required to
file an Exchange Offer Registration Statement (as defined in the Registration Rights
Agreement) or permitted to consummate the Exchange Offer because the Exchange Offer is
not permitted by applicable law or Commission policy, or (ii) any holder of Old Notes
shall notify the Company prior to the 20th day following consummation of the Exchange
Offer (A) that such holder is prohibited by law or Commission policy from participating
in the Exchange Offer
</TABLE>
3
<PAGE> 11
<TABLE>
<S> <C>
or (B) that such holder may not resell the New Notes acquired by it
in the Exchange Offer to the public without delivery of a prospectus
and the prospectus contained in the Exchange Offer Registration
Statement would not be appropriate or available for such resales by
such holder.
Acceptance of Old Notes and
Delivery of New Notes.......................The Company will accept for exchange any and all Old Notes which
are properly tendered in the Exchange Offer prior to
5:00 p.m., New York City time, on the Expiration
Date. The New Notes issued pursuant to the Exchange
Offer will be delivered promptly following the
Expiration Date. See "The Exchange Offer - Terms of
the Exchange Offer."
Exchange Agent..............................The First National Bank of Chicago is serving as Exchange Agent in
connection with the Exchange Offer.
Federal Income Tax
Considerations..............................The exchange pursuant to the Exchange Offer should not be a taxable
event for federal income tax purposes. See "Certain Federal Income
Tax Considerations."
Effect of Note Tendering....................Old Notes that are not tendered or that are improperly tendered and
therefor not accepted will, following the completion of the Exchange
Offer, continue to be subject to the existing restrictions upon transfer
thereof. The Company will have no further obligation to provide for
the registration under the Securities Act of such Old Notes.
TERMS OF NEW NOTES
Securities Offered..........................$150 million aggregate principal amount of 8 5/8% Series B Senior
Notes due 2007.
Maturity....................................October 1, 2007.
Interest Payment Dates......................Interest on the New Notes will be payable semi-annually in arrears on April 1 and
October 1 of each year, commencing April 1, 1998.
Ranking.....................................The New Notes will be general unsecured obligations of the Company, ranking pari passu
in right of payment with all other present or future senior indebtedness of the
Company, and senior in right of payment to all present or future subordinated
indebtedness of the Company. The New Notes will be effectively subordinated, however,
to all secured obligations of the Company, including the Company's borrowings under the
New Credit Facility, to the extent of the assets securing such obligations. As of June
30, 1997, after giving pro forma effect to the Offering and the Acquisition, the New
Notes would have been effectively subordinated to approximately $41.8 million of
secured borrowings of the Company. The Indenture will permit the Company to incur
additional indebtedness, including additional secured indebtedness, subject to certain
conditions.
Guarantees..................................The New Notes will be jointly and severally guaranteed by all existing Domestic
Restricted Subsidiaries and certain other Subsidiaries of the
</TABLE>
4
<PAGE> 12
<TABLE>
<S> <C>
Company and by all Domestic Restricted Subsidiaries of the Company created or acquired
in the future (collectively, the "Guarantors"). See "Description of Notes - Subsidiary
Guarantees."
Optional Redemption.........................Prior to October 1, 2002, the New Notes will be redeemable at the option of the
Company, in whole or in part, at the Make-Whole Price, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the redemption date. On and after October 1,
2002, the New Notes will be redeemable, at the option of the Company, in whole or in
part, at the redemption prices set forth herein, plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date. In addition, at any time on or
prior to October 1, 2000, the Company may redeem up to 35% of the New Notes at a
redemption price equal to 108.625% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with
the net proceeds of one or more sales of Equity Interests, other than Disqualified
Stock, of the Company, provided that at least $97.5 million of New Notes remain
outstanding immediately following each such redemption.
Change of Control...........................Upon the occurrence of a Change of Control, the Company will be required to make an
offer to repurchase all or any part of each holder's New Notes at a price equal to 101%
of the principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of repurchase. See "Risk Factors - Repurchase of
Notes Upon Change of Control" and "Description of Notes Repurchase at the Option of
Holders - Change of Control."
Certain Covenants...........................The indenture pursuant to which the New Notes will be issued (the "Indenture") contains
certain covenants that, among other things, limit the ability of the Company and its
Restricted Subsidiaries to incur additional Indebtedness (as defined herein), pay
dividends or make other distributions, repurchase Equity Interests (as defined herein)
or subordinated Indebtedness, create certain liens, enter into certain transactions
with affiliates, sell assets or enter into certain mergers or consolidations. See
"Description of Notes - Certain Covenants."
</TABLE>
5
<PAGE> 13
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA
The following table sets forth certain summary historical and pro forma
consolidated financial and operating data of the Company for each of the three
years in the period ended December 31, 1996 and for the six-month periods ended
June 30, 1996 and 1997. The financial data is derived from the Company's audited
and unaudited consolidated financial statements included elsewhere herein. The
pro forma data gives effect to the Offering and the Acquisition as if they had
occurred on (i) January 1, 1996 with respect to the statement of operations
data, other financial data, pro forma ratios and operating data, and (ii) June
30, 1997 with respect to the balance sheet data. This table should be read in
conjunction with "Selected Financial Data," "Unaudited Pro Forma Financial
Information," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Consolidated Financial Statements, including the
notes thereto, of the Company and Ryder included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
-------------------------------------------- -------------------------------
HISTORICAL HISTORICAL
------------------------------ -------------------
PRO FORMA PRO FORMA
1994(1) 1995 1996 1996 1996 1997 1997
-------- ------- --------- --------- -------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues ......................... $297,236 $381,464 $ 392,547 $960,661 $200,565 $208,969 $ 524,665
Operating expenses ............... 268,505 360,543 373,952 928,913 189,510 197,519 496,936
-------- -------- --------- -------- -------- -------- ---------
Operating income ................. 28,731 20,921 18,595 31,748(2) 11,055 11,450 27,729
Interest expense ................. 5,462 11,260 10,720 23,288 5,396 5,408 11,570
Interest income .................. 312 707 603 1,216 303 357 1,448
Other income, net ................ -- -- -- 2,472 -- -- 752
Income tax provision ............. 9,393 4,222 3,557 6,474 2,504 2,688 8,262
-------- -------- --------- -------- ------ -------- --------
Income before extraordinary item.. $ 14,188 $ 6,146 $ 4,921 $ 5,674 3,458 $ 3,711 10,097
======== ======== ========= ======== ======== ======== ========
OTHER FINANCIAL DATA:
EBITDA(3) ........................ $ 45,045 $ 46,352 $ 45,020 $ 98,880(2) $ 23,986 $ 25,236 $ 62,011
Depreciation and amortization .... 16,314 25,431 26,425 64,660 12,931 13,786 33,530
Capital expenditures:
New Rigs and modifications ..... 23,337 11,716 17,092 58,470 12,053 5,811 15,206
Maintenance and other .......... 7,208 6,494 8,880 12,724 2,323 1,0991 1,739
-------- -------- --------- -------- -------- --------- ---------
Total .................... 30,545 18,210 25,972 71,194 14,376 6,910 16,945
PRO FORMA RATIOS:
EBITDA to interest expense 4.2x(2) 5.4x
Total debt to EBITDA 2.3x(2) 1.9x(4)
OPERATING DATA:
Rigs operated (at end of period).. 2,151 2,063 1,947 5,323 1,999 1,893 5,250
Vehicles delivered (in thousands). 3,254 4,515 4,738 10,767 2,450 2,503 5,749
Loads delivered (in thousands).... 385 540 572 1,348 295 307 713
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
------------------------
ACTUAL AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets.......................................................................$228,694 $540,000(5)
Total debt......................................................................... 105,234 231,789
Stockholders' equity............................................................... 60,157 60,157(5)
</TABLE>
(footnotes on following page)
6
<PAGE> 14
(1) Includes the results of Auto Haulaway commencing with its acquisition
by the Company on October 31, 1994.
(2) Pro forma operating income and EBITDA for 1996 includes an $11.3
million restructuring charge at Ryder related to efforts to improve its
profitability and focus on its core business of transporting vehicles
and related services. See "Business -- Ryder." Excluding such charge,
the pro forma ratios of EBITDA to interest expense and total debt to
EBITDA would have been 4.7x and 2.1x, respectively.
(3) Represents income before interest expense, interest income, income tax
provision, depreciation and amortization and extraordinary item. EBITDA
is presented because it provides useful information regarding a
company's ability to service and/or incur debt. EBITDA should not be
considered in isolation from or as a substitute for net income, cash
flows from operating activities and other consolidated income or cash
flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of profitability or liquidity.
(4) The ratio of total debt to EBITDA for the pro forma six months ended
June 30, 1997 has been calculated as total debt as of June 30, 1997
divided by two times EBITDA for the six months ended June 30, 1997, in
each case on a pro forma basis.
(5) Excludes an after-tax charge of approximately $5.0 million that the
Company intends to record to write down Company Rigs and terminal
facilities that will be idled or closed as a result of the Acquisition.
7
<PAGE> 15
RISK FACTORS
Prospective purchasers of the New Notes offered hereby should carefully
review the information set forth below, in addition to the other information
contained in this Prospectus, in evaluating an investment in the New Notes
offered hereby.
SUBSTANTIAL LEVERAGE
The Company has, and will continue to have consolidated indebtedness
that is substantial in relation to its stockholders' equity. As of June 30,
1997, after giving pro forma effect to the offering of the Old Notes completed
September 30, 1997 (the "Offering") and the Acquisition, the Company would have
had total debt of approximately $231.8 million (excluding $155.2 million of
trade payables and other accrued liabilities) and stockholders' equity of
approximately $60.2 million. In addition, the Company would have had
approximately $126.3 million of additional borrowings available under the New
Credit Facility. The Company's leveraged financial position poses substantial
consequences to holders of the New Notes, including the risks that (i) a
substantial portion of the Company's cash flow from operations will be dedicated
to the payment of interest on the New Notes, borrowings under the New Credit
Facility and other indebtedness, (ii) the Company's leveraged position may
impede its ability to obtain financing in the future for working capital,
capital expenditures and general corporate purposes and (iii) the Company's
highly leveraged financial position may make it more vulnerable to economic
downturns and may limit its ability to withstand competitive pressures. If the
Company is unable to generate sufficient cash flow from operations in the future
to service its indebtedness and to meet its other commitments, the Company will
be required to adopt one or more alternatives, such as refinancing or
restructuring its indebtedness, selling material assets or operations, or
seeking to raise additional debt or equity capital. There can be no assurance
that any of these actions could be effected on satisfactory terms, that they
would enable the Company to continue to satisfy its capital requirements or that
they would be permitted by the terms of existing or future debt agreements,
including the Indenture and the New Credit Facility. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
ABILITY TO INTEGRATE ACQUISITION OF RYDER
The full benefits of the business combination of the Company and Ryder
requires the integration of each company's operational, administrative, finance
and marketing organizations, the coordination of each company's operations and
the implementation of appropriate operational, financial and management systems
and controls in order to capture the efficiencies and the cost reductions that
are expected to result from the Acquisition. This will require substantial
attention from the Company's management team. The diversion of management
attention, as well as any other difficulties which may be encountered in the
transition and integration process, could have an adverse impact on the revenue
and operating results of the Company. In addition, there can be no assurance
that the Company will be successful in integrating the operations of Ryder, or
that the anticipated benefits will be realized.
DEPENDENCE ON AUTOMOTIVE INDUSTRY
The automotive transportation industry is dependent upon the volume of
automobiles and light trucks manufactured, imported and sold. The automotive
industry is highly cyclical and demand for new automobiles and light trucks is
directly affected by such factors as general economic conditions, consumer
confidence, and the availability of affordable new car financing. As a result,
the Company's results of operations will be adversely affected by cyclical
downturns in the general economy or in the automotive industry and by consumer
preferences in purchasing new automobiles and light trucks.
DEPENDENCE ON MAJOR CUSTOMERS
The Company's business is highly dependent upon General Motors, Ford
and Chrysler, its largest customers. The Company derived approximately 35%, 26%
and 14% of its 1996 pro forma revenues from General Motors, Ford and Chrysler,
respectively. A significant reduction in General Motors', Ford's or Chrysler's
production, the loss of General Motors, Ford or Chrysler as a customer, or a
significant reduction in the services provided for any of these customers by the
Company would have a materially adverse effect upon the Company. See "Business."
8
<PAGE> 16
CONTRACTS WITH CUSTOMERS
The Company operates under contracts with most of its customers with
terms varying from 30 days to five years. The Company's contract with Ford
expires in May 1999, its contract with Chrysler expires in June 2000, and it has
an agreement in principle with General Motors to enter into a three-year
contract. See "-- Dependence on Major Customers." The contracts between the
Company and its customers generally establish rates for the transportation of
vehicles based upon a fixed rate per vehicle transported and a variable rate
for each mile a vehicle is transported. The contracts generally do not permit
the Company to recover for increases in fuel prices, fuel taxes or labor costs,
and any such increases are likely to have an adverse effect on the Company's
results of operations, although some contracts provide for renegotiation to
address certain material adverse changes. In addition, certain of the Company's
contracts provide for annual rate reductions. While the Company may be able to
derive savings through increased efficiencies with respect to vehicles
transported for these customers, the savings may not offset the reductions,
which would adversely affect the Company's results of operations.
LIABILITY EXPOSURE
The Company currently retains up to $650,000 of liability for each
claim for workers' compensation and up to $500,000 of liability for automobile
and general liability, including personal injury and property damage claims. In
addition to the $500,000 per occurrence deductible for automobile liability,
there is a $500,000 aggregate deductible for those claims which exceed the
$500,000 per occurrence deductible. The Company also retains up to $250,000 of
liability for each cargo damage claim in the United States. In Canada, the
Company retains up to C$100,000 (approximately U.S. $72,000 at September 19,
1997) of liability for each claim for personal injury, property damage or cargo
damage. Ryder's insurance contracts also provide for substantial deductibles or
indemnifications. If the Company were to experience a material increase in the
frequency or severity of accidents or workers' compensation claims or
unfavorable developments in existing claims, the Company's operating results
could be adversely affected. The Company formed Haul Insurance Limited in
December 1995 as a captive insurance subsidiary to provide insurance coverage to
the Company with respect to its deductibles for workers' compensation and
commercial general liability in the United States and for automobile liability
insurance in the United States and Canada. See "Business -- Risk Management and
Insurance."
ENVIRONMENTAL REGULATION
The Company is subject to environmental laws and regulations that
impose liability for the costs of cleaning up, and certain damages resulting
from, sites of past spills, disposals or other releases of hazardous materials
or petroleum products. Such liability could relate to spills, disposals or other
releases of hazardous materials or petroleum products at property that the
Company (i) currently owns or operates, (ii) formerly owned or operated, or
(iii) used for the disposal of wastes. These environmental laws and regulations
typically impose cleanup responsibility and liability without regard to whether
the owner or operator knew or caused the presence of the contaminants, and the
liability under the laws has been interpreted to be joint and several unless the
harm is divisible and there is a reasonable basis for allocation of liabilities.
Many of the Company's terminals contain, or have contained, underground storage
tanks ("USTs") for storing fuel and other materials. While the Company believes
that it is in material compliance with all environmental requirements, including
requirements relating to the USTs, there can be no assurance that any failure to
comply, or compliance in the future, with such environmental laws (including the
potential imposition of liabilities associated with releases of hazardous
substances or petroleum products from the properties currently or formerly owned
or operated by the Company) will not have a material adverse effect on the
Company's business, financial condition or results of operations. See "Business
- -- Regulation."
LABOR MATTERS
Certain subsidiaries of the Company, along with five other motor
carriers who, together with the Company, provide approximately 95% of the total
new vehicle motor transportation services in the United States, are signatories
to the Automobile National Master Agreement (the "Master Agreement") with the
International Brotherhood of Teamsters (the "Teamsters"). As a result of being a
party to the Master Agreement, the Company does not have exclusive control over
labor concessions in bargaining with the Teamsters. In 1995, Ryder
9
<PAGE> 17
experienced a 32-day Teamsters strike. In Canada, certain subsidiaries of the
Company are signatories to four labor agreements, each covering certain of the
Canadian provinces and territories. The contracts expire from May 31, 1998 to
March 31, 2000. In addition, the Company is a party to agreements with other
labor unions. There can be no assurance that renegotiation of labor contracts as
they expire will not result in increased labor costs to the Company, which
increases could be material, or that such contracts can be renegotiated without
work stoppages.
COMPETITION
The automotive transportation industry is highly competitive. The
Company currently competes with other motor carriers of varying sizes, as well
as with railroads. The Company also competes with non-union motor carriers that
may be able to provide comparable services at lower costs. The development of
new methods for hauling vehicles could also lead to increased competition. See
"Business -- Competition."
EFFECTIVE SUBORDINATION
The New Credit Facility, which provides the Company with available
borrowings of up to $230.0 million, is secured by liens on substantially
all of the assets of the Company. Under certain circumstances, certain other
indebtedness of the Company may be secured by liens on assets of the Company.
See "Description of Notes -- Certain Covenants -- Liens" and "Description of
Other Indebtedness -- New Credit Facility." In the event of a liquidation or
insolvency of the Company, or if any of its secured indebtedness is accelerated,
the secured assets of the Company will be available to pay obligations on the
New Notes only after borrowings under the New Credit Facility and any other
secured indebtedness have been paid in full. Accordingly, there may not be
sufficient assets remaining to pay amounts due on any or all of the New Notes
then outstanding. In addition, the existence of the liens on the assets of the
Company may impair the Company's ability to obtain additional financing in the
future.
The Company is a holding company that conducts substantially all of its
operations through its subsidiaries. As a result, the Company is dependent on
dividends or other distributions from its subsidiaries to meet the Company's
debt service and other obligations, including its obligations under the New
Notes, which may be restricted by applicable law. In addition, to the extent
that any such subsidiary incurs indebtedness and becomes insolvent or is
liquidated, creditors of such subsidiary would be entitled to payment from the
proceeds of such subsidiary's assets before the Company and its creditors would
derive any value from such subsidiary's assets. The New Notes will be guaranteed
by all of the Company's present and future Domestic Restricted Subsidiaries. If
a court were to invalidate or limit the guarantee of any such Restricted
Subsidiary under fraudulent conveyance or other applicable legal principles,
other creditors of such Restricted Subsidiary would to such extent have priority
as to the assets of such Restricted Subsidiary over the claims of holders of the
New Notes. See "-- Fraudulent Conveyance."
REPURCHASE OF NOTES UPON CHANGE OF CONTROL
The Indenture provides that, in the event of a Change of Control, the
Company will be required to make an offer to each holder of New Notes to
repurchase all or any part of such holder's New Notes at a repurchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the repurchase date. In addition, a
Change of Control may result in a default under the New Credit Facility or other
indebtedness of the Company. If a Change of Control were to occur, there can be
no assurance that the Company would have the financial resources necessary to
repay all such indebtedness and repurchase all New Notes tendered pursuant to
such an offer. See "Description of New Notes -- Repurchase at the Option of
Holders -- Change of Control."
LACK OF PUBLIC MARKET
The Company and the Guarantors do not intend to list the New Notes on
any securities exchange. The Company has been advised by Bear, Stearns & Co.
Inc., BT Alex. Brown Incorporated and NationsBanc Capital Markets, Inc.
(collectively, the "Initial Purchasers") that the Initial Purchasers intend to
make a market in the New Notes after the consummation of the Exchange Offer, as
permitted by applicable laws and regulations; however, the Initial Purchasers
are not obligated to do so, and any such market making activities may be
discontinued at any time without notice. Therefore, there can be no assurance
that an active market for the New Notes will develop.
10
<PAGE> 18
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of Old Notes set forth in the legend thereon as a consequence of the
issuance of the Old Notes pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. In general, the
Old Notes may not be offered or sold, unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act and applicable state securities laws. The Company does not
anticipate registering the Old Notes under the Securities Act. Holders of the
Old Notes who do not tender their Old Notes in the Exchange Offer will continue
to hold such Old Notes and their rights under such Old Notes will not be
altered, except for any such rights under the Registration Rights Agreement,
which by their terms generally terminate or cease to have further effectiveness
as a result of the making of, and the acceptance for exchange of all validly
tendered Old Notes pursuant to, the Exchange Offer.
SEASONALITY
The Company's revenues are seasonable, with the second and fourth
quarters generally experiencing higher revenues than the first and third
quarters. The volume of vehicles shipped during the second and fourth quarters
is generally higher due to the introduction of new models which are shipped to
dealers during those periods and the higher spring and early summer sales of
automobiles and light trucks. During the first and third quarters, vehicle
shipments typically decline due to lower sales volume during those periods and
scheduled plant shut downs which primarily occur during the third quarter. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Seasonality and Inflation."
DEPENDENCE ON KEY PERSONNEL
The success of the Company is dependent upon its senior management
team, as well as its ability to attract and retain qualified personnel. There is
competition for qualified personnel in the automotive transportation industry.
There is no assurance that the Company will be able to retain its existing
senior management or to attract additional qualified personnel. See
"Management."
EFFECTIVE CONTROL BY PRINCIPAL SHAREHOLDERS
The Company's management beneficially owns an aggregate of 3,861,191
shares of the common stock of the Company, or 49.4% of the outstanding common
stock. As a result, if management and members of their families choose to vote
all of their shares in a similar manner, management likely would have sufficient
voting power to elect the entire Board of Directors of the Company and to
determine the outcome of matters submitted to shareholders. See "Management."
FRAUDULENT CONVEYANCE
Under applicable provisions of the United States Bankruptcy Code and
comparable provisions of state fraudulent transfer or conveyance law, if the
Company or any Guarantor, at the time it originally issued the Old Notes or its
guarantee of the Old Notes, as the case may be, (a) incurred such obligation
with intent to hinder, delay or defraud creditors, or (b) received less than
reasonably equivalent value or fair consideration in connection with such
incurrence and (i) was insolvent at the time of the incurrence, (ii) was
rendered insolvent by reason of such incurrence (and the application of the
proceeds thereof), (iii) was engaged or was about to engage in a business or
transaction for which the assets remaining with the Company or such Guarantor
constituted unreasonably small capital to carry on its business or (iv) intended
to incur, or believed that it would incur, debts beyond its ability to pay such
debts as they mature, then, in each such case, a court of competent jurisdiction
could avoid, in whole or in part, the Notes or such guarantee thereof, as the
case may be, or, in the alternative, subordinate the Notes or such guarantee to
existing and future indebtedness of the Company or such Guarantor, as the case
may be. The measure of insolvency for purposes of the foregoing will vary
depending upon the law applied in such case. Generally, however, the Company or
a Guarantor would be considered insolvent if the sum of its debts, including
contingent liabilities, was greater than all of its assets at fair valuation or
if the present fair saleable value of its assets was less
11
<PAGE> 19
than the amount that would be required to pay the probable liability on its
existing debts, including contingent liabilities, as they become absolute and
matured.
The Company believes that, for purposes of the United States Bankruptcy
Code and state fraudulent transfer or conveyance laws, (a) the Old Notes and the
guarantees thereof were issued without the intent to hinder, delay or defraud
creditors and for proper purposes and in good faith, (b) the Company and the
Guarantors received reasonably equivalent value or fair consideration and (c)
the Company and the Guarantors, after the initial issuance of the Old Notes and
the application of the proceeds thereof, were solvent, had sufficient capital
for carrying on their business and were (and are) able to pay their debts as
they mature. There can be no assurance, however, that a court passing on such
questions would agree with the Company's belief.
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company on September 30, 1997, in the
Original Offering. In connection with that sale, the Company entered into the
Registration Rights Agreement, which requires that the Company file the
Registration Statement under the Securities Act with respect to the New Notes
and, upon the effectiveness of the Registration Statement, offer to the holders
of the Old Notes the opportunity to exchange their Old Notes for a like
principal amount of New Notes, which will be issued without a restrictive legend
and which generally may be reoffered and resold by the holder without
registration under the Securities Act. The Registration Rights Agreement further
provides that the Company and the Guarantors must use their reasonable best
efforts to (i) cause the Registration Statement with respect to the Exchange
Offer to be declared effective on or before December 30, 1997 and (ii)
consummate the Exchange Offer on or before the 30th business day following the
date the Registration Statement is declared effective. Except as provided below,
upon the completion of the Exchange Offer, the Company's obligations with
respect to the registration of the Old Notes and the New Notes will terminate. A
copy of the Registration Rights Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part and the summary herein
of certain provisions thereof does not purport to be complete and is subject to,
and is qualified in its entirety by reference thereto. As a result of the filing
and the effectiveness of the Registration Statement, certain liquidated damages
provided for in the Registration Rights Agreement will not become payable by the
Company. Following the completion of the Exchange Offer (except as set forth in
the paragraph immediately below), holders of Old Notes not tendered will not
have any further registration rights and those Old Notes will continue to be
subject to certain restrictions on transfer. Accordingly, the liquidity of the
market for the Old Notes could be adversely affected upon completion of the
Exchange Offer.
In order to participate in the Exchange Offer, a holder must represent
to the Company, among other things, that (i) the New Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of the
person receiving the New Notes, (ii) neither the holder nor any such other
person is engaging in or intends to engage in a distribution of the New Notes,
(iii) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of the New
Notes and (iv) neither the holder nor any such other person is an "affiliate,"
as defined under Rule 405 promulgated under the Securities Act, of the Company.
Pursuant to the Registration Rights Agreement, the Company is required to file a
"shelf" registration statement for a continuous offering pursuant to Rule 415
under the Securities Act in respect of the Old Notes (and cause such shelf
registration statement to be declared effective by the Commission and keep it
continuously effective, supplemented and amended for prescribed periods) if (i)
the Company is not required to file an Exchange Offer Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy, or (ii) any holder of Old
Notes shall notify the Company prior to the 20th day following consummation of
the Exchange Offer (A) that such holder is prohibited by law or Commission
policy from participating in the Exchange Offer or (B) that such holder may not
resell the New Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained in the Exchange Offer
Registration Statement would not be appropriate or available for such resale by
such holder. Other than as set forth in this paragraph, no holder will have the
right to participate in the "shelf" registration statement nor otherwise to
require that the Company register such holder's shares of Old Notes under the
Securities Act. See "- Procedures for Tendering."
12
<PAGE> 20
Based on an interpretation by the Commission's staff set forth in
no-action letters issued to third parties unrelated to the Company and the
Guarantors and subject to the two immediately following sentences, the Company
and the Guarantors believe that New Notes issued pursuant to the Exchange Offer
in exchange for Old Notes may be offered for resale, resold and otherwise
transferred by any person receiving the New Notes, whether or not that person is
the holder (other than any such holder or such other person that is an
"affiliate" of the Company or any Guarantors within the meaning of Rule 405
under the Securities Act), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that (i) the New
Notes are acquired in the ordinary course of business of that holder or such
other person, (ii) neither the holder nor such other person is engaging in or
intends to engage in a distribution of the New Notes, and (iii) neither the
holder nor such other person has an arrangement or understanding with any person
to participate in the distribution of the New Notes. Notwithstanding the
foregoing, any holder of Old Notes who is an "affiliate" of the Company or who
intends to participate in the Exchange Offer for the purpose of distributing the
New Notes, or any broker-dealer who purchased the Old Notes from the Company for
resale pursuant to Rule 144A or any other available exemption under the
Securities Act, (a) will not be able to rely on the interpretations of the staff
of the Division of Corporation Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will not be permitted or entitled to
tender such Old Notes in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Notes unless such sale is
made pursuant to an exemption from such requirements. In addition, each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes, where those Old Notes were acquired by the broker-dealer as a result of
its market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of these New Notes.
See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offer (except as set forth in
the second paragraph under "-- Purpose and Effect" above), holders of Old Notes
not tendered will not have any further registration rights and those Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for a holder's Old Notes could be adversely affected
upon completion of the Exchange Offer if the holder does not participate in the
Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, the Company will accept any and all
Old Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. The Company will issue $1,000 principal amount of
New Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000 in principal amount.
The form and terms of the New Notes are substantially the same as the
form and terms of the Old Notes except that the New Notes have been registered
under the Securities Act and will not bear legends restricting their transfer.
The New Notes will evidence the same debt as the Old Notes and will be issued
pursuant to, and entitled to the benefits of, the Indenture pursuant to which
the Old Notes were issued.
As of September 30, 1997, Old Notes representing $150,000,000 aggregate
principal amount were outstanding and there was one registered holder, a nominee
of DTC. This Prospectus, together with the Letter of Transmittal, is being sent
to such registered Holder and to others believed to have beneficial interests in
the Old Notes. Holders of Old Notes do not have any appraisal or dissenters'
rights under the Georgia Business Corporation Code or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as, and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent
13
<PAGE> 21
for the tendering holders for the purpose of receiving the New Notes from the
Company. If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"The Exchange Offer - Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
___________, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. In order to extend the
Exchange Offer, the Company will notify the Exchange Agent and each registered
holder of any extension by oral or written notice prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or, if any of the
conditions set forth under "The Exchange Offer - - Certain Conditions to
Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer,
by giving oral or written notice of such delay, extension or termination to the
Exchange Agent, or (ii) to amend the terms of the Exchange Offer in any manner.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the Exchange
Offer. Except as set forth under "The Exchange Offer - Book Entry Transfer," to
tender in the Exchange Offer a holder must complete, sign, and date the Letter
of Transmittal, or a copy thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and deliver the Letter of Transmittal or
copy to the Exchange Agent prior to the Expiration Date. In addition, either (i)
certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal, (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Old Notes, if that procedure is
available, into the Exchange Agent's account at DTC (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below,
must be received by the Exchange Agent prior to the Expiration Date, or (iii)
the holder must comply with the guaranteed delivery procedures described below.
To be tendered effectively, the Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth under
"The Exchange Offer - Exchange Agent" prior to the Expiration Date.
The tender by a holder that is not withdrawn before the Expiration Date
will constitute an agreement between that holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR
NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
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 beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the Letter of Transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in the beneficial owner's name or obtain a properly completed bond power
from the registered holder. The transfer of
14
<PAGE> 22
registered 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 (as defined below)
unless Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration Instruction"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, the
guarantee must be by any eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations, or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal unless waived by the Company.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities, or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent, nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "-- Conditions to the Exchange Offer,"
to terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
By tendering, each holder will represent to the Company that, among
other things, (i) the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the registered holder, (ii) neither the
holder nor any such other person is engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) neither the holder nor any such other
person is an "affiliate," as defined under Rule 405 of the Securities Act, of
the Company.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of and
agreement to be bound by the Letter of Transmittal), and all other required
documents. If any tendered Old Notes are not
15
<PAGE> 23
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering Holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such nonexchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration or termination of the Exchange Offer.
Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where the Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the Book-Entry Transfer Facility for purposes of
the Exchange Offer within two business days after the date of this Prospectus,
and any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes being tendered by
causing the Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or copy thereof, with
any required signature guarantees and any other required documents, must, in any
case other than as set forth in the following paragraph, be transmitted to and
received by the Exchange Agent at the address set forth under "The Exchange
Offer - Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old
Notes and the Old Notes are not immediately available, or time will not permit
such holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date.
16
<PAGE> 24
For a withdrawal of a tender of Old Notes to be effective, a written
or, for DTC participants, electronic ATOP transmission notice of withdrawal must
be received by the Exchange Agent at its address set forth on the back cover
page of this Prospectus prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes), (iii) be signed by the holder
in the same manner as the original signature on the Letter of Transmittal by
which such Old Notes were tendered (including any required signature guarantees)
or be accompanied by documents of transfer sufficient to have the Trustee
register the transfer of such Old Notes into the name of the person withdrawing
the tender, and (iv) specify the name in which any such Old 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 such notices will
be determined by the Company, whose determination shall be final and binding on
all parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender, or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures under "The Exchange Offer -- Procedures for Tendering" at any
time on or prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission or any order of any governmental agency or court of competent
jurisdiction.
The foregoing conditions are for the sole benefit of the Company and
may be asserted by the Company regardless of the circumstances giving rise to
any such condition or may be waived by the Company in whole or in part at any
time and from time to time in its sole discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"). In any such event the Company is required to use
every reasonable effort to obtain the withdrawal of any stop order at the
earliest possible time.
EXCHANGE AGENT
All executed Letters of Transmittal should be directed to the Exchange
Agent. The First National Bank of Chicago has been appointed as Exchange Agent
for the Exchange Offer. Questions, 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:
17
<PAGE> 25
The First National Bank of Chicago
By Registered or Certified Mail or By Hand or Overnight Delivery
Service:
The First National Bank of Chicago
c/o First Chicago Trust Company of New York
14 Wall Street
8th Floor, Window 2
New York, New York 10005
By Facsimile Transmission (for Eligible Institutions only)
Fax (212) 240-8939
(For Information by Telephone or Telephone Confirmation)
(212) 240-8801
(Originals of all documents sent by facsimile should be sent promptly
by registered or certified mail, by hand, or by overnight delivery service.)
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company. The estimated cash
expenses to be incurred in connection with the Exchange Offer will be paid by
the Company and are estimated in the aggregate to be $______, which includes
fees and expenses of the Exchange Agent, accounting, legal, printing, and
related fees and expenses.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register New Notes in the name of, or request that Old
Notes not tendered or not accepted in the Exchange Offer be returned to, a
person other than the registered tendering holder will be responsible for the
payment of any applicable transfer tax thereon.
18
<PAGE> 26
THE ACQUISITION
On September 30, 1997, the Company acquired Ryder, North America's
largest motor carrier of automobiles and light trucks, from Ryder System for
$114.5 million in cash. Ryder offers a full range of automotive delivery
services including transporting new, used and off-lease vehicles to dealers from
plants, rail ramps, ports and auctions, and providing vehicle rail-car loading
and unloading services. Ryder also provides logistics solutions and other
services to the new and used vehicle distribution market and other segments of
the automotive industry, including the growing used car superstore market.
For the year ended December 31, 1996, Ryder generated revenues and
EBITDA of $568.1 million and $41.2 million, respectively (in each case, adjusted
to reflect only the businesses being acquired by the Company, before any pro
forma adjustments). Ryder's EBITDA for 1996 includes an $11.3 million charge
relating to a restructuring that was intended to improve Ryder's future
operating performance. See "Unaudited Pro Forma Financial Information" and
"Business -- Ryder."
Ryder operated throughout the Continental United States and Canada
through approximately 90 terminals and a fleet of approximately 3,400 Rigs,
including approximately 600 owner-operated Rigs, and had approximately 4,800
employees. Similar to the Company, Ryder provided vehicle hauling services to
all of the major domestic and foreign automotive manufacturers. General Motors
represented Ryder's largest customer, accounting for approximately 49.9% of 1996
revenues.
The Acquisition was consistent with the Company's growth strategy to
increase its market share of the North American automotive carrier industry. The
Acquisition also provided an opportunity for the Company to significantly
accelerate its penetration with existing customers and gain entry to new
customers. The Company believed that the Acquisition was attractive because: (i)
the combination of Allied and Ryder creates the largest motor carrier in the
automotive transportation industry, hauling approximately 65% of the new
vehicles sold in the United States and Canada in 1996; (ii) significant cost
savings and margin enhancement improvement opportunities are expected to be
realized through consolidation of terminal operations and administrative
functions, the integration of proprietary information systems, and the
implementation of performance improvement programs; (iii) the Company will be
able to provide additional services to its customers through increased
capabilities, such as port processing and rail yard management; (iv) the
Company's customer base will become more diversified; and (v) the Company will
expand the geographic territories in which it does business from the southern
and eastern United States and Canada to the entire Continental United States and
Canada.
The Company believes that the Acquisition will result in the following
cost-savings upon the integration of the operations of Ryder with the Company,
which is expected to begin during the fourth quarter of 1997 and be completed by
the end of 1998.
- Optimize Terminal Network. The Company plans to consolidate approximately
19 terminals, or approximately 14% of the combined companies' terminal
locations, which are located in close proximity to one another. The
consolidation of these terminals will reduce operating and terminal
overhead costs through the elimination of lease or depreciation charges,
the reduction in on-site personnel costs, and the reduction of other
direct operating expenses. In addition, the Company believes that
additional cost savings can be achieved by combining terminal
administrative functions.
- Improve Productivity. Over the past decade, the Company has implemented
performance improvement programs at its terminal locations which have
resulted in reduced operating costs. The Company intends to implement
these programs at the Ryder locations. In addition, the Company believes
it will be able to increase Rig utilization through the consolidation of
terminal locations and through the increased backhaul potential that the
Company believes will result from the Acquisition. These actions are
expected to reduce the number of Rigs the Company is required to operate
and result in reduced operating costs.
- Integration of Proprietary Information Systems. The Company intends to
integrate Ryder's information systems with its own proprietary information
systems. This is expected to result in increased operating efficiencies
and reduced administrative costs.
19
<PAGE> 27
- Centralize Administrative Functions. The Company's administrative
functions are centralized and performed at its corporate headquarters in
Decatur, Georgia. The Company has adopted a detailed integration plan to
combine most of Ryder's central office functions with the Company's in
order to eliminate redundant functions and reduce costs.
In addition, the Company believes that significant opportunities exist
to further increase its revenues by offering a broader scope of services to
existing and new customers. For example, Ryder began providing transportation
logistics services to AutoNation in January 1997 and to DriversMart in March
1997 for the movement of vehicles to their reconditioning centers and stores and
began providing port processing services to Volkswagen in August 1997. The
Company also began providing transportation logistics services to Aucnet in
August 1997 relating to the management of the movement of vehicles sold through
live interactive auctions and bulletin board sales on the Internet.
USE OF PROCEEDS
The Company will not receive any cash proceeds or incur an additional
indebtedness as a result of the issuance of the New Notes pursuant to the
Exchange Offer.
The net proceeds to the Company from the Offering were approximately
$144,650,000 (after deducting discounts and commissions and estimated expenses
of the Offering). Concurrently with the consummation of the Offering, the
Company entered into the New Credit Facility. See "Description of Other
Indebtedness -- New Credit Facility." The Company used the proceeds from the
Offering to fund the Acquisition, to pay related fees and expenses and to reduce
borrowings. See "The Acquisition."
CAPITALIZATION
The following table sets forth the capitalization of the Company at
June 30, 1997 and as adjusted to give effect to the Acquisition and the
Offering. This table should be read in conjunction with "Selected Financial
Data," "Unaudited Pro Forma Financial Information," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements, including the notes thereto, of the Company and Ryder
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt (including current maturities):
Revolving credit facility(1) $ 59,737 $ 35,487
8 5/8% Senior Notes due 2007 -- 150,000
12% Senior Subordinated Notes due 2003 40,000 40,000
Other debt and capital lease obligations 5,497 6,302
-------- --------
Total debt 105,234 231,789
Stockholders' equity 60,157 60,157(2)
-------- --------
Total capitalization $165,391 $291,946
======== ========
</TABLE>
- --------
(1) The Company entered into a new credit facility (the "New Credit Facility")
on September 30, 1997 which provides for $230.0 million of total
availability. The New Credit Facility was finalized concurrent with the
consummation of the Original Offering. On a pro forma basis, the Company
has approximately $35.5 million of borrowings, approximately $68.3 million
of letters of credit outstanding and approximately $126.3 million of
undrawn availability under the New Credit Facility. See "Description of
Other Indebtedness -- New Credit Facility."
(2) Excludes an after-tax charge of approximately $5.0 million that the Company
intends to record as a result of the Acquisition to write down Company Rigs
and terminal facilities that will be idled or closed.
20
<PAGE> 28
SELECTED FINANCIAL DATA
The selected financial data presented below as of and for each of the
five years in the period ended December 31, 1996 are derived from the Company's
Consolidated Financial Statements which have been audited by Arthur Andersen
LLP, independent public accountants. The selected financial data presented below
as of and for the six months ended June 30, 1996 and 1997 are derived from the
Company's unaudited Consolidated Financial Statements, which in the opinion of
management include all adjustments (consisting only of normal recurring
accruals) necessary to fairly present the information set forth therein. The
results for the six months ended June 30, 1997 are not necessarily indicative of
the results that may be expected for the entire year ending December 31, 1997.
The selected 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, including the notes thereto, included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- ----------------------
1992 1993 1994(1) 1995 1996 1996 1997
-------- --------- --------- --------- --------- --------- ----------
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................................... $212,655 $ 241,981 $ 297,236 $ 381,464 $ 392,547 $ 200,565 $ 208,969
-------- --------- --------- --------- --------- --------- ---------
Operating expenses:
Salaries, wages and fringe benefits...... 116,901 134,054 157,979 195,952 204,838 105,315 109,634
Operating supplies and expenses.......... 40,154 44,090 51,532 62,179 62,880 31,526 32,563
Purchased transportation................. 2,002 3,223 9,486 32,084 34,533 17,666 19,170
Insurance and claims..................... 9,553 9,745 12,043 16,022 16,849 8,039 8,098
Operating taxes and licenses............. 10,084 12,223 14,301 16,564 16,122 8,381 8,190
Depreciation and amortization............ 8,878 11,683 16,314 25,431 26,425 12,931 13,786
Rent expense............................. 6,051 3,485 3,214 5,354 4,975 2,481 2,470
Communications and utilities............. 1,405 1,456 1,855 3,435 3,111 1,740 1,534
Other operating expenses................. 1,467 1,662 1,781 3,522 4,219 1,431 2,074
-------- --------- --------- --------- --------- --------- ---------
Total operating expenses........... 196,495 221,621 268,505 360,543 373,952 189,510 197,519
-------- --------- --------- --------- --------- --------- ---------
Operating income........................... 16,160 20,360 28,731 20,921 18,595 11,055 11,450
Minority interest in earnings of
consolidated subsidiary.................. (1,034) (858) -- -- -- -- --
Interest expense........................... 6,963 6,042 5,462 11,260 10,720 5,396 5,408
Interest income............................ 61 313 312 707 603 303 357
Other expense, net......................... 169 49 -- -- -- -- --
-------- --------- --------- --------- --------- --------- ---------
Income before income taxes, extraordinary
item and cumulative effect of accounting
change .................................... 8,055 13,724 23,581 10,368 8,478 5,962 6,399
Income tax provision(2).................... 3,249 4,183 9,393 4,222 3,557 2,504 2,688
-------- --------- --------- --------- --------- --------- ---------
Income before extraordinary item and
cumulative effect of accounting change..... $ 4,806 $ 9,541 $ 14,188 $ 6,146 $ 4,921 $ 3,458 $ 3,711
======== ========= ========= ========= ========= ========= =========
OTHER DATA:
EBITDA(3).................................. $ 25,038 $ 32,043 $ 45,045 $ 46,352 $ 45,020 $ 23,986 $ 25,236
Ratio of earnings to fixed charges(4)...... 2.0x 3.0x 4.6x 1.8x 1.7x 2.0x 2.0x
Capital expenditures:
New Rigs and modifications............... $ 11,680 $ 33,848 $ 23,337 $ 11,716 $ 17,092 $ 12,053 $ 5,811
Maintenance and other.................... 1,811 2,149 7,208 6,494 8,880 2,323 1,099
-------- --------- --------- --------- --------- --------- ---------
Total.............................. $ 13,491 $ 35,997 $ 30,545 $ 18,210 $ 25,972 $ 14,376 $ 6,910
======== ========= ========= ========= ========= ========= =========
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets............................... $ 89,722 $ 119,897 $ 218,806 $ 214,686 $ 211,083 $ 216,903 $ 228,694
Minority interest in consolidated
subsidiary............................... 12,224 -- -- -- -- -- --
Total debt................................. 48,023 44,120 122,894 111,002 95,983 103,259 105,234
Stockholders' equity (deficit)............. (5,944) 35,759 45,835 53,022 56,709 55,563 60,157
</TABLE>
- ----------
(1) Includes the results of Auto Haulaway commencing with its acquisition by
the Company on October 31, 1994.
(2) Prior to the Company's initial public offering in 1993, its predecessors
were not subject to federal or most state income taxes. Accordingly, the
Company's consolidated financial statements for the periods prior to the
initial public offering include a pro forma provision for income taxes.
(3) Represents income before interest expense, interest income, income tax
provision, depreciation and amortization and extraordinary item. EBITDA is
presented because it provides useful information regarding a company's
ability to service and/or incur debt. EBITDA should not be considered in
isolation from or as a substitute for net income, cash flows from operating
activities and other consolidated income or cash flow statement data
prepared in accordance with generally accepted accounting principles or as a
measure of profitability or liquidity.
(4) For purposes of computing the ratio of earnings to fixed charges (a)
earnings consist of income before income taxes, extraordinary item,
cumulative effect of accounting change and minority interest in net income
(loss) of
21
<PAGE> 29
unconsolidated entities plus fixed charges, and (b) fixed charges consist of
interest expense, amortization of debt expense and the portion
(approximately one-third) of rental expense that management believes is
representative of the interest component of rental expense.
22
<PAGE> 30
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information has been
derived from the historical financial statements of the Company and Ryder, and
gives pro forma effect to the Acquisition and the Offering as if they had
occurred as of January 1, 1996 with respect to the unaudited condensed pro forma
statements of operations and as of June 30, 1997 with respect to the unaudited
condensed pro forma balance sheet.
The unaudited pro forma financial information does not purport to
represent what the Company's results of operations actually would have been if
each of such transactions had occurred as of the dates indicated or will be for
any future periods. The unaudited pro forma financial information is based upon
assumptions believed appropriate by management of the Company and does not
reflect all potential cost savings or improvements in revenues that the Company
believes could be realized as a result of the Acquisition. However, there can be
no assurance that any of these anticipated savings can be achieved or that the
effects of any such savings will not be offset by unexpected, unforeseen
increases in other costs. The unaudited pro forma financial information should
be read in conjunction with "Selected Financial Data," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
Consolidated Financial Statements, including the notes thereto, of the Company
and Ryder included elsewhere in this Prospectus.
The Acquisition was accounted for under the purchase method of
accounting. The total purchase price for the Acquisition has been allocated to
the assets and liabilities acquired based upon their relative fair values at the
closing of the Acquisition, based upon valuation and other studies which are not
yet complete. The allocation of the purchase price reflected herein is subject
to revision when additional information from the valuations and studies become
available. However, the Company does not expect that the effects of the final
allocation will differ materially from those set forth herein.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
ACQUISITION ADJUSTED PRICE PRO FORMA
RYDER(1) ADJUSTMENTS RYDER ALLIED ADJUSTMENTS COMBINED
------- ----------- --------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES ................................. $ 315,156 $(2,663)(2) $ 315,696 $ 208,969 $ -- $ 524,665
3,203(3)
--------- ------- --------- --------- ------- ---------
OPERATING EXPENSES
Depreciation and amortization .......... 19,818 (190)(2) 19,636 13,786 108(5) 33,530
8(3)
Other operating expenses ............... 285,497 (2,637)(2) 286,013 183,733 (6,340)(6) 463,406
--------- ------- --------- --------- ------- ---------
Total operating expenses 305,315 334 305,649 197,519 (6,232) 496,936
--------- ------- --------- --------- ------- ---------
OPERATING INCOME ......................... 9,841 206 10,047 11,450 6,232 27,729
--------- ------- --------- --------- ------- ---------
OTHER INCOME (EXPENSE)
Interest expense ....................... (334) (1)(3) (335) (5,408) (5,827)(7) (11,570)
Interest income ........................ 1,228 (137)(2) 1,091 357 -- 1,448
Other income (expense), net ............ 738 14(2) 752 -- -- 752
--------- ------- --------- --------- ------- ---------
1,632 (124) 1,508 (5,051) (6,089) (9,370)
--------- ------- --------- --------- ------- ---------
INCOME BEFORE INCOME
TAXES .................................. 11,473 82 11,555 6,399 405 18,359
INCOME TAX PROVISION ..................... 3,818 724(4) 4,542 2,688 (1,032) 8,262
--------- ------- --------- --------- ------- ---------
NET INCOME (LOSS) ........................ $ 7,655 $ (642) $ 7,013 $ 3,711 $ (627) $ 10,087
========= ======= ========= ========= ======= =========
EARNINGS PER SHARE ....................... $ 0.48 $ 1.31
========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 7,725 7,725
EBITDA(8)................................. $ 30,435 $ 25,236 $ 62,011
========= ========= =========
</TABLE>
See accompanying notes to unaudited pro forma financial information.
23
<PAGE> 31
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
OFFERING AND
PURCHASE
ACQUISITION ADJUSTED PRICE PRO FORMA
RYDER(1) ADJUSTMENTS RYDER ALLIED ADJUSTMENTS COMBINED
--------- ----------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES .................................... $ 583,292 $(15,178)(2) $ 568,114 $ 392,547 $ -- $ 960,661
--------- -------- --------- --------- ------- ---------
OPERATING EXPENSES
Depreciation and amortization ............. 38,838 (718)(2) 38,120 26,425 115(5) 64,660
Restructuring charge ...................... 18,328 (7,023)(2) 11,305 -- -- 11,305
Other operating expenses .................. 543,315 (25,216)(2) 518,099 347,527 (12,678)(6) 852,948
--------- ------- --------- --------- ------- ---------
Total operating expenses .......... 600,481 (32,957) 567,524 373,952 (12,563) 928,913
--------- ------- --------- --------- ------- ---------
OPERATING (LOSS) INCOME ..................... (17,189) 17,779 590 18,595 12,563 31,748
--------- ------- --------- --------- ------- ---------
OTHER INCOME (EXPENSE)
Interest expense .......................... (866) -- (866) (10,720) (11,702)(7) (23,288)
Interest income ........................... 895 (282)(2) 613 603 -- 1,216
Other income (expense), net ............... 2,470 2(2) 2,472 -- -- 2,472
--------- ------- --------- --------- ------- ---------
2,499 (280) 2,219 (10,117) (11,702) (19,600)
--------- ------- --------- --------- ------- ---------
(LOSS) INCOME BEFORE INCOME
TAXES AND EXTRAORDINARY
ITEM ...................................... (14,690) 17,499 2,809 8,478 861 12,148
INCOME TAX (BENEFIT)
PROVISION ................................. (1,256) 3,837(4) 2,581 3,557 336(4) 6,474
--------- ------- --------- --------- ------- ---------
(LOSS) INCOME BEFORE
EXTRAORDINARY ITEM ........................ $ (13,434) $13,662 $ 228 $ 4,921 $ 527 $ 5,674
========= ======= ========= ========= ======= =========
EARNINGS PER SHARE .......................... $ 0.64 $ 0.73
========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING ........................ 7,725 7,725
EBITDA(8) ................................... $ 41,182 $ 45,020 $ 98,880
========= ========= =========
</TABLE>
See accompanying notes to unaudited pro forma financial information.
24
<PAGE> 32
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AS OF JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
OFFERING AND
ACQUISITION ADJUSTED PURCHASE PRICE PRO FORMA
RYDER(9) ADJUSTMENTS RYDER ALLIED ADJUSTMENTS COMBINED
---------- ----------- -------- --------- -------------- -------------
ASSETS
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ................ $ 6,047 $ 170(10) $ 1,217 $ 4,409 $ -- $ 5,626
(5,000)(11)
Short-term investments ................... -- -- -- 8,821 -- 8,821
Receivables, net of allowance for
doubtful accounts ...................... 46,396 650(10) 47,046 28,325 -- 75,371
Deferred income taxes .................... 6,509 (293)(11) 11,608 -- -- 11,608
4,433(12)
959(13)
Other current assets ..................... 17,552 (7,861)(11) 9,691 18,469 -- 28,160
--------- -------- --------- --------- ------- -----------
Total current assets .............. 76,504 (6,942) 69,562 60,024 -- 129,586
--------- -------- --------- --------- ------- -----------
PROPERTY AND EQUIPMENT, net ................ 161,299 46(10) 159,122 126,364 14,500(17) 299,986
(2,223)(11)
OTHER ASSETS
Goodwill, net ............................ 42,550 -- 42,550 33,800 14,055(18) 90,405
Other .................................... 10,862 (4,695)(11) 6,167 8,506 5,350(19) 20,023
--------- -------- --------- --------- ------- -----------
Total other assets ................ 53,412 (4,695) 48,717 42,306 19,405 110,428
--------- -------- --------- --------- ------- -----------
Total assets ...................... $ 291,215 $ 13,814) $ 277,401 $ 228,694 $33,905 $ 540,000
========= ======== ========= ========= ======= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt ..... $ -- $ -- $ -- $ 8,248 $ -- $ 8,248
Trade accounts payable ................... 21,246 710(10) 21,956 12,910 -- 34,866
Accrued liabilities ...................... 57,657 50(10) 69,845 37,433 13,082(20) 120,360
(3,329)(11)
12,909(14)
2,558(15)
Total current
liabilities ..................... 78,903 12,898 91,801 58,591 13,082 163,474
--------- -------- --------- --------- ------- -----------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current maturities ..... 805 -- 805 96,986 150,000(21) 223,541
(24,250)(22)
DEFERRED INCOME TAXES ...................... 26,300 765(11) 9,274 8,700 5,655(23) 23,629
(17,791)(12)
OTHER LONG-TERM LIABILITIES ................ 20,615 79(10) 65,665 4,260 (726)(24) 69,199
(1,419)(11)
46,390(14)
STOCKHOLDERS' EQUITY ....................... 164,592 (54,736)(16) 109,856 60,157 (109,856)(24) 60,157(25)
--------- -------- --------- --------- -------- -----------
Total liabilities and stockholders'
equity ......................... $ 291,215 $(13,814) $ 277,401 $ 228,694 $ 33,905 $ 540,000
========= ======== ========= ========= ======== ===========
</TABLE>
See accompanying notes to unaudited pro forma financial information.
25
<PAGE> 33
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(1) Represents the historical results of operations of Ryder Automotive
Carrier Services, Inc. ("RACS") for the period indicated.
(2) Elimination of the operations of RACS not included in the Acquisition.
(3) Addition of the operations of RC Management Corp. ("RCMC"), which was
acquired as part of the Acquisition. RCMC began operations in January
1997.
(4) Reflects the income tax effect of the adjustments.
(5) Reflects the net effect of the change in goodwill amortization expense
related to the Acquisition, as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1997 DECEMBER 31, 1996
------------- -----------------
<S> <C> <C>
(a) Increased goodwill amortization expense based upon the
preliminary purchase price allocation of the Acquisition, using
the straight-line method over a 40-year life................... $ 708 $ 1,415
(b) Elimination of goodwill amortization expense from
Ryder's operations............................................. (600) (1,300)
------ --------
$ 108 $ 115
====== ========
</TABLE>
(6) Represents elimination of the following costs:
(a)Salaries and wages, rent expenses and other operating expenses to be
eliminated as a result of closing duplicate terminals and offices.
(b)Management and other fees allocated to Ryder by Ryder System which
will not be incurred by Ryder under the Company's ownership.
(7) Reflects interest expense at 8 5/8%, elimination of interest expense on
amounts under the revolving credit facility to be repaid with proceeds
of the Original Offering, and amortization of deferred debt costs
incurred in connection with the issuance of the Old Notes.
(8) Represents income before interest expense, interest income, income tax
provision and depreciation and amortization. EBITDA is presented
because it provides useful information regarding a company's ability to
service and/or incur debt. EBITDA should not be considered in isolation
from or as a substitute for net income, cash flows from operating
activities and other consolidated income or cash flow statement data
prepared in accordance with generally accepted accounting principles or
as a measure of profitability or liquidity.
(9) Represents the historical assets and liabilities of RACS as of June 30,
1997.
(10) Addition of the assets and liabilities of RCMC, which was acquired as
part of the Acquisition.
(11) Elimination of the assets and liabilities of RACS not included in the
Acquisition.
(12) Deferred income tax assets and liabilities related to the assumption by
Ryder of certain insurance liabilities from Ryder System as part of the
Acquisition (see note 14).
(13) Effect on deferred income taxes related to severance liability (see
note 15).
(14) Reflects the transfer to Ryder of certain insurance liabilities,
including workers' compensation, post employment benefits other than
pensions, and general liability, previously maintained on the books of
Ryder System.
(15) Severance liability related to termination of certain Ryder personnel
in connection with the Acquisition.
(16) Effect on stockholders' equity of pro forma adjustments to assets and
liabilities as follows:
<TABLE>
<S> <C> <C>
(a) Insurance liabilities assumed from Ryder System, net of deferred taxes...... $ (37,075)
(b) Severance liability assumed from Ryder System, net of deferred taxes........ (1,599)
(c) Assets and liabilities of RACS not acquired................................. (16,089)
(d) Assets and liabilities of RCMC acquired..................................... 27
----------
Total effect on stockholders' equity.............................. $ (54,736)
==========
</TABLE>
(17) Write-up of Ryder property and equipment to fair market value.
26
<PAGE> 34
(18) Adjustment to goodwill reflects:
<TABLE>
<S> <C> <C>
(a) Addition of goodwill related to the Acquisition $ 56,605
(b) Elimination of goodwill recorded by Ryder (42,550)
-----------
Total effect on goodwill................................. $ 14,055
===========
</TABLE>
(19) Estimated Offering expenses to be deferred and amortized over the life
of the Notes.
(20) Estimated additional liabilities incurred in connection with the
Acquisition, including severance and Acquisition costs.
(21) Reflects the issuance of the Old Notes.
(22) Repayment of amounts outstanding under the revolving credit facility
with a portion of the proceeds of the Original Offering.
(23) Deferred income taxes, recorded at 39%, related to the write-up of
Ryder property and equipment to fair market value.
(24) Elimination of Ryder advances to affiliates and stockholders' equity.
(25) Excludes an after-tax charge of approximately $5.0 million the Company
intends to record as a result of the Acquisition to write down Company
Rigs and terminal facilities that will be idled or closed.
27
<PAGE> 35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company provides automobile and light truck transportation and
logistics services to automotive manufacturers and retailers. The Company's
primary business is the transportation of new automobiles and light trucks
principally from manufacturing plants and rail heads to dealerships in trip
lengths generally under 200 miles.
The Company receives revenues from the transportation of vehicles on a
per unit basis. Revenue is comprised of a fixed rate per unit and a variable
rate on a per mile transported basis to account for differences in the length of
the haul. Accordingly, both the number of units transported, as well as the
distance vehicles are transported, are the primary components of revenue. The
Company's cost structure is highly variable with salaries, wages and fringe
benefits comprising greater than 50% of total revenue.
In October 1994, the Company acquired Auto Haulaway, the largest motor
carrier of new automobiles and light trucks in Canada. Accordingly, since the
acquisition of Auto Haulaway, the Company has derived approximately 30% of its
revenues in Canada with the balance in the United States. The following table
summarizes historic new vehicle production and sales in the United States and
Canada, the primary drivers of the Company's revenues.
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------ ------------------
1994 1995 1996 1996 1997
---- ---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
NEW VEHICLE PRODUCTION
United States................................................. 11.9 11.6 11.5 6.1 6.1
Percent increase (decrease) over prior year................... 12.6% (2.3)% (0.9)% -- 0.3%
Canada........................................................ 2.3 2.4 2.4 1.3 1.4
Percent increase over prior year.............................. 2.8% 3.6% 0.0% -- 8.7%
NEW VEHICLE SALES
United States................................................. 15.0 14.7 15.1 7.8 7.6
Percent increase (decrease) over prior year 8.3% (2.2)% 2.5% -- (2.0)%
Canada........................................................ 1.2 1.1 1.2 0.6 0.7
Percent increase (decrease) over prior year................... 5.3% (7.6)% 3.5% -- 16.2%
</TABLE>
- ----------
Source: DRI/McGraw-Hill.
Since 1996, the Company has made a significant commitment to developing
its logistics business in response to its customers' needs for integrated
automotive distribution services beyond the traditional movement of vehicles.
Over the past two years, the Company has incurred significant start-up costs to
develop its logistic business which is operated through a subsidiary, Axis
Group, Inc. ("Axis"). Management believes these start-up costs are largely
complete.
During 1995, the Company's operations were impacted by the lower sales
of automobiles and light trucks, particularly in Canada, and lower new vehicle
production in the United States. While new vehicle sales improved in the United
States and Canada in 1996, the Company's operations were negatively impacted by
decreased new vehicle production in the United States and by an increase in fuel
costs which impacted operating earnings by approximately $2.5 million, as well
as by the start-up costs of Axis which totaled approximately $3.0 million in
1996. In the first half of 1997, the strength of the Canadian market offset both
slight weakness in United States vehicle sales and approximately $2.4 million of
continued start-up losses of Axis.
Capital expenditures primarily consist of expenditures for the
acquisition and maintenance of Rigs, as well as proprietary information systems.
Capital expenditures for Rigs are utilized to maintain the Company's fleet and
to minimize operating costs. Since 1994, the Company has spent approximately
$52.2 million to purchase new 75-foot Rigs and to modify existing Rigs primarily
to lengthen them to 75 feet, the maximum length allowed by most
28
<PAGE> 36
governmental regulations, in order to increase fleet efficiency. The Company's
proprietary information systems are designed to support the Company's operations
by providing timely management information and sophisticated data exchange with
the Company's customers. Since 1994, the Company has spent $5.4 million to
enhance the capability of its proprietary information systems. The Company's
information systems also facilitate the efficient integration of new operations
into the Company's infrastructure, including those of Auto Haulaway and Ryder.
The Company believes that the Acquisition will provide the Company with
significant opportunities for cost reduction. The Company expects to achieve
cost savings by: (i) eliminating duplicative administrative functions; (ii)
integrating Ryder's operations into its proprietary information systems; and
(iii) consolidating certain terminal locations.
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations as a
percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------- -------------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenues........................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages and fringe benefits.............. 53.1 51.4 52.2 52.5 52.5
Operating supplies and expenses.................. 17.3 16.3 16.0 15.7 15.6
Purchased transportation......................... 3.2 8.4 8.8 8.8 9.2
Insurance and claims............................. 4.1 4.2 4.3 4.0 3.9
Operating taxes and licenses..................... 4.8 4.3 4.1 4.2 3.9
Depreciation and amortization.................... 5.5 6.7 6.7 6.5 6.6
Rent expense..................................... 1.1 1.4 1.3 1.2 1.2
Communications and utilities..................... 0.6 0.9 0.8 0.9 0.8
Other operating expenses......................... 0.6 0.9 1.1 0.7 0.8
------- ------- ------- ------- -------
Total operating expenses................. 90.3 94.5 95.3 94.5 94.5
------- ------- ------- ------- -------
Operating income................................... 9.7 5.5 4.7 5.5 5.5
------- ------- ------- ------- -------
Other income(expense):
Interest expense................................. (1.8) (3.0) (2.8) (2.7) (2.6)
Interest income.................................. 0.1 0.2 0.2 0.2 0.2
------- ------- ------- ------- -------
Total other income (expense)............. (1.7) (2.8) (2.6) (2.5) (2.4)
------- ------- ------- ------- -------
Income before income taxes and extraordinary item.. 8.0 2.7 2.1 3.0 3.1
Income tax provision............................... (3.2) (1.1) (0.9) (1.3) (1.3)
------- ------- ------- ------- -------
Income before extraordinary item................... 4.8% 1.6% 1.2% 1.7% 1.8%
======= ======= ======= ======= =======
</TABLE>
Six months ended June 30, 1997 compared to six months ended June 30, 1996
Revenues were $209.0 million for the first six months of 1997 compared
to $200.6 million for the first six months of 1996, an increase of $8.4 million,
or 4.2%. The increase in revenues was primarily due to an increase in the number
of vehicles the Company delivered together with an increase in the revenue
generated per vehicle delivered. The Company delivered approximately 2% more
vehicles during the first six months of 1997 than during the first six months of
1996. A 13% increase in vehicle deliveries in Canada due to increased Canadian
new vehicle production and sales more than offset a 4% decline in vehicle
deliveries in the United States. In addition, the revenue generated per vehicle
delivered for the first six months of 1997 increased approximately 2% from the
first six months of 1996 due to an increase in longer haul dealer deliveries.
The operating ratio (operating expenses as a percentage of revenues)
for the first six months of 1997 was 94.5%, the same as in the first six months
of 1996. Additional operating income resulting from the increase in revenues was
offset by continued start-up losses of Axis.
The following is a discussion of significant changes in the Company's
major expense categories:
Salaries, wages and fringe benefits were 52.5% of revenues in both the
first six months of 1997 and 1996. However, purchased transportation increased
from 8.8% of revenues for the first six months of 1996 to 9.2% of revenues
during the first six months of 1997 due to the increased use of owner-operators,
together with an increase in the vehicles the Company had delivered by other
carriers.
29
<PAGE> 37
Operating taxes and licenses decreased from 4.2% of revenues during the
first six months of 1996 to 3.9% of revenues during the first six months of
1997. The decrease was primarily due to a decline in the operating taxes and
licenses the Company paid for its fleet of Rigs due to a decrease in the number
of active Rigs the Company operated.
1996 Compared to 1995
Revenues were $392.6 million in 1996 compared to $381.5 million in
1995, an increase of $11.1 million, or 2.9%. The increase in revenues was
primarily due to a 5% increase in the number of vehicles delivered, offset in
part by a decrease in the revenue generated per vehicle delivered due to an
increase in the percentage of shorter haul deliveries.
The operating ratio for 1996 was 95.3%, compared to 94.5% in 1995. The
increase was primarily due to planned startup costs for Axis, together with
increased fuel costs and an increase in the percentage of light trucks hauled by
the Company, which led to lower load averages and increased costs.
The following is a discussion of the changes in the Company's major
expense categories:
Salaries, wages and fringe benefits increased from 51.4% of revenues in
1995 to 52.2% of revenues in 1996. This change as a percent of revenues was
primarily due to the addition of payroll costs for Axis, increased costs
resulting from strikes at General Motors during March and October 1996 and the
severe winter weather during the first quarter of 1996.
Operating supplies and expenses as a percentage of revenues decreased
from 16.3% in 1995 to 16.0% in 1996, despite a rise in diesel fuel prices. This
decrease is primarily due to an increase in the units delivered by owner-
operators combined with the use of newer, more efficient equipment which has
reduced the costs to operate the Company's Rigs and has increased fuel
efficiency. Owner-operators are responsible for all costs to operate their Rigs
and such costs are included in purchased transportation. In addition, the
Company implemented productivity and efficiency programs that reduced operating
expenses.
Purchased transportation increased from 8.4% of revenues in 1995 to
8.8% in 1996. This is mainly due to an increase in the number of units hauled by
owner-operators and by other carriers for the Company as part of an exchange
program to improve the backhaul ratio.
Interest expense for 1996 decreased to $10.7 million compared to $11.3
million in 1995. This decrease is primarily the result of reductions in
long-term debt during the year due to debt repayments.
The effective tax rate increased from approximately 41% of pre-tax
income in 1995 to approximately 42% of pre-tax income in 1996. This increase was
due to higher state taxes.
1995 Compared to 1994
Revenues were $381.5 million in 1995 compared to $297.2 million in
1994, an increase of $84.3 million, or 28.4%. The increase in revenues was
primarily attributable to the acquisition of Auto Haulaway which was completed
October 31, 1994. Auto Haulaway contributed $123.4 million of revenues in 1995.
The additional revenues gained from the acquisition of Auto Haulaway were offset
in part by decreased revenues from the Company's U.S. operations due to a
decrease in vehicles delivered arising from a weaker U.S. auto market compared
to 1994.
The operating ratio for 1995 was 94.5%, compared to 90.3% in 1994. The
increase was primarily due to decreases in vehicles delivered because of
decreases in new vehicle production and sales. U.S. car and light truck sales
for 1995 decreased approximately 2% from 1994 and Canada's car and light truck
sales were approximately 8% below that of 1994. In addition, 1995 new vehicle
production in Canada for Auto Haulaway's largest customer decreased
approximately 22% from 1994, mainly due to model changeovers. New vehicle
production in the U.S. and Canada during 1995 was impacted by numerous model
changeovers as well as slower than expected ramp-up of
30
<PAGE> 38
production after the model changeovers at two of the Company's primary
customers. As a result of the decline in new vehicle production and sales, the
number of vehicles delivered by Auto Haulaway during 1995 decreased 13% compared
to 1994.
Salaries, wages and fringe benefits decreased from 53.1% of revenues in
1994 to 51.4% of revenues in 1995. This decrease as a percentage of revenue was
primarily because Auto Haulaway utilizes approximately 200 owner-operators.
Owner-operators are either paid a percentage of the revenues they generate or
receive normal driver pay plus a truck allowance, and amounts earned by the
owner-operators are included as purchased transportation expense. Prior to the
acquisition of Auto Haulaway, all of the Company's drivers were employees of the
Company.
Operating supplies and expenses as a percentage of revenues decreased
from 17.3% in 1994 to 16.3% in 1995. This decrease is primarily attributable to
the inclusion of a full year of Auto Haulaway's operating results as Auto
Haulaway's owner-operators are responsible for all costs to operate their Rigs,
so the operating supplies and expenses related to the vehicles delivered by the
owner-operator are greatly reduced.
Purchased transportation increased from 3.2% of revenues in 1994 to
8.4% in 1995. As discussed above, this increase is the result of Auto Haulaway
utilizing owner-operators to deliver vehicles.
Depreciation and amortization expense increased from 5.5% of revenues
in 1994 to 6.7% of revenues in 1995 mainly due to the acquisition of additional
Rigs together with the additional goodwill amortization resulting from the
acquisition of Auto Haulaway.
Interest expense for 1995 increased to $11.3 million compared to $5.5
million in 1994. This increase was due to the increase in long-term debt
resulting from the acquisition of Auto Haulaway and due to a rise in interest
rates.
The effective tax rate increased from approximately 40% of pre-tax
income in 1994 to approximately 41% of pre-tax income in 1995. This increase was
due to higher effective tax rates in Canada.
Liquidity and Capital Resources
The Company's sources of liquidity are funds provided by operations and
borrowings under the New Credit Facility. The Company's liquidity needs are for
the acquisition and maintenance of Rigs and terminals, the payment of operating
expenses and the payment of interest on and repayment of long-term debt.
Net cash provided by operating activities totaled $30.1 million for
1995, $31.1 million for 1996, and $14.2 million for the six months ended June
30, 1997. The increase in cash flows from operations during 1996 was mainly due
to changes in working capital. Net cash used in investing activities totaled
$18.0 million for 1995, $24.5 million for 1996, and $21.0 million for the six
months ended June 30, 1997. The increase during 1996 was primarily due to an
increase in the number of new Rigs that were acquired, modifications of existing
equipment, and renovations and additions to terminal and maintenance facilities.
The increase in cash used in investing activities during the first six months of
1997 is due to the acquisition of Kar-Tainer for approximately $13.1 million.
Net cash used in financing activities was $12.8 million for 1995 and $15.7
million during 1996, and $9.3 million was provided by financing activities for
the six months ended June 30, 1997. These amounts include repayments of
long-term debt of $12.0 million in 1995 and $57.7 million in 1996. The
acquisition of Kar-Tainer for approximately $13.1 million in April 1997 was
financed through borrowings of long-term debt. In February 1996, the Company
issued $40.0 million principal amount of 12% senior subordinated notes due
February 1, 2003 (the "Senior Subordinated Notes"), the proceeds of which were
used to repay long-term debt. The Senior Subordinated Notes were issued to ease
restrictions and provide increased flexibility under the Company's existing
revolving credit facility.
The Company entered into the New Credit Facility, concurrent with the
closing of the Offering. The New Credit Facility allows the Company to borrow up
to $230.0 million under a revolving line of credit and a five-year maturity. The
Company has approximately $35.5 million of borrowings, approximately $68.3
million of letters of credit outstanding and approximately $126.3 million of
undrawn availability under the New Credit Facility. See "Description of Other
Indebtedness--New Credit Facility."
31
<PAGE> 39
The Company had $59.7 million of borrowings outstanding under its
revolving credit facility at June 30, 1997 bearing interest at a weighted
average interest rate of 7.5%. The Company has entered into interest rate cap
agreements to cap a portion of the outstanding borrowings under its existing
revolving credit facility at June 30, 1997. Such interest rate cap agreements
are required under the terms of its existing revolving credit facility.
Seasonality and Inflation
The Company generally experiences its highest revenues during the
second and fourth quarters of each calendar year due to the shipment of new
models and because the first and third quarters are impacted by manufacturing
plant downtime. During the past three years, inflation has not significantly
affected the Company's results of operations. The following table sets forth
certain operating data of the Company by quarter for each of 1996 and 1995 (in
millions):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues................................... $ 93.4 $ 107.2 $ 87.6 $ 104.4 $ 392.6
EBITDA(1).................................. 9.5 14.5 7.7 13.3 45.0
Operating income........................... 3.1 8.0 1.0 6.5 18.6
Income (loss) before extraordinary item.... 0.4 3.1 (0.9) 2.3 4.9
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
----------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- -------- -------- -------- --------
Revenues................................... $101.1 $ 102.3 $ 82.2 $ 95.9 $ 381.5
EBITDA(1).................................. 12.5 13.9 7.1 12.9 46.4
Operating income........................... 6.3 7.6 0.6 6.4 20.9
Income (loss).............................. 2.1 2.9 (1.2) 2.4 6.2
</TABLE>
- ----------
(1) Represents income before interest expense, interest income, income tax
provision, depreciation and amortization and extraordinary item.
32
<PAGE> 40
BUSINESS
INDUSTRY OVERVIEW
The new vehicle transportation business involves the transportation of new
vehicles from manufacturing plants to new vehicle dealers. Vehicles are usually
shipped by rail from the manufacturing plant to rail ramps throughout the United
States where motor carriers, such as the Company, handle final delivery to
dealers. Vehicles destined for dealers within a radius of approximately 250
miles from the plant are usually shipped by truck directly to the dealer. In
each case, the rail or motor carrier generally is responsible for loading the
vehicles on railcars or trailers and for any damages incurred while the vehicles
are in the carrier's custody. Automobiles manufactured in Mexico and Canada are
usually shipped into the United States by rail and delivered from rail ramps to
dealers by truck. Automobiles manufactured in Europe and Asia for sale in the
United States are transported into the United States by ship and are delivered
directly to dealers from seaports by truck or shipped by rail to rail ramps and
delivered by trucks to dealers.
The current trend of automotive manufacturers is to reduce the number of
suppliers with which they do business in an effort to reduce their manufacturing
and inventory costs, as well as to improve the quality of their products.
Manufacturers are increasingly demanding quality, service and cost efficiencies
from the companies that transport their vehicles. For example, manufacturers
require that their automotive carriers utilize sophisticated information systems
to reduce the costs of the manufacturer through measures such as tracking the
location of vehicles being transported, thereby improving inventory management.
The remarketed vehicle transportation business involves the transportation of
used and previously leased vehicles and vehicles sold through the automotive
auction process. Vehicles are usually shipped from dealers or auctions to
reconditioning centers or other used car dealers. There has recently been
consolidation in the remarketed vehicle sector due to the rapid growth of the
used car superstores, such as AutoNation and DriversMart, which has increased
the volume of vehicles being delivered to the used car superstores and their
reconditioning centers.
THE COMPANY
Prior to the Acquisition, the Company, founded in 1934, was the second
largest motor carrier in North America specializing in the transportation of new
and used automobiles and light trucks for all of the major domestic and foreign
automotive manufacturers. As a result of the Acquisition, the Company is now the
largest motor carrier of automobiles and light trucks in North America. The
Company offers a full range of automotive delivery services including
transporting new, used and off-lease vehicles to dealers from plants, rail
ramps, ports and auctions, and providing vehicle rail-car loading and unloading
services. The Company also provides logistics solutions and other services to
the new and used vehicle distribution market and other segments of the
automotive industry, including the rapidly growing used car superstore market.
Allied and Ryder together hauled approximately 65% of the new vehicles sold in
the United States and Canada in 1996 and had pro forma 1996 revenues nearly five
times greater than the Company's closest competitor. For the year ended December
31, 1996, after giving pro forma effect to the Acquisition, revenues and EBITDA
(as defined herein) of the Company would have been approximately $960.7 million
and $98.9 million, respectively.
The Company operates primarily in the short-haul segment of the
automotive transportation industry with an average length of haul of less than
200 miles. The Company delivers new and used vehicles throughout the United
States and Canada for all of the major domestic and foreign manufacturers of
automobiles and light trucks and certain of the used car superstores. General
Motors, Ford and Chrysler represent the Company's largest customers, accounting
for approximately 35%, 26% and 14%, respectively, of 1996 pro forma revenues.
The Company also provides services to all of the major foreign manufacturers,
including Honda, Mazda, Nissan, Toyota, Isuzu, Volkswagen and Mitsubishi.
The Company also provides logistics solutions that complement its new
and used vehicle distribution services operations and is pursuing additional
opportunities in the growing remarketed vehicle sector, which includes the
delivery of used and previously leased vehicles and vehicles sold through the
automotive auction process. For example, in early 1997 Ryder entered into
agreements with AutoNation and DriversMart to provide transportation logistics
services for the movement of vehicles to their reconditioning centers and
stores, and in August 1997 Allied
33
<PAGE> 41
entered into a contract with Aucnet to provide transportation logistics services
relating to the movement of vehicles sold through live interactive auctions and
bulletin board sales on the Internet.
KEY STRENGTHS
The Company's key strengths and distinguishing characteristics, which
management believes have been enhanced as a result of the Acquisition, include
the following:
LEADING MARKET POSITION. The Company has become the largest motor
carrier of automobiles and light trucks in North America as a result of the
Acquisition. Allied and Ryder together hauled approximately 65% of the new
vehicles sold in the United States and Canada in 1996 and had 1996 pro forma
revenues nearly five times greater than the Company's closest competitor. The
Company believes that its significant market position upon consummation of the
Acquisition, combined with its specialized equipment and service, will
strengthen the Company's position as a leader in the automotive transportation
industry.
LONG-TERM CUSTOMER RELATIONSHIPS. Over the past six decades, the
Company has built a reputation as a reliable vehicle transporter and, as a
result, has developed and maintained long-term relationships with its major
customers. For example, the Company has been serving Ford since 1934 and
Chrysler since 1979, while Ryder has been serving General Motors since 1914.
These long-term relationships, combined with consistent quality service, have
resulted in the Company and Ryder together hauling more than 50% of General
Motors', Ford's and Chrysler's 1996 North American production. The Company
believes that its long-term relationships, along with the integration of its
information systems with those of its customers, provide the Company with a
significant competitive advantage.
PROPRIETARY INFORMATION SYSTEMS. The Company believes that its
commitment to being a leader in developing proprietary information systems
enables it to better serve its customers and reduce costs through improved
efficiencies. For example, the Company maintains proprietary information systems
that allow its customers to track the location of vehicles being transported by
the Company, thereby improving inventory management and reducing costs
associated with the delivery process. Additionally, through EDI capabilities,
the Company communicates directly with manufacturers throughout the vehicle
delivery process and electronically bills and collects from its customers,
significantly decreasing cycle time. The Company believes that this is
particularly important as the major manufacturers evaluate automotive carriers
on the basis of such factors as the number of error-free exchanges of
information, cycle time for receiving information, and the security of
information systems.
EMPHASIS ON PRODUCTIVITY IMPROVEMENTS. The Company continually seeks to
enhance and improve performance and productivity through measures such as
efficient management of its fleet of Rigs, the use of performance improvement
programs for employees, and information systems development. Approximately 94%
of the Company's Rigs are 75-foot models, the maximum length allowed by most
governmental regulations, which enables the Company to haul a greater number of
vehicles per load. Additionally, the Company has implemented a management
strategy designed to increase the productivity of its employees through various
programs which recognize employee performance, such as rewarding damage-free
deliveries, employee efficiency and driver safety. During the first six months
of 1997, the Company maintained a damage-free delivery rate of 99.6%.
EXPERIENCED MANAGEMENT TEAM WITH SIGNIFICANT OWNERSHIP INTEREST. The
Company's management team provides a depth and continuity of experience. The
Company's senior management group averages over 20 years experience in the
automotive transportation industry with certain officers having over 30 years
experience with the Company. Additionally, the Company's management team owns an
aggregate of approximately 49% of the outstanding common stock of the Company.
Growth Strategy
The Company's objective is to consistently meet its customers' needs by
maintaining its position as a leading provider of high quality and cost
effective automotive distribution services. The following are the primary
elements of the Company's strategy to continue to enhance revenue growth and
profitability:
34
<PAGE> 42
INCREASE SHARE OF USED VEHICLE TRANSPORTATION MARKET. The Company believes
it can generate additional revenue by continuing to pursue opportunities in the
growing remarketed vehicle sector, which is undergoing significant
consolidation. The remarketed vehicle sector includes the delivery of used and
previously leased vehicles and vehicles sold through the automotive auction
process. The Company has been aggressively pursuing business from the used car
superstores, which represents one of the fastest growing sectors of the
automotive industry, as well as off-lease companies and auto auctions. For
example, the Company recently entered into a contract with Aucnet to provide
transportation logistics services for the movement of vehicles sold through live
interactive auctions and bulletin board sales on the Internet, and Ryder has
recently entered into agreements with AutoNation and DriversMart to provide
logistics services for the movement of vehicles to their reconditioning centers
and stores.
EXPAND SHARE OF NEW VEHICLE TRANSPORTATION MARKET. The Company believes it
can capture a larger percentage of its major customers' North American
production volume by building upon existing relationships and leveraging its
reputation for providing high-quality service, value-added services and
competitive pricing, while expanding the breadth of services offered to its
customers. The Company also believes it can increase its business with existing
customers by utilizing its expansive terminal locations and its sophisticated
information systems to deliver vehicles more efficiently and cost effectively.
REALIZE OPERATING EFFICIENCIES. The Company continually focuses on
increasing operating efficiencies without compromising the quality or range of
its services. Allied has identified the following areas which, as a result of
the Acquisition, provide significant savings potential:
- Optimize Terminal Network. The Company plans to consolidate
approximately 19 terminals, or approximately 14% of the combined
companies' terminal locations, which are located in close proximity to
one another. The consolidation of these terminals will reduce operating
and terminal overhead costs. In addition, the Company believes that
additional cost savings can be achieved by combining terminal
administrative functions.
- Improve Productivity. Over the past decade, the Company has implemented
performance improvement programs at its terminal locations which have
resulted in reduced operating costs. The Company intends to implement
these programs at the former Ryder locations. In addition, the Company
believes it will be able to increase Rig utilization through the
consolidation of terminal locations and through the increased backhaul
potential that the Company believes will result from the Acquisition.
These actions are expected to reduce the number of Rigs the Company is
required to operate and result in reduced operating costs.
- Integration of Proprietary Information Systems. The Company intends to
integrate Ryder's information systems with its own proprietary
information systems. This is expected to result in increased operating
efficiencies and reduced administrative costs.
- Centralize Administrative Functions. The Company's administrative
functions are centralized and performed at its corporate headquarters in
Decatur, Georgia. The Company intends to combine most of Ryder's central
office functions with the Company's in order to eliminate redundant
functions and reduce costs.
CONTINUE TO INTRODUCE COMPLEMENTARY SERVICES. Over the past several years,
the Company and Ryder have made a significant commitment to providing logistics
solutions and other services to their existing customers and other segments of
the automotive industry utilizing their proprietary information systems and
extensive terminal networks. These services include identifying new and
innovative distribution methods, providing solutions relating to improving the
management of inventory of new and used vehicles, and providing distribution
services relating to the used and remarketed vehicle market. For example, Ryder
has entered into an agreement with Volkswagen to provide port processing and
vehicle distribution services. The Company also believes that significant
opportunities exist for it to provide automotive distribution services to its
existing customers' foreign manufacturing plants through the formation of joint
ventures with established local transportation carriers.
PURSUE SELECTIVE ACQUISITIONS. The Company plans to pursue selective
acquisitions within the automotive distribution services industry. Specifically,
the Company believes that significant opportunities exist to acquire entities
which would enable the Company to provide additional logistics services to the
domestic and international
35
<PAGE> 43
operations of its existing customer base and other global automotive
manufacturers. As the largest motor carrier of automobiles and light trucks in
North America, the Company believes that acquisitions will enable it to leverage
its existing infrastructure and thereby increase profit opportunities. In
October 1994 the Company acquired Auto Haulaway, the largest transporter of
automobiles and light trucks in Canada, for $65.0 million. Allied has
successfully integrated Auto Haulaway's information systems and administrative
functions into those of the Company resulting in significant cost savings. In
addition, the Company acquired Kar-Tainer in April 1997 for $13.1 million to
provide the capability to transport finished and partially completed vehicles
and parts in intermodal containers domestically and internationally and is
currently integrating Kar-Tainer's systems and operations with those of the
Company.
RYDER
Prior to the Acquisition, Ryder, founded in 1914, was North America's
largest motor carrier of new and used automobiles and light trucks offering a
full range of automotive delivery services including transporting new, used and
off-lease vehicles to dealers from plants, railramps, ports and auctions, and
providing vehicle rail-car loading and unloading services. Ryder also provided
logistics solutions and other services to the new and used vehicle distribution
market and other segments of the automotive industry, including the growing used
car superstore market.
As of June 30, 1997, Ryder operated approximately 90 terminal locations
throughout the United States and Canada with a fleet of approximately 3,400
Rigs, including approximately 600 owner-operated Rigs. Ryder provided automotive
distribution services to all of the major domestic and foreign manufacturers.
General Motors represented Ryder's largest customer, accounting for
approximately 49.9% of 1996 revenues. Ryder had also been aggressively pursuing
opportunities that complemented its core automotive distribution services. For
example, Ryder recently entered into agreements with AutoNation to provide
transportation logistics services for the movement of vehicles to their
reconditioning centers and stores and with Volkswagen to provide port processing
services.
During 1996, Ryder undertook a restructuring of its operations in an effort
to improve its profitability and to focus on its core business of transporting
cars and light trucks and related services. The primary components of the
restructuring were (i) to reduce employee headcount through an early retirement
program, (ii) to consolidate administrative functions and (iii) to divest
non-core operations. For example, in February 1997 Ryder sold Blazer Truck
Lines, Inc., a provider of inbound logistics services to the automotive
industry. Additionally, during 1995 and 1996, a number of factors, including
certain special charges and credits, a Teamsters strike at Ryder during 1995,
strikes at certain General Motors' manufacturing plants during 1996, and
increased diesel fuel costs during 1996, limit the comparability of Ryder's
operating performance during this period.
Specifically, 1996 operating results were adversely impacted by a
restructuring charge of approximately $18.3 million ($11.3 million of which is
attributable to the businesses being acquired by the Company), the impact of
strikes at certain General Motors manufacturing plants, which management
estimates to be approximately $5.5 million, and the impact of higher diesel fuel
costs, estimated to be approximately $3.2 million. These charges were offset in
part by asset sale gains which totaled $4.1 million.
In 1995, Ryder's financial results were positively impacted by reduced
insurance costs totaling $2.5 million, an operating tax settlement of $9.9
million and asset sale gains of $10.7 million, offset by the impact of a 32-day
Teamsters strike.
Ryder's results of operations for the six months ended June 30, 1997 have
improved significantly with revenues and EBITDA increasing 6% and 35%,
respectively, over the prior comparable period. The increase in revenues
resulted primarily from a 5% increase in vehicle deliveries. In addition, the
Company believes that Ryder's 1997 results have benefited from the restructuring
initiatives implemented during 1996.
The following table sets forth certain historical financial information of
Ryder for the periods indicated. These results include entities not being
acquired by Allied, as well as the charges and credits discussed above.
Accordingly, such amounts are not necessarily representative of future operating
results. See "Unaudited Pro Forma Financial Information" and Consolidated
Financial Statements of Ryder included elsewhere in this Prospectus.
36
<PAGE> 44
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- ----------------------
1994 1995 1996 1996 1997
--------- --------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues.................................... $ 645,402 $ 594,446 $583,292 $ 297,945 $ 315,156
Operating Income (Loss)..................... 49,850 36,238 (17,189) 622 9,841
EBITDA...................................... 87,422 81,442 24,119 22,499 30,397
Capital Expenditures
New Rigs and modifications................ 39,793 60,628 41,378 18,511 9,395
Maintenance and other..................... 3,996 3,935 3,844 1,909 640
--------- --------- -------- --------- ---------
Total............................. 43,789 64,563 45,222 20,420 10,035
</TABLE>
For the year ended December 31, 1996, the businesses acquired by the Company
generated revenues and EBITDA of $568.1 million and $41.2 million, respectively.
EBITDA includes an $11.3 million charge relating to a restructuring that was
intended to improve Ryder's future operating performance. Such businesses
generated revenues and EBITDA of $315.7 million and $30.4 million, respectively,
for the six months ended June 30, 1997. See "Unaudited Pro Forma Financial
Information."
SERVICES
As a result of the Acquisition, the Company is the largest motor carrier in
North America specializing in the transportation of new and used automobiles and
light trucks for all the major domestic and foreign automotive manufacturers.
Allied and Ryder together participated in the transportation of approximately
65% of the new vehicles sold in the United States and Canada in 1996, including
more than 50% of the North American production of General Motors, Ford and
Chrysler. The Company believes it can capture a larger percentage of its major
customers' North American production by building upon its relationships with
manufacturers and leveraging its reputation for high quality services,
competitive pricing and value-added services. The Company also believes that it
can expand the types of services provided to its existing customers by utilizing
its sophisticated technology in order to deliver vehicles and provide other
services more efficiently and cost effectively than its competitors.
The Company also provides automotive transportation services in the growing
remarketed vehicle sector, which includes the delivery of used and previously
leased vehicles and vehicles sold through the automotive auction process. The
Company has been aggressively pursuing business from the used car superstores.
Ryder recently entered into an agreement with AutoNation to provide logistics
services for the movement of vehicles to its reconditioning centers and stores
and Allied recently entered into a contract with Aucnet to provide
transportation logistics services relating to the movement of vehicles sold
through live interactive auctions and bulletin board sales on the Internet.
Additionally, Ryder entered into an agreement with Volkswagen to provide port
processing and vehicle distribution services.
The Company has made a significant commitment to providing complementary
services to its existing customers and to new customers. The Company is
aggressively pursuing opportunities to provide logistics solutions to customers
in the automotive industry and seeks to leverage its proprietary information
systems and extensive terminal network in order to efficiently provide such
services. These services include identifying new and innovative distribution
methods for customers, providing solutions relating to improving the management
of inventory of new and used vehicles, and providing reconditioning services
relating to the used and remarketed vehicle market. The Company further believes
that significant opportunities exist for it to provide automotive hauling and
other related services to its existing customers' foreign manufacturing plants
through the formation of joint ventures with established local transportation
carriers. For example, through its Kar-Tainer subsidiary, the Company transports
finished and partially completed vehicles and parts in intermodal containers
both domestically and internationally.
CUSTOMER RELATIONSHIPS
The following table sets forth the percentage of 1996 revenues derived from
each major customer:
37
<PAGE> 45
<TABLE>
<CAPTION>
MANUFACTURER ALLIED RYDER PRO FORMA
--------------- --------- --------- ----------
<S> <C> <C> <C>
General Motors............................... 11.1% 49.9% 34.8%
Ford......................................... 53.3 6.9 26.0
Chrysler..................................... 17.9 10.5 13.7
Mazda........................................ 2.5 1.9 2.2
Nissan....................................... 1.8 5.6 4.1
Honda........................................ 2.6 6.3 4.9
Toyota....................................... 2.3 6.4 4.8
Others....................................... 8.5 12.5 9.5
-------- -------- -------
Total.............................. 100.0% 100.0% 100.0%
======== ======== =======
</TABLE>
The Company has contracts with most of its customers. The Company's
contracts with its customers establish rates for the transportation of vehicles
based upon a fixed rate per vehicle transported and a variable rate for each
mile a vehicle is transported. While the contracts generally do not permit the
Company to recover for increases in fuel prices, fuel taxes or labor cost,
certain of the Company's contracts provide for renegotiation in the event
material adverse changes occur. Allied has an agreement with Ford expiring in
May 1999 which provides that Allied is the primary carrier for 24 locations in
the United States and all Canadian locations and a contract with Chrysler
expiring in June 2000, which provides that Allied is the primary carrier for 26
locations throughout the United States and Canada. Ryder operates under a
month-to-month contract with Ford in the United States and Canada and under
various contracts with Chrysler in the United States with terms varying from
month-to-month to those which expire in February 2001. The Company has an
agreement in principal with General Motors to enter into a three-year contract
upon consummation of the Acquisition.
PROPRIETARY MANAGEMENT INFORMATION SYSTEMS
The Company has made a long-term commitment to utilizing technology to serve
its customers. The Company's advanced management information system is a
centralized, fully integrated information system utilizing a mainframe computer
together with client servers. The system is based on a company-wide information
database, which allows the Company to quickly respond to customer information
requests without having to combine data files from several sources. Updates with
respect to vehicle load, dispatch and delivery are immediately available from
all Company locations for reporting to customers and for better control and
tracking of customer vehicle inventories. Through EDI, the Company communicates
directly with manufacturers in the process of delivering vehicles and
electronically bills and collects from manufacturers. The Company also utilizes
EDI to communicate with inspection companies, railroads, port processors and
other carriers.
The Company also utilizes its system to allow it to operate more
efficiently. For example, the Company's information systems automatically design
an optimal load for each Rig, taking into account factors such as the capacity
of the Rig, the size of the vehicles, the route, the drop points, fuel taxes,
applicable weight and height restrictions and the formula for paying drivers.
The system also determines the most economical and efficient load sequence and
drop sequence for the vehicles to be transported.
MANAGEMENT STRATEGY
The Company has adopted a performance management strategy which it believes
contributes to quality, enhanced efficiency, safety and profitability in its
operations. The Company's management strategy and culture is designed to enhance
employee performance through careful selection and continuous training of new
employees, with individual performance goals established for each employee and
performance measured regularly through the Company's management information
system. The Company believes that its performance management strategy is unique
with respect to the role that employees play in the form of participation in
this process.
The Company has developed and implemented various programs to incentivize
and reward increased employee productivity. The various programs developed by
the Company reward damage-free delivery by drivers, driver efficiency and driver
safety. The Company believes that these programs have improved customer and
employee satisfaction and driver related productivity in areas such as
damage-free deliveries, as evidenced by the fact that the Company maintained a
damage-free delivery rate of 99.6% for the first six months of 1997.
During 1997, the Company adopted an economic value added ("EVA") based
performance measurement and incentive compensation system. EVA is the measure
used by the Company to determine incentive compensation for senior management.
EVA also provides management with a measure to gauge financial performance,
allocate capital to appropriate projects, assist in providing valuations in
regard to proposed acquisitions, and evaluate daily
38
<PAGE> 46
operating decisions. The Company believes that the EVA based performance
measurement and incentive compensation system promotes the creation of economic
value and increase shareholder value by aligning the interests of senior
management with that of the Company's shareholders.
SAFETY
The Company's safety department is responsible for training and supervising
personnel to keep safety awareness at its highest level and to minimize injuries
and related lost time. The department rewards drivers who have satisfied safety
performance goals established by the Company. The Company utilizes various forms
of safety equipment, such as cap liners to protect against head injuries, which
have reduced the number and severity of accident-related injuries to its
drivers. Management believes that the Company's safety programs have resulted in
significant cost savings since they have been implemented. For example, lost
time injuries decreased from 526 in 1990 to 453 in 1996, notwithstanding a 65%
increase in the number of employees during this period.
RISK MANAGEMENT AND INSURANCE
The Company's risk management department is responsible for defining risks
and securing appropriate insurance programs and coverages at cost effective
rates. The Company internally administers all claims for auto and general
liability and for workers compensation claims in Alabama, Florida, Georgia,
Missouri, North Carolina, South Carolina, Tennessee and Virginia. Liability
claims are subject to periodic audits by the Company's commercial insurance
carriers. The Company currently retains up to $650,000 of liability for each
claim for workers' compensation and up to $500,000 of liability for automobile
and general liability, including personal injury and property damage claims. In
addition to the $500,000 per occurrence deductible for automobile liability,
there is a $500,000 aggregate deductible for those claims which exceed the
$500,000 per occurrence deductible. The Company also retains up to $250,000 of
liability for each cargo damage claim in the United States. In Canada, the
Company retains up to C$100,000 (approximately U.S. $72,000 at September 30,
1997) of liability for each claim for personal injury, property damage or cargo
damage. Ryder's insurance contracts also provide for substantial deductibles or
indemnifications. If the Company were to experience a material increase in the
frequency or severity of accidents or workers' compensation claims or
unfavorable developments in existing claims, the Company's operating results
could be adversely affected. The Company formed Haul Insurance Limited in
December 1995 as a captive insurance subsidiary to provide insurance coverage to
the Company with respect to its deductibles for workers' compensation and
commercial general liability in the United States and for automobile liability
insurance in the United States and Canada.
EQUIPMENT, MAINTENANCE AND FUEL
As a result of the Acquisition, the Company operates approximately 5,300
Rigs with an average age of 6.9 years. Approximately 73% of such Rigs are
75-foot models. The Company has historically invested heavily in both new
equipment and equipment upgrades, which have served to increase efficiency and
extend the useful life of Rigs. Currently, new 75-foot Rigs cost between
$120,000 and $140,000.
Over the past 10 years, changes in governmental regulations have gradually
permitted the lengthening of Rigs from 55 to 75 feet. This has increased load
factors and improved operating efficiency by permitting the Company to haul more
vehicles with fewer Rigs and employees. The Company has worked closely with
manufacturers to develop specialized equipment to meet the specific needs of
manufacturers.
The Company's Rigs are maintained at 65 shops by approximately 300
maintenance personnel, including supervisors. Rigs are scheduled for regular
preventive maintenance inspections. Each shop is equipped to handle repairs
resulting from inspection or driver write up, including repairs to electrical
systems, air conditioners, suspension, hydraulic systems, cooling systems, and
minor engine repairs. Major engine overhaul and engine replacement can be
handled at larger terminal facilities, while smaller terminals rely on outside
vendors. The trend has been to use engine suppliers' outlets for engine repairs
due to the long-term warranties obtained by the Company.
All of Allied's terminals in the United States have access to a central
parts warehouse through the management information system. The system calculates
maximum and minimum parts inventory quantities based upon usage and
39
<PAGE> 47
automatically reorders parts. The Company intends to implement its management
information system at Ryder terminals during 1998. Minor modifications of
equipment are performed at all terminal locations. Major modifications involving
change in length, configuration or load capacity are performed by the trailer
manufacturers.
In order to reduce fuel costs, the Company purchases approximately 56% of
its fuel in bulk. Fuel is purchased by drivers on the road from a few major
suppliers that offer discounts and central billing.
COMPETITION
The transportation of vehicles in the long-haul segment of the automotive
industry is primarily controlled by rail carriers. In the 1970s and 1980s,
following deregulation of the trucking industry by the Interstate Commerce
Commission and as importers obtained a more significant share of United States
automobile sales, new motor carriers, some without union contracts, began to
compete for automobile traffic. In some instances, these new carriers were
created, or their creation facilitated, by importer interests.
Since the mid-1980s, nearly all transportation has been pursuant to
contracts entered into by negotiation or competitive bid. The competition for
these contracts has been from both rail carriers and union and non-union motor
carriers. As a result, many negotiations and bids have resulted in contracts
that do not allow for recovery of increased costs of labor or fuel over the
contract term and that provide for rate reductions of varying magnitudes.
Two other recent developments are now beginning to have an impact on
competition. The first is the rise in the use of third-party logistics companies
by automotive manufacturers. This is expected to convert further traffic to
competitive bidding and ease entry for less well capitalized, less sophisticated
haulers as the logistics companies provide the information systems and
integrate, more comprehensively, the full distribution function. The second is
the fundamental changes automotive manufacturers are making to their vehicle
distribution systems in order to expedite the delivery of finished vehicles to
dealers. Certain manufacturers are creating vehicle mixing centers where rail
traffic from numerous manufacturing plants is re-mixed for delivery to the
dealer. These mixing centers offer the opportunity for longer haul business to
be obtained through competitive bidding. In addition, manufacturers are creating
new rail ramps in order to place vehicles in more central locations closer to
the market but off the dealer lots. These new rail ramps may reduce the average
length of haul for motor carriers of automobiles. In metropolitan areas,
competition for traffic from the new rail ramps to the dealers may increase as
local delivery carriers and equipment and driver leasing companies may become
new competitors for the traffic. In addition, some parties may attempt to
utilize drive-away operators or dealer pick-ups to deliver vehicles.
Major motor carriers specializing in the delivery of new vehicles that are
competitors of the Company include Leaseway, Jack Cooper, Cassens, Hadley and E
& L, all of which are privately held companies.
EMPLOYEES AND OWNER OPERATORS
As a result of the Acquisition, the Company has approximately 8,300
employees, including approximately 5,400 drivers. All drivers and shop and yard
personnel are represented by various labor unions. The majority of the Company's
employees are covered by the Master Agreement with the Teamsters which expires
on May 31, 1999. The compensation and benefits paid by the Company to union
employees are established by union contracts. The Company also utilizes
approximately 800 owner-operators, with approximately 200 driving exclusively
for Auto Haulaway in Canada and approximately 600 driving exclusively for Ryder
in the United States. The owner-operators are either paid a percentage of the
revenues they generate or receive normal driver pay plus a truck allowance.
TERMINALS AND OTHER PROPERTIES
The Company's executive offices are located in Decatur, Georgia, a suburb of
Atlanta. The Company leases approximately 96,000 square feet of space for its
executive offices, which is sufficient to permit the Company to conduct its
operations. The Company will operate 121 terminals after the Acquisition, which
are located at or near manufacturing plants, ports and railway terminals, 26 of
which are owned and 95 of which are leased.
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<PAGE> 48
REGULATION
The Company is regulated in the United States by the United States
Department of Transportation ("DOT") and various state agencies, and in Canada
by the National Transportation Agency of Canada and various provincial transport
boards. Truck and trailer length, height, width, maximum weight capacity and
other specifications are regulated federally in the United States, as well as by
individual states and provinces. Interstate motor carrier operations are subject
to safety requirements prescribed by the DOT. The DOT also regulates certain
safety features incorporated in the design of Rigs. The motor carrier
transportation industry is also subject to regulatory and legislative changes
which can affect the economics of the industry by requiring changes in operating
policies or influencing the demand for, and the costs of providing, services to
shippers.
In addition, the Company's terminal operations are subject to environmental
laws and regulations enforced by federal, state, provincial and local agencies,
including those related to the treatment, storage and disposal of wastes, and
those related to the storage and handling of fuel and lubricants. The Company
maintains regular ongoing testing programs for their USTs located at most of
their terminals for compliance with environmental laws and regulations.
Management believes that the Company's USTs are in compliance with current
environmental standards and that the Company will not be required to incur
substantial costs to bring the USTs into compliance with higher standards which
take effect in 1998.
LEGAL PROCEEDINGS
The Company is routinely a party to litigation incidental to its business,
primarily involving claims for personal injury and property damage incurred in
the transportation of vehicles. The Company does not believe that any of such
pending litigation, if adversely determined, would have a material adverse
effect on the Company.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
directors and executive officers:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- --- -----
<S> <C> <C>
Robert J. Rutland......................................... 56 Chairman of the Board of Directors and Chief
Executive Officer
Guy W. Rutland, III....................................... 60 Chairman Emeritus and Director
A. Mitchell Poole, Jr..................................... 50 President, Chief Operating Officer and Director
Bernard O. De Wulf........................................ 48 Vice Chairman, Executive Vice President and Director
Berner F. Wilson, Jr...................................... 58 Vice Chairman, Secretary and Director
Guy W. Rutland, IV........................................ 33 Vice President and Director
Joseph W. Collier......................................... 55 President of Allied Automotive Group and Director
Douglas R. Cartin......................................... 43 President of Axis
Douglas A. Lauer.......................................... 33 President of Link Information Systems, Inc.
Daniel H. Popky........................................... 33 Vice President, Finance
Robert R. Woodson......................................... 65 Director
David G. Bannister........................................ 42 Director
</TABLE>
Robert Rutland has been Chairman and Chief Executive Officer of the Company
since December 1995. Mr. Rutland served as President and Chief Executive Officer
of the Company from 1986 to December 1995. Prior to October 1993, Mr. Rutland
was Chief Executive Officer of each of the Company's subsidiaries.
Guy Rutland, III was elected Chairman Emeritus in December 1995. Mr. Rutland
served as Chairman of the Board of the Company from 1986 to December 1995. Prior
to October 1993, Mr. Rutland was Chairman or Vice Chairman of each of the
Company's subsidiaries.
Mr. Poole has been President and Chief Operating Officer of the Company
since December 1995. Prior to December 1995, Mr. Poole served as Executive Vice
President and Chief Financial Officer of the Company. Mr.
41
<PAGE> 49
Poole joined Allied Systems, Ltd. in 1988 as Senior Vice President and Chief
Financial Officer. He was appointed President of Allied Industries Incorporated
in December 1990 and continues to serve in such capacity. Prior to joining the
Company in 1988, Mr. Poole was an audit partner with Arthur Andersen LLP,
independent public accountants.
Mr. De Wulf has been Vice Chairman and an Executive Vice President of the
Company since October 1993. Prior to such time, Mr. De Wulf was Vice Chairman of
each of the Company's subsidiaries.
Mr. Wilson has been Vice President of the Company since October 1993 and
Vice Chairman of the Board of Directors and Secretary since December 1995. Prior
to October 1993, Mr. Wilson was an officer or Vice Chairman of several of the
Company's subsidiaries. Mr. Wilson joined the Company in 1974 and has held
various finance, administration, and operations positions.
Guy Rutland, IV has been Vice President of the Company since October 1993
and Vice President of the Reengineering Core Team of Allied Automotive Group,
Inc. since November 1996. From January 1996 to November 1996, Mr. Rutland was
Assistant Vice President of the Central and Southeast Region of Operations for
Allied Systems, Ltd. From March 1995 to January 1996, Mr. Rutland was Assistant
Vice President of the Central Division of Operations for Allied Systems, Ltd.
From June 1994 to March 1995, Mr. Rutland was Assistant Vice President of the
Eastern Division of Operations for Allied Systems, Ltd. From 1993 to June 1994,
Mr. Rutland was assigned to special projects with an assignment in the Company's
Industrial Relations/Labor Department and, from 1988 to 1993, Mr. Rutland was
Director of Performance Management.
Mr. Collier was appointed as a director of the Company and has been the
President of Allied Automotive Group, Inc. since December 1995. Mr. Collier had
been Executive Vice President of Marketing and Sales and Senior Vice President
of Allied Systems, Ltd. since 1991. Mr. Collier joined the Company in 1979.
Mr. Cartin has been President of Axis Group since October 1995. From April
1995 to October 1995, Mr. Cartin was Vice President of Allied Industries. Mr.
Cartin has 20 years of international senior management level expertise in
providing third-party integrated supply chain logistics solutions. Prior to
joining the Company, he held a number of positions over a 13-year period at
National Freight Consortium.
Mr. Lauer has been President of Link Information Systems, Inc. since July
1996. From January 1996 to July 1996, Mr. Lauer was Vice President and Chief
Information Officer of Allied Industries. Mr. Lauer has 11 years of information
technology experience. Prior to joining the Company, he was Director,
Information Systems at Exel Logistics.
Mr. Popky has been Vice President, Finance of the Company since December
1995. From January 1995 to December 1995, Mr. Popky was Vice President and
Controller and, from October 1994 to January 1995, he was Assistant Vice
President and Controller for the Company. Prior to joining the Company, Mr.
Popky held various positions with Arthur Andersen LLP for nine years.
Mr. Woodson has been a director of the Company since December 1993. Mr.
Woodson retired as the Chairman of John H. Harland Company in April 1997 and
remains as a member of its Board of Directors. Mr. Woodson was the President and
Chief Executive Officer of John H. Harland Company prior to October 1995 and
also serves as a director of Haverty Furniture Companies, Inc.
Mr. Bannister has been a director of the Company since December 1993. Mr.
Bannister is a Managing Director in the Transportation Group of Alex. Brown &
Sons Incorporated and has been employed by that firm in various capacities since
1983.
SECURITY OWNERSHIP OF DIRECTORS AND CERTAIN EXECUTIVE OFFICERS
The following table sets forth certain information about beneficial
ownership of the common stock of the Company (the "Common Stock") as of June 30,
1997 by (i) each director and the five most highly compensated executive
officers of the Company, and (ii) all directors and executive officers of the
Company as a group. Unless
42
<PAGE> 50
otherwise indicated, the beneficial owners of the Common Stock listed below have
sole voting and investment power with respect to all shares shown as
beneficially owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
BENEFICIAL OWNERS BENEFICIALLY OWNED OUTSTANDING
- ----------------- ------------------ ----------------
<S> <C> <C>
Robert J. Rutland(1)....................................................... 1,256,469 16.1
Guy W. Rutland, III(2)..................................................... 842,551 10.8
Guy W. Rutland, IV(3)...................................................... 687,311 8.8
Bernard O. De Wulf(4)...................................................... 572,750 7.3
A. Mitchell Poole, Jr(5)................................................... 226,200 2.9
Berner F. Wilson, Jr....................................................... 225,710 2.9
Joseph W. Collier (6)...................................................... 11,000 *
David G. Bannister......................................................... 3,000 *
Robert R. Woodson.......................................................... 4,000 *
All executive officers and directors as a group(7) (12 persons)........... 3,861,191 49.4
</TABLE>
- ----------
* Less than 1% not applicable
(1) Includes 18,099 shares owned by his wife to which he disclaims beneficial
ownership and 25,000 shares owned by him under the Restricted Stock Plan
which are subject to transfer restrictions.
(2) Includes 18,099 shares owned by his wife and 67,800 shares owned by a
private foundation of which Mr. Rutland is a trustee to which he disclaims
beneficial ownership.
(3) All shares held in a general partnership of which he is a partner.
(4) Includes 165,000 shares held in trust for the benefit of his wife and family
members and 2,750 shares held in a limited partnership to which he disclaims
beneficial ownership.
(5) Includes 20,000 shares owned by him under the Restricted Stock Plan which
are subject to transfer restrictions.
(6) Includes 10,000 shares owned by him under the Restricted Stock Plan which
are subject to transfer restrictions. Does not include options to acquire
61,000 shares.
(7) Includes 30,000 shares issued under the Restricted Stock Plan which are
subject to transfer restrictions. Does not include options to acquire 28,800
shares.
SECURITY OWNERSHIP OF OTHERS
The following table sets forth certain information about beneficial
ownership of each person known to the Company to own more than 5% of the
outstanding Common Stock as of September 1, 1997 other than directors of the
Company.
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percentage of Shares
Beneficial Owner Beneficially Owned Outstanding
---------------- ------------------ -----------
<S> <C> <C>
Brinson Partners, Inc.(1) 585,112 7.5
209 South LaSalle
Chicago, Illinois 60604
Private Capital Management, Inc.(2) 1,044,818 13.4
3003 Tamiami Trail N.
Naples, Florida 33940
</TABLE>
(1) According to a Schedule 13G dated February 10, 1997, filed on behalf of
Brinson Partners, Inc. and a subsidiary and its parent companies, each of
which may also be deemed a beneficial owner of the shares held by Brinson
Partners, Inc. by virtue of their corporate relationships.
(2) According to a Schedule 13G dated March 10, 1997, filed on behalf of Private
Capital Management, Inc. and its affiliates, each of which may also be
deemed a beneficial owner of the shares held by Private Capital Management,
Inc. by virtue of their relationships.
43
<PAGE> 51
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board, which was formed in December
1993, reviews, administers and monitors the Company's executive compensation
plans, policies and programs.
EXECUTIVE COMPENSATION COMPONENTS
The executive compensation philosophy of the Company is to link
compensation with enhancement of shareholder value. The Company's executive
compensation is based on three principal components, each of which is intended
to support the overall compensation philosophy. The three principal components
are:
Base Salary. Base salary amounts for each of the named executive
officers are specified in their employment agreements. During January 1996, the
Compensation Committee approved amendments to the employment agreements with the
named executive officers to increase the base salary and to extend the
expiration of the agreements through January 2001. In January 1997, the
Compensation Committee approved amendments to Messrs. Wilson and Colliers'
employment agreements to increase the base salary.
Incentive Compensation. In 1996, the Compensation Committee approved the
payment of incentive compensation for the Company's executive officers who are
not parties to employment agreements which provide for bonus compensation.
Incentive compensation for Messrs. Robert Rutland, Poole and Collier for 1996
was paid in accordance with formulas specified in their employment agreements.
In January 1997, the Compensation Committee approved amendments to the
employment agreements with the named executive officers to allow them to
participate in the Allied Holdings, Inc. EVA Based Incentive Plan ("Incentive
Plan"). Beginning in 1997, incentive compensation for the named executive
officers will be paid in accordance with the Incentive Plan. Economic Value
Added ("EVA") and the Incentive Plan are discussed in detail below.
Stock Compensation. Executive officers are eligible to receive annual
grants of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, performance units and performance shares
under the Company's Long-Term Incentive Plan. In December 1996, the Compensation
Committee approved restricted stock awards to Messrs. Robert Rutland, Poole and
Collier. The Long-Term Incentive Plan is discussed elsewhere in this proxy.
EVA AND THE INCENTIVE PLAN
The primary objective of the Company in regard to executive compensation
is to link compensation with shareholder value. To that end, the Company has
adopted a more formalized approach to measuring value creation through the EVA
framework. The Company together with Stern Stewart & Co., the financial advisory
firm that pioneered the EVA framework, undertook a five-month project during
1996 to create and install an EVA based performance measurement and incentive
compensation system. The proprietary EVA financial measure can be defined as net
operating profits after tax ("NOPAT"), less a capital charge for the average
operating capital employed. NOPAT is a measure of operating results which
differs from normal accounting profit due to the adjustment for certain
non-economic charges. The Company and Stern Stewart believe that EVA more
accurately measures shareholder value created than traditional performance
measures such as return on assets, earnings per share and return on equity.
EVA provides a framework that enables management to make decisions that
will build long-term value for the Company and its shareholders rather than
focus on short-term results. In 1997, EVA will be the measure used to determine
incentive compensation for senior management.
CEO COMPENSATION
The Compensation Committee believes that Robert J. Rutland's
compensation as Chief Executive
44
<PAGE> 52
Officer appropriately relates to short and long term performance. Mr. Rutland's
compensation in 1996 was $427,000 as provided by his employment agreement.
Additionally, Mr. Rutland was paid a bonus in an amount equal to $121,620 for
1996 which was calculated in accordance with a formula set forth in his
employment agreement. The Compensation Committee believes that the employment
agreement provides for appropriate compensation to Mr. Rutland based upon the
measures described above for determining executive officer compensation. The
Compensation Committee considers the compensation received by Mr. Rutland to be
comparable to chief executive officers of other leading companies engaged in
transportation.
David G. Bannister Robert R. Woodson
SUMMARY COMPENSATION TABLE
Remuneration paid in 1996, 1995 and 1994 to executive officers is set
forth on the following table:
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ---------------------
Securities
Restricted Underlying
Name and Principal Stock Options/SAR All Other
Position Year Salary Bonus Awards(1) Awards (#) Compensation(2)
-------- ---- ------ ----- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Rutland 1996 $427,000 $121,620 200,000 -- $13,667
Chairman and Chief 1995 424,493 143,180 -- -- 14,380
Executive Officer 1994 409,000 284,140 -- -- 14,703
Bernard O. De Wulf 1996 320,000 75,000 -- -- 3,917
Vice Chairman and 1995 318,370 100,000 -- -- 5,217
Executive Vice 1994 306,750 150,000 -- -- 3,488
President
A. Mitchell Poole, Jr. 1996 290,000 121,620 160,000 -- 991
President and Chief 1995 265,302 143,180 -- -- 910
Operating Officer 1994 256,752 256,752 -- -- 886
Berner F. Wilson, Jr. 1996 175,000 75,000 -- -- 1,565
Vice Chairman and 1995 159,179 100,000 -- -- 2,450
Secretary 1994 153,370 150,000 -- -- 1,413
Joseph W. Collier 1996 175,000 60,816 80,000 -- --
President - Allied 1995 131,485 100,000 -- 50,000 --
Automotive Group, Inc. 1994 114,437 150,000 -- -- --
</TABLE>
(1) Represents dollar value of awards granted in 1996 based on the closing
market price on December 31, 1996. Under the Restricted Stock Plan,
restrictions lapse over a five year period, 20% per year, commencing
on the first anniversary of the date of grant.
(2) Unless otherwise noted, all amount in this column are insurance premiums
paid on behalf of the named executive officers.
OPTION EXERCISE AND VALUES FOR LAST FISCAL YEAR
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<PAGE> 53
The following table sets forth as to each of the named executive
officers information with respect to option exercises during 1996 and the
status of their options on December 31, 1996 (i) the number of shares of
Common Stock underlying options exercised during 1996, (ii) the aggregate
dollar value realized upon the exercise of such options, (iii) the total
number of exercisable and non-exercisable stock options held on December 31,
1996 and (iv) the aggregate dollar value of in-the-money exercisable options
on December 31, 1996.
46
<PAGE> 54
AGGREGATED OPTION EXERCISE DURING LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Shares Value Number of Unexercised Value of Unexercised
Acquired Realized Options at Fiscal Year End In-the-Money
Upon Upon -------------------------- Options at Fiscal
of Option Exercise Year End(1)
--------- -------- -----------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Rutland -- -- -- -- -- --
Bernard O. De Wulf -- -- -- -- -- --
A. Mitchell Poole, Jr. -- -- -- -- -- --
Berner F. Wilson, Jr. -- -- -- -- -- --
Joseph W. Collier -- -- 10,500 50,500 -- --
</TABLE>
(1) In accordance with the SEC's rules, values are calculated by
subtracting the exercise price from the fair market value of the
underlying Common Stock. For purposes of this table, fair market value
is deemed to be $7.50, the average of the high and low Common Stock
price reported on the NASDAQ National Market on December 31, 1996.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Messrs. Robert Rutland, De Wulf, Poole, Wilson and Collier have
entered into employment agreements with the Company. These agreements, which
are substantially similar, are for five year terms ending in January 2001 and
provide for compensation to the officers in the form of annual base salaries
in the amount of $427,000 for Robert Rutland, $320,000 for Mr. De Wulf,
$290,000 for Mr. Poole, $175,000 for Mr. Wilson, and $175,000 for Mr. Collier
in 1996, plus percentage annual increases based upon the Consumer Price Index
and other factors. In January 1997, the employment agreements with Messrs.
Wilson and Collier were amended to increase the annual base pay for 1997 to
$200,000.
The employment agreements also provide that in the event of (i) an
officer's termination of employment by the Company other than for cause, (ii)
termination by the officer for reasons such as a material change by the
Company in the officer's duties and responsibilities or as a result of a
merger or consolidation of the Company, or (iii) the death or disability of
the officer, the officer shall receive severance benefits from the Company.
These severance benefits include a cash payment in an amount equal to two
times the annual base salary plus the average of the previous two years' bonus
payments for the applicable officer. The Company is also required to provide
to the officer group medical and hospitalization benefits and related benefits
for a period of one year.
LONG-TERM INCENTIVE PLAN
The Company has adopted a Long-Term Incentive Plan (the "LTI Plan")
pursuant to which an aggregate of 650,000 shares of Common Stock could be
issued. The LTI Plan authorizes the Company to grant incentive stock options,
non-qualified stock options, stock appreciation rights, restricted stock,
performance units and performance shares to eligible employees as determined
by the LTI Plan. The LTI Plan was adopted and approved by the Board of
Directors and shareholders in July 1993.
The Compensation Committee elects those employees to whom awards are
granted under the LTI Plan and determines the number of performance units,
performance shares, shares of restricted stock, and stock appreciation rights
granted pursuant to each award and prescribes the terms and conditions of each
such award.
47
<PAGE> 55
Nonqualified Stock Option Plan
During 1996 the Company granted options to purchase 34,000 shares of
the Company's Common Stock at a price per share of $9.00. The options are
granted pursuant to the non-qualified stock option provisions set forth in the
LTI Plan and are not intended to qualify as incentive stock options within the
meaning of the Internal Revenue Code of 1986, as amended. A maximum of 300,000
shares may be issued as non-qualified options under the provisions of the LTI
Plan. Options granted become exercisable after one year in 20% or 33a%
increments per year and expire ten years from the date of the grant. There
were 41,867 options exercisable at December 31, 1996.
Restricted Stock Plan
Effective December 19, 1996 the Company adopted the Allied Holdings,
Inc. Restricted Stock Plan ("Restricted Stock Plan") pursuant to authority
granted by the LTI Plan. The awards granted under the Restricted Stock Plan
vest over five years, 20% per year commencing on the first anniversary of the
date of grant. Effective December 19, 1996 the Company awarded an aggregate of
85,000 shares, with a value of $680,000 as of the date of grant.
STOCK APPRECIATION RIGHTS PLAN
The Board of Directors of the Company adopted the Allied Holdings,
Inc. Stock Appreciation Rights Plan effective January 1, 1997 (the "SAR
Plan"). The purpose of the SAR Plan is to provide deferred compensation to
certain management employees of the Company. Such deferred compensation shall
be based upon the award of stock appreciation rights units, the value of which
are related to the appreciation in fair market value of the Common Stock. All
payments under the SAR Plan will be in cash. The Compensation Committee shall
determine the applicable terms for each award under the SAR Plan. There has
been no grants under the SAR Plan as of the date of this proxy.
EVA BASED INCENTIVE PLAN
The Board of Directors of the Company adopted the Incentive Plan
effective January 1, 1997. The Incentive Plan's objectives are to focus on
(i)creating shareholder value and reward participants significantly when
achieved, and (ii) sustaining, continuous performance improvement.
The Incentive Plan is administered by the Compensation Committee.
Under the Incentive Plan, incentive compensation will be directly linked to
changes in EVA. EVA will be measured for each of the Company's major operating
units and will reward participants for increases in EVA and penalize such
employees for any decreases in EVA. Management employees designated as
participants by the Chairman and President of the Company and approved by the
Compensation Committee are eligible to participate in the Incentive Plan.
Target bonus amounts will be determined for each participant by the Chairman
and President and approved by the Compensation Committee.
A Participant's target bonus will either be based solely on the
performance of the Company on a consolidated basis or on the performance of a
subsidiary or a business unit and the Company. For example, a target bonus
might be based seventy-five percent (75%) on a business unit or a subsidiary
and twenty-five percent (25%) on the Company's consolidated results.
Annually, an actual bonus will be declared for each Participant based
on the comparison of the change in EVA to the expected change in EVA. If the
change in EVA is exactly equal to the expected change in EVA, the actual bonus
will equal the target bonus. The actual bonus for any calendar year will be
higher than the target bonus if the change in EVA is higher than the expected
change in EVA and lower if the change in EVA is lower than the expected change
in EVA. Such adjustment shall be established by the Compensation Committee in
its sole discretion.
The actual bonus declared for each Participant with respect to any
calendar year will be allocated to the Participants' bonus bank, within 30
days after the amount of the actual bonus for such year is determined. If,
after
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<PAGE> 56
the allocation with respect to any calendar year, the balance in the
Participants' bonus bank is less than or equal to the Participants' target
bonus for such year, the entire amount in the bonus bank will be paid as
soon as practicable but in no event later than 15 days following such
allocation. If the balance in the bonus bank is greater than the target
bonus, the Participant will be paid the target bonus plus one-third of the
remainder of the bonus bank balance. Amounts remaining in the bonus bank
will be carried forward to future years. Negative bonuses may be declared if
the change in EVA for any calendar year is significantly below the expected
change in EVA for such year and negative bonuses declared will be subtracted
from the bonus bank.
Ninety-five percent (95%)of the portion of the actual bonus payable to a
Participant with respect to any calendar year will be paid to the
Participants in cash and five percent (5%) will be paid in the form of stock
appreciation rights, pursuant to the SAR Plan.
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<PAGE> 57
RETIREMENT PLANS
The Company maintains a tax qualified benefit pension plan (the
"Retirement Plan"). The table set forth below illustrates the total combined
estimated annual benefits payable under the Retirement Plan to eligible
salaried employees for years of service assuming normal retirement at age 65.
Allied Defined Benefit Pension Plan
Years of Service
----------------
<TABLE>
<CAPTION>
Remuneration 10 15 20 25 30 35
------------ -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
100,000 20,000 30,000 40,000 50,000 50,000 50,000
125,000 25,000 37,500 50,000 62,500 62,500 62,500
150,000 30,000 45,000 60,000 75,000 75,000 75,000
175,000 32,000 48,000 64,000 80,000 80,000 80,000
200,000 32,000 48,000 64,000 80,000 80,000 80,000
225,000 32,000 48,000 64,000 80,000 80,000 80,000
250,000 32,000 48,000 64,000 80,000 80,000 80,000
275,000 32,000 48,000 64,000 80,000 80,000 80,000
300,000 32,000 48,000 64,000 80,000 80,000 80,000
</TABLE>
The Retirement Plan uses average compensation, as defined by the
Retirement Plan, paid to an employee by the plan sponsor during a plan year
for computing benefits. Compensation includes bonuses and any amount
contributed by a plan sponsor on behalf of an employee pursuant to a salary
reduction agreement which is not includable in the gross income of the
employee under Internal Revenue Code (AIRC@) Section 125, 402(a)(8), or
402(h). However, compensation in excess of the IRC Section 401(a)(17) limit
shall not be included. The limit for 1996 was $150,000 and for 1997 is
$160,000.
The compensation covered by the Retirement Plan for Messrs, Robert
Rutland, De Wulf, Poole, Wilson, and Collier is $160,000.
The estimated years of credited service for each of the current
executives as of December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Years of Credited Service
Name as of December 31, 1996
---- -----------------------
<S> <C>
Robert J. Rutland 32.7
Berner F. Wilson 22.0
Joseph W. Collier 17.0
Bernard O. De Wulf 13.0
A. Mitchell Poole, Jr. 8.7
</TABLE>
The benefits shown in the Pension Plan Table are payable in the form
of a straight life annuity commencing at age 65. There is no reduction for
social security benefits or other offset amounts.
CERTAIN TRANSACTIONS
The Company leases the space in the building in which its headquarters
is located from DELOS, a general partnership of which Messrs. Rutland, III,
Robert Rutland, and Wilson are beneficially the sole general partners.
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<PAGE> 58
The aggregate rents paid by the Company to DELOS in 1996 were $1,030,139. During
January 1997, the Company extended the lease with DELOS to expire December 31,
2007. The Company provided loans to DELOS in the aggregate amount of $573,419
which bear interest at the rate of 6% per annum. The outstanding balance of
principal and accrued interest thereon regarding the loans is due and payable on
November 30, 1998.
The Company paid Capital Management Services, Inc., a company controlled
by Messrs. Rutland, III and Robert Rutland's brother-in-law, $40,000 in 1995 and
$80,000 in 1996 to manage a construction project.
David G. Bannister, a director and member of the Compensation Committee
of the Company, is a Managing Director of BT Alex. Brown Incorporated.
DESCRIPTION OF OTHER INDEBTEDNESS
The following is a summary of important terms of certain indebtedness of the
Company.
NEW CREDIT FACILITY
The New Credit Facility allows the Company to borrow, under a revolving line
of credit, and issue letters of credit, up to the lesser of $230.0 million or a
borrowing base amount that is determined based on a defined percentage of the
Company's accounts receivable and equipment. At June 30, 1997, after giving pro
forma effect to the Offering and the Acquisition, the Company would have undrawn
availability of approximately $126.3 million. Annual commitment fees will be due
on the undrawn portion of the commitment. The New Credit Facility will mature in
2002. The interest rate for the New Credit Facility is, at the Company's option,
either (i) the bank's Base Rate, as defined, or (ii) the bank's Eurodollar rate,
as defined, as determined at the date of each borrowing, plus an applicable
margin. The Company has the right to repay the outstanding debt under the New
Credit Facility, in whole or in part, without penalty or premium, subject to a
limitation that prepayment of Eurodollar rate loans will be subject to a
breakage penalty if prepaid other than on the last day of the applicable
interest period. The Company is subject to mandatory prepayment with a defined
percentage of net proceeds from certain asset sales, new debt offerings and new
equity offerings. The revolving line of credit allows the Company to repay and
reborrow so long as there is no event of default. The New Credit Facility gives
the Company the ability to reduce the commitment amount and the Company
periodically reviews its borrowing needs.
Borrowings under the New Credit Facility are secured by a first priority
security interest on assets of the Company and certain of its subsidiaries,
other than real estate but including a pledge of stock of certain subsidiaries.
In addition, certain subsidiaries of the Company have jointly and severally
guaranteed the obligations of the Company under the New Credit Facility.
The New Credit Facility sets forth a number of affirmative, negative, and
financial covenants binding on the Company. The negative covenants will limit
the ability of the Company to, among other things, incur debt, incur liens, make
investments, make dividend or other distributions, or enter into any merger or
other consolidation transaction. The financial covenants include the maintenance
of a minimum consolidated tangible net worth, compliance with a leverage ratio
and a coverage ratio, and limitations on capital expenditures. The New Credit
Facility contains standard events of default including failure to make payments
on a timely basis, breach of covenants, breach of any representation or
warranty, and defaults on other indebtedness.
SENIOR SUBORDINATED NOTES
In February 1996, the Company issued the Senior Subordinated Notes through a
private placement. Proceeds from the Senior Subordinated Notes were used to
reduce borrowings under the Company's existing credit facility. Interest on the
Senior Subordinated Notes is payable semi-annually at a rate of 12% per year on
February 1 and August 1 of each year. The Senior Subordinated Notes are
prepayable at any time at 100% of the principal amount thereof, plus a
make-whole amount (the "SSN Make-Whole Amount"), as determined by discounting
the remaining interest payments through maturity at a rate equal to the yield on
the date of redemption of the class of United States Treasury securities
corresponding to the weighted average life to maturity of the principal amount
being repaid plus
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<PAGE> 59
100 basis points (the "Reinvestment Rate"). The SSN Make-Whole Amount will be
zero if the Reinvestment Rate exceeds 12%.
The indenture pursuant to which the Senior Subordinated Notes were issued
contains covenants requiring the Company to maintain or place limitations on,
among other things: (i) minimum consolidated net worth, (ii) additional
indebtedness, (iii) fixed charge coverage ratio, (iv) liens, (v) restricted
payments, (vi) asset sales, (vii) mergers and consolidations, and (viii)
transactions with affiliates.
The payment of principal, the SSN Make-Whole Amount, if any, and interest on
the Senior Subordinated Notes is subordinated to all senior indebtedness of the
Company, including the Notes. Upon a distribution to creditors of the Company in
a bankruptcy, reorganization, liquidation or dissolution of the Company, the
holders of all senior indebtedness will be entitled to receive payment in full
before the holders of the Senior Subordinated Notes would be entitled to receive
any distributions.
DESCRIPTION OF NOTES
GENERAL
The New Notes will be issued pursuant to the Indenture among the Company,
the Guarantors and The First National Bank of Chicago, as trustee (the
"Trustee"). The terms of the New Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(the "Trust Indenture Act"). The New Notes are subject to all such terms, and
Holders of New Notes are referred to the Indenture and the Trust Indenture Act
for a statement thereof. The following summary of the material provisions of the
Indenture does not purport to be complete and is qualified in its entirety by
reference to the Indenture, including the definitions therein of certain terms
used below. Copies of the proposed form of Indenture will be made available to
prospective investors as set forth under "Available Information." The
definitions of certain terms used in the following summary are set forth below
under "Certain Definitions." For purposes of this "Description of Notes," the
term "Company" refers only to Allied Holdings, Inc. and not to any of its
Subsidiaries.
The New Notes will be general unsecured obligations of the Company, ranking
pari passu in right of payment with all present and future senior indebtedness
of the Company, and senior in right of payment to all present and future
subordinated indebtedness of the Company. However, the New Notes will be
effectively junior to all present and future secured indebtedness of the Company
to the extent of the assets securing such indebtedness. As of June 30, 1997,
after giving pro forma effect to the Offering and the Acquisition, the New Notes
would have been effectively junior to $41.8 million of secured indebtedness,
including borrowings under the New Credit Facility. In addition, the Company
would have had $126.3 million of additional secured borrowings available under
the New Credit Facility. The Indenture permits the Company to incur additional
indebtedness in the future, subject to certain restrictions. See "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock."
As of the Closing Date, all of the Company's Subsidiaries will be Restricted
Subsidiaries, other than Haul Insurance Limited, which will be an Unrestricted
Subsidiary. Under certain circumstances, the Company will be able to designate
other current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted
Subsidiaries will not be subject to many of the restrictive covenants set forth
in the Indenture. The Company's payment obligations under the New Notes will be
guaranteed by all of the Company's present and future Domestic Restricted
Subsidiaries and existing Canadian Subsidiaries (other than AH Industries,
Inc.). See "-Subsidiary Guarantees."
PRINCIPAL, MATURITY AND INTEREST
The New Notes (sometimes referred to as the "Notes") will be limited in
aggregate principal amount to $150.0 million and will mature on October 1,
2007. Interest on the Notes will accrue at the rate of 8 5/8% per annum and
will be payable semi-annually in arrears on April 1 and October 1 of each year,
commencing on April 1, 1998, to Holders of record on the immediately preceding
March 15 and September 15. Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of original issuance. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months. Principal of and premium,
interest and Liquidated Damages, if any, on the Notes will be payable at the
office or agency of the Company maintained for such purpose or, at the option
of the Company, payment of interest and Liquidated Damages may be made by check
mailed to the
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<PAGE> 60
Holders of the Notes at their respective addresses set forth in the register of
Holders of Notes; provided that all payments of principal, premium, interest and
Liquidated Damages with respect to Notes the Holders of which have given wire
transfer instructions to the Company will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, the Company's office or
agency will be the office of the Trustee maintained for such purpose. The Notes
will be issued in denominations of $1,000 and integral multiples thereof.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes will be guaranteed by all
of the Company's Domestic Restricted Subsidiaries and Canadian Subsidiaries
(other than AH Industries, Inc.) existing on the Closing Date. Certain of such
Canadian Subsidiaries will indirectly guarantee the Company's payment
obligations under the Notes by guaranteeing their parent companies' obligations
under direct Guarantees. The Indenture will provide that (i) if the Company or
any of its Restricted Subsidiaries shall acquire or create another Domestic
Restricted Subsidiary after the Closing Date, or any Unrestricted Subsidiary
shall cease to be an Unrestricted Subsidiary and shall become a Domestic
Restricted Subsidiary, then such Subsidiary shall execute a Guarantee of the
notes and deliver an opinion of counsel, in accordance with the terms of the
Indenture and (ii) in the event of a sale or other disposition of all of the
assets of any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all of the capital stock of any Guarantor, or in the
case the Company designates a Guarantor to be an Unrestricted Subsidiary in
accordance with the Indenture, then such Guarantor will be released and relieved
of any obligations under its Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of the Indenture. See "-- Redemption or Repurchase at Option of
Holders -- Asset Sales."
Separate financial statements of the Guarantors have not been provided within
this Prospectus as (i) the Guarantors are jointly and severally liable for the
Company's obligations under the Notes, (ii) the Unrestricted Subsidiaries are
inconsequential to the consolidated operations of the Company and its
subsidiaries, and (iii) the net assets and earnings of the Guarantors are
substantially equivalent to the net assets and earnings of the consolidated
entity as reflected in the consolidated financial statements of the Company
included in this Prospectus.
OPTIONAL REDEMPTION
Prior to October 1, 2002, the Notes will be subject to redemption at any
time at the option of the Company, in whole or in part, upon not less than 30
nor more than 60 days' notice, at the Make-Whole Price, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date. On and after October 1, 2002, the Notes will be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002............................................. 104.3125%
2003............................................. 102.8750%
2004............................................. 101.4375%
2005 and thereafter.............................. 100.0000%
</TABLE>
Notwithstanding the foregoing, at any time on or prior to October 1, 2000,
the Company may redeem up to 35% of the Notes at a redemption price equal to
108.625% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the redemption date, with the net
proceeds of one or more sales of Equity Interests (other than Disqualified
Stock) of the Company, provided that (i) at least $97.5 million of Notes remain
outstanding immediately following each such redemption and (ii) such redemption
shall occur within 90 days of the date of the consummation of such sale.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. Notices of redemption may not be conditional. 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. A new Note in
principal amount equal to the unredeemed portion thereof will be
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<PAGE> 61
issued in the name of the Holder thereof upon cancellation of the original Note.
Notes called for redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on Notes or portions of
them called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "-- Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, the Company will be obligated to
make an offer (a "Change of Control Offer") to each Holder of Notes to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Notes at an offer price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase (the "Change of Control Payment"). Within 30
days following a Change of Control, the Company will mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by the Indenture and described in such notice. 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 the Notes as
a result of a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction. The Company will not be required to make a Change of
Control Offer following a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
The occurrence of a Change of Control could constitute a default under the
New Credit Facility or under future agreements governing indebtedness of the
Company, which could permit the lenders under the New Credit Facility or the
holders of such indebtedness, as the case may be, to declare all such
indebtedness to be due and payable. There can be no assurance that, upon a
Change of Control, the Company would have sufficient resources to repurchase all
Notes tendered in a Change of Control Offer and to repay all indebtedness that
may be declared due and payable. The Company's failure to purchase tendered
Notes following a Change of Control would constitute an Event of Default under
the Indenture which could, in turn, constitute as default under the New Credit
Facility or under future agreements governing indebtedness of the Company.
Asset Sales
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<PAGE> 62
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company
or such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided 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 such Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (b) any securities, notes or other
obligations received by the Company or such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) shall be deemed to be
cash for purposes of this provision.
Within 365 days of the receipt of any Net Proceeds from an Asset Sale, the
Company, at its option, may apply such Net Proceeds to the acquisition of a
controlling interest in another business, the making of a capital expenditure or
the acquisition of other assets (other than assets that would be classified as
current assets in accordance with GAAP), in each case, in the same or a similar
line of business as the Company and its Restricted Subsidiaries, or in any
business reasonably complementary, related or incidental thereto, as determined
in good faith by the Board of Directors. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce borrowings under the New
Credit Facility or otherwise invest such Net Proceeds in any manner that is not
prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Company will be required to make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase, in accordance with the procedures set forth in the Indenture. To
the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may use any remaining Excess
Proceeds for general corporate purposes. If the aggregate principal amount of
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of an Asset Sale Offer, the amount of Excess Proceeds shall be reset
at zero.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Company) or to any direct or indirect
holders of the Company's Equity Interests in their capacity as such (other than
dividends or distributions (a) payable in Equity Interests (other than
Disqualified Stock) of the Company or (b) to the Company or any Guarantor); (ii)
purchase, redeem or otherwise acquire or retire for value (including without
limitation, in connection with any merger or consolidation involving the
Company) any Equity Interests of the Company or any direct or indirect parent of
the Company (other than any such Equity Interests owned by the Company or any
Guarantor); (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness of the Company
or any Guarantor that is subordinated to the Notes or any Guarantee thereof,
except a payment of interest or principal at Stated Maturity; or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
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<PAGE> 63
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the first paragraph
of the covenant described below under caption "Incurrence of Indebtedness
and Issuance of Preferred Stock;" and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Closing Date (excluding Restricted Payments permitted
by clause (ii) through (vii) of the next succeeding paragraph), is less than
the sum of (1) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from October 1, 1997 to the end of
the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period is a deficit, less 100%
of such deficit), plus (2) 100% of the aggregate net proceeds received by
the Company from the issue or sale since the Closing Date of Equity
Interests of the Company (other than Disqualified Stock), plus (3) the
amount by which Indebtedness of the Company and its Restricted Subsidiaries
is reduced on the balance sheet of the Company upon the conversion or
exchange (other than by a Restricted Subsidiary of the Company) subsequent
to the Closing Date of any such Indebtedness for Equity Interests (other
than Disqualified Stock) of the Company, plus (4) to the extent that any
Restricted Investment that was made after the Closing Date is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (B) the initial amount of such Restricted
Investment, plus (5) in the event that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary, the lesser of (A) an amount equal
to the fair value (as determined by the Board of Directors) of the Company's
Investments in such Restricted Subsidiary and (B) the amount of Restricted
Investments previously made by the Company and its Restricted Subsidiaries
in such Unrestricted Subsidiary.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
or any Restricted Subsidiary in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company)
of, other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c)(2) of the preceding paragraph; (iii) the defeasance,
redemption, repurchase or other acquisition of subordinated Indebtedness with
the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;
(iv) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company or any Restricted Subsidiary of the Company
held by any member of the Company's (or any of its Restricted Subsidiaries')
management or board of directors pursuant to any management equity subscription
agreement, stock option agreement or other similar agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $500,000 in any twelve-month period and no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction; (v) the repurchase or other acquisition of subordinated
Indebtedness in anticipation of satisfying a sinking fund or principal payment
obligation, in each case due within one year of the date of repurchase or other
acquisition, provided that the date such sinking fund or principal payment
obligation becomes due is prior to the final maturity date of the Notes; (vi)
repurchases of Equity Interests that may be deemed to occur upon the exercise of
options, warrants or other rights to acquire Capital Stock of the Company to the
extent that such Equity Interests represent a portion of the exercise price of
such options, warrants or other rights; and (vii) additional Restricted Payments
in an amount not to exceed $5.0 million.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board of Directors whose resolution with respect thereto shall be
delivered to the Trustee. Not later than 30 days following the end of any fiscal
quarter in which any Restricted Payments were made, the Company shall deliver to
the Trustee an Officers' Certificate stating that such Restricted Payments were
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed.
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The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (i) the net book value of such Investments at the time of such
designation, (ii) the fair market value of such Investments at the time of such
designation and (iii) the original fair market value of such Investments at the
time they were made. Such designation will only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions. If, at any time, any
Unrestricted Subsidiary would fail to meet the definition of an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant described under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock," the Company shall be in default of such covenant).
The Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the covenant described under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company's Restricted Subsidiaries will not issue any
shares of preferred stock (other than to the Company or a Wholly Owned
Restricted Subsidiary of the Company); provided, however, that the Company and
the Guarantors may incur Indebtedness (including Acquired Debt) if the
Consolidated Interest Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
would have been at least 2.0 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to the
incurrence of any of the following (collectively, "Permitted Debt"):
(i) the incurrence by the Company and the Guarantors of Indebtedness
under (a) the New Credit Facility and (b) Capital Lease Obligations and
purchase money financing in respect of property, plant and equipment,
provided that the aggregate amount of Indebtedness incurred pursuant to this
clause (i) shall not exceed at any time outstanding the greater of (1)
$230.0 million and (2) the sum of (A) 80% of the consolidated accounts
receivable of the Company as shown on the Company's most recent balance
sheet, plus (B) 60% of the consolidated inventory of the Company as shown on
the Company's most recent balance sheet, plus (C) 50% of the consolidated
property, plant and equipment, net of depreciation, of the Company as shown
on the Company's most recent balance sheet;
(ii) the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes, the Guarantees thereof and the Indenture;
(iii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
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(iv) the incurrence by the Company and the Guarantors of additional
Indebtedness in an aggregate amount not to exceed $10.0 million at any time
outstanding;
(v) the incurrence by the Company and the Guarantors of Indebtedness
in connection with the acquisition of assets or a new Restricted Subsidiary;
provided that such Indebtedness was incurred by the prior owner of such
assets or such Restricted Subsidiary prior to such acquisition by the
Company and the Guarantors and was not incurred in connection with, or in
contemplation of, such acquisition by the Company and the Guarantors; and
provided further that the aggregate amount of Indebtedness incurred pursuant
to this clause (vi) does not exceed $5.0 million; at any time outstanding;
(vi) the incurrence by the Company and its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness that was
permitted to be incurred by the first paragraph, or by clauses (ii) through
(ix) of the second paragraph of the covenant;
(vii) the incurrence of Indebtedness between or among the Company and
its Restricted Subsidiaries; provided, however, that any subsequent issuance
or transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than the Company or a Restricted Subsidiary, and any
sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Restricted Subsidiary, shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or
such Restricted Subsidiary, as the case may be;
(viii) the incurrence by the Company and its Restricted Subsidiaries of
Hedging Obligations that are incurred for the purpose of fixing or hedging
(a) interest rate risk with respect to any Indebtedness that is permitted by
the terms of this Indenture to be outstanding or (b) foreign currency risk;
(ix) the incurrence of Indebtedness by a Restricted Subsidiary of the
Company that is not a Guarantor in an aggregate amount not to exceed the sum
of (a) 80% of the accounts receivable of such Subsidiary as shown on such
Subsidiary's most recent balance sheet, plus (b) 60% of the inventory of
such Subsidiary as shown on such Subsidiary's most recent balance sheet,
plus (c) 50% of the property, plant and equipment, net of depreciation, of
such Subsidiary as shown on such Subsidiary's most recent balance sheet;
(x) the guarantee by the Company or any Guarantor of Indebtedness
that was permitted to be incurred by another provision of this covenant;
and
(xi) Indebtedness of a Receivables Subsidiary that is not recourse to
the Company or any of its Restricted Subsidiaries (other than Standard
Securitization Undertakings) incurred in connection with a Qualified
Receivables Transaction.
For purposes of determining the amount of any Indebtedness of any Person
under this covenant, (a) there shall be no double counting of direct
obligations, Guarantees and reimbursement obligations for letter of credit; (b)
the principal amount of any Indebtedness of such Person arising by reason of
such Person having granted or assumed a Lien on its property to secure
Indebtedness of another Person shall be the lower of the fair market value of
such property and the principal amount of such Indebtedness outstanding (or
committed to be advanced) at the time of determination; (c) the amount of any
Indebtedness of such Person arising by reason of such Person having Guaranteed
Indebtedness of another Person where the amount of such Guarantee is limited to
an amount less than the principal amount of the Indebtedness so Guaranteed shall
be such amount as so limited; (d) Indebtedness shall not include a non-recourse
pledge by the Company or any of its Restricted Subsidiaries of Investments in
any Person that is not a Restricted Subsidiary of the Company to secure the
Indebtedness of such Person; and (e) Indebtedness of the Company and its
Restricted Subsidiaries shall not include Indebtedness of a Restricted
Subsidiary whose assets consist solely of partnership or similar interests in
another person that is not a Restricted Subsidiary of the Company, where the
obligations with respect to such Indebtedness arise as a matter of law from the
obligations of such other Person.
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For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (i) through (x) above or is entitled to be
incurred pursuant to the first paragraph of this covenant, the Company shall, in
its sole discretion, classify such item of Indebtedness in any manner that
complies with this covenant and such item 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, the accretion of accredit value and
the payment of interest in the form of additional Indebtedness will not be
deemed to be an incurrence of Indebtedness for purposes of this covenant.
Liens
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens, unless the Notes are
equally and ratably secured with the obligations so secured until such time as
such obligations are no longer secured by a Lien.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries or (iii) 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 (a) Existing
Indebtedness as in effect on the Closing Date, (b) the New Credit Facility as in
effect as of the Closing Date, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement or refinancings are no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the New Credit Facility as in effect on the Closing Date, (c)
the Notes, any Guarantee thereof and the Indenture, (d) applicable law, (e) any
instrument governing Indebtedness or Equity Interests of a Person acquired by
the Company or any of its Restricted Subsidiaries as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the Equity Interests, properties
or assets of any Person, other than the Person, or the Equity Interests,
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture to
be incurred, (f) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (h) customary restrictions in asset or
stock sale agreements limiting transfer of such assets or stock pending the
closing of such sale, (i) customary non-assignment provisions in contracts
entered into in the ordinary course of business, (j) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced,
or (k) any Purchase Money Note, or other Indebtedness or contractual
requirements incurred with respect to a Qualified Receivables Transaction
relating to a Receivables Subsidiary.
Merger, Consolidation, or Sale of Assets
The Indenture provides that neither the Company nor any Guarantor will
consolidate or merge with or into (whether or not the Company or such Guarantor,
as the case may be, is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another Person unless (i) the
Company or such Guarantor, as the case may be, is the surviving corporation or
the Person formed by or surviving any such consolidation or merger (if other
than the Company or such Guarantor) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a corporation
organized or existing under the laws of the United States, any state thereof or
the District of
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Columbia; (ii) the Person formed by or surviving any such consolidation or
merger (if other than the Company or a Guarantor) or the Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all the obligations of the Company or such Guarantor, as the
case may be, under the Notes or such Guarantor's Guarantee thereof and the
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of the Company or such
Guarantor with or into another Guarantor or a Wholly Owned Restricted Subsidiary
of the Company, or a merger of a Guarantor with or into another Person in
connection with a Permitted Investment in such Person, the Company or the Person
formed by or surviving any such consolidation or merger (if other than the
Company), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made (A) will have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B) will, at the
time of such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the first paragraph of
the covenant described above under the caption "Incurrence of Indebtedness and
Issuance of Preferred Stock."
Transactions with Affiliates
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or such Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $3.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors and (b) except in the case of the provision of services in
the ordinary course of business to, or the receipt of services in the ordinary
course of business from, any Person who is an Affiliate of the Company solely by
reason of an Investment in such Person by the Company or its Subsidiaries, with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing.
The foregoing provisions will not prohibit (i) any employment agreement or
other compensation plan or arrangement in the ordinary course of business and
either consistent with past practice or approved by a majority of the
disinterested members of the Board of Directors; (ii) transactions between or
among the Company and/or its Restricted Subsidiaries; (iii) any Permitted
Investment or any Restricted Payment that is permitted by the provisions of the
Indenture described above under the caption "Restricted Payments;" (iv) sales of
Equity Interests (other than Disqualified Stock) to Affiliates of the Company;
(v) transactions with Haul Insurance Limited, provided that no less than once
each calendar year, the Company delivers to the Trustee a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
transactions are in the ordinary course of business and consistent with past
practices and prudent insurance underwriting standards; (vi) transactions in
existence on the Closing Date, and any modifications thereof or extensions
thereto the terms of which are not materially more adverse to the Company than
those in existence on the Closing Date, including, in each case, all future
payments pursuant thereto; and (vii) sales of accounts receivable and other
related assets customarily transferred in an asset securitization transaction
involving accounts receivable to a Receivables Subsidiary in a Qualified
Receivables Transaction.
Payments for Consent
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries will, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of the Indenture or the Notes unless such consideration
is offered to be paid or is paid to all Holders of the Notes that
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consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Notes are outstanding, the Company
will furnish to the Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results of
operations of the Company and its consolidated Subsidiaries (showing in
reasonable detail, either on the face of the financial statements or in the
footnotes thereto and in Management's Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial information and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the Commission on Form 8-K if
the Company were required to file such reports. In addition, whether or not
required by the rules and regulations of the Commission, the Company will file a
copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company and its Restricted Subsidiaries will agree
that, for so long as any Notes remain outstanding, they will furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes; (ii) default in payment
when due of the principal of or premium, if any, on the Notes; (iii) failure by
the Company or any of its Restricted Subsidiaries to comply with the provisions
described under the caption "Change of Control;" (iv) failure by the Company or
any of its Restricted Subsidiaries to comply with the provisions described under
the captions "Asset Sales," "Restricted Payments," "Incurrence of Indebtedness
and Issuance of Preferred Stock" or "Merger, Consolidation or Sale of Assets,"
which default continues for 60 days; (v) failure by the Company or any of its
Restricted Subsidiaries for 60 days after written notice by the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes to
comply with any of its other agreements in the Indenture or the Notes; (vi)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Restricted Subsidiaries),
whether such Indebtedness or guarantee now exists or is created after the
Closing Date, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more; (vii) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess
of $5.0 million and either (a) any creditor commences enforcement proceedings
upon any such judgment or (b) such judgments are not paid, discharged or stayed
for a period of 60 days; (viii) except as permitted by the Indenture, any
Guarantee of the Notes shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect, or any Guarantor, or any Person acting on behalf of any Guarantor, shall
deny or disaffirm its obligations under its Guarantee of the Notes; and (ix)
certain events of bankruptcy or insolvency with respect to the Company or any of
its Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all the Notes to be due and payable immediately. Notwithstanding the foregoing,
in the case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to the Company, any Significant Subsidiary or any group
of Restricted Subsidiaries that, taken together, would
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constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, INCORPORATORS AND
STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or such Guarantor under the Notes, any Guarantee thereof, the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Notes by accepting a Note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the Notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the Commission that such
a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of and premium, interest and
Liquidated Damages, if any, on the Notes when such payments are due from the
trust referred to below, (ii) the Company's obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes and the maintenance of an office or agency for
payment and money for security payments held in trust, (iii) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to certain covenants that are
described in the Indenture ("Covenant Defeasance") and thereafter any omission
to comply with such obligations shall not constitute a Default or Event of
Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of and premium, interest and Liquidated Damages, if any, on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date; (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that (a) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (b) since the Closing Date, there has been
a change in
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the applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the Holders of the
outstanding Notes 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; (iii) in the
case of Covenant Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes 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; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency events
are concerned, at any time in the period ending on the 91st day after the date
of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in
a breach or violation of, or constitute a default under any material agreement
or instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that 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; (vii) 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 of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and (viii) the Company shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture, the
Notes and the Guarantees thereof may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Notes), and any existing
default or compliance with any provision of the Indenture, the Notes or the
Guarantees thereof may be waived with the consent of the Holders of a majority
in principal amount of the then outstanding Notes (including consents obtained
in connection with a tender offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver; (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"Repurchase at the Option of Holders"); (iii) reduce the rate of or change the
time for payment of interest on any Note; (iv) waive a Default or Event of
Default in the payment of principal of or premium, interest or Liquidated
Damages, if any, on the Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted from such acceleration); (v)
make any Note payable in money other than that stated in the Notes; (vi) make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Notes to receive payments of principal of
or premium, interest or Liquidated Damages, if any, on the Notes; (vii) waive a
redemption payment with respect to any Note (other than a payment required by
one of the covenants
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described above under the caption "Repurchase at the Option of Holders"); (ix)
release any Guarantor from its Guarantee of the Notes; or (ix) make any change
in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture, the Notes or
any Guarantee thereof to cure any ambiguity, defect or inconsistency, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or any Guarantor's obligations to
Holders of Notes in the case of a merger or consolidation, to make any change
that would provide any additional rights or benefits to the Holders of Notes or
that does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company, the Guarantors and the Initial Purchasers entered into a
Registration Rights Agreement on September 30, 1997. Pursuant to the
Registration Rights Agreement, the Company and the Guarantors agreed to file
with the Commission the Registration Statement of which this Prospectus is a
part. If (i) the Company is not required to file the Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy or (ii) any Holder of Transfer
Restricted Securities notifies the Company prior to the 20th day following
consummation of the Exchange Offer that (a) it is prohibited by law or
Commission policy from participating in the Exchange Offer or (b) that it may
not resell the New Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the prospectus contained in the Registration
Statement is not appropriate or available for such resales or (c) that it is a
broker-dealer and owns Notes acquired directly from the Company or an affiliate
of the Company, the Company and the Guarantors will file with the Commission a
Shelf Registration Statement to cover resales of the Notes by the Holders
thereof who satisfy certain conditions relating to the provision of information
in connection with the Shelf Registration Statement. The Company and the
Guarantors will use their best efforts to cause the applicable registration
statement to be declared effective as promptly as possible by the Commission.
For purposes of the foregoing, "Transfer Restricted Securities" means each Note
until (i) the date on which such Old Note has been exchanged by a person other
than a broker-dealer for a New Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of an Old Note for a New Note,
the date on which such New Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Registration Statement, (iii) the date on which such Note has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act.
The Registration Rights Agreement also (i) required the Company and the
Guarantors to file the Registration Statement with the Commission on or prior to
30 days after the Closing Date, (ii) required the Company and the Guarantors to
use their best efforts to have the Registration Statement declared effective by
the Commission on or prior to 90 days after the Closing Date, (iii) unless the
Exchange Offer would not be permitted by applicable law or
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Commission policy, required the Company and the Guarantors to commence the
Exchange Offer and use their best efforts to issue, on or prior to 30 business
days after the date on which the Registration Statement was declared effective
by the Commission, New Notes in exchange for all Old Notes tendered prior
thereto in the Exchange Offer and (iv) if obligated to file the Shelf
Registration Statement, requires the Company and the Guarantors to use their
best efforts to file the Shelf Registration Statement with the Commission on or
prior to 30 days after such filing obligation arises and to cause the Shelf
Registration to be declared effective by the Commission on or prior to 90 days
after such obligation arises. If (a) the Company and the Guarantors fail to file
any of the Registration Statements required by the Registration Rights Agreement
on or before the date specified for such filing, (b) any of such Registration
Statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), (c) the
Company and the Guarantors fail to consummate the Exchange Offer within 30
business days of the Effectiveness Target Date with respect to the Registration
Statement or (d) the Shelf Registration Statement or the Registration Statement
is declared effective but thereafter ceases to be effective or usable in
connection with resales of Transfer Restricted Securities during the periods
specified in the Registration Rights Agreement (each such event referred to in
clauses (a) through (d) above a "Registration Default"), then the Company will
pay Liquidated Damages to each Holder of Notes, with respect to the first 90-day
period immediately following the occurrence of the first Registration Default,
in an amount equal to $.05 per week per $1,000 principal amount of Notes held by
such Holder. The amount of the Liquidated Damages will increase by an additional
$.05 per week per $1,000 principal amount of Notes with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal
amount of Notes. All accrued Liquidated Damages will be paid by the Company on
each Damages Payment Date to the Global Note Holder by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback), excluding sales of services and ancillary products in the ordinary
course of business consistent with past practices (provided that the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole will be governed
by the provisions of the Indenture described above under the caption "Change of
Control" and/or the provisions described above under the caption "Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant), and (ii) the issue or sale by the Company or any of its Subsidiaries
of Equity Interests of any of the Company's Subsidiaries (other than directors'
qualifying shares or shares required by applicable law to be held by a Person
other than the Company or a Restricted Subsidiary of the Company), in the case
of either clause (i) or (ii), whether in a single transaction or a series of
related transactions (a) that have a fair market value in excess of $1.0 million
or (b) for net proceeds in excess of $1.0 million. Notwithstanding the
foregoing, the following will be deemed not to be Asset Sales: (i) a transfer of
assets by the Company to a Wholly Owned Restricted Subsidiary or
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by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly
Owned Restricted Subsidiary; (ii) an issuance of Equity Interests by a Wholly
Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary; (iii) a Permitted Investment or Restricted Payment that is permitted
by the covenant described above under the caption "Restricted Payments; (iv) the
exchange of Rigs or terminals for other assets that are usable in the business
of the Company and its Restricted Subsidiaries to the extent that the assets
received by the Company and its Restricted Subsidiaries have a fair market value
at least equal to the fair market value of the Rigs and terminals exchanged by
the Company, in each case as determined in good faith by the Board of Directors;
(v) a disposition of Cash Equivalents solely for cash or other Cash Equivalents;
(vi) a sale-leaseback transaction involving Rigs or real estate within one year
of the acquisition of such Rigs or real estate; and (vii) the sale of accounts
receivables and related assets customarily transferred in an asset
securitization transaction involving accounts receivable to a Receivables
Subsidiary or by a Receivables Subsidiary in connection with a Qualified
Receivables Transaction.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition, (iii) certificates of deposit and
Eurodollar time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case with any lender party to the New Credit
Facility or with any domestic commercial bank having capital and surplus in
excess of $500.0 million and a Keefe Bank Watch Rating of AB or better, (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above and (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within six months after the date of acquisition.
"Change of Control" means, with respect to the Company or any successor
Person permitted under the covenant "Merger, Consideration, or Sale of Assets,"
the occurrences of any of the following: (a) the adoption of a plan relating to
the liquidation or dissolution of the Company; (b) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" or "group" (as such terms are used in
Section 13(d)(3) of the Exchange Act), other than the Principals, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and rule 13d-5 under
the Exchange Act), directly or indirectly, of (i) more than 35% of the voting
power of the outstanding voting stock of the Company or (ii) more of the voting
power of the outstanding voting stock of the Company than that beneficially
owned by the Principals; or (c) the first day on which more than a majority of
the members of the Board of Directors are not continuing Directors.
"Closing Date" means the date of the closing of the sale of the Old Notes.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus, to the extent
deducted in computing such Consolidated Net Income, (i) an amount equal to any
extraordinary loss plus any net loss realized in connection with an Asset Sale,
(ii) provision for taxes based on income or profits, (iii) Consolidated Interest
Expense, (iv) depreciation and amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and (v) nonrecurring charges relating to the
Acquisition, to the extent that such charges are set forth in "Unaudited Pro
Forma Financial Information," including the notes thereto, in each case on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization of, a Person shall be added to Consolidated Net
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Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Person was included in calculating
Consolidated Net Income.
"Consolidated Interest Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Consolidated Interest Expense of such Person and its Restricted
Subsidiaries for such period. In the event that the Company or any of its
Restricted Subsidiaries incurs, assumes, Guarantees, redeems or repays any
Indebtedness (other than revolving credit borrowings) subsequent to the
commencement of the period for which the Consolidated Interest Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Consolidated Interest Coverage Ratio is made (the
"Calculation Date"), then the Consolidated Interest Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee,
redemption or repayment of Indebtedness as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, and other transactions consummated by the Company or any of its
Restricted Subsidiaries with respect to which pro forma effect may be given
pursuant to Article 11 of Regulation S-X under the Securities Act, in each case
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (iv)
of the proviso set forth in the definition of Consolidated Net Income, (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded and (iii) the Consolidated Interest Expense
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such
Consolidated Interest Expense will not be obligations of the referent Person or
any of its Restricted Subsidiaries following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of (i) the consolidated interest expense
of such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), (ii) the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon), in each case, on a consolidated basis and in accordance with GAAP.
"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 that (i) if the Net Income of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting is a
gain, the Net Income of such Person shall be included only to the extent of the
amount of dividends or distributions paid in cash to the referent Person or a
Wholly Owned Restricted Subsidiary thereof, (ii) if the Net Income of any Person
that is not a Restricted Subsidiary or that is accounted for by the equity
method of accounting is a loss, the Net Income of such Person shall be excluded
except to the extent that (a) the Company or any of its Restricted Subsidiaries
funds such loss by means of the provision of additional capital to such Person
or (b) the aggregate losses of such Person excluded pursuant to this clause (ii)
exceed the aggregate gains of such Person excluded pursuant to clause (i), (iii)
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, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
solely for purposes of calculating Consolidated Interest Expense for purposes of
the covenant described under the caption "Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock", the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (a) the consolidated equity of the common stockholders of such Person
and its consolidated Restricted Subsidiaries as of such date, plus
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(b) the respective amounts reported on such Person's balance sheet as of such
date with respect to any series of preferred stock (other than Disqualified
Stock) that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (i) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the Closing Date in the
book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, (ii) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Restricted Subsidiaries
and (iii) all unamortized debt discount and expense and unamortized deferred
charges as of such date, in each case determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the Closing Date or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature; provided, that any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof (or of any security into which it is convertible or for which it
is exchangeable) have the right to require the issuer to repurchase such Capital
Stock (or such security into which it is convertible or for which it is
exchangeable) upon the occurrence of an Asset Sale or a Change of Control shall
not constitute Disqualified Stock if such Capital Stock (and all such securities
into which it is convertible or for which it is exchangeable) provides that the
issuer thereof will not repurchase or redeem any such Capital Stock (or any such
security into which it is convertible or for which it is exchangeable) pursuant
to such provisions prior to compliance by the Company with the provisions of the
Indenture described under the caption "Repurchase at the Option of Holders,"
"Change of Control" or "Asset Sales," as the case may be.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary that is not
formed, incorporated or organized in a jurisdiction outside of the United
States.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness (other than Indebtedness under
the New Credit Facility) in existence on the Closing Date, until such
Indebtedness is repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means all Domestic Restricted Subsidiaries and Canadian
Subsidiaries of the Company existing on the Closing Date (other than AH
Industries, Inc.), and all Subsidiaries of the Company created or acquired by
the Company after the Closing Date that becomes a Guarantor as set forth under
"Subsidiary Guarantees."
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"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap, cap or collar
agreements and (ii) other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange or interest rates.
"Indebtedness" means, with respect to any Person, (i) any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, (ii) all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and (iii) to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP,
excluding, however, trade accounts receivable and bank deposits made in the
ordinary course of business. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a 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 Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of the covenant described above under the caption "Restricted
Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, and any option or other agreement to sell or give a Lien).
"Limited-Recourse Debt" means Indebtedness (a) as to which neither the
Company nor any of its Restricted Subsidiaries (i) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) or is otherwise directly or indirectly liable (as a
guarantor or otherwise) or (ii) constitutes the lender, except, in the case of
clauses (i) and (ii), to the extent permitted by the covenants described under
the captions "Restricted Payments" and "Incurrence of Indebtedness and Issuance
of Preferred Stock, (b) no default with respect to which (including any rights
that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity and
(c) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries, except to the extent of any Indebtedness incurred by the Company
or any of its Restricted Subsidiaries in accordance with clause (a)(i) above.
"Make-Whole Amount" means, with respect to any Note, an amount equal to the
excess, if any, of (a) the present value of the remaining principal, premium and
interest payments that would be payable with respect to such Note if such Note
were redeemed on October 1, 2002, computed using a discount rate equal to the
Treasury Rate plus 75 basis points, over (b) the outstanding principal amount of
such Note.
"Make-Whole Average Life" means, with respect to any date of redemption of
Notes, the number of years (calculated to the nearest one-twelfth) from such
redemption date to October 1, 2002.
"Make-Whole Price" means, with respect to any Note, the greater of (a) the
sum of the principal amount of and Make-Whole Amount with respect to such Note,
and (b) the redemption price of such Note on October 1, 2002.
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"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of (i) the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, (ii) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements), (iii) amounts applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale and (iv) any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain credit agreement, dated the date of
the Indenture, by and among the Company and BankBoston, N.A., as administrative
agent, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case,
as amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Investments" means (i) any Investment in the Company or in a
Restricted Subsidiary of the Company; (ii) any Investment in Cash Equivalents;
(iii) any Investment by the Company or any Restricted Subsidiary of the Company
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 of the
Company; (iv) any Restricted Investment made as a result of the receipt of
non-cash consideration from (a) an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "Repurchase at
the Option of Holders." "Asset Sales" or (b) a disposition of assets that does
not constitute an Asset Sale; (v) any Investments received solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company; (vi) loans or advances to owner-operators and employees of the Company
or its Restricted Subsidiaries made in the ordinary course of business; (vii)
Investments in an amount not to exceed $5.0 million in Haul Insurance Limited to
the extent required by applicable laws or regulations or pursuant to any
directive or request (whether or not having the force of law) of any
governmental authority having jurisdiction over Haul Insurance Limited; (viii)
Investments received in connection with the settlement of any ordinary course
obligations owed to the Company or any of its Restricted Subsidiaries; (ix)
other Investments in businesses related to the businesses operated by the
Company and its Restricted Subsidiaries in an aggregate amount not to exceed
$30.0 million, provided that the aggregate amount of such Investments shall not
exceed $15.0 million in any calendar year; and (x) investments by the Company or
a Restricted Subsidiary of the Company in a Receivables Subsidiary or any
Investment by a Receivables Subsidiary in any other Person or assets in
connection with a Qualified Receivables Transaction; provided that any
Investment in any such Person is in the form of a Purchase Money Note, an equity
interest or interests in accounts receivable generated by the Company or a
Subsidiary of the Company and transferred to any Person in connection with a
Qualified Receivables Transaction or any such Person owning such accounts
receivable.
"Permitted Liens" means (i) Liens in favor of the Company or any of its
Restricted Subsidiaries; (ii) Liens securing Obligations incurred pursuant to
clause (i) of the second paragraph of the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Stock;" (iii) Liens on property or Equity
Interests of a Person existing at the time such Person is merged into or
consolidated with the Company or any Restricted Subsidiary of the Company;
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets or Equity Interests
other than those of the Person merged into or consolidated with the
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Company; (iv) Liens on property existing at the time of acquisition thereof by
the Company or any Restricted Subsidiary of the Company, provided that such
Liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in the
ordinary course of business; (vi) Liens to secure Indebtedness (including
Capital Lease Obligations) permitted by clause (v) of the second paragraph of
the covenant entitled "Incurrence of Indebtedness and Issuance of Preferred
Stock" covering only the assets acquired with such Indebtedness; (vii) Liens
existing on the Closing Date; (viii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefore;
(ix) Liens securing the Notes or any Guarantee thereof; (x) Liens securing
Permitted Refinancing Indebtedness to the extent that the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded was permitted to
be secured by a Lien; (xi) Liens on Investments of the Company or any of its
Restricted Subsidiaries in any Person that is not a Restricted Subsidiary of the
Company to secure the Indebtedness of such Person; (xii) Liens incurred in the
ordinary course of business of the Company or any Restricted Subsidiary of the
Company with respect to obligations that do not exceed $2.0 million at any one
time outstanding and that (a) are not incurred in connection with the borrowing
of money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Restricted Subsidiary and (xiii)
Liens on assets of a Receivables Subsidiary securing Indebtedness incurred in
connection with a Qualified Receivables Transaction, provided that such
Indebtedness was incurred in connection with such Qualified Receivables
Transaction.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or accredit value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accredit value, if applicable), plus premium and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness is subordinated in right of payment to
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Restricted Subsidiary that is an
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Principals" means the directors and executive officers of the Company on
the Closing Date, as set forth above under "Management," their respective
spouses and lineal descendants, and any Affiliate of any of the foregoing.
"Purchase Money Note" means a promissory note evidencing a line of credit,
which may be irrevocable, from, or evidencing other Indebtedness owed to, the
Company or any Subsidiary of the Company in connection with a Qualified
Receivables Transaction, which note shall be repaid from cash available to the
maker of such note, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts paid in
connection with the purchase of newly generated receivables.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Subsidiary of the
Company pursuant to which the Company or any Subsidiary of the Company may sell,
convey or otherwise transfer to (i) a Receivables Subsidiary (in the case of a
transfer by the Company or any Subsidiary of the Company) and (ii) any other
person (in the case of a transfer by a Receivables Subsidiary), or may grant a
security interest in, any accounts receivable (whether now existing or arising
in the future) of the Company or any Subsidiary of the Company, and any assets
related thereto including, without limitation, all collateral securing such
accounts receivable, all contracts and all guarantees or other obligations in
respect of such accounts receivable, proceeds of such accounts receivable and
other assets which are customarily transferred or in
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respect of which security interests are customarily granted in connection with
asset securitization transactions involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company
(other than a Guarantor), which engages in no activities other than in
connection with the financing of accounts receivable and which is designated by
the Board of Directors of the Company (as provided below) as a Receivables
Subsidiary (i) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which (a) is guaranteed by the Company or any other
Subsidiary of the Company (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness)) pursuant to Standard
Securitization Undertakings, (b) is recourse to or obligates the Company or any
other Subsidiary of the Company in any way other than pursuant to Standard
Securitization Undertakings or (c) subjects any property or asset of the Company
or any other Subsidiary of the Company, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to Standard
Securitization Undertakings, (ii) with which neither the Company nor any other
Subsidiary of the Company has any material contract, agreement, arrangement or
understanding (except in connection with a Purchase Money Note or Qualified
Receivables Transaction) other than on terms no less favorable to the Company or
such other Subsidiary of the Company than those that might be obtained at the
time from persons that are not Affiliates of the Company, other than fees
payable in the ordinary course of business in connection with servicing accounts
receivable, and (iii) to which neither the Company nor any other Subsidiary of
the Company 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 Company shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the resolution of
the Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying, to the best of such officer's knowledge and
belief after consulting with counsel, that such designation complied with the
foregoing conditions.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the Company or any Subsidiary of the
Company which are reasonably customary in an accounts receivable transaction.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Treasury Rate" means, at any time of computation, the yield to maturity at
such time (as compiled by and published in the most recent Federal Reserve
Statistical Release H.15(519), which has become publicly available at least two
business days prior to the date of the redemption notice or, if such Statistical
Release is no longer published, any publicly available source of similar market
data) of United States Treasury securities with a constant maturity most nearly
equal to the Make-Whole Average Life; provided, however, that if the Make-Whole
Average Life is not equal to the constant maturity of the United States Treasury
security for which a weekly average yield is
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<PAGE> 80
given, the Treasury Rate shall be obtained by linear interpolation (calculated
to the nearest one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given, except that if the
Make-Whole Average Life is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a constant
maturity of one year shall be used.
"Unrestricted Subsidiary" means any Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution,
but only to the extent that such Subsidiary (a) has no Indebtedness other than
Limited-Recourse Debt, (b) is not party to any agreement, contract, arrangement
or understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
comply with the covenant set forth under "Affiliate Transactions" and (c) except
to the extent permitted by the covenant set forth under "Restricted Payments,"
is a Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any direct or indirect obligation (i) to subscribe for
additional Equity Interests or (ii) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does not
purport to be a complete analysis of all potential tax effects. The discussion
is based upon the Internal Revenue Code of 1986, as amended, Treasury
regulations, Internal Revenue Service rulings and pronouncements, and judicial
decisions now in effect, all of which are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect a holder of the New Notes.
The description does not consider the effect of any applicable foreign, state,
local or other tax laws or estate or gift tax considerations.
EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
EXCHANGE OF OLD NOTES FOR NEW NOTES
The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not constitute a significant modification of the terms of the Old Notes
and, therefore such exchange should not constitute an exchange for federal
income tax purposes. Accordingly, such exchange should have no federal income
tax consequences to holders of Old Notes.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS
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<PAGE> 81
The following is a general discussion of certain United States federal
income and estate tax consequences of the acquisition, ownership and disposition
of Notes by an initial beneficial owner of Notes that, for United States federal
income tax purposes, is not a "United States person" (a "Non-United States
Holder"). This discussion is based upon the Internal Revenue Code of 1986, as
amended to the date hereof (the "Code"), administrative pronouncements, judicial
decisions and existing and proposed Treasury Regulations, changes to any of
which subsequent to the date hereof may adversely affect the tax consequences
described herein, possibly on a retroactive basis. This summary is addressed to
holders who hold Notes as capital assets within the meaning of Section 1221 of
the Code. For purposes of this discussion, a "United States person" means a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in the United States or under the laws of the United
States or of any political subdivision thereof, an estate, or, for taxable years
beginning on or before December 31, 1996, in general, any trust, whose income is
includible in gross income for United States federal income tax purposes
regardless of its source or for the taxable years beginning after December 31,
1996, a trust, if a U. S. court is able to exercise primary supervision over the
administration of the trust and one or more U. S. persons have the authority to
control all substantial decisions of the trust. The tax treatment of the holders
of the Notes may vary depending upon their particular situations. U. S. persons
acquiring the Notes are subject to different rules than those discussed below.
In addition, certain other holders (including insurance companies, tax exempt
organizations, financial institutions and broker-dealers) may be subject to
special rules not discussed below. Prospective investors are urged to consult
their tax advisors regarding the United States federal tax consequences of
acquiring, holding and disposing of Notes, as well as any tax consequences that
may arise under the laws of any foreign, state, local or other taxing
jurisdiction.
INTEREST
Interest paid by the Company to a Non-United States Holder will not be
subject to United States federal income or withholding tax if such interest is
not effectively connected with the conduct of a trade or business within the
United States by such Non-United States Holder and such Non-United States Holder
(i) does not directly or indirectly own 10% or more of the total combined voting
power of all classes of stock of the Company; (ii) is not a controlled foreign
corporation that is a "related person" of the Company (within the meaning of the
Code), and (iii) certifies, under penalties of perjury, that such holder is not
a United States person and provides such holder's name and address.
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United
States federal income tax on gain recognized on a sale, redemption or other
disposition of a Note unless (i) the gain is effectively connected with the
conduct of a trade or business within the United States by the Non-United States
Holder or (ii) in the case of a Non-United States Holder who is a nonresident
alien individual and holds the Note as a capital asset, such holder is present
in the United States for 183 or more days in the taxable year and certain other
requirements are met.
FEDERAL ESTATE TAXES
If interest on the Notes is exempt from withholding of United States
federal income tax under the rules described above, the Notes will not be
included in the estate of a deceased individual Non-United States Holder for
United States federal estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company will, where required, report to the holders of Notes and
the Internal Revenue Service the amount of any interest paid on the Notes in
each calendar year and the amounts of tax withheld, if any, with respect to such
payments.
In the case of payments of interest to Non-United States Holders,
temporary Treasury Regulations provide that the 31% backup withholding of United
States federal income tax and certain information reporting will not apply to
such payments with respect to which either the requisite certification has been
received or an exemption has otherwise been established; provided that neither
the Company nor its payment agent has actual knowledge that the holder is a
United States person or that the conditions of any other exemption are not in
fact satisfied. The
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requisite certification is made by providing Internal Revenue Service Form W-8,
Certificate of Foreign Status, to the Company (or a substitute form provided by
the Company or its agent).
Under temporary Treasury regulations, information reporting and backup
withholding requirements may apply to the gross proceeds paid to a Non-United
States Holder on the disposition of the Notes, unless the holder provides
similar certification. A Non-United States holder is advised and encouraged to
consult its own tax advisor as to the consequences of disposing of the Notes.
Recently, the United States Treasury Department issued proposed
regulations regarding the withholding and information reporting rules discussed
above. In general, the proposed Treasury Regulations do not alter the
substantive withholding and information reporting. If finalized in their current
form, the proposed regulations would generally be effective for payments made
after December 31, 1997, subject to certain transition rules.
Backup withholding is not an additional tax. Any amounts withheld under
the backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New 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 New 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 New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of one year after
the date of this Prospectus, they will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New 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 New 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 New Notes. Any broker-dealer that
resells New 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 New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of one year after the date of this Prospectus, the Company
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. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Notes) other than commissions or concessions of any brokers or
dealers and will indemnify holders of the Old Notes (including any
broker-dealers) against certain liabilities, including certain liabilities under
the Securities Act.
LEGAL MATTERS
The validity of the issuance of the New Notes offered hereby will be
passed upon for the Company by Troutman Sanders LLP, Atlanta, Georgia.
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EXPERTS
The historical Consolidated Financial Statements of Allied Holdings,
Inc. and Subsidiaries as of December 31, 1995 and 1996, and for each of the
three years in the period ended December 31, 1996, 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 giving said report.
The historical Consolidated Financial Statements of Ryder Automotive
Carrier Services, Inc. and Subsidiaries as of December 31, 1995 and 1996, and
for each of the three years in the period ended December 31, 1996, included in
this Prospectus, have been audited by KPMG Peat Marwick 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 giving said
report.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets at December 31, 1995 and 1996
and June 30, 1997 (Unaudited)............................. F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1995, and 1996 and the Six Months Ended
June 30, 1996 and 1997 (Unaudited)........................ F-4
Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1994, 1995, and 1996 and
the Six Months Ended June 30, 1997 (Unaudited)............ F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1995 and 1996 and the Six Months Ended
June 30, 1996 and 1997 (Unaudited)........................ F-6
Notes to Consolidated Financial Statements.................. F-7
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
Independent Auditors' Report................................ F-23
Consolidated Balance Sheets at December 31, 1995 and 1996
and June 30, 1997 (Unaudited)............................. F-24
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1995, and 1996 and the Six Months Ended
June 30, 1996 and 1997 (Unaudited)........................ F-25
Consolidated Statements of Shareholder's Equity for the
Years Ended December 31, 1994, 1995, and 1996 and the Six
Months Ended June 30, 1997 (Unaudited).................... F-26
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1995, and 1996 and the Six Months Ended
June 30, 1996 and 1997 (Unaudited)........................ F-27
Notes to Consolidated Financial Statements.................. F-28
</TABLE>
F-1
<PAGE> 85
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Allied Holdings, Inc.:
We have audited the accompanying consolidated balance sheets of ALLIED
HOLDINGS, INC. (a Georgia corporation) AND SUBSIDIARIES as of December 31, 1995
and 1996 and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Allied Holdings, Inc. and
subsidiaries as of December 31, 1995 and 1996 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 4, 1997
(except with respect to
the matters discussed in
Note 13, as to which the
date is September 30, 1997)
F-2
<PAGE> 86
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996
AND JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 11,147 $ 1,973 $ 4,409
Short-term investments.................................... 0 8,520 8,821
Receivables, net of allowance for doubtful accounts of
$689, $564, and $564 at December 31, 1995 and 1996 and
June 30, 1997, respectively............................ 22,690 22,673 28,325
Inventories............................................... 4,184 4,096 4,215
Prepayments and other current assets...................... 12,400 11,940 14,254
-------- -------- --------
Total current assets.............................. 50,421 49,202 60,024
-------- -------- --------
PROPERTY AND EQUIPMENT, net................................. 134,873 132,552 126,364
-------- -------- --------
OTHER ASSETS:
Goodwill, net............................................. 23,568 22,081 33,800
Notes receivable due from related parties................. 573 573 573
Other..................................................... 5,251 6,675 7,933
-------- -------- --------
Total other assets................................ 29,392 29,329 42,306
-------- -------- --------
Total assets...................................... $214,686 $211,083 $228,694
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 4,368 $ 2,275 $ 8,248
Trade accounts payable.................................... 11,320 15,872 12,910
Accrued liabilities....................................... 27,569 30,347 37,433
-------- -------- --------
Total current liabilities......................... 43,257 48,494 58,591
-------- -------- --------
LONG-TERM DEBT, less current maturities..................... 106,634 93,708 96,986
-------- -------- --------
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS................. 3,698 3,621 3,557
-------- -------- --------
DEFERRED INCOME TAXES....................................... 5,561 7,487 8,700
-------- -------- --------
OTHER LONG-TERM LIABILITIES................................. 2,514 1,064 703
-------- -------- --------
COMMITMENTS AND CONTINGENCIES (Notes 5, 7, 8 and 13)
STOCKHOLDERS' EQUITY:
Common stock, no par value; 20,000 shares authorized,
7,725, 7,810 and 7,810 shares outstanding at December
31, 1995 and 1996 and June 30, 1997, respectively...... 0 0 0
Additional paid-in capital................................ 42,977 43,657 43,657
Retained earnings......................................... 10,489 14,475 18,186
Foreign currency translation adjustment, net of tax....... (444) (743) (1,074)
Unearned compensation..................................... 0 (680) (612)
-------- -------- --------
Total stockholders' equity........................ 53,022 56,709 60,157
-------- -------- --------
Total liabilities and stockholders' equity........ $214,686 $211,083 $228,694
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE> 87
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES.................................... $297,236 $381,464 $392,547 $200,565 $208,969
-------- -------- -------- -------- --------
OPERATING EXPENSES:
Salaries, wages, and fringe benefits...... 157,979 195,952 204,838 105,315 109,634
Operating supplies and expenses........... 51,532 62,179 62,880 31,526 32,563
Purchased transportation.................. 9,486 32,084 34,533 17,666 19,170
Insurance and claims...................... 12,043 16,022 16,849 8,039 8,098
Operating taxes and licenses.............. 14,301 16,564 16,122 8,381 8,190
Depreciation and amortization............. 16,314 25,431 26,425 12,931 13,786
Rent expenses............................. 3,214 5,354 4,975 2,481 2,470
Communications and utilities.............. 1,855 3,435 3,111 1,740 1,534
Other operating expenses.................. 1,781 3,522 4,219 1,431 2,074
-------- -------- -------- -------- --------
Total operating expenses.......... 268,505 360,543 373,952 189,510 197,519
-------- -------- -------- -------- --------
Operating income.................. 28,731 20,921 18,595 11,055 11,450
-------- -------- -------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense.......................... (5,462) (11,260) (10,720) (5,396) (5,408)
Interest income........................... 312 707 603 303 357
-------- -------- -------- -------- --------
(5,150) (10,553) (10,117) (5,093) (5,051)
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY
ITEM...................................... 23,581 10,368 8,478 5,962 6,399
INCOME TAX PROVISION........................ (9,393) (4,222) (3,557) (2,504) (2,688)
-------- -------- -------- -------- --------
INCOME BEFORE EXTRAORDINARY ITEM............ 14,188 6,146 4,921 3,458 3,711
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT, net of income tax benefit of
$2,072, $573, and $573 for the years ended
December 31, 1994 and 1996 and for the six
months ended June 30, 1996,
respectively.............................. (2,627) 0 (935) (935) 0
-------- -------- -------- -------- --------
NET INCOME.................................. $ 11,561 $ 6,146 $ 3,986 $ 2,523 $ 3,711
======== ======== ======== ======== ========
PER COMMON SHARE:
Income before extraordinary item.......... $ 1.84 $ 0.80 $ 0.64 $ 0.45 $ 0.48
Extraordinary loss on early extinguishment
of debt................................ (0.34) 0.00 (0.12) (0.12) 0.00
-------- -------- -------- -------- --------
NET INCOME PER COMMON SHARE................. $ 1.50 $ 0.80 $ 0.52 $ 0.33 $ 0.48
======== ======== ======== ======== ========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING............................... 7,725 7,725 7,725 7,725 7,725
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-4
<PAGE> 88
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOREIGN
COMMON STOCK ADDITIONAL RETAINED CURRENCY
--------------- PAID-IN EARNINGS TRANSLATION UNEARNED
SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT COMPENSATION TOTAL
------ ------ ---------- --------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1993................. 7,725 $0 $42,977 $(7,218) $ 0 $ 0 $35,759
Net income............................... 0 0 0 11,561 0 0 11,561
Foreign currency translation adjustment,
net of income taxes of $978............ 0 0 0 0 (1,485) 0 (1,485)
----- -- ------- ------- ------- ----- -------
BALANCE, December 31, 1994................. 7,725 0 42,977 4,343 (1,485) 0 45,835
Net income............................... 0 0 0 6,146 0 0 6,146
Foreign currency translation adjustment,
net of income taxes of $701............ 0 0 0 0 1,041 0 1,041
----- -- ------- ------- ------- ----- -------
BALANCE, December 31, 1995................. 7,725 0 42,977 10,489 (444) 0 53,022
Net income............................... 0 0 0 3,986 0 0 3,986
Foreign currency translation adjustment,
net of income taxes of $181............ 0 0 0 0 (299) 0 (299)
Restricted stock awards.................. 85 0 680 0 0 (680) 0
----- -- ------- ------- ------- ----- -------
BALANCE, December 31, 1996................. 7,810 0 43,657 14,475 (743) (680) 56,709
Net income (unaudited)................... 0 0 0 3,711 0 0 3,711
Foreign currency translation adjustment,
net of income taxes of $181
(unaudited)............................ 0 0 0 0 (331) 0 (331)
Restricted stock awards (unaudited)...... 0 0 0 0 0 68 68
----- -- ------- ------- ------- ----- -------
BALANCE, June 30, 1997 (Unaudited)......... 7,810 $0 $43,657 $18,186 $(1,074) $(612) $60,157
===== == ======= ======= ======= ===== =======
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-5
<PAGE> 89
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996
AND THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................... $ 11,561 $ 6,146 $ 3,986 $ 2,523 $ 3,711
-------- -------- -------- -------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 16,314 25,431 26,425 12,931 13,786
Gain on sale of property and equipment............ (401) (57) (13) (359) 27
Extraordinary loss on early extinguishment of
debt, net....................................... 2,627 0 935 935 0
Deferred income taxes............................. 4,189 1,806 1,921 84 1,405
Change in operating assets and liabilities,
excluding effect of business acquired:
Increase in short-term investments.............. 0 0 (8,520) 0 (301)
Receivables, net................................ (3,155) 1,299 (9) (6,149) (5,699)
Inventories..................................... 457 163 82 148 (128)
Prepayments and other current assets............ (95) (444) 452 (2,150) (2,333)
Trade accounts payable.......................... (1,907) 645 4,565 1,247 (2,934)
Accrued liabilities............................. (1,482) (4,927) 1,277 6,069 6,685
-------- -------- -------- -------- --------
Total adjustments............................ 16,547 23,916 27,115 12,756 10,508
-------- -------- -------- -------- --------
Net cash provided by operating activities.... 28,108 30,062 31,101 15,279 14,219
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment................. (30,545) (18,210) (25,972) (14,376) (6,910)
Proceeds from sale of property and equipment........ 1,032 768 3,447 1,734 114
Purchase of business, net of cash acquired.......... (32,332) 0 0 0 (12,898)
Increase in the cash surrender value of life
insurance......................................... (356) (589) (1,981) (991) (1,283)
-------- -------- -------- -------- --------
Net cash used in investing activities........ (62,201) (18,031) (24,506) (13,633) (20,977)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt........................ (73,839) (11,952) (57,691) (47,692) (11,404)
Proceeds from issuance of long-term debt............ 113,113 0 42,657 40,000 20,655
Other, net.......................................... (1,243) (827) (655) (513) 0
-------- -------- -------- -------- --------
Net cash provided by (used in) financing
activities................................. 38,031 (12,779) (15,689) (8,205) 9,251
-------- -------- -------- -------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS......................................... (137) 183 (80) 69 (57)
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................................... 3,801 (565) (9,174) (6,490) 2,436
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD...... 7,911 11,712 11,147 11,147 1,973
-------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............ $ 11,712 $ 11,147 $ 1,973 $ 4,657 $ 4,409
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
F-6
<PAGE> 90
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1995, AND 1996
(INFORMATION AS OF JUNE 30, 1997 AND
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)
1. ORGANIZATION AND OPERATIONS
Allied Holdings, Inc. (the "Company"), a Georgia corporation, is a holding
company which operates through its wholly owned subsidiaries. The principal
subsidiary of the Company is Allied Automotive Group, Inc. ("AAG"), a Georgia
corporation. AAG is comprised of Allied Systems, Ltd. ("Allied Systems"), a
Georgia limited partnership, Auto Haulaway, Inc. ("Auto Haulaway"), an Ontario,
Canada corporation, Inter Mobile, Inc. ("Inter Mobile"), Legion Transportation,
Inc. ("Legion"), and Auto Haulaway Releasing Services (1981) Limited
("Releasing"). Allied Systems and Auto Haulaway are engaged in the business of
transporting automobiles and light trucks from manufacturing plants, ports,
auctions, and railway distribution points to automobile dealerships. The Company
acquired all of the outstanding capital stock of Auto Haulaway on October 31,
1994 (Note 2). Currently, Inter Mobile, Legion, and Releasing are not
significant to the consolidated financial position or results of operations of
the Company.
During 1996, the Company incorporated Axis Group, Inc. ("Axis Group"). Axis
Group provides logistics solutions to the finished vehicle, service, and
aftermarket parts segments of the automotive market. Axis Group identifies new
and innovative methods of distribution as well as better use of traditional and
emerging technologies to help customers solve the most complex transportation,
inventory management, and logistics problems.
The Company has three other operating subsidiaries, Allied Industries, Inc.
("Allied Industries"), Haul Insurance Limited ("Haul"), and Link Information
Systems, Inc. ("Link"). These subsidiaries provide services to AAG, Axis Group,
and the other subsidiaries of the Company. Allied Industries provides
administrative, financial, risk management, and other related services. During
December 1995, the Company incorporated Haul as a captive insurance company.
Haul was formed for the purpose of insuring general liability, automobile
liability, and workers' compensation for the Company. Link, which was
incorporated in 1996, provides information systems hardware, software, and
support.
2. ACQUISITION OF AUTO HAULAWAY
On October 31, 1994, the Company acquired all of the outstanding capital
stock of Auto Haulaway for approximately $30 million. The acquisition has been
accounted for under the purchase method, and accordingly, the operating results
of Auto Haulaway have been included in the accompanying financial statements
since the date of the acquisition.
In connection with the acquisition, the Company refinanced approximately
$35 million of Auto Haulaway's long-term debt, which resulted in an
extraordinary loss on the extinguishment of the debt of approximately $2.6
million, net of income taxes of approximately $2.1 million. The source of funds
utilized for the payment of the purchase price and the debt refinancing was
borrowings under the Company's revolving credit agreement and available cash on
hand.
The following unaudited pro forma results of operations for the year ended
December 31, 1994 assume that the acquisition of Auto Haulaway had occurred on
January 1, 1994. The pro forma results are not necessarily indicative of what
actually would have occurred if the acquisition of Auto Haulaway had been
consummated on January 1, 1994. In addition, they are not intended to be a
projection of future results and do
F-7
<PAGE> 91
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
not reflect any synergies that might be achieved from combined operations (in
thousands, except per share data).
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Revenues.................................................... $410,631
Operating income............................................ 35,245
Income before extraordinary item............................ 14,871
Net income.................................................. 12,244
Income per share before extraordinary item.................. $ 1.93
Net income per share........................................ $ 1.58
Average shares outstanding.................................. 7,725
</TABLE>
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany transactions and accounts
have been eliminated.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of the Company's Canadian subsidiaries are
translated into U.S. dollars using current exchange rates in effect at the
balance sheet date, and revenues and expenses are translated at average monthly
exchange rates. The resulting translation adjustments are recorded as a separate
component of stockholders' equity, net of related income taxes.
REVENUE RECOGNITION
Substantially all revenue is derived from transporting automobiles and
light trucks from manufacturing plants, ports, auctions, and railway
distribution points to automobile dealerships. Revenue is recorded by the
Company when the vehicles are delivered to the dealerships.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
INVENTORIES
Inventories consist primarily of tires, parts, materials, and supplies for
servicing the Company's tractors and trailers. Inventories are recorded at the
lower of cost (on a first-in, first-out basis) or market.
PREPAYMENTS AND OTHER CURRENT ASSETS
Prepayments and other current assets consist of the following at December
31, 1995 and 1996 and June 30, 1997 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------ --------
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Tires on tractors and trailers.......................... $ 5,944 $ 6,785 $ 6,611
Prepaid insurance....................................... 3,192 2,572 3,307
Other................................................... 3,264 2,583 4,336
------- ------- -------
$12,400 $11,940 $14,254
======= ======= =======
</TABLE>
F-8
<PAGE> 92
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TIRES ON TRACTORS AND TRAILERS
Tires on tractors and trailers are capitalized and amortized to operating
supplies and expenses on a cents per mile basis.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Major property additions,
replacements, and betterments are capitalized, while maintenance and repairs
which do not extend the useful lives of these assets are expensed currently.
Depreciation is provided using the straight-line method for financial reporting
and accelerated methods for income tax purposes. The detail of property and
equipment at December 31, 1995 and 1996 and June 30, 1997 is as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997 USEFUL LIVES
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
Tractors and trailers..................... $164,422 $181,841 $186,288 4 to 10 years
Buildings and facilities (including
leasehold improvements)................. 22,951 23,679 23,786 4 to 25 years
Land...................................... 9,999 9,953 9,953
Furniture, fixtures, and equipment........ 9,745 10,520 10,560 3 to 10 years
Service cars and equipment................ 1,330 1,175 2,190 3 to 10 years
-------- -------- --------
208,447 227,168 232,777
Less accumulated depreciation and
amortization............................ 73,574 94,616 106,413
-------- -------- --------
$134,873 $132,552 $126,364
======== ======== ========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
FOR THE SIX
FOR THE YEARS ENDED MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------------- ---------------
1994 1995 1996 1996 1997
------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Cash paid during the period for interest.......... $ 3,738 $11,470 $8,514 $3,623 $6,124
Cash paid during the period for income taxes, net
of refunds...................................... 6,205 1,364 (280) 730 228
Liabilities assumed in connection with business
acquired........................................ 48,261 0 0 0 0
Capital lease obligations terminated.............. 4,093 0 0 0 0
</TABLE>
GOODWILL
The acquisition of Auto Haulaway resulted in goodwill of approximately
$23,425,000. Goodwill related to the acquisition is being amortized on a
straight-line basis over 20 years. Other goodwill is being amortized on a
straight-line basis over ten years. Amortization (included in depreciation and
amortization expense) for the years ended December 31, 1994, 1995, and 1996
amounted to approximately $607,000, $1,407,000, and $1,541,000, respectively.
Amortization for the six months ended June 30, 1996 and 1997 amounted to
approximately $772,000 and $846,000, respectively. Accumulated amortization was
approximately $4,082,000, $5,623,000, and $6,454,000 at December 31, 1995 and
1996 and June 30, 1997, respectively. The Company periodically evaluates the
realizability of goodwill based upon expectations of nondiscounted cash flows
and operating income for each subsidiary having a material goodwill balance. The
Company believes no impairment of goodwill exists at June 30, 1997.
F-9
<PAGE> 93
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CASH SURRENDER VALUE OF LIFE INSURANCE
The Company maintains life insurance policies for certain employees of the
Company. Under the terms of the policies, the Company will receive, upon the
death of the insured, the lesser of aggregate premiums paid or the face amount
of the policy. Any excess proceeds over premiums paid are remitted to the
employee's beneficiary. The Company records the increase in cash surrender value
each year as a reduction of premium expense. The Company has recorded
approximately $2,146,000 and $4,127,000 of cash surrender value as of December
31, 1995 and 1996, respectively, included in other assets on the accompanying
balance sheets.
USE OF 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 and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 ("SFAS No. 107"),
"Disclosures About Fair Value of Financial Instruments," requires disclosure of
the following information about the fair value of certain financial instruments
for which it is practicable to estimate that value. For purposes of the
following disclosure, the fair value of a financial instrument is the amount at
which the instrument could be exchanged in a current transaction between willing
parties other than in a forced sale or liquidation.
The amounts disclosed represent management's best estimates of fair value.
In accordance with SFAS No. 107, the Company has excluded certain financial
instruments and all other assets and liabilities from its disclosure.
Accordingly, the aggregate fair value amounts presented are not intended to, and
do not, represent the underlying fair value of the Company.
The methods and assumptions used to estimate fair value are as follows:
Cash and Cash Equivalents
The carrying amount approximates fair value due to the relatively
short period to maturity of these instruments.
Short-Term Investments
The Company's short-term investments are comprised of debt securities,
all classified as trading securities, which are carried at their fair value
based upon the quoted market prices of those investments. Accordingly, net
realized and unrealized gains and losses on trading securities are included
in net earnings.
Long-Term Debt
The carrying amount approximates fair value based on the borrowing
rates currently available to the Company for bank loans with similar terms
and average maturities.
Interest Rate Cap Agreements
The Company has entered into several interest rate protection
agreements which expire at various dates through February 1999. The
agreements protect outstanding floating rate debt at varying amounts
ranging from $47,000,000 in 1996 to $33,000,000 in 1999. Under the
agreements, the Company is
F-10
<PAGE> 94
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
reimbursed when actual interest rates exceed a limit, as defined. The
limit, based primarily upon the 90-day LIBOR, ranges from 6.5% to 8% over
the protection period and certain of the agreements limit the reimbursement
if actual LIBOR exceeds a specified rate. The fair value of the interest
rate cap agreements is the amount at which they could be settled, based on
estimates obtained from brokers.
The asset and (liability) amounts recorded in the balance sheet and the
estimated fair values of financial instruments at December 31, 1995 and 1996 and
June 30, 1997 consisted of the following (in thousands):
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
--------- ---------
<S> <C> <C>
December 31, 1995:
Cash and cash equivalents................................. $ 11,147 $ 11,147
Long-term debt............................................ (111,002) (111,002)
Interest rate cap agreements.............................. 228 0
December 31, 1996:
Cash and cash equivalents................................. $ 1,973 $ 1,973
Short-term investments.................................... 8,520 8,520
Long-term debt............................................ (95,983) (95,983)
Interest rate cap agreements.............................. 309 0
June 30, 1997:
Cash and cash equivalents................................. $ 4,409 $ 4,409
Short-term investments.................................... 8,821 8,821
Long-term debt............................................ (105,234) (105,234)
Interest rate cap agreements.............................. 209 0
</TABLE>
ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31, 1995 and
1996 and June 30, 1997 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
------- ------- --------
<S> <C> <C> <C>
Wages and benefits........................................ $14,540 $12,566 $15,274
Claims and insurance reserves............................. 9,649 13,145 14,844
Other..................................................... 3,380 4,636 7,315
------- ------- -------
$27,569 $30,347 $37,433
======= ======= =======
</TABLE>
CLAIMS AND INSURANCE RESERVES
In the United States, the Company retains liability up to $500,000 for each
claim for automobile, workers' compensation, and general liability, including
personal injury and property damage claims. In addition to the $500,000 per
occurrence deductible for automobile liability, there is a $250,000 aggregate
deductible for those claims which exceed the $500,000 per occurrence deductible.
In addition, the Company retains liability up to $250,000 for each cargo damage
claim. In Canada, the Company retains liability up to CDN $100,000 for each
claim for personal injury, property damage, and cargo damage. The estimated
costs of all known and potential losses are accrued by the Company. In the
opinion of management, adequate provision has been made for all incurred claims.
Subsequent to December 31, 1996, the Company increased its liability up to
$650,000 for each claim for workers' compensation. The Company also increased
its aggregate deductible for automobile liability to
F-11
<PAGE> 95
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$500,000 for those claims which exceed the per occurrence deductible. These
changes are in effect for the fiscal year beginning January 1, 1997.
INCOME TAXES
The Company follows the practice of providing for income taxes based on
SFAS No. 109, "Accounting for Income Taxes." SFAS No. 109 requires recognition
of deferred tax liabilities and assets for the expected future tax consequences
of events that have been included in the financial statements or tax returns
(Note 4).
EARNINGS PER SHARE
Earnings per share are calculated by dividing net income by the weighted
average number of common shares outstanding for the years presented. The
dilutive effect of equivalent shares derived from stock options and restricted
stock was less than 3% for the years ended December 31, 1995 and 1996 and for
the six months ended June 30, 1996 and 1997 (there were no stock options or
restricted stock outstanding during 1994), and therefore, the equivalent shares
were not included in the computation of earnings per share.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings per Share." This new statement will not result in changes to the
Company's earnings per share for the first six months of 1997 or prior years.
RECLASSIFICATION
Certain amounts in the December 31, 1994, 1995, and 1996 financial
statements have been reclassified to conform to the current period presentation.
INTERIM UNAUDITED DATA FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1997
In the opinion of management, the unaudited condensed consolidated
financial statements contain all of the normal and recurring adjustments
necessary to present fairly the consolidated financial position of the Company
and its subsidiaries at June 30, 1997 and the consolidated results of operations
and cash flows of the Company and its subsidiaries for the six months ended June
30, 1996 and 1997.
4. INCOME TAXES
For all periods presented, the accompanying financial statements reflect
provisions for income taxes computed in accordance with the requirements of SFAS
No. 109.
The following summarizes the components of the income tax provision for the
years ended December 31, 1994, 1995, and 1996 (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------ ------- -------
<S> <C> <C> <C>
Current:
Federal.................................................. $3,991 $ 571 $ 369
State.................................................... 607 177 269
Foreign.................................................. 325 1,989 932
Deferred:
Federal.................................................. 3,599 3,371 4,365
State.................................................... 630 422 646
Foreign.................................................. 241 (2,308) (3,024)
------ ------- -------
Total income tax provision....................... $9,393 $ 4,222 $ 3,557
====== ======= =======
</TABLE>
F-12
<PAGE> 96
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
For the six months ended June 30, 1996 and 1997, the Company recorded an
income tax provision of $2,504 and $2,688, respectively.
The provision for income taxes differs from the amounts computed by
applying federal statutory rates due to the following for the years ended
December 31, 1994, 1995, and 1996 (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Provision computed at the federal statutory rate............ $8,018 $3,525 $2,883
State income taxes, net of federal income tax benefit....... 943 415 604
Insurance premiums, net of recovery......................... 42 54 (115)
Earnings in jurisdictions taxed at rates different from the
statutory U.S. federal rate............................... 0 (252) (494)
Other, net.................................................. 390 480 679
------ ------ ------
Income tax provision........................................ $9,393 $4,222 $3,557
====== ====== ======
</TABLE>
The tax effect of significant temporary differences representing deferred
tax assets and liabilities at December 31, 1995 and 1996 is as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Noncurrent deferred tax assets (liabilities):
Tax carryforwards......................................... $ 1,775 $ 3,623
Postretirement benefits................................... 1,535 1,501
Depreciation and amortization............................. (10,085) (13,823)
Other, net................................................ 1,214 1,212
-------- --------
Net noncurrent deferred tax liabilities........... (5,561) (7,487)
-------- --------
Current deferred tax assets (liabilities):
Tires on tractors and trailers............................ (2,244) (2,615)
Liabilities not currently deductible...................... 3,881 2,470
Other, net................................................ (511) 498
-------- --------
Net current deferred tax assets................... 1,126 353
-------- --------
Net deferred tax liabilities...................... $ (4,435) $ (7,134)
======== ========
</TABLE>
The Company has certain tax carryforwards available to offset future income
taxes consisting of net operating losses that expire from 2002 to 2012, foreign
tax credits that expire from 2001 to 2002, and alternative minimum tax credits
that have no expiration dates.
Management believes that a valuation allowance is not considered necessary
based upon the Company's earnings history, the projections for future taxable
income, and other relevant considerations over the periods during which the
deferred tax assets are deductible.
5. LEASE COMMITMENTS
RELATED PARTIES
Prior to December 1995, the Company leased automobiles and service trucks
from a related party under leases generally having one-year to three-year lease
terms at fixed monthly rental rates. In addition, the Company leases office
space from a related party under a lease which expires in 2003. Rental expenses
under these noncancellable leases amounted to approximately $1,398,000 in 1994,
$1,652,000 in 1995, and $1,030,000 in 1996. In the opinion of management, the
terms of these leases are as favorable as those which could be obtained from
unrelated lessors.
F-13
<PAGE> 97
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
UNRELATED PARTIES
The Company leases equipment and certain terminal facilities from unrelated
parties under noncancellable operating lease agreements which expire in various
years through 2003. Rental expenses under these leases amounted to approximately
$454,000, $1,796,000, and $3,245,000 in 1994, 1995, and 1996, respectively.
The Company also leases certain terminal facilities and revenue equipment
from unrelated parties under cancelable leases (i.e., month-to-month terms). The
total rental expenses under these leases were approximately $1,973,000,
$1,965,000, and $2,142,000 for the years ended December 31, 1994, 1995, and
1996, respectively.
Future minimum rental commitments under all noncancellable operating lease
agreements, excluding lease agreements that expire within one year, are as
follows as of December 31, 1996 (in thousands):
<TABLE>
<CAPTION>
RELATED
PARTY OTHER TOTAL
------- ------ -------
<S> <C> <C> <C>
1997........................................................ $1,061 $2,840 $ 3,901
1998........................................................ 1,093 2,563 3,656
1999........................................................ 1,126 1,750 2,876
2000........................................................ 1,159 812 1,971
2001........................................................ 1,194 618 1,812
Thereafter.................................................. 1,540 1,052 2,592
------ ------ -------
Total............................................. $7,173 $9,635 $16,808
====== ====== =======
</TABLE>
6. LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1995 and 1996 and
June 30, 1997 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31
------------------ JUNE 30,
1995 1996 1997
-------- ------- --------
<S> <C> <C> <C>
Revolving credit and term loan agreement................ $100,000 $49,348 $ 59,737
Senior subordinated notes............................... 0 40,000 40,000
Floating rate installment note payable with interest at
LIBOR plus 2.25% (8.48% at December 31, 1996)......... 8,909 6,635 5,497
Fixed rate installment note payable bearing interest at
10%................................................... 2,093 0 0
-------- ------- --------
111,002 95,983 105,234
Less current maturities of long-term debt............... (4,368) (2,275) (8,248)
-------- ------- --------
$106,634 $93,708 $ 96,986
======== ======= ========
</TABLE>
In February 1996, the Company issued $40,000,000 of senior subordinated
notes ("Senior Subordinated Notes") through a private placement. The Senior
Subordinated Notes mature February 1, 2003 and bear interest at 12% annually.
Proceeds from the Senior Subordinated Notes were used to reduce borrowings under
the Company's revolving credit and term loan agreement (the "Agreement"). In
connection with the issuance of the Senior Subordinated Notes, the Company
refinanced the Agreement (the "Refinancing") to provide for the Senior
Subordinated Notes. In addition, the floating rate installment note payable was
amended and refinanced to allow for the Senior Subordinated Notes, and the
interest rate was changed from prime plus 2% to the LIBOR plus 2.25%.
The Agreement enables the Company to borrow up to the lesser of
$130,000,000 or the borrowing base amount, as defined in the Agreement. After
the Refinancing, annual commitment fees are .375% of the undrawn portion of the
commitment. Amounts outstanding under the revolving portion of the Agreement,
after giving consideration to the Refinancing, mature February 1998, subject to
one-year extensions, at which
F-14
<PAGE> 98
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
time the balance outstanding converts into a term loan which matures four years
after the maturity date of the revolving portion of the Agreement. The interest
rate for the Agreement is, at the Company's option, either (1) the bank's base
rate, as defined, or (2) the bank's Eurodollar rate, as defined, as determined
at the date of each borrowing, plus an applicable margin.
The Agreement is unsecured and contains restrictive covenants which, among
other things, limit indebtedness and distributions, require certain cash flow
and leverage ratios to be maintained, and require a minimum consolidated
tangible net worth, as defined. After the Refinancing, and assuming that the
extension of the revolving portion of the Agreement is not exercised, future
maturities of long-term debt are as follows at December 31, 1996 (in thousands):
<TABLE>
<S> <C>
1997........................................................ $ 2,275
1998........................................................ 12,144
1999........................................................ 11,956
2000........................................................ 9,870
2001........................................................ 7,403
Thereafter.................................................. 52,335
-------
$95,983
=======
</TABLE>
At December 31, 1996, the weighted average interest rate on borrowings
under the revolving credit agreement was 7.3%, and approximately $8,520,000 was
committed under letters of credit. At December 31, 1996, the Company had
available borrowings under the Agreement of approximately $48,000,000.
Property and equipment with a net book value of approximately $10,348,000
at December 31, 1996 are secured as collateral under an installment note
payable.
7. EMPLOYEE BENEFITS
PENSION PLANS
The Company maintains the Allied Defined Benefit Pension Plan, a trusteed
noncontributory defined benefit pension plan for management and office personnel
in the United States, and the Pension Plan for Employees of Auto Haulaway, Inc.
and Associated Companies for management and office personnel in Canada (the
"Plans"). Under the Plans, benefits are paid to eligible employees upon
retirement based primarily on years of service and compensation levels at
retirement. Contributions to the Plans reflect benefits attributed to employees'
services to date and services expected to be rendered in the future. The
Company's funding policy is to contribute annually at a rate that is intended to
fund future service benefits as a level percentage of pay and past service
benefits over a 30-year period.
F-15
<PAGE> 99
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the Plans' status and amounts recognized in
the Company's balance sheets as of December 31, 1995 and 1996 (in thousands):
<TABLE>
<CAPTION>
1995 1996
------- -------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $15,046 and $16,444 in 1995 and 1996,
respectively........................................... $15,349 $16,810
======= =======
Projected benefit obligation................................ $19,609 $21,438
Plan assets at fair value................................... 17,106 19,052
------- -------
Projected benefit obligation in excess of plan assets....... (2,503) (2,386)
Unrecognized net loss....................................... 3,180 2,787
Unrecognized prior service cost............................. (508) (472)
Unrecognized net transition asset being recognized over
approximately 15 years.................................... (312) (270)
------- -------
Accrued pension cost recognized in the consolidated balance
sheets.................................................... $ (143) $ (341)
======= =======
</TABLE>
The net periodic pension cost consisted of the following components for the
years ended December 31, 1994, 1995, and 1996 (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Service cost for benefits earned during the period........ $ 826 $ 732 $ 993
Interest cost on projected benefit obligation............. 972 1,336 1,523
Actual (gain) loss on plan assets......................... 69 (2,522) (2,226)
Net amortization and deferral of actuarial gains and
losses.................................................. (1,149) 1,169 713
------- ------- -------
Net periodic pension cost................................. $ 718 $ 715 $ 1,003
======= ======= =======
</TABLE>
The following assumptions were used:
<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Weighted average discount rate............................ 8.5% 7.5% 7.75%
Increase in future compensation levels.................... 3.5-6.0 3.5-6.0 3.5-6.0
Expected long-term rate of return on assets -- United
States.................................................. 10.0 10.0 10.0
Expected long-term rate of return on assets -- Canada..... 7.5 7.5 7.5
</TABLE>
At December 31, 1996, plan assets consisted primarily of U.S. and
international corporate bonds and stocks, convertible equity securities, and
U.S. and Canadian government securities.
A substantial number of the Company's employees are covered by
union-sponsored, collectively bargained, multiemployer pension plans. The
Company contributed and charged to expense approximately $8,350,000,
$10,916,000, and $11,444,000 for the years ended December 31, 1994, 1995, and
1996, respectively, for such plans. These contributions are determined in
accordance with the provisions of negotiated labor contracts and are generally
based on the number of man-hours worked.
401(K) PLAN
The Company has a 401(k) plan covering all of its employees in the United
States. Prior to July 1, 1993, the Company did not contribute to this plan;
however, the Company did incur the cost of administering this plan. The
Company's administrative expense for the 401(k) plan was approximately $221,000,
$160,000, and $165,000 in fiscal years 1994, 1995, and 1996, respectively.
Beginning July 1, 1993, the Company contributes the lesser of 3% of participant
wages or $1,000 per year for each nonbargaining unit participant of the plan.
F-16
<PAGE> 100
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company contributed approximately $183,000, $225,000, and $225,000 to the
plan during the years ended December 31, 1994, 1995, and 1996, respectively.
POSTRETIREMENT BENEFIT PLANS
The Company provides certain health care and life insurance benefits for
eligible employees who retired prior to July 1, 1993 and their dependents.
Generally, the medical plan pays a stated percentage of most medical expenses
reduced for any deductibles and payments by government programs or other group
coverage. The life insurance plan pays a lump-sum death benefit based on the
employee's salary at retirement. The plans are unfunded. Employees retiring
after July 1, 1993 are not entitled to any postretirement medical or life
insurance benefits.
The following table sets forth the status of the plan reconciled to the
accrued postretirement benefit cost recognized in the Company's balance sheets
at December 31, 1995 and 1996 (in thousands):
<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation, retirees..... $4,111 $3,586
Unrecognized net gain (loss)................................ (155) 338
------ ------
Accrued postretirement benefit cost......................... 3,956 3,924
Less current portion........................................ (258) (303)
------ ------
$3,698 $3,621
====== ======
</TABLE>
Net periodic benefit cost for 1994, 1995, and 1996 included the following
components (in thousands):
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Service cost of benefits earned............................. $ 0 $ 0 $ 0
Interest cost on accumulated postretirement benefit
obligation................................................ 325 308 260
---- ---- ----
Net periodic postretirement benefit cost.................... $325 $308 $260
==== ==== ====
</TABLE>
Assumptions used in the computation of the accumulated postretirement
benefit obligation and net periodic benefit cost are as follows:
<TABLE>
<CAPTION>
1994 1995 1996
---- ---- -----
<S> <C> <C> <C>
Discount rate............................................... 8.5% 7.5% 7.75%
Initial health care cost trend rate......................... 12.5 11.0 10.25
Ultimate health care cost trend rate........................ 5.5 5.5 5.5
Year ultimate health care cost trend rate reached........... 2003 2003 2003
</TABLE>
If the health care cost trend rate were increased 1%, the accumulated
postretirement benefit obligation as of December 31, 1996 would have increased
by approximately $177,000. The effect of this change on the periodic
postretirement benefit cost for 1996 would be approximately $13,000.
A substantial number of the Company's employees are covered by
union-sponsored, collectively bargained, multiemployer health and welfare
benefit plans. The Company contributed and charged to expense approximately
$11,700,000, $13,723,000, and $14,811,000 in 1994, 1995, and 1996, respectively,
in connection with these plans. These required contributions are determined in
accordance with the provisions of negotiated labor contracts and are for both
active and retired employees.
8. COMMITMENTS AND CONTINGENCIES
The Company is involved in various litigation and environmental matters
relating to employment practices, damages, and other matters arising from
operations in the ordinary course of business. In the
F-17
<PAGE> 101
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
opinion of management, the ultimate disposition of these matters will not have a
material adverse effect on the Company's financial position or results of
operations.
The Company has entered into employment agreements with certain executive
officers of the Company. The agreements, which are substantially similar,
provide for compensation to the officers in the form of annual base salaries and
bonuses based on earnings. The employment agreements also provide for severance
benefits upon the occurrence of certain events, including a change in control,
as defined.
9. REVENUES FROM MAJOR CUSTOMERS
Substantially all of the Company's trade receivables and revenues are
realized through the automotive industry.
In 1994, 1995, and 1996, approximately 77%, 80%, and 82%, respectively, of
the Company's revenues were derived from three customers, one of which, Ford
Motor Company ("Ford"), accounted for approximately 58%, 52%, and 53% of
revenues, respectively.
The Company had accounts receivable from Ford of approximately $8,081,000
and $8,964,000 at December 31, 1995 and 1996, respectively.
10. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates in one industry segment: transporting automobiles and
light trucks from manufacturing plants, ports, auctions, and railway
distribution points to automotive dealerships. Prior to the acquisition of Auto
Haulaway on October 31, 1994, the Company only operated in the United States.
Auto Haulaway operates in Canada. Geographic financial information as of
December 31, 1995 and 1996 and June 30, 1997 and for the years ended December
31, 1994, 1995, and 1996 and the six months ended June 30, 1996 and 1997 is as
follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
United States $274,293 $258,038 $264,909 $133,841 $133,165
Canada............................ 22,943 123,426 127,638 66,724 75,804
-------- -------- -------- -------- --------
$297,236 $381,464 $392,547 $200,565 $208,969
======== ======== ======== ======== ========
Operating income (loss):
United States..................... $ 27,141 $ 19,821 $ 19,129 $ 9,143 $ 7,678
Canada............................ 1,590 1,100 (534) 1,912 3,772
-------- -------- -------- -------- --------
$ 28,731 $ 20,921 $ 18,595 $ 11,055 $ 11,450
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
-------- -------- --------
<S> <C> <C> <C>
Identifiable assets:
United States........................................ $136,948 $133,618 $152,734
Canada............................................... 77,738 77,465 75,960
-------- -------- --------
$214,686 $211,083 $228,694
======== ======== ========
</TABLE>
11. STOCKHOLDERS' EQUITY
The Company has authorized 5,000,000 shares of preferred stock with no par
value. No shares have been issued, and therefore, there were no shares
outstanding at December 31, 1995 and 1996. The board of directors
F-18
<PAGE> 102
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
has the authority to issue these shares and to fix dividends, voting and
conversion rights, redemption provisions, liquidation preferences, and other
rights and restrictions.
In addition, the Company adopted a long-term incentive plan which allows
the issuance of grants or awards of incentive stock options, restricted stock,
stock appreciation rights, performance units, and performance shares to
employees and directors of the Company to acquire up to 400,000 shares of the
Company's common stock.
During December 1996, the Company granted 85,000 shares of restricted stock
to certain employees of the Company. In connection with the award of the
restricted stock, the Company recorded $680,000 of unearned compensation in the
accompanying balance sheets which will be amortized over five years, the vesting
period of the restricted stock.
In addition, the Company has granted nonqualified stock options under the
long-term incentive plan. Options granted become exercisable after one year in
20% or 33 1/3% increments per year and expire ten years from the date of the
grant.
No restricted stock or stock options were issued during the six months
ended June 30, 1997.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTION PRICE EXERCISE
SHARES (PER SHARE) PRICE
------- ------------ --------
<S> <C> <C> <C>
Outstanding as of January 1, 1995........................... 8,550 $11.75 $11.75
Granted................................................... 128,500 9.50 9.50
Exercised................................................. 0 N/A N/A
Lapsed.................................................... 0 N/A N/A
------- ------------ ------
Outstanding as of December 31, 1995......................... 137,050 $9.50-$11.75 $ 9.64
Granted................................................... 34,000 9.00 9.00
Exercised................................................. 0 N/A N/A
Lapsed.................................................... 0 N/A N/A
------- ------------ ------
Outstanding as of December 31, 1996......................... 171,050 $9.00-$11.75 $ 9.51
======= ============ ======
</TABLE>
<TABLE>
<CAPTION>
1995 1996
---------- --------
<S> <C> <C>
Options exercisable at year-end............................. 2,850 41,867
Weighted average exercise price of options exercisable at
year-end.................................................. $ 11.75 $ 9.81
Weighted average grant-date fair value of options granted
during the year........................................... $1,220,750 $306,000
</TABLE>
The weighted average remaining contractual life of options outstanding at
December 31, 1996 was 9.2 years.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," but applies Accounting Principles
Board Opinion No. 25 and related interpretations in accounting for the long-term
incentive plan. If the Company had elected to recognize compensation cost for
the long-term incentive plan based on the fair value at the grant dates for
awards under the plan, consistent
F-19
<PAGE> 103
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
with the method prescribed by SFAS No. 123, net income and earnings per share
would have been changed to the pro forma amounts indicated below at December 31,
1995 and 1996 (in thousands, except per share data):
<TABLE>
<CAPTION>
1995 1996
------ ------
<S> <C> <C>
Net income:
As reported............................................... $6,146 $3,986
Pro forma................................................. 6,136 3,844
Earnings per share:
As reported............................................... $ 0.80 $ 0.52
Pro forma................................................. 0.79 0.50
</TABLE>
The fair value of the Company's stock options used to compute pro forma net
income and earnings per share disclosures is the estimated present value at
grant date using the Black-Scholes option pricing model with the following
weighted average assumptions for 1995 and 1996: dividend yield of 0%, expected
volatility of 34%, a risk-free interest rate of 5.7%, and an expected holding
period of five years.
12. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
1995
----------------------------------------
FIRST SECOND THIRD FOURTH
-------- -------- ------- --------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues............................................... $101,062 $102,252 $82,192 $ 95,958
Operating income....................................... 6,265 7,617 632 6,407
Net income (loss)...................................... 2,063 2,848 (1,182) 2,417
Net income (loss) per share............................ $ 0.27 $ 0.37 $ (0.15) $ 0.31
Average shares outstanding............................. 7,725 7,725 7,725 7,725
Stock prices:
High................................................. $ 12.500 $ 11.000 $11.750 $ 10.000
Low.................................................. 9.750 8.500 7.250 7.375
</TABLE>
<TABLE>
<CAPTION>
1996
----------------------------------------
FIRST(1) SECOND THIRD FOURTH
-------- -------- ------- --------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues............................................... $ 93,396 $107,169 $87,609 $104,373
Operating income....................................... 3,090 7,965 987 6,553
Income (loss) before extraordinary item(1)............. 360 3,098 (936) 2,399
Income (loss) per share before extraordinary item(1)... 0.05 0.40 (0.12) 0.31
Net income (loss)...................................... (575) 3,098 (936) 2,399
Net income (loss) per share............................ $ (0.07) $ 0.40 $ (0.12) $ 0.31
Average shares outstanding............................. 7,725 7,725 7,725 7,725
Stock prices:
High................................................. $ 9.875 $ 10.500 $10.625 $ 10.500
Low.................................................. 7.750 7.750 8.375 7.000
</TABLE>
F-20
<PAGE> 104
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
1997
---------------------
FIRST SECOND
-------- ---------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Revenues.................................................... $96,393 $112,576
Operating income............................................ 2,806 8,644
Net income.................................................. 198 3,513
Net income per share........................................ $ 0.03 $ 0.45
Average shares outstanding.................................. 7,725 7,725
Stock prices:
High...................................................... $ 8.250 $ 11.125
Low....................................................... 6.250 5.500
</TABLE>
- ---------------
(1) During the first quarter of 1996, the Company recorded an extraordinary loss
on extinguishment of debt of approximately $935,000, net of taxes.
13. SUBSEQUENT EVENTS
KAR-TAINER INTERNATIONAL LIMITED ("KAR-TAINER")
In April 1997, the Company completed the acquisition of the stock of
Kar-Tainer for approximately $13,100,000 and Kar-Tainer became a wholly-owned
subsidiary of Axis Group. Kar-Tainer, with offices in Bermuda, United States,
London and South Africa, is a leader in the containerized shipping of vehicles.
As a result of the acquisition of Kar-Tainer, the Company recorded goodwill of
approximately $12,677,000 which will be amortized over 30 years.
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND RC MANAGEMENT CORP. (COLLECTIVELY,
"RYDER")
On September 30, 1997, the Company completed the acquisition of Ryder
from Ryder System, Inc. ("Ryder System") for approximately $114,500,000 in cash
(the "Acquisition"). The Acquisition is consistent with the Company's growth
strategy to increase its market share of the North American automotive carrier
industry while expanding its range of services and capabilities.
The Acquisition has been accounted for under the purchase method, and,
accordingly, the results of operations for Ryder will be included with those of
the Company for periods subsequent to the date of the Acquisition.
THE OFFERING
On September 30, 1997, the Company issued and sold $150,000,000 of 8 5/8%
senior notes (the "Notes") through a private placement. The Company raised
approximately $144,650,000, net of discounts and expenses, through the issuance
of the Notes. The net proceeds from the Notes were used to fund the
Acquisition, pay related fees and expenses, and reduce amounts owed on
outstanding Company debt. The Company's obligations under the Notes are
guaranteed by substantially all of the subsidiaries of the Company (the
"Guarantors"). Separate financial statements of the Guarantors are not provided
herein as (i) the Guarantors are jointly and severally liable for the Company's
obligations under the Notes (ii) the subsidiaries which are not Guarantors are
inconsequential to the consolidated operations of the Company and its
subsidiaries and (iii) the net assets and earnings of the Guarantors are
substantially equivalent to the net assets and earnings of the consolidated
entity as reflected in these consolidated financial statements.
PRO FORMA INFORMATION
The unaudited pro forma combined information below presents the combined
results of operations as if the Acquisition and the Offering had occurred on
January 1, 1996 and balance sheet information as if the Acquisition and the
Offering had occurred as of June 30, 1997. The unaudited pro forma combined
information, based upon the historical consolidated financial statements of the
Company and Ryder, assumes an acquisition cost of approximately $114,500,000 and
further assumes that an estimated $56,605,000 excess
F-21
<PAGE> 105
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
of acquisition cost over the net value of Ryder's tangible assets is
allocated to goodwill with a useful life of 40 years.
The unaudited pro forma combined information is not necessarily indicative
of the results of operations of the combined company had the acquisition
occurred on January 1, 1996 or financial position had the acquisition occurred
on June 30, 1997, nor is it necessarily indicative of future results or
financial position.
The following proforma data is unaudited and is in thousands except per
share data.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
1996 1997
------------ --------------
<S> <C> <C>
Statement of Income Data:
Revenues.................................................. $960,661 $524,665
Net income before extraordinary item...................... 5,674 10,097
Earnings per share........................................ 0.73 1.31
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
1997
--------
<S> <C>
Balance Sheet Data:
Total Assets.............................................. $540,000
Borrowings................................................ 231,789
Stockholders' equity...................................... 60,157
</TABLE>
NEW CREDIT FACILITY
Concurrent with the closing of the Offering, the Company closed on a new
credit facility (the "New Credit Facility") which allows the Company to borrow
under a revolving line of credit, and issue letters of credit, up to the lesser
of $230,000,000 or a borrowing base amount (as defined in the New Credit
Facility) that is determined based on a defined percentage of the Company's
accounts receivable and equipment. The New Credit Facility matures in 2002, and
the annual commitment fees are due on the undrawn portion of the commitment over
the agreement period. The interest rate for the New Credit Facility is, at the
Company's option, either (i) the bank's Base Rate, as defined, or (ii) the
bank's Eurodollar rate, as defined, as determined at the date of the borrowing,
plus an applicable margin. The Company has the right to repay the oustanding
debt under the New Credit Facility, in whole or in part, without penalty or
premium subject to a limitation that prepayment of Eurodollar rate loans are
subject to a breakage penalty if prepaid other than on the last day of the
applicable interest period. The Company is subject to mandatory prepayment with
a defined percentage of net proceeds from certain asset sales, new debt
offerings, and new equity offerings. The revolving line of credit allows the
Company to repay and reborrow so long as there is no event of default.
Borrowings under the New Credit Facility are secured by a first
priority security interest on assets of the Company and certain of its
subsidiaries other than real estate but including a pledge of stock of certain
subsidiaries. In addition, the Guarantors of the Notes are also Guarantors of
the New Credit Facility.
The New Credit Facility sets forth a number of affirmative, negative,
and financial covenants binding on the Company. The negative covenants limit
the ability of the Company to, among other things, incur debt, incur liens,
make investments, make dividend or other distributions, or enter into any
merger or other consolidation transaction. The financial covenants include the
maintenance of a minimum consolidated tangible net worth, compliance with a
leverage ratio and a coverage ratio, and limitations on capital expenditures.
F-22
<PAGE> 106
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder of
Ryder Automotive Carrier Services, Inc.:
We have audited the accompanying consolidated balance sheets of Ryder
Automotive Carrier Services, Inc. and subsidiaries as of December 31, 1995 and
1996, and the related consolidated statements of operations, cash flows and
shareholder's equity for each of the years in the three-year period ended
December 31, 1996. These consolidated 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Ryder
Automotive Carrier Services, Inc. and subsidiaries as of December 31, 1995 and
1996, and the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1996, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Miami, Florida
February 28, 1997
F-23
<PAGE> 107
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- JUNE 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 4,558 $ 1,441 $ 6,047
Receivables, net.......................................... 43,945 39,404 46,396
Inventories............................................... 11,012 4,594 3,624
Deferred income taxes..................................... 5,653 7,620 6,509
Prepaid expenses and other current assets................. 13,768 12,813 13,928
-------- -------- --------
Total current assets.............................. 78,936 65,872 76,504
Revenue earning equipment, net.............................. 137,967 142,535 134,493
Operating property and equipment, net....................... 37,326 28,641 26,806
Goodwill.................................................... 40,113 43,266 42,550
Other assets................................................ 11,955 13,200 10,862
-------- -------- --------
Total Assets...................................... $306,297 $293,514 $291,215
======== ======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................... $ 25,531 $ 22,700 $ 21,246
Accrued expenses and other current liabilities............ 53,116 59,452 57,657
-------- -------- --------
Total current liabilities......................... 78,647 82,152 78,903
-------- -------- --------
Deferred income taxes....................................... 28,685 26,992 26,300
Other non-current liabilities............................... 15,924 19,574 20,773
Advances (to) from Ryder.................................... 2,692 (2,154) 647
Shareholder's equity:
Common stock and additional paid-in capital, $1 par value,
7,500 shares authorized, 1,000 shares issued and
outstanding............................................ 157,335 157,384 157,384
Retained earnings......................................... 25,074 11,640 9,314
Translation adjustment.................................... (2,060) (2,074) (2,106)
-------- -------- --------
Total shareholder's equity........................ 180,349 166,950 164,592
-------- -------- --------
Total Liabilities and Shareholder's Equity........ $306,297 $293,514 $291,215
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-24
<PAGE> 108
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue..................................... $645,402 $594,446 $583,292 $297,945 $315,156
-------- -------- -------- -------- --------
Operating Expense:
Salaries, wages and benefits.............. 321,363 293,145 301,276 153,981 166,290
Operating supplies and expenses........... 99,569 90,331 95,178 49,437 46,146
Purchased transportation.................. 61,988 63,596 62,670 30,853 38,080
Insurance and claims...................... 28,384 28,143 37,569 15,754 14,388
Depreciation and amortization............. 37,262 40,700 38,838 20,608 19,818
Rent expense.............................. 2,525 2,914 3,291 1,633 1,470
Communications and utilities.............. 4,651 4,934 5,727 2,823 3,344
Operating taxes and licenses.............. 27,247 24,715 23,976 12,444 11,136
Restructuring charges..................... -- -- 18,328 4,174 --
Other operating expense................... 12,563 9,730 13,628 5,616 4,643
-------- -------- -------- -------- --------
Total operating expense........... 595,552 558,208 600,481 297,323 305,315
-------- -------- -------- -------- --------
Operating income (loss)........... 49,850 36,238 (17,189) 622 9,841
-------- -------- -------- -------- --------
Other Income:
Miscellaneous income, net................. 310 4,504 2,470 1,269 738
Interest income (expense)................. (82) 2,402 29 697 894
-------- -------- -------- -------- --------
228 6,906 2,499 1,966 1,632
-------- -------- -------- -------- --------
Earnings (Loss) Before Income Taxes......... 50,078 43,144 (14,690) 2,588 11,473
Provision (Benefit) For Income Taxes........ 20,428 17,777 (1,256) 1,163 3,818
-------- -------- -------- -------- --------
Net Earnings (Loss)......................... $ 29,650 $ 25,367 $(13,434) $ 1,425 $ 7,655
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-25
<PAGE> 109
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
AND ADDITIONAL RETAINED TRANSLATION
PAID-IN CAPITAL EARNINGS ADJUSTMENT TOTAL
--------------- -------- ----------- --------
<S> <C> <C> <C> <C>
At December 31, 1993............................. $139,640 $ 24,794 $(1,744) $162,690
Net earnings................................... -- 29,650 -- 29,650
Dividend....................................... (13,229) (53,057) -- (66,286)
Currency adjustment............................ -- -- (558) (558)
-------- -------- ------- --------
At December 31, 1994............................. 126,411 1,387 (2,302) 125,496
Net earnings................................... -- 25,367 -- 25,367
Dividend....................................... -- (1,680) -- (1,680)
Capital contribution........................... 30,924 -- -- 30,924
Currency adjustment............................ -- -- 242 242
-------- -------- ------- --------
At December 31, 1995............................. 157,335 25,074 (2,060) 180,349
Net loss....................................... -- (13,434) -- (13,434)
Capital contribution........................... 49 -- -- 49
Currency adjustment............................ -- -- (14) (14)
-------- -------- ------- --------
At December 31, 1996............................. 157,384 11,640 (2,074) 166,950
Net earnings................................... -- 7,655 -- 7,655
Dividend....................................... -- (9,981) -- (9,981)
Currency adjustment............................ -- -- (32) (32)
-------- -------- ------- --------
At June 30, 1997 (unaudited)..................... $157,384 $ 9,314 $(2,106) $164,592
======== ======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-26
<PAGE> 110
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)....................... $ 29,650 $ 25,367 $(13,434) $ 1,425 $ 7,655
Depreciation and amortization............. 37,262 40,700 38,838 20,608 19,818
Deferred income tax expense (benefit)..... (89) 2,861 362 257 324
Decrease (increase) in receivables........ 6,158 (2,334) 4,541 (12,876) (6,992)
Decrease (increase) in inventories........ (2,912) (2,722) 6,418 4,190 970
Decrease (increase) in prepaid and other
current assets......................... (4,267) (600) 955 (1,083) (1,115)
Increase (decrease) in accounts payable... 13,185 (18,610) (2,831) (1,162) (1,454)
Increase (decrease) in accrued expenses
and other liabilities.................. (5,651) (9,250) 6,336 (10,556) (1,795)
Increase in other non-current
liabilities............................ 3,157 8,912 3,650 (12,135) 1,199
Other, net................................ (1,826) (6,173) 2,005 2,636 1,910
-------- -------- -------- -------- --------
74,667 38,151 46,840 (8,696) 20,520
Cash flows from investing activities:
Purchases of property and revenue earning
equipment.............................. (43,789) (64,563) (45,222) (20,420) (10,035)
Sales of property and revenue earning
equipment.............................. 3,103 11,910 10,011 5,112 1,996
Other, net................................ 2,609 (5,606) 1,926 (637) (663)
-------- -------- -------- -------- --------
(38,077) (58,259) (33,285) (15,945) (8,702)
Cash flows from financing activities:
Net increase (decrease) in advances from
Ryder.................................. 29,163 (8,951) (16,721) 23,814 2,769
Dividends................................. (66,286) (1,680) -- -- (9,981)
Capital contributions..................... -- 30,924 49 -- --
-------- -------- -------- -------- --------
(37,123) 20,293 (16,672) 23,814 (7,212)
-------- -------- -------- -------- --------
Increase (decrease) in cash................. (533) 185 (3,117) (827) 4,606
Cash at beginning of period............... 4,906 4,373 4,558 4,558 1,441
-------- -------- -------- -------- --------
Cash at end of period....................... $ 4,373 $ 4,558 $ 1,441 $ 3,731 $ 6,047
======== ======== ======== ======== ========
Summary of Noncash Activities:
Contribution of goodwill from Ryder....... $ -- $ -- $ 7,853 $ 7,853 $ --
Increase in advances from Ryder........... -- -- 7,853 7,853 --
</TABLE>
See accompanying notes to consolidated financial statements.
F-27
<PAGE> 111
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND
1997 IS UNAUDITED)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization. Ryder Automotive Carrier Services, Inc. ("RACS"), a Florida
corporation and a wholly-owned subsidiary of Ryder System, Inc. ("Ryder"), is a
holding company which operates through its wholly-owned subsidiaries. The
principal subsidiaries of RACS are Ryder Automotive Operations, Inc. ("RAOI"),
MCL Ryder Transport, Inc. ("MCL"), a Canadian corporation, QAT, Inc. ("QAT") and
Blazer Truck Lines, Inc. (Blazer). RAOI is principally comprised of Commercial
Carriers, Inc. ("CCI"), Ryder Freight Broker, Inc. and F. J. Boutell Driveaway
Co., Inc. ("Boutell"). CCI, Boutell, QAT and MCL are engaged in the business of
transporting automobiles and light and medium-duty trucks from manufacturing
plants, ports and railway distribution points to other distribution points and
automobile dealers. CCI also manufacturers equipment for RACS's use in the
transportation and delivery of automobiles and trucks. Blazer provided inbound
logistics to the automobile industry and was sold on February 28, 1997 (see Note
19).
Basis of Presentation. The accompanying consolidated financial statements
include the operations, assets and liabilities of Ryder Automotive Carrier
Services, Inc. and subsidiaries (the "Company"). The financial statements do not
include assets and liabilities of Ryder not specifically identifiable to the
Company. Reserves for workers' compensation claims, postretirement benefits
other than pensions, auto and general liability claims which are from $500,000
to $1,000,000 per occurrence and medical and dental claims are maintained by
Ryder. The financial information included herein is not necessarily indicative
of the financial position and results of operations or cash flows that would
have occurred had the Company been an independent stand-alone entity during the
periods presented, nor is it necessarily indicative of future results of the
Company. All significant intercompany accounts and transactions have been
eliminated.
Revenue Recognition. Revenue is recorded by the Company when the vehicles
are dispatched to the dealerships and other distribution points. Estimated
direct costs to complete delivery of freight in-transit are accrued. All other
expenses are recognized as incurred.
Receivables. Receivables consist primarily of trade receivables resulting
from vehicle shipments. Receivables are reduced by amounts considered by
management to be uncollectible based on historical loss experience and review of
the current status of existing receivables.
Inventories. Inventories consist primarily of parts, materials and fuel as
well as inventory related to the manufacturing of trailers and headramps.
Inventories are stated at the lower of cost or market.
Tires in Service. The Company allocates a portion of the acquisition costs
of tractors and trailers to tires in service and amortizes this amount on a
straight-line basis over seven years. The cost of replacement tires and tire
repairs are expensed when incurred.
Revenue Earning Equipment, Operating Property and Equipment and
Depreciation. Revenue earning equipment, principally tractors and trailers, and
operating property and equipment are stated at cost. Provision for depreciation
is computed using the straight-line method on all depreciable assets. Annual
straight-line depreciation rates are 14% for revenue earning equipment, 3% to
10% for buildings and improvements and 14% to 20% for furniture, fixtures and
equipment. Effective January 1, 1995, the estimated residual values used to
calculate the provision for depreciation on certain types of revenue earning
equipment were changed to reflect recent experience. As a result of this change,
depreciation expense was decreased by $2.2 million and $1.2 million for the
years ended December 31, 1995 and 1996, respectively.
Gains on sales of revenue earning equipment, net of vehicle disposition
costs, are reported as reductions of other operating expense and totaled $0.8
million, $2.6 million and $0.1 million for the years ended December 31, 1994,
1995 and 1996, respectively, and $0.1 million for each of the six month periods
ended
F-28
<PAGE> 112
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 1996 and 1997. Gains on sales of operating property and equipment are
also reflected in other operating expense.
Goodwill. Goodwill is amortized on a straight-line basis over 40 years.
Amortization (included in depreciation and amortization expense) amounted to
approximately $1.3 million for each of the years in the three-year period ended
December 31, 1996. Accumulated amortization was approximately $11.5 million at
December 31, 1995 and 1996, respectively. During 1996, Ryder contributed $7.9
million in goodwill to the Company for acquisitions made in prior years.
Impairment of Long-Lived Assets. Long-lived assets, including goodwill,
used in the Company's operations are reviewed for impairment when circumstances
indicate that the carrying amount of an asset may not be recoverable. The
primary indicators of recoverability are the associated current and forecasted
undiscounted operating cash flows. If management has made a decision to dispose
of an asset or a group of assets, those assets are reported at the lower of
carrying amount or the estimated fair value less costs to sell.
Accrued Insurance and Loss Reserves. The Company participates in Ryder's
overall risk management programs for vehicle and general liability, workers'
compensation, property (including cargo) and other. The major programs are
summarized as follows:
Vehicle and general liability -- The Company has recorded reserves
which reflect the Company's portion of the undiscounted estimated
liabilities up to $500,000 per occurrence (plus allocated loss adjustment
expense) and an estimate of claims incurred but not reported. For exposures
from $500,000 to $1 million per occurrence, the Company is charged a
premium by Ryder based on the Company's loss experience and the related
liability is retained by Ryder. Costs associated with insurance premiums to
third party insurance companies for coverage in excess of $1 million are
charged by Ryder to the Company based on the Company's pro rata share of
Ryder's revenue.
Workers' compensation -- Ryder has recorded reserves which reflect the
Company's portion of the undiscounted estimated workers' compensation
liabilities up to $1 million per injury (plus allocated loss adjustment
expense) and an estimate of claims incurred but not reported. The Company
is billed by Ryder based on actuarial projections of expected losses. For
losses in excess of $1 million per injury, Ryder has third party insurance
coverage, the cost of which is charged by Ryder to the Company based on the
Company's proportionate share of losses up to $1 million. At December 31,
1995 and 1996 and June 30, 1997 the workers' compensation reserves
maintained by Ryder on the Company's behalf were $58.3 million, $47.1
million, and $46.2 million, respectively.
Property, including cargo -- The Company has recorded reserves for
estimated damages to transported vehicles. The accruals for these claims
include both reported claims and an estimate of claims incurred but not
reported for amounts up to $50,000 per occurrence. Damages in excess of
$50,000 per occurrence are insured by a third party insurance company.
Such liabilities, whether recorded as a liability by Ryder or the Company,
are necessarily based on estimates and, while management believes that the
amounts are adequate, there can be no assurance that changes to management's
estimates may not occur due to limitations inherent in the estimation process.
Changes in the estimates of these reserves are charged or credited to income in
the period determined. For reserves recorded by the Company, amounts estimated
to be paid within one year have been classified as accrued expenses with the
remainder included in other non-current liabilities.
Income Taxes. The Company has been included in consolidated income tax
filings of Ryder for Federal and state income tax purposes. However, the income
tax provisions included in the accompanying Consolidated Financial Statements
have been determined as if the Company was an independent stand-alone entity
filing separate income tax returns.
F-29
<PAGE> 113
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred taxes are provided using the asset and liability method for
temporary differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
balances are adjusted for any tax law changes in the periods that include the
enactment date of such changes. See Note 12.
Foreign Currency Translation. The Company's Canadian operations use the
local currency as their functional currency. Assets and liabilities of these
operations are translated at the exchange rates in effect on the balance sheet
date. Items included in the Statements of Operations are translated at the
average exchange rates for the year. The impact of currency fluctuation is
included in shareholder's equity as a translation adjustment.
Use of Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Interim Unaudited Data for the Six Months Ended June 30, 1996 and 1997. In
the opinion of management, the unaudited consolidated financial statements
contain all of the normal and recurring adjustments necessary to present fairly
the consolidated financial position of the Company at June 30, 1997 and the
consolidated results of operations and cash flows of the Company for the six
months ended June 30, 1996 and 1997.
NOTE 2 TRANSACTIONS WITH RYDER
Certain Ryder branch locations provide fuel, vehicle repairs and
maintenance services to the Company. Rates charged to the Company for these
items approximate rates charged to significant Ryder customers for similar items
and reflect the cost plus a mark-up.
The Company participates in Ryder's combined risk management programs for
vehicle and general liability, workers' compensation liability and property
losses and Ryder processes claims related to vehicle and general liability and
workers' compensation. The Company also participates in Ryder's medical and
dental, postretirement and savings plans. See Notes 14 and 15.
Ryder provides various general and administrative services to the Company
including treasury, legal, human resources, accounting and others. Costs for
these services are charged to the Company through a management fee, which is
based on the Company's equity and revenue levels.
The Company's cash and financing needs are managed by Ryder. The
accompanying Consolidated Balance Sheets do not include Ryder's general
corporate debt, which is used to finance the operations of all of Ryder's
business units. However, Ryder allocates its corporate interest expense to each
business unit based upon a target debt to equity ratio. The Company's
shareholder's equity in the Consolidated Balance Sheets has been periodically
adjusted to effect this target debt to equity ratio. Interest expense charged
(or credited) to the Company by Ryder is principally based upon the interest
cost incurred by Ryder for certain of its indebtedness.
Management believes the methods used to determine intercompany charges and
cost allocations are reasonable, however, such costs may not be representative
of those which would be incurred if the Company operated as an independent
stand-alone entity.
F-30
<PAGE> 114
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Amounts charged and allocated by Ryder and its subsidiaries to the Company
for the above expense items are summarized in the following table:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating expense:
Salaries, wages and benefits:
Medical and dental................................... $ 3,653 $ 2,589 $ 2,615
Postretirement....................................... 1,305 1,139 2,536
Savings plan......................................... 277 368 402
Other................................................ 1,306 117 118
Operating supplies and expense:
Fuel, repairs and maintenance........................ 23,700 19,094 21,459
Insurance and claims.................................... 24,674 18,754 22,823
Other operating expense:
General and administrative expense................... 721 432 1,542
Management fees...................................... 3,370 3,258 3,098
Interest income (expense)................................. 858 (511) (252)
</TABLE>
NOTE 3 RESTRUCTURING AND OTHER CHARGES
During 1996, the Company implemented several restructuring initiatives in
an effort to reduce costs, improve profitability and align the organizational
structure with the strategic direction of the Company. As a result of the
initiatives, the Company recorded pretax charges in 1996 of $18.3 million which
included restructuring costs of $5.5 million, early retirement costs of $4.2
million, asset write-downs of $6.0 million and other charges of $2.6 million.
The charges reduced net income by $14.4 million. The pre tax charge of $4.2
million related to early retirement costs is included in the results of
operations for the six month period ended June 30, 1996.
The Company's pretax charges included $8.0 million in employee-related
costs, which were primarily related to the planned elimination of approximately
140 positions. This amount included $4.2 million for approximately 60 employees
who retired pursuant to a voluntary early retirement program. The headcount
reductions resulted from consolidating and reorganizing corporate and field
operations and affected employee groups across all levels of the Company. Nearly
50% and 65% of the separations occurred by December 31, 1996 and June 30, 1997,
respectively, with the remaining separations expected to be completed by the end
of 1997.
The Company recorded $7.7 million in estimated closure costs, including
asset write-downs of $6.0 million relating to both anticipated property sales
and the anticipated sale of Blazer Truck Lines, Inc. (See Note 19). The Company
also incurred $2.6 million of other costs, including employee relocation
relating to the implementation of the restructuring.
Management believes that the remaining restructuring liabilities of
approximately $6.0 million and $2.0 million at December 31, 1996 and June 30,
1997, respectively, are adequate to complete its plans and that the liabilities
will be substantially paid by the end of 1997. The additional pension and
postretirement liabilities will be paid in accordance with the provisions of the
existing plans. As a result of these actions, and prior to considering the
effect of the sale of the Company discussed in Note 20, earnings are ultimately
expected to be benefited by approximately $9.0 million annually.
F-31
<PAGE> 115
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 RECEIVABLES
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Trade accounts receivable................................... $36,152 $35,706 $39,496
Current portion of owner-operator notes receivable.......... 1,813 2,932 3,097
Other receivables........................................... 6,158 1,507 4,538
------- ------- -------
44,123 40,145 47,131
Allowance for doubtful accounts............................. (178) (741) (735)
------- ------- -------
$43,945 $39,404 $46,396
======= ======= =======
</TABLE>
No bad debt expense was recorded for the year ended December 31, 1994. Bad
debt expense totaled $0.1 million and $0.6 million for the years ended December
31, 1995 and 1996, respectively.
NOTE 5 INVENTORIES
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Trailer manufacturing inventory............................. $ 9,499 $ 3,149
Parts, materials and fuel................................... 1,513 1,445
------- -------
$11,012 $ 4,594
======= =======
</TABLE>
NOTE 6 PREPAID EXPENSES AND OTHER CURRENT ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Prepaid pension............................................. $ 5,876 $ 5,457
Tires in service............................................ 4,037 3,944
Licenses and permits........................................ 1,706 1,410
Operating taxes............................................. 1,002 882
Other....................................................... 1,147 1,120
------- -------
$13,768 $12,813
======= =======
</TABLE>
NOTE 7 REVENUE EARNING EQUIPMENT, NET
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- JUNE 30,
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Tractors.................................................... $ 226,505 $ 226,941 $ 225,944
Trailers.................................................... 142,858 150,453 147,998
Other....................................................... 966 279 1,349
--------- --------- ---------
370,329 377,673 375,291
Accumulated depreciation.................................... (232,362) (235,138) (240,798)
--------- --------- ---------
$ 137,967 $ 142,535 $ 134,493
========= ========= =========
</TABLE>
F-32
<PAGE> 116
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8 OPERATING PROPERTY AND EQUIPMENT, NET
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Buildings and improvements.................................. $ 43,316 $ 37,227
Furniture, fixtures and equipment........................... 20,265 20,455
Land........................................................ 12,265 8,866
Service vehicles and other.................................. 6,653 3,513
-------- --------
82,499 70,061
Accumulated depreciation.................................... (45,173) (41,420)
-------- --------
$ 37,326 $ 28,641
======== ========
</TABLE>
NOTE 9 OTHER ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Long-term portion of owner-operator notes receivable........ $ 4,035 $ 6,322
Long-term portion of property notes receivable.............. 2,871 2,173
Properties held for sale.................................... 4,845 4,518
Other....................................................... 204 187
------- -------
$11,955 $13,200
======= =======
</TABLE>
NOTE 10 ACCRUED EXPENSES AND OTHER LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Vehicle and general liability reserves...................... $ 20,207 $ 26,552
Salaries and wages.......................................... 22,760 21,805
Employee benefits........................................... 9,448 6,708
Cargo liability reserves.................................... 5,910 5,782
Operating taxes............................................. 4,255 4,140
Environmental liabilities................................... 543 1,198
Other, including restructuring.............................. 5,917 12,841
-------- --------
69,040 79,026
Non-current portion......................................... (15,924) (19,574)
-------- --------
Accrued expenses and other liabilities...................... $ 53,116 $ 59,452
======== ========
</TABLE>
During 1995 and 1996, the Company released employee benefit reserves of
$9.9 million and $0.8 million, respectively, related to prior year FICA taxes.
F-33
<PAGE> 117
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 11 LEASES
The Company leases offices and office equipment under operating lease
agreements. During 1994, 1995 and 1996, rent expense was $3.3 million, $3.2
million and $2.8 million, respectively. Future minimum payments for operating
leases in effect at December 31, 1996 are as follows (in thousands):
<TABLE>
<S> <C>
1997........................................................ $ 891
1998........................................................ 893
1999........................................................ 847
2000........................................................ 766
2001........................................................ 732
Thereafter.................................................. 3,063
------
$7,192
======
</TABLE>
NOTE 12 INCOME TAXES
The provision (benefit) for income taxes included the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current tax expense (benefit):
Federal................................................. $18,188 $13,469 $(1,214)
State................................................... 2,472 1,288 (404)
Foreign................................................. (143) 159 --
------- ------- -------
20,517 14,916 (1,618)
------- ------- -------
Deferred tax expense (benefit):
Federal................................................. (621) 1,517 68
State................................................... 355 1,321 334
Foreign................................................. 177 23 (40)
------- ------- -------
(89) 2,861 362
------- ------- -------
Provision (benefit) for income taxes...................... $20,428 $17,777 $(1,256)
======= ======= =======
</TABLE>
A reconciliation of the Federal statutory tax rate with the effective tax
rate follows:
<TABLE>
<CAPTION>
% OF PRETAX INCOME
--------------------
YEAR ENDED
DECEMBER 31,
--------------------
1994 1995 1996
----- ---- -----
<S> <C> <C> <C>
Statutory tax rate.......................................... 35.0 35.0 (35.0)
Impact on deferred taxes for changes in tax rates........... 0.6 -- --
State income taxes, net of Federal income tax benefit....... 3.1 4.0 (0.3)
Amortization of goodwill.................................... 0.9 1.0 3.1
Restructuring and other charges............................. -- -- 19.1
Miscellaneous items, net.................................... 1.2 1.2 4.5
----- ---- -----
Effective tax rate.......................................... 40.8 41.2 (8.6)
===== ==== =====
</TABLE>
The lower 1996 effective tax rate is primarily due to the permanent
differences associated with the charge for restructuring and other items.
Additionally, lower income before taxes increased the rate impact of normal,
recurring permanent differences.
F-34
<PAGE> 118
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
As described in Note 1, the Company was wholly-owned by Ryder for all of
the periods presented in the accompanying Consolidated Financial Statements. The
deferred tax assets and liabilities shown below have been determined as though
the Company was a separate company and not part of Ryder's consolidated Federal
income tax returns. The components of the net deferred income tax liability were
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax assets:
Accrued insurance and loss reserves....................... $ 9,761 $ 11,091
Accrued compensation and benefits......................... 4,027 3,733
Restructuring and other charges........................... -- 1,622
Miscellaneous accruals and other.......................... 3,656 6,256
-------- --------
17,444 22,702
Valuation allowance....................................... (1,812) (3,490)
-------- --------
Deferred income tax assets........................ 15,632 19,212
-------- --------
Deferred income tax liabilities:
Property and equipment bases differences.................. (32,984) (32,510)
Other items............................................... (5,680) (6,074)
-------- --------
Deferred income tax liabilities................... (38,664) (38,584)
-------- --------
Net deferred income tax liability........................... $(23,032) $(19,372)
======== ========
</TABLE>
A valuation allowance has been established to reduce the income tax
benefits of tax loss carryforwards to amounts expected to be realized.
Income taxes paid totaled $19 million in 1994 and $15 million in 1995.
There were no income tax payments in 1996.
NOTE 13 FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amounts of the Company's notes receivable, which originate
from the sale of equipment to owner-operators, were $5.8 million and $9.3
million as of December 31, 1995 and 1996, respectively. As of the same dates,
the fair values of the notes receivable were $6.0 million and $9.5 million,
respectively. The fair values were determined from discounted future cash flows
through maturity or expiration using current rates. The fair values of all other
financial instruments approximate their carrying amounts.
F-35
<PAGE> 119
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 14 PENSION AND SAVINGS PLANS
The Company sponsors three defined benefit pension plans, covering
substantially all employees not covered by union-administered plans. These plans
generally provide participants with benefits based on years of service and
recent average compensation levels. Funding policy for these plans is to make
contributions based on normal costs plus amortization of unfunded past service
liability but not greater than the maximum allowable contribution deductible for
Federal income tax purposes. The majority of the plans' assets are invested in a
master trust which, in turn, is primarily invested in listed stocks and bonds.
Total pension expense was as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1994 1995 1996
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Company-administered plans:
Present value of benefits earned during the year....... $ 1,604 $ 1,203 $ 1,443
Interest cost on projected benefit obligation.......... 3,214 3,320 3,755
Return on plan assets:
Actual.............................................. (710) (14,145) (8,397)
Deferred............................................ (3,583) 9,669 2,863
Additional expense from early retirement program....... -- -- 2,650
Other, net............................................. (575) (583) (691)
------- -------- -------
(50) (536) 1,623
Union-administered plans................................. 19,625 18,948 20,921
------- -------- -------
Net pension expense...................................... $19,575 $ 18,412 $22,544
======= ======== =======
</TABLE>
As a part of the Company's restructuring and other profit improvement
initiatives, certain employees accepted early retirement benefits, which
increased 1996 pension expense by $2.7 million.
The following table sets forth the plans' funded status and the Company's
prepaid pension expense:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Plan assets at fair value................................... $66,734 $71,334
Actuarial present value of service rendered to date:
Accumulated benefit obligation, including vested benefits
of $43,819 and $47,770 in 1995 and 1996,
respectively........................................... 44,429 50,107
Additional benefit based on estimated future salary
levels................................................. 2,972 4,225
------- -------
Projected benefit obligation................................ 47,401 54,332
------- -------
Plan assets in excess of projected benefit obligation....... 19,333 17,002
Unrecognized transition amount.............................. (4,311) (3,685)
Other, primarily unrecognized prior service cost and net
gains..................................................... (9,146) (7,860)
------- -------
Prepaid pension expense..................................... $ 5,876 $ 5,457
======= =======
</TABLE>
F-36
<PAGE> 120
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the actuarial assumptions used for the
Company's dominant plan:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Discount rate............................................... 8.5% 7.5% 7.5%
Rate of increase in compensation levels..................... 5.0% 5.0% 5.0%
Expected long-term rate of return on plan assets............ 8.5% 8.5% 8.5%
Transition amortization in years............................ 17 17 17
Gain and loss amortization in years......................... 9 9 9
</TABLE>
The Company also contributed to various defined benefit,
union-administered, multi-employer plans for employees under collective
bargaining agreements. The Company contributed and charged to expense
approximately $19.6 million, $18.9 million, and $20.9 million for the years
ended December 31, 1994, 1995, and 1996, respectively, for such plans. These
contributions are determined in accordance with the provisions of negotiated
labor contracts and are generally based on the number of hours or days worked.
In addition, the Company participates in certain defined contribution
savings plans sponsored by Ryder that cover substantially all eligible
employees. Contributions to the plans include employee contributions and
contributions made by Ryder under a matching program. Defined contribution
expense totaled $0.3 million, $0.4 million and $0.4 million for the years ended
December 31, 1994, 1995 and 1996, respectively.
NOTE 15 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company participates in Ryder plans which provide retired employees
with certain health care and life insurance benefits. Substantially all
employees not covered by union-administered health and welfare plans are
eligible for these benefits. Health care benefits are generally provided to
qualified retirees and eligible dependents. Generally, these plans require
employee contributions which vary based on years of service and include
provisions which cap Company contributions. Reserves related to these plans are
carried by Ryder.
Total periodic postretirement benefit expense was as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1995 1996
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current year service cost................................... $ 230 $ 216 $ 185
Interest accrued on postretirement benefit obligation....... 867 923 828
Additional expense from early retirement program............ -- -- 1,523
Other, net.................................................. 208 -- --
------ ------ ------
Periodic postretirement benefit expense..................... $1,305 $1,139 $2,536
====== ====== ======
</TABLE>
As part of the Company's restructuring and other profit improvement
initiatives, certain employees accepted early retirement benefits which
increased 1996 postretirement benefit expense by $1.5 million.
F-37
<PAGE> 121
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's postretirement benefit plans are not funded. The following
summarizes the reserves carried by Ryder:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................. $ 9,509 $10,006
Fully eligible active plan participants................... 863 800
Other active plan participants............................ 2,908 2,314
------- -------
13,280 13,120
Unrecognized net gains (losses)............................. (1,872) 300
------- -------
Accrued unfunded postretirement benefit obligation.......... $11,408 $13,420
======= =======
Discount rate............................................... 7.5% 7.5%
</TABLE>
The actuarial assumptions include health care cost trend rates projected
ratably from 11% in 1997 to 6% in the year 2003 and thereafter. Increasing the
assumed health care cost trend rates by 1% in each year would have increased the
accumulated postretirement benefit obligation as of December 31, 1996 by $1.0
million and would not have had a material effect on periodic postretirement
benefit expense for 1996.
NOTE 16 ENVIRONMENTAL MATTERS
The Company's operations involve storing and dispensing petroleum products,
primarily diesel fuel. In 1988, the Environmental Protection Agency issued
regulations that established requirements for testing and replacing underground
storage tanks. The Company is involved in various stages of investigation,
cleanup and tank replacement to comply with the regulations. In addition, the
Company received notices from the Environmental Protection Agency and others
that it has been identified as a potentially responsible party (PRP) under the
Comprehensive Environmental Response, Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act and similar state statutes and may
be required to share in the cost of cleanup of four identified disposal sites.
The Company records a liability for environmental assessments and/or
cleanup when it is probable a loss has been incurred. Generally, the timing of
these accruals coincides with the identification of an environmental problem
through the Company's internal procedures or upon notification from regulatory
agencies. The estimate of loss is based on information obtained from independent
environmental engineers and/or from Company experts regarding the nature and
extent of environmental contamination, remedial alternatives available and the
cleanup criteria required by relevant governmental agencies. The estimated costs
include amounts for anticipated site testing, consulting, remediation, disposal,
post-remediation monitoring and legal fees, as appropriate. These amounts
represent the estimated undiscounted costs to fully resolve the environmental
matters in accordance with prevailing Federal, state and local requirements
based on information presently available. The liability includes estimates of
cost sharing with other PRPs at Superfund sites. The Company's environmental
expenses were $0.6 million, $2.0 million and $1.2 million for the years ended
December 31, 1994, 1995 and 1996, respectively.
The ultimate costs of the Company's environmental liabilities cannot be
projected with certainty due to the presence of several unknown factors,
primarily the level of contamination, the effectiveness of selected remediation
methods, the stage of investigation at individual sites, the determination of
the Company's liability in proportion to other responsible parties and the
recoverability of such costs from third parties. Based on information presently
available, management believes that the ultimate disposition of these matters,
although potentially material to the results of operations in any one year, will
not have a material adverse effect on the Company's financial condition or
liquidity.
F-38
<PAGE> 122
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 17 INDUSTRY SEGMENT, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION
The Company operates solely in the automotive industry, primarily
transporting automobiles and light and medium-duty trucks from manufacturing
plants, ports and railway distribution points to automobile dealerships and
other distribution points. In 1994, 1995 and 1996, approximately 83.8%, 84.9%
and 85.6%, respectively, of the Company's revenue was derived from six
customers, one of which, General Motors, accounted for approximately 51.1%,
51.6% and 49.9% of revenue, respectively. The Company operates in the United
States and Canada. Operating income (loss) shown below includes gains on the
sale of operating property and equipment in the amounts of $0.2 million, $3.5
million and $1.6 million for 1994, 1995 and 1996, respectively. Geographic
financial information is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1995 1996
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenue:
United States........................................ $610,088 $556,663 $547,158
Canada............................................... 35,314 37,783 36,134
-------- -------- --------
$645,402 $594,446 $583,292
======== ======== ========
Operating income (loss):
United States........................................ $ 50,800 $ 37,107 $(13,186)
Canada............................................... (950) (869) (4,003)
-------- -------- --------
$ 49,850 $ 36,238 $(17,189)
======== ======== ========
Identifiable assets:
United States........................................ $233,645 $265,200 $257,095
Canada............................................... 40,942 41,097 36,419
-------- -------- --------
$274,587 $306,297 $293,514
======== ======== ========
</TABLE>
NOTE 18 COMMITMENTS AND CONTINGENCIES
The Company is a party to various claims, legal actions and complaints
arising in the ordinary course of business which relate to the Company's
operations, including the manufacture of trailers and headramps. While any
proceeding or litigation has an element of uncertainty, management believes that
the disposition of these matters will not have a material impact on the
financial condition, liquidity or results of operations of the Company.
The Company has entered into employment agreements with certain executive
officers of the Company. The agreements, which are substantially similar,
provide for compensation to the officers in the form of annual base salaries and
bonuses based on earnings. The employment agreements also provide for severance
benefits upon the occurrence of certain events, including a change in control,
as defined.
F-39
<PAGE> 123
RYDER AUTOMOTIVE CARRIER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 19 SALE OF BLAZER
In the fourth quarter of 1996, management made a decision to dispose of
Blazer, an in-bound logistics provider to the automotive industry. Consistent
with this decision and included within the full year restructuring charge
discussed in Note 3, management recorded restructuring and other charges of $2.8
million and asset write-downs of $4.2 million to reduce the carrying values of
Blazer assets to an estimate of fair value less costs to sell. The Company sold
Blazer on February 28, 1997. The condensed financial statements of Blazer are as
follows:
STATEMENTS OF OPERATIONS AND CHANGES IN COMPANY INVESTMENT
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------- ------------------
1994 1995 1996 1996 1997
------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenue................................... $25,529 $19,366 $14,520 $7,565 $ 2,204
Operating expense......................... 25,897 19,816 22,203 8,357 2,277
------- ------- ------- ------ -------
Operating loss............................ (368) (450) (7,683) (792) (73)
Other expense............................. (378) (110) (9) 10 14
------- ------- ------- ------ -------
Loss before income taxes.................. (746) (560) (7,692) (802) (87)
Income tax benefit........................ (19) (472) (320) 275 739
------- ------- ------- ------ -------
Net income (loss)......................... (727) (88) (7,372) (527) 652
Company investment at beginning of
period.................................. 721 5 (151) (151) (7,648)
Net change in Company investment.......... 11 (68) (125) 453 6,996
------- ------- ------- ------ -------
Company investment at end of period....... $ 5 $ (151) $(7,648) $ (225) $ --
======= ======= ======= ====== =======
</TABLE>
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1995 1996 1997
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Current assets............................................ $ 2,049 $ 1,526 $ --
Property and equipment, net............................... 1,687 428 --
Other assets, principally goodwill........................ 3,428 -- --
------- ------- -------
Total assets.............................................. $ 7,164 $ 1,954 $ --
======= ======= =======
Current liabilities....................................... $ 2,768 $ 5,976 --
Other liabilities......................................... 4,547 3,626 --
Company investment........................................ (151) (7,648) --
------- ------- -------
Total liabilities and Company investment.................. $ 7,164 $ 1,954 $ --
======= ======= =======
</TABLE>
NOTE 20 SUBSEQUENT EVENT
On August 21, 1997, Ryder announced that it had reached a definitive
agreement and received the necessary regulatory approvals to sell the stock of
the Company, along with another business unit, to Allied Holdings, Inc.
("Allied") for approximately $114.5 million in cash and assumption of certain
liabilities of the business. The sale of the Company to Allied is expected to be
completed by September 30, 1997.
F-40
<PAGE> 124
<TABLE>
============================================================== ================================================
- -------------------------------------------------------------- ------------------------------------------------
<S> <C>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED $150,000,000
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT
CONTAINED IN, OR INCORPORATED BY REFERENCE IN, THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN [ALLIED HOLDINGS LOGO]
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO BUY, THE NEW NOTES IN ANY JURISDICTION WHERE, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS OFFER TO EXCHANGE ALL OUTSTANDING
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY 8 5/8% SERIES A SENIOR NOTES DUE 2007
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT FOR
BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS 8 5/8% SERIES B SENIOR NOTES DUE 2007
OR INCORPORATED BY REFERENCE HEREIN OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
___________________ __________________
PROSPECTUS
___________________
TABLE OF CONTENTS
PAGE
----
, 1997
- -------------------------------------------------------------- ------------------------------------------------
==============================================================
</TABLE>
<PAGE> 125
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The provisions of the Georgia Business Corporation Code and the
Registrant's Bylaws set forth the extent to which the Registrant's directors and
officers may be indemnified against liabilities they may incur while serving in
such capacities. Under these indemnification provisions, the Registrant is
required to indemnify any of its directors or officers against any reasonable
expenses (including attorneys' fees) incurred by such director or officer in
defense of any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, and whether formal or informal, to which such
director or officer was made a party, or in defense of any claim, issue or
matter therein, by reason of the fact that such director or officer is or was a
director or officer of the Registrant or who, while a director of the
Registrant, is or was serving at the Registrant's request as a director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
to the extent that such director or officer has been successful, on the merits
or otherwise, in such defense. The Registrant also must indemnify any of its
directors, and may indemnify any of its officers, against any liability incurred
in connection with any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, and
whether formal or informal, by reason of the fact that such director or officer
is or was a director or officer of the Registrant or who, while a director or
officer of the Registrant, is or was serving at the Registrant's request as a
director, officer, partner, trustee, employee, or agent of another corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise,
if such director or officer acted in a manner such director or officer believed
in good faith to be in, or not opposed to, the best interests of the Registrant,
or, with respect to any criminal proceeding, had no reasonable cause to believe
such director's or officer's conduct was unlawful, if a determination has been
made that the director or officer has met these standards of conduct. Such
indemnification in connection with a proceeding by or in the right of the
Registrant, however, is limited to reasonable expenses, including attorneys'
fees, incurred in connection with the proceeding. The Registrant may also
provide advancement of expenses incurred by a director or officer in defending
any such action, suit, or proceeding upon receipt of a written affirmation of
such officer or director that such director or officer has met certain standards
of conduct and an undertaking by or on behalf of such director or officer to
repay such advances unless it is ultimately determined that such director or
officer is entitled to indemnification by the Registrant.
The Registrant may not indemnify a director or officer in connection
with a proceeding by or in the right of the Registrant in which the director or
officer was adjudged liable to the Registrant, or in connection with a
proceeding in which he was adjudged liable on the basis that he improperly
received a personal benefit.
The Registrant's Articles of Incorporation contain a provision which
provides that, to the fullest extent permitted by the Business Corporation Code
of Georgia, directors of the Registrant shall not be personally liable to the
Registrant or its shareholders for monetary damages for breach of his duty of
care or any other duty as a director.
The Registrant maintains an insurance policy insuring the Registrant
and directors and officers of the Registrant against certain liabilities,
including liabilities under the Securities Act of 1933.
II-1
<PAGE> 126
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits (See exhibit index immediately preceding the exhibits for
the page number where each exhibit can be found)
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------ -----------------------
(1) 4.1 Indenture dated September 30, 1997 by and among the Company,
the Guarantors and The First National Bank of Chicago, as
Trustee.
(1) 4.2 Purchase Agreement dated September 19, 1997 by and among the
Company and the Initial Purchasers.
(1) 4.3 Form of 8 5/8% Series A Senior Note due 2007 (Included in
Exhibit 4.1).
(1) 4.4 Registration Rights Agreement dated September 30, 1997 by and
between the Company and Bear, Stearns & Co. Inc., as initial
purchaser.
(1) 4.5 $230 million Revolving Credit Agreement among Allied Holdings,
Inc. and BankBoston, N.A., individually and as Administrative
Agent, et al., dated September 30, 1997.
(1) 4.6 Form of 8 5/8% Series B Senior Note due 2007 (Included in
Exhibit 4.1).
(1) 4.7 Form of Guarantee (Included in Exhibit 4.1).
(2) 5.1 Opinion of Troutman Sanders LLP.
(1) 12.1 Statement regarding Ratio of Earnings to Fixed Charges
(2) 23.1 Consent of Troutman Sanders LLP (Included in Exhibit 5.1).
(1) 23.2 Consent of Arthur Andersen LLP.
(1) 23.3 Consent of KPMG Peat Marwick LLP
(1) 24.1 Power of Attorney. (Included on the signature pages in Part
II of this Registration Statement)
(1) 25.1 Statement of Eligibility of the Trustee under the Indenture
filed as Exhibit 4.1
(1) 99.1 Form of Letter of Transmittal
(1) 99.2 Form of Notice of Guaranteed Delivery
99.3 Acquisition Agreement among Allied Holdings, Inc., AH
Acquisition Corp., Canadian Acquisition Corp., and Axis
International Incorporated and Ryder System, Inc. dated August
20, 1997 (incorporated by reference from Form 8-K filed with
the Commission on August 29, 1997).
- - - - - - - - - -
(1) Filed herewith.
(2) To be filed by amendment.
II-2
<PAGE> 127
ITEM 22. UNDERTAKINGS.
The Registrant hereby undertakes the following:
(a)(1) To file, during any period in which offers or sales are being
made, a post effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the Offering.
(b) For purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) See Item 20.
(d) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day after
receipt of such request, and to send the incorporation 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.
(e) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 128
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
ALLIED HOLDINGS, INC.
By /s/ Robert J. Rutland
-------------------------------------------------------
Robert J. Rutland, Chairman and Chief Executive Officer
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
Mitchell Poole, Jr., President, Chief Operating
Officer, Chief Financial Officer, and Assistant
Secretary
Each person whose signature to this Registration Statement appears
below appoints Robert J. Rutland and Joseph W. Collier, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Chairman of the Board of Directors and Chief October 1, 1997
- -------------------------- Executive Officer, and Director
Robert J. Rutland
/s/ Guy W. Rutland, III Chairman Emeritus and Director October 1, 1997
- --------------------------
Guy W. Rutland, III
/s/ A. Mitchell Poole, Jr. President, Chief Operating Officer, Chief October 1, 1997
- -------------------------- Financial Officer, Assistant Secretary and
A. Mitchell Poole, Jr. Director
Vice Chairman, Executive Vice President, and
- -------------------------- Director
Bernard O. De Wulf
/s/ Berner F. Wilson, Jr. Vice Chairman, Secretary and Director October 1, 1997
- --------------------------
Berner F. Wilson, Jr.
/s/ Guy W. Rutland, IV Vice President and Director October 1, 1997
- --------------------------
Guy W. Rutland, IV
/s/ Joseph W. Collier Director October 1, 1997
- --------------------------
Joseph W. Collier
Director
- --------------------------
David G. Bannister
Director
- --------------------------
Robert R. Woodson
</TABLE>
II-4
<PAGE> 129
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
ALLIED AUTOMOTIVE GROUP, INC.
By /s/ Joseph W. Collier
-----------------------------------------------
Joseph W. Collier, President and Chief
Executive Officer
By /s/ David S. Forbes
-----------------------------------------------
David S. Forbes, Chief Financial Officer,
Treasurer and Assistant Secretary
Each person whose signature to this Registration Statement appears
below appoints David S. Forbes and Joseph W. Collier, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President, Chief Executive Officer and October 1, 1997
- ---------------------- Director
Joseph W. Collier
/s/ Tom Baker Director October 1, 1997
- ----------------------
Tom Baker
/s/ Tex R. Flippin Director October 1, 1997
- ----------------------
Tex R. Flippin.
/s/ Michael E. Axelrod Director October 1, 1997
- ----------------------
Michael E. Axelrod
</TABLE>
II-5
<PAGE> 130
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
ALLIED INDUSTRIES INCORPORATED
By /s/ Daniel H. Popky
------------------------------------------------------
Daniel H. Popky, Treasurer and Chief Financial Officer
By /s/ A. Mitchell Poole, Jr.
------------------------------------------------------
Mitchell Poole, Jr., President and Chief Executive
Officer
Each person whose signature to this Registration Statement appears
below appoints Daniel H. Popky and A. Mitchell Poole, Jr., and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ William J. Berberich Director October 1, 1997
- --------------------------
William J. Berberich
/s/ Daniel H. Popky Treasurer, Chief Financial Officer and October 1, 1997
- -------------------------- Director
Daniel H. Popky
</TABLE>
II-6
<PAGE> 131
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
HAUL RISK MANAGEMENT SERVICES, INC.
By /s/ Herbert A. Terwilliger
----------------------------------------------------
Herbert A. Terwilliger, President and Chief Executive
Officer
By /s/ Daniel H. Popky
-----------------------------------------------------
Daniel H. Popky, Treasurer and Chief Financial Officer
Each person whose signature to this Registration Statement appears
below appoints Herbert A. Terwilliger and Daniel H. Popky, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. Director October 1, 1997
- --------------------------
A. Mitchell Poole, Jr.
Director
- --------------------------
Bernard O. De Wulf
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- --------------------------
Berner F. Wilson, Jr.
/s/ Herbert A. Terwilliger President, Chief Executive Officer, October 1, 1997
- -------------------------- and Director
Herbert A. Terwilliger
</TABLE>
II-7
<PAGE> 132
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
LINK INFORMATION SYSTEMS, INC.
By /s/ Douglas A. Lauer
------------------------------------------------
Douglas A. Lauer, President and, Chief Executive
Officer
By /s/ Daniel H. Popky
------------------------------------------------
Daniel H. Popky, Vice President, Chief Financial
Officer, Chief Financial Officer, and Assistant
Secretary
Each person whose signature to this Registration Statement appears
below appoints Douglas A. Lauer and Daniel H. Popky, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Douglas A. Lauer President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
Douglas A. Lauer
/s/ A. Mitchell Poole, Jr. Director October 1, 1997
- --------------------------
A. Mitchell Poole, Jr.
/s/ Samuel Whitehurst Director October 1, 1997
- --------------------------
Samuel Whitehurst
</TABLE>
II-8
<PAGE> 133
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
ALLIED SOUTHWOODS, INC.
By /s/ A. Mitchell Poole, Jr.
-----------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ Daniel H. Popky
-----------------------------------------------------
Daniel H. Popky, Vice President and Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and Daniel H. Popky, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Vice President, Chief Financial Officer and October 1, 1997
- -------------------------- Director
Daniel H. Popky
</TABLE>
II-9
<PAGE> 134
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
AXIS GROUP, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- ------------------------
Gary R. Long
</TABLE>
II-10
<PAGE> 135
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
ALLIED SYSTEMS, LTD. (L.P.)
BY: ALLIED AUTOMOTIVE GROUP, INC., as Managing
General Partner
By /s/ Joseph W. Collier
------------------------------------------------
Joseph W. Collier, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer,
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President and Chief Executive Officer, and October 1, 1997
- --------------------- Director of the Managing Director
Joseph W. Collier
/s/ David S. Forbes Vice President and Chief Financial Officer, October 1, 1997
- --------------------- and Director of the Managing Director
David S. Forbes
</TABLE>
II-11
<PAGE> 136
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
ALLIED, INC.
By /s/ Joseph W. Collier
------------------------------------------------
Joseph W. Collier, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President and Chief
Financial Officer
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President and Chief Executive Officer and October 1, 1997
- ---------------------- Director
Joseph W. Collier
/s/ Tom Baker Director October 1, 1997
- ----------------------
Tom Baker
/s/ Tex R. Flippin Director October 1, 1997
- ----------------------
Tex R. Flippin
/s/ Michael E. Axelrod Director October 1, 1997
- ----------------------
Michael E. Axelrod
</TABLE>
II-12
<PAGE> 137
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
INTER MOBILE, INC.
By /s/ Joseph W. Collier
-----------------------------------------------------
Joseph W. Collier, President, Chief Executive Officer
and Chief Financial Officer
By /s/ Tex R. Flippin
-----------------------------------------------------
Tex R. Flippin, Vice President
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Tex R. Flippin, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President, Chief Executive Officer, October 1, 1997
- --------------------- Chief Financial Officer, and Director
Joseph W. Collier
/s/ Tex R. Flippin Vice President and Director October 1, 1997
- ---------------------
Tex R. Flippin
</TABLE>
II-13
<PAGE> 138
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
LEGION TRANSPORTATION, INC.
By /s/ Joseph W. Collier
-----------------------------------------------------
Joseph W. Collier, President, Chief Executive Officer
and Chief Financial Officer
By /s/ Tex R. Flippin
-----------------------------------------------------
Tex R. Flippin, Vice President
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Tex R. Flippin, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joseph W. Collier President, Chief Executive Officer, October 1, 1997
- ---------------------- Chief Financial Officer, and Director
Joseph W. Collier
/s/ Tex R. Flippin Vice President and Director October 1, 1997
- ----------------------
Tex R. Flippin
</TABLE>
II-14
<PAGE> 139
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
INNOVATIVE CAR CARRIERS, INC.
By /s/ Joseph W. Collier
-----------------------------------------------------
Joseph W. Collier, President, Chief Executive Officer
and Chief Financial Officer
By /s/ Tex R. Flippin
-----------------------------------------------------
Tex R. Flippin, Vice President
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Tex R. Flippin, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael E. Axelrod Director October 1, 1997
- ----------------------
Michael E. Axelrod
</TABLE>
II-15
<PAGE> 140
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
AUTOMOTIVE TRANSPORT SERVICES, INC.
By /s/ Joseph W. Collier
-----------------------------------------------------
Joseph W. Collier, President, Chief Executive Officer
and Chief Financial Officer
By /s/ Tex R. Flippin
-----------------------------------------------------
Tex R. Flippin, Vice President
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Tex R. Flippin, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael E. Axelrod Director October 1, 1997
- ----------------------
Michael E. Axelrod
</TABLE>
II-16
<PAGE> 141
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
AUTO HAULAWAY, INC.
By /s/ Joseph W. Collier
------------------------------------------------
Joseph W. Collier, President and Chief Executive
Officer
By /s/ Daniel H. Popky
-------------------------------------------------
Daniel H. Popky, Vice President and Chief
Financial Officer,
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Daniel H. Popky, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joel M. Rose Director October 1, 1997
- ----------------
Joel M. Rose
</TABLE>
II-17
<PAGE> 142
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
AXIS INTERNATIONAL, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- ------------------------
Gary R. Long
</TABLE>
II-18
<PAGE> 143
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
AXIS TRUCK LEASING, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- ------------------------
Gary R. Long
</TABLE>
II-19
<PAGE> 144
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
AXIS NORTH AMERICA, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- ------------------------
Gary R. Long
</TABLE>
II-20
<PAGE> 145
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
AUTO HAULAWAY RELEASING SERVICES
(1981) LIMITED
By /s/ Joseph W. Collier
------------------------------------------------
Joseph W. Collier, President and Chief Executive
Officer
By /s/ Daniel H. Popky
--------------------------------------------------
Daniel H. Popky, Vice President and Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Joseph W. Collier and Daniel H. Popky, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joel M. Rose Directors October 1, 1997
- ----------------
Joel M. Rose
</TABLE>
II-21
<PAGE> 146
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
DECATUR DRIVER EXCHANGE COMPANY, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- ------------------------
Gary R. Long
</TABLE>
II-22
<PAGE> 147
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
CLAIREMONT DRIVER EXCHANGE COMPANY, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- -------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------- Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- -------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- -------------------------
Gary R. Long
</TABLE>
II-23
<PAGE> 148
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
KAR-TAINER INTERNATIONAL, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes., Vice President, Chief
Financial Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Douglas R. Cartin President, Chief Executive Officer, and October 1, 1997
- --------------------- Director
Douglas R. Cartin
/s/ Richard Cox Director October 1, 1997
- ---------------------
Richard Cox
/s/ Robert C. Matheson Director October 1, 1997
- ----------------------
Robert C. Matheson
</TABLE>
II-24
<PAGE> 149
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
AH ACQUISITION CORP.
By /s/ A. Mitchell Poole, Jr.
------------------------------------------------------
A. Mitchell Poole, Jr., President and, Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------------
David S. Forbes, Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-25
<PAGE> 150
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
CANADIAN ACQUISITION CORP.
By /s/ A. Mitchell Poole, Jr.
-----------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-26
<PAGE> 151
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
AXIS NATIONAL INCORPORATED
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- -------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------- Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- -------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- -------------------------
Gary R. Long
</TABLE>
II-27
<PAGE> 152
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
RC MANAGEMENT CORP.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and, Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- -------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------- Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- -------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- -------------------------
Gary R. Long
</TABLE>
II-28
<PAGE> 153
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
RYDER AUTOMOTIVE CARRIER SERVICES, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-29
<PAGE> 154
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
RYDER AUTOMOTIVE ACQUISITION LLC
BY: CANADIAN ACQUISITION CORP, as Member
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director of Member October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Operating Officer and October 1, 1997
- -------------------------- Director of Member
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director of Member October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-30
<PAGE> 155
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
MCL RYDER TRANSPORT, INC.
By /s/ A. Mitchell Poole, Jr.
-----------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-----------------------------------------------------
David S. Forbes, Vice President and Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Joel M. Rose Director October 1, 1997
- ----------------
Joel M. Rose
</TABLE>
II-31
<PAGE> 156
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
RYDER AUTOMOTIVE OPERATIONS, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-32
<PAGE> 157
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
RYDER FREIGHT BROKER, INC.
By /s/ A. Mitchell Poole, Jr.
-----------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-----------------------------------------------------
David S. Forbes, Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-33
<PAGE> 158
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
QAT, INC.
By /s/ A. Mitchell Poole, Jr.
------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------------
David S. Forbes, Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-34
<PAGE> 159
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
OSHCO, INC.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- ------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------ Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- ------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- ------------------------
Gary R. Long
</TABLE>
II-35
<PAGE> 160
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
TERMINAL SERVICE CO.
By /s/ Douglas R. Cartin
------------------------------------------------
Douglas R. Cartin, President and Chief Executive
Officer
By /s/ David S. Forbes
------------------------------------------------
David S. Forbes, Vice President, Chief Financial
Officer
Each person whose signature to this Registration Statement appears
below appoints Douglas R. Cartin and David S. Forbes, and each of them, any one
of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Berner F. Wilson, Jr. Director October 1, 1997
- -------------------------
Berner F. Wilson, Jr.
/s/ Douglas R. Cartin President, Chief Executive Officer and October 1, 1997
- ------------------------- Director
Douglas R. Cartin
/s/ Robert C. Matheson Director October 1, 1997
- -------------------------
Robert C. Matheson
/s/ Gary R. Long Director October 1, 1997
- -------------------------
Gary R. Long
</TABLE>
II-36
<PAGE> 161
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
F.J. BOUTELL DRIVEWAY CO., INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-37
<PAGE> 162
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
RMX, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-38
<PAGE> 163
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
TRANSPORT SUPPORT, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-39
<PAGE> 164
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
COMMERCIAL CARRIERS, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-40
<PAGE> 165
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Decatur, State of Georgia, on the 1st day of October
1997.
B&C, INC.
By /s/ A. Mitchell Poole, Jr.
-------------------------------------------------------
A. Mitchell Poole, Jr., President and Chief Executive
Officer
By /s/ David S. Forbes
-------------------------------------------------------
David S. Forbes., Chief Financial Officer and Secretary
Each person whose signature to this Registration Statement appears
below appoints A. Mitchell Poole, Jr. and David S. Forbes, and each of them, any
one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which amendments may make such changes in
and additions to this Registration Statement as such agent and attorney-in-fact
may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert J. Rutland Director October 1, 1997
- --------------------------
Robert J. Rutland
/s/ A. Mitchell Poole, Jr. President, Chief Executive Officer and October 1, 1997
- -------------------------- Director
A. Mitchell Poole, Jr.
/s/ Daniel H. Popky Director October 1, 1997
- --------------------------
Daniel H. Popky
</TABLE>
II-41
<PAGE> 1
EXHIBIT 4.1
================================================================================
------------------------------------
ALLIED HOLDINGS, INC.
SERIES A AND SERIES B
85/8% SENIOR NOTES DUE 2007
------------------------------------
INDENTURE
Dated as of September 30, 1997
------------------------------------
The First National Bank of Chicago
------------------------------------
Trustee
------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C> <C>
310 (a)(1) ............................................. 7.10
(a)(2) ............................................. 7.10
(a)(3) ............................................. N.A.
(a)(4) ............................................. N.A.
(a)(5) ............................................. 7.10
(b) ................................................ 7.10
(c) ................................................ N.A.
311 (a) ................................................ 7.11
(b) ................................................ 7.11
(c) ................................................ N.A.
312 (a) ................................................ 2.05
(b) ................................................ 11.03
(c) ................................................ 11.03
313 (a) ................................................ 7.06
(b)(1) ............................................. N.A.
(b)(2) ............................................. 7.07
(c) ................................................ 7.06;11.02
(d) ................................................ 7.06
314 (a) ................................................ 4.03;11.02
(b) ................................................ N.A.
(c)(1) ............................................. 11.04
(c)(2) ............................................. 11.04
(c)(3) ............................................. N.A.
(d) ................................................ N.A.
(e) ................................................ 11.05
(f) ................................................ N.A.
315 (a) ................................................ 7.01
(b) ................................................ 7.05,11.02
(c) ................................................ 7.01
(d) ................................................ 7.01
(e) ................................................ 6.11
316 (a)(last sentence) ................................. 2.09
(a)(1)(A) .......................................... 6.05
(a)(1)(B) .......................................... 6.04
(a)(2) ............................................. N.A.
(b) ................................................ 6.07
(c) ................................................ 2.12
317 (a)(1) ............................................. 6.08
(a)(2) ............................................. 6.09
(b) ................................................ 2.04
318 (a) ................................................ 11.01
(b) ................................................ N.A.
(c) ................................................ 11.01
N.A. means not applicable
</TABLE>
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
<S> <C> <C>
Section 1.01. Definitions....................................................... 1
Section 1.02. Other Definitions................................................. 15
Section 1.03. Incorporation by Reference of Trust Indenture Act................. 15
Section 1.04. Rules of Construction............................................. 15
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating................................................... 16
Section 2.02. Execution and Authentication...................................... 17
Section 2.03. Registrar and Paying Agent........................................ 17
Section 2.04. Paying Agent to Hold Money in Trust............................... 18
Section 2.05. Holder Lists...................................................... 18
Section 2.06. Transfer and Exchange............................................. 18
Section 2.07. Replacement Notes................................................. 30
Section 2.08. Outstanding Notes................................................. 30
Section 2.09. Treasury Notes.................................................... 30
Section 2.10. Temporary Notes................................................... 31
Section 2.11. Cancellation...................................................... 31
Section 2.12. Defaulted Interest................................................ 31
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee................................................ 31
Section 3.02. Selection of Notes to Be Redeemed................................. 32
Section 3.03. Notice of Redemption.............................................. 32
Section 3.04. Effect of Notice of Redemption.................................... 33
Section 3.05. Deposit of Redemption Price....................................... 33
Section 3.06. Notes Redeemed in Part............................................ 33
Section 3.07. Optional Redemption............................................... 33
Section 3.08. Mandatory Redemption.............................................. 34
Section 3.09. Offer to Purchase by Application of Excess Proceeds............... 34
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.................................................. 36
Section 4.02. Maintenance of Office or Agency................................... 36
Section 4.03. Reports........................................................... 36
Section 4.04. Compliance Certificate............................................ 37
Section 4.05. Taxes............................................................. 38
Section 4.06. Stay, Extension and Usury Laws.................................... 38
Section 4.07. Restricted Payments............................................... 38
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries...................................................... 40
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock............................................................. 41
Section 4.10. Asset Sales....................................................... 43
Section 4.11. Transactions with Affiliates...................................... 44
Section 4.12. Liens............................................................. 44
Section 4.13. Additional Subsidiary Guarantees.................................. 45
Section 4.14. Corporate Existence............................................... 45
Section 4.15. Offer to Repurchase Upon Change of Control........................ 45
Section 4.16. Payments for Consent.............................................. 46
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.......................... 46
Section 5.02. Successor Corporation Substituted................................. 47
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default................................................. 47
Section 6.02. Acceleration...................................................... 49
Section 6.03. Other Remedies.................................................... 49
Section 6.04. Waiver of Past Defaults........................................... 49
Section 6.05. Control by Majority............................................... 50
Section 6.06. Limitation on Suits............................................... 50
Section 6.07. Rights of Holders of Notes to Receive Payment..................... 50
Section 6.08. Collection Suit by Trustee........................................ 50
Section 6.09. Trustee May File Proofs of Claim.................................. 51
Section 6.10. Priorities........................................................ 51
Section 6.11. Undertaking for Costs............................................. 51
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee................................................. 52
Section 7.02. Rights of Trustee................................................. 53
Section 7.03. Individual Rights of Trustee...................................... 53
Section 7.04. Trustee's Disclaimer.............................................. 53
Section 7.05. Notice of Defaults................................................ 54
Section 7.06. Reports by Trustee to Holders of the Notes........................ 54
Section 7.07. Compensation and Indemnity........................................ 54
Section 7.08. Replacement of Trustee............................................ 55
Section 7.09. Successor Trustee by Merger, etc.................................. 56
Section 7.10. Eligibility; Disqualification..................................... 56
Section 7.11. Preferential Collection of Claims Against Company................. 56
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance........................................................ 56
Section 8.02. Legal Defeasance and Discharge.................................... 56
Section 8.03. Covenant Defeasance............................................... 57
Section 8.04. Conditions to Legal or Covenant Defeasance........................ 57
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions..................... 58
Section 8.06. Repayment to Company.............................................. 59
Section 8.07. Reinstatement..................................................... 59
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes............................... 59
Section 9.02. With Consent of Holders of Notes.................................. 60
Section 9.03. Compliance with Trust Indenture Act............................... 61
Section 9.04. Revocation and Effect of Consents................................. 61
Section 9.05. Notation on or Exchange of Notes.................................. 62
Section 9.06. Trustee to Sign Amendments, etc................................... 62
ARTICLE 10
SUBSIDIARY GUARANTEES
Section 10.01. Subsidiary Guarantees............................................. 62
Section 10.02. Execution and Delivery of Subsidiary Guarantees................... 63
Section 10.03. Guarantors May Consolidate, etc., on Certain Terms................ 63
Section 10.04. Releases Following Sale of Assets................................. 64
Section 10.05. Limitation on Guarantor Liability................................. 64
Section 10.06. Trustee to Include Paying Agent................................... 65
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls...................................... 65
Section 11.02. Notices........................................................... 65
Section 11.03. Communication by Holders of Notes with Other
Holders of Notes.................................................. 66
Section 11.04. Certificate and Opinion as to Conditions Precedent................ 66
Section 11.05. Statements Required in Certificate or Opinion..................... 67
Section 11.06. Rules by Trustee and Agents....................................... 67
Section 11.07. No Personal Liability of Directors, Officers,
Employees and Stockholders........................................ 67
Section 11.08. Governing Law..................................................... 67
Section 11.09. No Adverse Interpretation of Other Agreements..................... 68
Section 11.10. Successors........................................................ 68
Section 11.11. Severability...................................................... 68
Section 11.12. Counterpart Originals............................................. 68
Section 11.13. Table of Contents, Headings, etc.................................. 68
EXHIBITS
Exhibit A-1 FORM OF NOTE (OTHER THAN REGULATION S
TEMPORARY NOTE)
Exhibit A-2 FORM OF REGULATION S TEMPORARY NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF SUBSIDIARY GUARANTEE
</TABLE>
iii
<PAGE> 6
INDENTURE dated as of September 30, 1997 between Allied Holdings, Inc.,
a Georgia corporation (the "Company"), the Guarantors named on the signature
pages hereto (together with all other Persons who execute a Subsidiary Guarantee
pursuant to the terms of this Indenture, the "Guarantors"), and The First
National Bank of Chicago, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 8 5/8% Series A Senior Notes due 2007 (the "Series A Notes") and the 8 5/8%
Series B Senior Notes due 2007 (the "Series B Notes" and, together with the
Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means the global note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold in reliance on Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (a)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (b) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means (a) the sale, lease, conveyance or other disposition
of any assets or rights (including, without limitation, by way of a sale and
leaseback), excluding sales of services and ancillary products in the ordinary
course of business consistent with past practices (provided that the sale,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company and its Restricted Subsidiaries taken as a whole shall be
governed by Section 4.15 hereof and/or Section 5.01 hereof and not by Section
4.10 hereof, and (b) the issue or sale by the Company or any of its Subsidiaries
of Equity Interests of any of the Company's Subsidiaries (other than directors'
qualifying shares or shares required by applicable law to be held by a Person
other than the Company or a Restricted Subsidiary of the Company), in the case
of either clause (a) or (b), whether in a single transaction or a series of
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<PAGE> 7
transactions (i) that have a fair market value in excess of $1.0 million or (ii)
for net proceeds in excess of $1.0 million. Notwithstanding the foregoing, the
following shall be deemed not to be Asset Sales: (a) a transfer of assets by the
Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary; (b)
an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary to the
Company or to another Wholly Owned Restricted Subsidiary; (c) a Permitted
Investment or Restricted Payment that is permitted by Section 4.07 hereof; (d)
the exchange of Rigs or terminals for other assets that are usable in the
business of the Company and its Restricted Subsidiaries to the extent that the
assets received by the Company and its Restricted Subsidiaries have a fair
market value at least equal to the fair market value of the Rigs and terminals
exchanged by the Company, in each case as determined in good faith by the Board
of Directors; (e) a disposition of Cash Equivalents solely for cash or other
Cash Equivalents; (f) a saleleaseback transaction involving Rigs or real estate
within one year of the acquisition of such Rigs or real estate; and (g) the sale
of accounts receivables and related assets customarily transferred in an asset
securitization transaction involving accounts receivable to a Receivables
Subsidiary or by a Receivables Subsidiary in connection with a Qualified
Receivables Transaction.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means (a) United States dollars, (b) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (c) certificates of deposit
and Eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any lender party to the New
Credit Facility or with any domestic commercial bank having capital and surplus
in excess of $500.0 million and a Keefe Bank Watch Rating of AB or better, (d)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (b) and (c) above entered into with
any financial institution meeting the qualifications specified in clause (c)
above and (e) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within six months after the date of acquisition.
"Cedel" means Cedel Bank, societe anonyme.
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<PAGE> 8
"Change of Control" means, with respect to the Company or any successor
Person permitted by Section 5.01, the occurrences of any of the following: (a)
the adoption of a plan relating to the liquidation or dissolution of the
Company; (b) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person" or "group"
(as such terms are used in Section 13(d)(3) of the Exchange Act), other than the
Principals, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and rule 13d-5 under the Exchange Act), directly or indirectly, of (i)
more than 35% of the voting power of the outstanding voting stock of the Company
or (ii) more of the voting power of the outstanding voting stock of the Company
than that beneficially owned by the Principals; or (c) the first day on which
more than a majority of the members of the Board of Directors are not continuing
Directors.
"Closing Date" means the date of the closing of the sale of the Notes.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus, to the
extent deducted in computing such Consolidated Net Income, (a) an amount equal
to any extraordinary loss plus any net loss realized in connection with an Asset
Sale, (b) provision for taxes based on income or profits, (c) Consolidated
Interest Expense, (d) depreciation and amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and (e) nonrecurring charges relating
to the Acquisition, to the extent that such charges are set forth in "Unaudited
Pro Forma Financial Information," including the notes thereto, in each case on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization of, a Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent (and in the same
proportion) that the Net Income of such Person was included in calculating
Consolidated Net Income.
"Consolidated Interest Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Consolidated Interest Expense of such Person and its Restricted
Subsidiaries for such period. In the event that the Company or any of its
Restricted Subsidiaries incurs, assumes, guarantees, redeems or repays any
Indebtedness (other than revolving credit borrowings) subsequent to the
commencement of the period for which the Consolidated Interest Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Consolidated Interest Coverage Ratio is made (the
"Calculation Date"), then the Consolidated Interest Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee,
redemption or repayment of Indebtedness as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (a) acquisitions that have
been made by the Company or any of its Restricted Subsidiaries, including
through mergers or consolidations and including any related financing
transactions, and other transactions consummated by the Company or any of its
Restricted Subsidiaries with respect to which pro forma effect may be given
pursuant to Article 11 of Regulation S-X under the Securities Act, in each case
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (d) of
the proviso set forth in the definition of Consolidated Net Income, (b) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded and (c) the Consolidated Interest Expense
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded,
3
<PAGE> 9
but only to the extent that the obligations giving rise to such Consolidated
Interest Expense will not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum, without duplication, of (a) the consolidated interest
expense of such Person and its Restricted Subsidiaries for such period, whether
paid or accrued (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), (b) the consolidated interest expense of such Person and its
Restricted Subsidiaries that was capitalized during such period and (c) any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of
such Person or one of its Restricted Subsidiaries (whether or not such Guarantee
or Lien is called upon), in each case, on a consolidated basis and in accordance
with GAAP.
"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 that (a) if the Net Income of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting is a gain, the Net Income of such Person shall be included only to
the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Wholly Owned Restricted Subsidiary thereof, (b) if the Net
Income of any Person that is not a Restricted Subsidiary or that is accounted
for by the equity method of accounting is a loss, the Net Income of such Person
shall be excluded except to the extent that (i) the Company or any of its
Restricted Subsidiaries funds such loss by means of the provision of additional
capital to such Person or (ii) the aggregate losses of such Person excluded
pursuant to this clause (b) exceed the aggregate gains of such Person excluded
pursuant to clause (a), (c) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of such acquisition
shall be excluded, (d) the cumulative effect of a change in accounting
principles shall be excluded and (e) solely for purposes of calculating
Consolidated Interest Expense for purposes of Section 4.09 hereof. The Net
Income of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Restricted Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (a) the consolidated equity of the common stockholders of such
Person and its consolidated Restricted Subsidiaries as of such date, plus (b)
the respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (i) all
write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the Closing Date in the
book value of any asset owned by such Person or a consolidated Restricted
Subsidiary of such Person, (ii) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Restricted Subsidiaries
and (iii) all unamortized debt discount and expense and unamortized deferred
charges as of such date, in each case determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (a) was a member of such
Board of Directors on the Closing Date or (b)
4
<PAGE> 10
was nominated for election or elected to such Board of Directors with the
approval of a majority of the Continuing Directors who were members of such
Board at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.07 hereof,
substantially in the form of Exhibit A-1 hereto, except that such Note shall not
bear the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature; provided, that any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof (or of any security into which it is convertible or for which it
is exchangeable) have the right to require the issuer to repurchase such Capital
Stock (or such security into which it is convertible or for which it is
exchangeable) upon the occurrence of an Asset Sale or a Change of Control shall
not constitute Disqualified Stock if such Capital Stock (and all such securities
into which it is convertible or for which it is exchangeable) provides that the
issuer thereof will not repurchase or redeem any such Capital Stock (or any such
security into which it is convertible or for which it is exchangeable) pursuant
to such provisions prior to compliance by the Company with Sections 3.07, 4.10
or 4.15 hereof, as the case may be.
"Domestic Restricted Subsidiary" means a Restricted Subsidiary that is
not formed, incorporated or organized in a jurisdiction outside of the United
States.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant
to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
5
<PAGE> 11
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness (other than Indebtedness
under the New Credit Facility) in existence on the Closing Date, until such
Indebtedness is repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibit A-1 or A-2 hereto issued in accordance with Article Two hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii)
to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" means all Domestic Restricted Subsidiaries and Canadian
Subsidiaries of the Company existing on the Closing Date (other than AH
Industries, Inc.), and all Subsidiaries of the Company created or acquired by
the Company after the Closing Date that becomes a Guarantor in accordance with
Section 4.13 hereof.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (a) currency exchange or interest rate swap,
cap or collar agreements and (b) other agreements or arrangements designed to
protect such Person against fluctuations in currency exchange or interest rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the Global Note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
will be issued in a denomination equal to the outstanding principal amount of
the Notes sold or transferred to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, (a) any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued
6
<PAGE> 12
expense or trade payable, if and to the extent any of the foregoing indebtedness
(other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP,
(b) all indebtedness of others secured by a Lien on any asset of such Person
(whether or not such indebtedness is assumed by such Person) and (c) to the
extent not otherwise included, the Guarantee by such Person of any indebtedness
of any other Person.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP,
excluding, however, trade accounts receivable and bank deposits made in the
ordinary course of business. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a 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 Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in
Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any option or other agreement to sell or give a Lien).
"Limited-Recourse Debt" means Indebtedness (a) as to which neither the
Company nor any of its Restricted Subsidiaries (i) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness) or is otherwise directly or indirectly liable (as a
guarantor or otherwise) or (ii) constitutes the lender, except, in the case of
clauses (i) and (ii), to the extent permitted by Sections 4.07 and 4.09 hereof,
(b) no default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted Subsidiary)
would permit (upon notice, lapse of time or both) any holder of any other
Indebtedness of the Company
7
<PAGE> 13
or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity and (c) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries, except to the extent of any
Indebtedness incurred by the Company or any of its Restricted Subsidiaries in
accordance with clause (a) (i) above.
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Make-Whole Amount" means, with respect to any Note, an amount equal to
the excess, if any, of (a) the present value of the remaining principal, premium
and interest payments that would be payable with respect to such Note if such
Note were redeemed on October 1, 2002, computed using a discount rate equal to
the Treasury Rate plus 75 basis points, over (b) the outstanding principal
amount of such Note.
"Make-Whole Average Life" means, with respect to any date of redemption
of Notes, the number of years (calculated to the nearest one-twelfth) from such
redemption date to October 1, 2002.
"Make-Whole Price " means, with respect to any Note, the greater of (a)
the sum of the principal amount of and Make-Whole Amount with respect to such
Note, and (b) the redemption price of such Note on October 1, 2002.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (a) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (i) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (ii)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (b) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
(a) the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, (b) taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), (c) amounts applied to the
repayment of Indebtedness secured by a Lien on the asset or assets that were the
subject of such Asset Sale and (d) any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"New Credit Facility" means that certain credit agreement, dated the
Closing Date, by and among the Company and BankBoston, N.A., as administrative
agent, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case,
as amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
8
<PAGE> 14
"Non-U.S. Person" means a person who is not a U.S. Person.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the Offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to DTC, Euroclear or Cedel, a Person
who has an account with DTC, Euroclear or Cedel, respectively (and, with respect
to DTC, shall include Euroclear and Cedel).
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company; (b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any Restricted Subsidiary of the Company in
a Person, if as a result of such Investment (i) such Person becomes a Restricted
Subsidiary of the Company or (ii) 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 of the
Company; (d) any Restricted Investment made as a result of the receipt of
non-cash consideration from (i) an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof or (ii) a disposition of assets that does
not constitute an Asset Sale; (e) any Investments received solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of the
Company; (f) loans or advances to owner-operators and employees of the Company
or its Restricted Subsidiaries made in the ordinary course of business; (g)
Investments in an amount not to exceed $5.0 million in Haul Insurance Limited to
the extent required by applicable laws or regulations or pursuant to any
directive or request (whether or not having the force of law) of any
governmental authority having jurisdiction over Haul Insurance Limited; (h)
Investments received in connection with the settlement of any ordinary course
obligations owed to the Company or any of its Restricted Subsidiaries; (i) other
Investments in businesses related to the businesses operated by the Company and
its Restricted Subsidiaries in an aggregate amount not to exceed $30.0 million,
provided that the aggregate amount of such Investments shall not exceed $15.0
million in any calendar year; and (j) investments by the Company or a Restricted
Subsidiary of the Company in a Receivables Subsidiary or any Investment by a
Receivables Subsidiary in any other Person or assets in connection with a
Qualified Receivables Transaction; provided that any Investment in any such
Person is in the form of a Purchase Money Note, an equity interest or interests
in accounts receivable generated by the Company or a Subsidiary of the Company
and transferred to any Person in connection with a Qualified Receivables
Transaction or any such Person owning such accounts receivable.
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<PAGE> 15
"Permitted Liens" means (a) Liens in favor of the Company or any of its
Restricted Subsidiaries; (b) Liens securing Obligations incurred pursuant to
clause (i) of the second paragraph of Section 4.09 hereof; (c) Liens on property
or Equity Interests of a Person existing at the time such Person is merged into
or consolidated with the Company or any Restricted Subsidiary of the Company;
provided that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets or Equity Interests
other than those of the Person merged into or consolidated with the Company; (d)
Liens on property existing at the time of acquisition thereof by the Company or
any Restricted Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (e) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (f) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (v) of the second paragraph of Section 4.09 hereof covering
only the assets acquired with such Indebtedness; (g) Liens existing on the
Closing Date; (h) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefore; (i) Liens securing the
Notes or any Guarantee thereof, (j) Liens securing Permitted Refinancing
Indebtedness to the extent that the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded was permitted to be secured by a Lien;
(k) Liens on Investments of the Company or any of its Restricted Subsidiaries in
any Person that is not a Restricted Subsidiary of the Company to secure the
Indebtedness of such Person; (l) Liens incurred in the ordinary course of
business of the Company or any Restricted Subsidiary of the Company with respect
to obligations that do not exceed $2.0 million at any one time outstanding and
that (i) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary course
of business) and (ii) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
business by the Company or such Restricted Subsidiary and (m) Liens on assets of
a Receivables Subsidiary securing Indebtedness incurred in connection with a
Qualified Receivables Transaction, provided that such Indebtedness was incurred
in connection with such Qualified Receivables Transaction.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries;
provided that: (a) the principal amount (or accredit value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accredit value, if applicable), plus premium and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (b)
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (c) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment to the
Notes on terms at least as favorable to the Holders of Notes as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and (d) such Indebtedness is incurred
either by the Company or by the Restricted Subsidiary that is an obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof
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<PAGE> 16
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"Principals" means the directors and executive officers of the Company
on the Closing Date, as set forth under "Management" in the offering memorandum
of the Company, dated September 19, 1997 with respect to the Notes, their
respective spouses and lineal descendants, and any Affiliate of any of the
foregoing.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) hereof to be placed on all Notes issued under this Indenture except
as otherwise permitted by the provisions of this Indenture.
"Purchase Money Note" means a promissory note evidencing a line of
credit, which may be irrevocable, from, or evidencing other Indebtedness owed
to, the Company or any Subsidiary of the Company in connection with a Qualified
Receivables Transaction, which note shall be repaid from cash available to the
maker of such note, other than amounts required to be established as reserves
pursuant to agreements, amounts paid to investors in respect of interest,
principal and other amounts owing to such investors and amounts paid in
connection with the purchase of newly generated receivables.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Subsidiary of the
Company pursuant to which the Company or any Subsidiary of the Company may sell,
convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a
transfer by the Company or any Subsidiary of the Company) and (b) any other
person (in the case of a transfer by a Receivables Subsidiary), or may grant a
security interest in, any accounts receivable (whether now existing or arising
in the future) of the Company or any Subsidiary of the Company, and any assets
related thereto including, without limitation, all collateral securing such
accounts receivable, all contracts and all guarantees or other obligations in
respect of such accounts receivable, proceeds of such accounts receivable and
other assets which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Subsidiary of the Company
(other than a Guarantor), which engages in no activities other than in
connection with the financing of accounts receivable and which is designated by
the Board of Directors of the Company (as provided below) as a Receivables
Subsidiary (a) no portion of the Indebtedness or any other Obligations
(contingent or otherwise) of which (i) is guaranteed by the Company or any other
Subsidiary of the Company (excluding guarantees of Obligations (other than the
principal of, and interest on, Indebtedness)) pursuant to Standard
Securitization Undertakings, (ii) is recourse to or obligates the Company or any
other Subsidiary of the Company in any way other than pursuant to Standard
Securitization Undertakings or (iii) subjects any property or asset of the
Company or any other Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings, (b) with which neither the Company nor any
other Subsidiary of the Company has any material contract, agreement,
arrangement or understanding (except in connection with a Purchase Money Note or
Qualified Receivables Transaction) other than on terms no less favorable to the
Company or such other Subsidiary of the Company than those that might be
obtained at the time from persons that are not Affiliates of the Company, other
than fees payable in the ordinary course of business in connection with
servicing accounts receivable, and (c) to which neither the Company nor any
other Subsidiary of the Company has any obligation to maintain or preserve such
entity's financial condition or cause such entity
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<PAGE> 17
to achieve certain levels of operating results. Any such designation by the
Board of Directors of the Company shall be evidenced to the Trustee by filing
with the Trustee a certified copy of the resolution of the Board of Directors of
the Company giving effect to such designation and an Officers' Certificate
certifying, to the best of such officer's knowledge and belief after consulting
with counsel, that such designation complied with the foregoing conditions.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Closing Date by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with and registered in the name of the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Regulation S Temporary Global Note upon expiration of
the Restricted Period.
"Regulation S Temporary Global Note" means a single temporary global
Note in the form of Note attached hereto as Exhibit A-2 bearing the Private
Placement Legend and deposited with and registered in the name of the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Regulation S.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Notes" means the 144A Global Note, the IAI Global
Note and the Regulation S Global Notes, each of which shall bear the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rigs" means specialized tractor-trailers used to haul to automobiles
and light trucks.
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
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<PAGE> 18
"Rule 903" means Rule 903 under the Securities Act.
"Rule 904" means Rule 904 under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company which are reasonably customary in an accounts
receivable transaction.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (b) any partnership (i) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (ii)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means the Guarantee of the Notes by each of the
Guarantors pursuant to Article Ten hereof in the form of Subsidiary Guarantee
attached hereto as Exhibit E and any additional Guarantee of the Notes to be
executed by any Subsidiary of the Company pursuant to Section 4.13 hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06(g) hereof.
"Treasury Rate" means, at any time of computation, the yield to
maturity at such time (as compiled by and published in the most recent Federal
Reserve Statistical Release H.15(519), which has become publicly available at
least two business days prior to the date of the redemption notice or, if such
Statistical Release is no longer published, any publicly available source of
similar market data) of United States Treasury securities with a constant
maturity most nearly equal to the Make-Whole Average Life;
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<PAGE> 19
provided, however, that if the Make-Whole Average Life is not equal to the
constant maturity of the United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the Make-Whole Average Life is less than one year, the
weekly average yield on actually traded United States Treasury Securities
adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global note in the form of
Exhibit A-1 attached hereto that bears the Global Note Legend and the "Schedule
of Exchanges of Interests in the Global Note" attached thereto, and that is
deposited with and registered in the name of the Depositary, representing a
series of Notes that do not bear the Private Placement Legend.
"Unrestricted Global Note" means one or more global Notes that do not
and are not required to bear the Private Placement Legend and are deposited with
and registered in the name of the Depositary or its nominee.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution, but only to the extent that such Subsidiary (a) has no Indebtedness
other than Limited-Recourse Debt, (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding comply with Section 4.11 hereof and (c) except to the extent
permitted by Section 4.07 hereof, is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (i) to subscribe for additional Equity Interests or (ii) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
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<PAGE> 20
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"........................................ 4.11
"Asset Sale Offer"............................................. 3.09
"Change of Control Offer"...................................... 4.15
"Change of Control Payment".................................... 4.15
"Change of Control Payment Date"............................... 4.15
"Covenant Defeasance".......................................... 8.03
"Event of Default"............................................. 6.01
"Excess Proceeds".............................................. 4.10
"incur"........................................................ 4.09
"Legal Defeasance" ............................................ 8.02
"Offer Amount"................................................. 3.09
"Offer Period"................................................. 3.09
"Paying Agent"................................................. 2.03
"Permitted Debt................................................ 4.09
"Purchase Date"................................................ 3.09
"Registrar".................................................... 2.03
"Restricted Payments".......................................... 4.07
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
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<PAGE> 21
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained, the Guarantors in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
Notes issued in global form shall be substantially in the form of
Exhibits A-1 or A-2 attached hereto (including the Global Note Legend and the
"Schedule of Exchanges in the Global Note" attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A-1 attached
hereto (but without the Global Note Legend and without the "Schedule of
Exchanges of Interests in the Global Note" attached thereto). Each Global Note
shall represent such of the outstanding Notes as shall be specified therein and
each shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The Restricted
Period shall be terminated upon the receipt by the Trustee of (i) a written
certificate from the Depositary, together with copies of certificates from
Euroclear and Cedel Bank certifying that they have received certification of
non-United States beneficial ownership of 100% of the aggregate principal amount
of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to
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<PAGE> 22
another exemption from registration under the Securities Act and who will take
delivery of a beneficial ownership interest in a 144A Global Note or an IAI
Global Note, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an
Officers' Certificate from the Company. Following the termination of the
Restricted Period, beneficial interests in the Regulation S Temporary Global
Note shall be exchanged for beneficial interests in Regulation S Permanent
Global Notes pursuant to the Applicable Procedures. Simultaneously with the
authentication of Regulation S Permanent Global Notes, the Trustee shall cancel
the Regulation S Temporary Global Note. The aggregate principal amount of the
Regulation S Temporary Global Note and the Regulation S Permanent Global Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by the Agent Members through
Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be 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 a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an
Officer, authenticate Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Notes. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. 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 agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
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") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying
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<PAGE> 23
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule 903
under the Securities Act. Upon the occurrence of either of the preceding events
in (i) or (ii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections
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<PAGE> 24
2.07 and 2.11 hereof. Every Note authenticated and delivered in exchange for, or
in lieu of, a Global Note or any portion thereof, pursuant to Section 2.07 or
2.11 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.06(a), however beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.06(b), (c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the procedures of the Depositary therefor. Beneficial interests in
the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. The Trustee shall have no obligation to ascertain the Depositary's
compliance with any such restrictions on transfer. Transfers of beneficial
interests in the Global Notes also shall require compliance with either
subparagraph (i) or (ii) below, as applicable, as well as one or more of the
other following subparagraphs as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in the
same Restricted Global Note in accordance with the transfer restrictions set
forth in the Private Placement Legend; provided, however, that prior to the
expiration of the Restricted Period transfers of beneficial interests in the
Temporary Regulation S Global Note may not be made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Note may be transferred only
to Persons who take delivery thereof in the form of a beneficial interest in
an Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described in
this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global
Notes. In connection with all transfers and exchanges of beneficial interests
(other than transfers of beneficial interests in a Global Note to Persons who
take delivery thereof in the form of a beneficial interest in the same Global
Note), the transferor of such beneficial interest must deliver to the
Registrar either (A) (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to credit or cause to be credited a
beneficial interest in the specified Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given
in accordance with the Applicable Procedures containing information regarding
the Participant account to be credited with such increase or (B) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause to
be issued a Definitive Note in an amount equal to the beneficial interest to
be transferred or exchanged and (2) instructions given by the Depositary to
the Registrar containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer ore exchange
referred to in (1) above; provided that in no event shall Definitive Notes be
issued upon the transfer or exchange of beneficial interests in the Regulation
S Temporary Global Note prior to (x) the expiration of the Restricted Period
and (y) the receipt by the Registrar of any certificates required pursuant to
Rule 903 under the Securities Act. Upon an Exchange Offer by the Company in
accordance with Section 2.06(f) hereof, the requirements of this Section
2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal delivered
by the Holder of such beneficial interests in the Restricted Global Notes.
Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this
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Indenture, the Notes and otherwise applicable under the Securities Act, the
Trustee shall adjust the principal amount of the relevant Global Note(s)
pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
another Restricted Global Note if the Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in item
(2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver (x) a certificate in the form of Exhibit B hereto, including the
certifications in item (3) thereof, (y) to the extent required by item
3(d) of Exhibit B hereto, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act and such beneficial interest is being
transferred in compliance with any applicable blue sky securities laws
of any State of the United States and (z) if the transfer is being made
to an Institutional Accredited Investor and effected pursuant to an
exemption from the registration requirements of the Securities Act other
than Rule 144A under the Securities Act, Rule 144 under the Securities
Act or Rule 904 under the Securities Act, a certificate from the
transferee in the form of Exhibit D hereto.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note.
Beneficial interests in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in the Unrestricted Global Note or
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Note if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
holder, in the case of an exchange, or the transferee, in the case of a
transfer, is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in the Unrestricted Global Note, a
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<PAGE> 26
certificate from such holder in the form of Exhibit C hereto, including
the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a beneficial interest in
the Unrestricted Global Note, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4) thereof;
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein and
in the Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such beneficial interest is
being exchanged or transferred in compliance with any applicable blue
sky securities laws of any State of the United States.
If any such transfer is effected pursuant to subparagraph (B) or
(D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an authentication order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraph
(B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in any Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) If any holder of a beneficial interest in a Restricted Global Note
proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in
the form of a Definitive Note, then, upon receipt by the Registrar of the
following documentation (all of which may be submitted by facsimile):
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 904 under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
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(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(d)
thereof, a certificate from the transferee to the effect set forth in
Exhibit D hereof and, to the extent required by item 3(d) of Exhibit B,
an Opinion of Counsel from the transferee or the transferor reasonably
acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act and such beneficial interest is being
transferred in compliance with any applicable blue sky securities laws
of any State of the United States;
(F) if such beneficial interest is being transferred to the Company
or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
(G) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and
the Company shall execute and the Trustee shall authenticate and deliver to
the Person designated in the instructions a Definitive Note in the appropriate
principal amount. Definitive Notes issued in exchange for beneficial interests
in a Restricted Global Note pursuant to this Section 2.06(c) shall be
registered in such names and in such authorized denominations as the holder
shall instruct the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such Definitive
Notes to the Persons in whose names such Notes are so registered. Definitive
Notes issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend
and shall be subject to all restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be (A)
exchanged for a Definitive Note prior to (x) the expiration of the Restricted
Period and (y) the receipt by the Registrar of any certificates required
pursuant to Rule 903 under the Securities Act or (B) transferred to a Person
who takes delivery thereof in the form of a Definitive Note prior to the
conditions set forth in clause (A) above or unless the transfer is pursuant to
an exemption from the registration requirements of the Securities Act other
than Rule 903 or Rule 904.
(iii) Notwithstanding 2.06(c)(i), a holder of a beneficial interest
in a Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
holder, in the case of an exchange, or the transferee, in the case of a
transfer, is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
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(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit C hereto, including
the certifications in item (1)(b) thereof;
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a Definitive Note that
does not bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit B hereto, including the certifications in
item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company, to the
effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein and
in the Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such beneficial interest in a
Restricted Global Note is being exchanged or transferred in compliance
with any applicable blue sky securities laws of any State of the United
States.
(iv) If any holder of a beneficial interest in an Unrestricted Global
Note proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in
the form of a Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.06(b)(ii), the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Definitive Notes issued
in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii)
shall be registered in such names and in such authorized denominations as the
holder shall instruct the Registrar through instructions from the Depositary
and the Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered.
Definitive Notes issued in exchange for a beneficial interest pursuant to this
section 2.06(c)(iii) shall not bear the Private Placement Legend. Beneficial
interests in an Unrestricted Global Note cannot be exchanged for a Definitive
Note bearing the Private Placement Legend or transferred to a Person who takes
delivery thereof in the form of a Definitive Note bearing the Private
Placement Legend.
(d) Transfer or Exchange of Definitive Notes for Beneficial Interests.
(i) If any Holder of Restricted Definitive Notes proposes to exchange
such Notes for a beneficial interest in a Restricted Global Note or to
transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Note, then, upon receipt
by the Registrar of the following documentation (all of which may be submitted
by facsimile):
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<PAGE> 29
(A) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Definitive Notes are being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such Definitive Notes are being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 904 under the
Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (2) thereof;
(D) if such Definitive Notes are being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Definitive Notes are being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed
in subparagraphs (B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(d)
thereof, a certificate from the transferee to the effect set forth in
Exhibit D hereof and, to the extent required by item 3(d) of Exhibit B,
an Opinion of Counsel from the transferee or the transferor reasonably
acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act and such Definitive Notes are being
transferred in compliance with any applicable blue sky securities laws
of any State of the United States;
(F) if such Definitive Notes are being transferred to the Company
or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
(G) if such Definitive Notes are being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Definitive Notes, increase or cause to be
increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, in the case of clause (C) above, the Regulation S Global
Note, and in all other cases, the IAI Global Note.
(ii) A Holder of Restricted Definitive Notes may exchange such Notes for
a beneficial interest in the Unrestricted Global Note or transfer such
Restricted Definitive Notes to a Person who takes delivery thereof in the form
of a beneficial interest in the Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
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(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof;
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company to the
effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein and
in the Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Definitive Notes are being
exchanged or transferred in compliance with any applicable blue sky
securities laws of any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) A Holder of Unrestricted Definitive Notes may exchange such Notes
for a beneficial interest in the Unrestricted Global Note or transfer such
Definitive Notes to a Person who takes delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note. Upon receipt of a request
for such an exchange or transfer, the Trustee shall cancel the Unrestricted
Definitive Notes and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Note.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
beneficial interests transferred pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above.
(e) Transfer and Exchange of Definitive Notes. Upon request by a Holder
of Definitive Notes and such Holder's compliance with the provisions of this
Section 2.06(e), the Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the
requesting Holder shall present or surrender to the Registrar the Definitive
Notes duly endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar duly executed by such Holder or by his attorney,
duly authorized in writing. In addition, the requesting Holder shall
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provide any additional certifications, documents and information, as applicable,
pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to and registered in
the name of Persons who take delivery thereof if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 904, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver (x) a certificate in the form of Exhibit B
hereto, including the certifications in item (3) thereof, (y) to the
extent required by item 3(d) of Exhibit B hereto, an Opinion of Counsel
in form reasonably acceptable to the Company to the effect that such
transfer is in compliance with the Securities Act and such beneficial
interest is being transferred in compliance with any applicable blue sky
securities laws of any State of the United States and (z) if the
transfer is being made to an Institutional Accredited Investor and
effected pursuant to an exemption from the registration requirements of
the Securities Act other than Rule 144A under the Securities Act, Rule
144 under the Securities Act or Rule 904 under the Securities Act, a
certificate from the transferee in the form of Exhibit D hereto.
(ii) Restricted Definitive Notes may be exchanged by any Holder thereof
for an Unrestricted Definitive Note or transferred to Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
holder, in the case of an exchange, or the transferee, in the case of a
transfer, is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes
to exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(a) thereof;
(2) if the Holder of such Restricted Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery thereof in
the form of an Unrestricted Definitive Note, a
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<PAGE> 32
certificate from such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph (D), an
Opinion of Counsel in form reasonably acceptable to the Company to the
effect that such exchange or transfer is in compliance with the
Securities Act, that the restrictions on transfer contained herein and
in the Private Placement Legend are not required in order to maintain
compliance with the Securities Act, and such Restricted Definitive Note
is being exchanged or transferred in compliance with any applicable blue
sky securities laws of any State of the United States.
(iii) A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request for such a transfer, the Registrar
shall register the Unrestricted Definitive Notes pursuant to the instructions
from the Holder thereof. Unrestricted Definitive Notes cannot be exchanged for
or transferred to Persons who take delivery thereof in the form of a
Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by persons that
are not (x) broker-dealers, (y) Persons participating in the distribution of the
Exchange Notes or (z) Persons who are affiliates (as defined in Rule 144) of the
Company and accepted for exchange in the exchange Offer and (ii) Definitive
Notes in an aggregate principal amount equal to the principal amount of the
Restricted Definitive Notes accepted for exchange in the Exchange Offer.
Concurrent with the issuance of such Notes, the Trustee shall cause the
aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the
following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A
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<PAGE> 33
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), (B) IT IS NOT A U.S. PERSON AND IS NOT ACQUIRING THIS SECURITY FOR THE
ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT
OR (C) AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT). THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT), IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY, (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
all Notes issued in exchange therefor or substitution thereof) shall not
bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY."
(iii) Regulation S Temporary Global Note Legend.he Regulation S
Temporary Global Note shall bear a legend in substantially the following form:
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<PAGE> 34
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Trustee or by the Depositary at the direction of the Trustee, to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and Definitive
Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.06, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration
of transfer or exchange of Global Notes or Definitive Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption under
Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part or (C) to register the transfer of or to exchange a
Note between a record date and the next succeeding Interest Payment Date.
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(vi) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and
for all other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 2.02 hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Trustee knows are so owned shall be so disregarded.
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SECTION 2.10.TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive Notes in exchange for
temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11.CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered to the Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12.DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or,
upon the written request of the Company, the Trustee in the name and at the
expense of the Company) shall mail or cause to be mailed to Holders a notice
that states the special record date, the related payment date and the amount of
such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01.NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (a) the clause of this Indenture pursuant
to which the redemption shall occur, (b) the redemption date, (c) the principal
amount of Notes to be redeemed and (e) the redemption price.
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SECTION 3.02.SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed, or, if the Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of Notes to be redeemed at its
registered address. Notices of redemption may not be conditional. 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. A
new Note in principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original
Note. Notes called for redemption become due on the date fixed for redemption.
On and after the redemption date, interest ceases to accrue on Notes or
portions of them called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date (unless a shorter time is acceptable to the Trustee), an
Officers'
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Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess
of the amounts necessary to pay the redemption price of, and accrued interest
on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to
the Person in whose name such Note was registered at the close of business on
such record date. If any Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Prior to October 1, 2002, the Notes will be subject to
redemption at any time at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at the Make-Whole Price, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date. On and after October 1, 2002, the Notes will be
subject to redemption at any time at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period
beginning on October 1 of the years indicated below:
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<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.3125%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.8750%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.4375%
2005 and thereafter . . . . . . . . . . . . . . . . . . . . . . . 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time on or prior to
October 1, 2000, the Company may redeem up to 35% of the Notes at a
redemption price equal to 108.625% of the principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, with the net proceeds of one or more sales of Equity Interests
(other than Disqualified Stock) of the Company, provided that (i) at least
$97.5 million of Notes remain outstanding immediately following each such
redemption and (ii) such redemption shall occur within 90 days of the date of
the consummation of such sale.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the Company
shall not be required to make mandatory redemption payments with respect to the
Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders to purchase Notes (an "Asset
Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later
than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount at maturity
of Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer
Amount") or, if less than the Offer Amount has been tendered, all Notes
tendered in response to the Asset Sale Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
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<PAGE> 40
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address specified in the
notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the 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); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee 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 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Notes tendered by such
Holder and accepted by the Company for purchase, and the Company shall promptly
issue a new Note, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not
so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale
Offer on the Purchase Date.
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<PAGE> 41
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Notes on the dates and in the manner provided in
the Notes. Principal, premium, if any, and interest shall be considered paid
on the date due if the Paying Agent, if other than the Company or a Subsidiary
thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due. The Company shall
pay all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace period) at the
same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange 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 Corporate Trust
Office of the Trustee.
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;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Notes are outstanding, the Company shall furnish to the Holders
of Notes (i) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
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<PAGE> 42
the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Company and
its consolidated Subsidiaries (showing in reasonable detail, either on the face
of the financial statements or in the footnotes thereto and in Management's
Discussion and Analysis of Financial Condition and Results of Operations, the
financial condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial information and results of operations
of the Unrestricted Subsidiaries of the Company) and, with respect to the
annual information only, a report thereon by the Company's certified
independent accountants and (ii) all current reports that would be required to
be filed with the SEC on Form 8-K if the Company were required to file such
reports. In addition, whether or not required by the rules and regulations of
the SEC, the Company will file a copy of all such information and reports with
the SEC for public availability (unless the SEC will not accept such a filing)
and make such information available to securities analysts and prospective
investors upon request.
(b) For so long as any Notes remain outstanding, the Company and its
Restricted Subsidiaries shall furnish to the Holders and to securities analysts
and prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A (d) (4) under the Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and the Pledge Agreement, and further stating,
as to each such Officer signing such certificate, that to the best of his or
her knowledge the Company has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of
this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by
a written statement of the Company's independent public accountants (who shall
be a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default
or Event of Default and what action the Company is taking or proposes to take
with respect thereto.
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SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, (a) declare or pay any dividend or make any other payment or
distribution on account of the Company's Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation
involving the Company) or to any direct or indirect holders of the Company's
Equity Interests in their capacity as such (other than dividends or
distributions (i) payable in Equity Interests (other than Disqualified Stock)
of the Company or (b) to the Company or any Guarantor); (b) purchase, redeem or
otherwise acquire or retire for value (including without limitation, in
connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the Company (other
than any such Equity Interests owned by the Company or any Guarantor); (c) make
any payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness of the Company or any Guarantor
that is subordinated to the Notes or any Guarantee thereof, except a payment of
interest or principal at Stated Maturity; or (d) make any Restricted Investment
(all such payments and other actions set forth in clauses (a) through (d) above
being collectively referred to as "Restricted Payments"), unless, at the time
of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the first paragraph of
Section 4.09; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the Closing Date (excluding Restricted Payments permitted by
clause (ii) through (vii) of the next succeeding paragraph), is less than the
sum of (1) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from October 1, 1997 to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
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Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (2) 100% of the aggregate net proceeds received by the Company
from the issue or sale since the Closing Date of Equity Interests of the
Company (other than Disqualified Stock), plus (3) the amount by which
Indebtedness of the Company and its Restricted Subsidiaries is reduced on the
balance sheet of the Company upon the conversion or exchange (other than by a
Restricted Subsidiary of the Company) subsequent to the Closing Date of any
such Indebtedness for Equity Interests (other than Disqualified Stock) of the
Company, plus (4) to the extent that any Restricted Investment that was made
after the Closing Date is sold for cash or otherwise liquidated or repaid for
cash, the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment, plus (5) in the event that any
Unrestricted Subsidiary is redesignated as a Restricted Subsidiary, the lesser
of (A) an amount equal to the fair value (as determined by the Board of
Directors) of the Company's Investments in such Restricted Subsidiary and (B)
the amount of Restricted Investments previously made by the Company and its
Restricted Subsidiaries in such Unrestricted Subsidiary.
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at the date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
or any Restricted Subsidiary in exchange for, or out of the net cash proceeds
of the substantially concurrent sale (other than to a Subsidiary of the
Company) of, other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (c)(2) of the preceding paragraph;
(iii) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; (iv) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary of the Company held by any member of the Company's
(or any of its Restricted Subsidiaries') management or board of directors
pursuant to any management equity subscription agreement, stock option
agreement or other similar agreement; provided that the aggregate price paid
for all such repurchased, redeemed, acquired or retired Equity Interests shall
not exceed $500,000 in any twelve-month period and no Default or Event of
Default shall have occurred and be continuing immediately after such
transaction; (v) the repurchase or other acquisition of subordinated
Indebtedness in anticipation of satisfying a sinking fund or principal payment
obligation, in each case due within one year of the date of repurchase or other
acquisition, provided that the date such sinking fund or principal payment
obligation becomes due is prior to the final maturity date of the Notes; (vi)
repurchases of Equity Interests that may be deemed to occur upon the exercise
of options, warrants or other rights to acquire Capital Stock of the Company to
the extent that such Equity Interests represent a portion of the exercise price
of such options, warrants or other rights; and (vii) additional Restricted
Payments in an amount not to exceed $5.0 million.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined in
good faith by the Board of Directors whose resolution with respect thereto
shall be delivered to the Trustee. Not later than 30 days following the end of
any fiscal quarter in which any Restricted Payments were made, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payments were permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed.
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The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (i) the net book value of such Investments at the time of such
designation, (ii) the fair market value of such Investments at the time of such
designation and (iii) the original fair market value of such Investments at the
time they were made. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be evidenced to
the Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions. If, at any time, any
Unrestricted Subsidiary would fail to meet the definition of an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date
under Section 4.09 hereof, the Company shall be in default of such Section).
The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.09 hereof is calculated on a pro
forma basis as if such designation had occurred at the beginning of the four-
quarter reference period, and (ii) no Default or Event of Default would be in
existence following such designation.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) (a) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock
or (2) with respect to any other interest or participation in, or measured by,
its profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) 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 (a) Existing
Indebtedness as in effect on the Closing Date, (b) the New Credit Facility as
in effect as of the Closing Date, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive with respect to such dividend and other
payment restrictions than those contained in the New Credit Facility as in
effect on the Closing Date, (c) the Notes, any Guarantee thereof and this
Indenture, (d) applicable law, (e) any instrument governing Indebtedness or
Equity Interests of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the Equity Interests, properties or assets of any Person, other than the
Person, or the Equity Interests, property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was permitted by
the terms of this
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Indenture to be incurred, (f) by reason of customary nonassignment provisions
in leases entered into in the ordinary course of business and consistent with
past practices, (g) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature described in
clause (iii) above on the property so acquired, (h) customary restrictions in
asset or stock sale agreements limiting transfer of such assets or stock
pending the closing of such sale, (i) customary non-assignment provisions in
contracts entered into in the ordinary course of business, (j) Permitted
Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, or (k) any Purchase Money Note, or other Indebtedness or
contractual requirements incurred with respect to a Qualified Receivables
Transaction relating to a Receivables Subsidiary.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company's Restricted Subsidiaries will not issue
any shares of preferred stock (other than to the Company or a Wholly Owned
Restricted Subsidiary of the Company); provided, however, that the Company and
the Guarantors may incur Indebtedness (including Acquired Debt) if the
Consolidated Interest Coverage Ratio for the Company's most recently ended four
full fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred would have been at least 2.0 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred at the beginning of such four-quarter
period.
The provisions of the first paragraph of this covenant will not apply
to the incurrence of any of the following (collectively, "Permitted Debt"):
(i) the incurrence by the Company and the Guarantors of Indebtedness
under (a) the New Credit Facility and (b) Capital Lease Obligations and
purchase money financing in respect of property, plant and equipment,
provided that the aggregate amount of Indebtedness incurred pursuant to
this clause (i) shall not exceed at any time outstanding the greater of
(1) $230.0 million and (2) the sum of (A) 80% of the consolidated accounts
receivable of the Company as shown on the Company's most recent balance
sheet, plus (B) 60% of the consolidated inventory of the Company as shown
on the Company's most recent balance sheet, plus (C) 50% of the
consolidated property, plant and equipment, net of depreciation, of the
Company as shown on the Company's most recent balance sheet;
(ii) the incurrence by the Company and the Guarantors of Indebtedness
represented by the Notes, the Subsidiary Guarantees and this Indenture;
(iii)the incurrence by the Company and its Restricted
Subsidiaries of the Existing Indebtedness;
(iv) the incurrence by the Company and the Guarantors of additional
Indebtedness in an aggregate amount not to exceed $10.0 million at any
time outstanding;
(v) the incurrence by the Company and the Guarantors of Indebtedness
in connection with the acquisition of assets or a new Restricted
Subsidiary; provided that such Indebtedness was incurred
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by the prior owner of such assets or such Restricted Subsidiary prior to
such acquisition by the Company and the Guarantors and was not incurred in
connection with, or in contemplation of, such acquisition by the Company
and the Guarantors; and provided further that the aggregate amount of
Indebtedness incurred pursuant to this clause (v) does not exceed $5.0
million; at any time outstanding;
(vi) the incurrence by the Company and its Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness that was
permitted to be incurred by the first paragraph, or by clauses (ii)
through (ix) of the second paragraph of this Section 4.09;
(vii) the incurrence of Indebtedness between or among the Company
and its Restricted Subsidiaries; provided, however, that any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary, and any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Restricted Subsidiary, shall be
deemed, in each case, to constitute an incurrence of such Indebtedness by
the Company or such Restricted Subsidiary, as the case may be;
(viii) the incurrence by the Company and its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging (a) interest rate risk with respect to any Indebtedness that is
permitted by the terms of this Indenture to be outstanding or (b) foreign
currency risk;
(ix) the incurrence of Indebtedness by a Restricted Subsidiary of the
Company that is not a Guarantor in an aggregate amount not to exceed the
sum of (a) 80% of the accounts receivable of such Subsidiary as shown on
such Subsidiary's most recent balance sheet, plus (b) 60% of the inventory
of such Subsidiary as shown on such Subsidiary's most recent balance
sheet, plus (c) 50% of the property, plant and equipment, net of
depreciation, of such Subsidiary as shown on such Subsidiary's most recent
balance sheet;
(x) the guarantee by the Company or any Guarantor of Indebtedness
that was permitted to be incurred by another provision of this Section
4.09; and
(xi) Indebtedness of a Receivables Subsidiary that is not recourse to
the Company or any of its Restricted Subsidiaries (other than Standard
Securitization Undertakings) incurred in connection with a Qualified
Receivables Transaction.
For purposes of determining the amount of any Indebtedness of any Person under
this Section 4.09, (a) there shall be no double counting of direct obligations,
Guarantees and reimbursement obligations for letter of credit; (b) the
principal amount of any Indebtedness of such Person arising by reason of such
Person having granted or assumed a Lien on its property to secure Indebtedness
of another Person shall be the lower of the fair market value of such property
and the principal amount of such Indebtedness outstanding (or committed to be
advanced) at the time of determination; (c) the amount of any Indebtedness of
such Person arising by reason of such Person having Guaranteed Indebtedness of
another Person where the amount of such Guarantee is limited to an amount less
than the principal amount of the Indebtedness so Guaranteed shall be such
amount as so limited; (d) Indebtedness shall not include a non-recourse pledge
by the Company or any of its Restricted Subsidiaries of Investments in any
Person that is not a Restricted Subsidiary of the Company to secure the
Indebtedness of such Person; and (e) Indebtedness of the Company and its
Restricted Subsidiaries shall not include Indebtedness of a Restricted
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Subsidiary whose assets consist solely of partnership or similar interests in
another person that is not a Restricted Subsidiary of the Company, where the
obligations with respect to such Indebtedness arise as a matter of law from the
obligations of such other Person.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (x) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness
in any manner that complies with this Section 4.09 and such item 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,
the accretion of accredit value and the payment of interest in the form of
additional Indebtedness will not be deemed to be an incurrence of Indebtedness
for purposes of this Section 4.09.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time
of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided 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 such Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Subsidiary
Guarantee) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (b) any securities, notes or other
obligations received by the Company or such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) shall be deemed to be
cash for purposes of this provision.
Within 365 days of the receipt of any Net Proceeds from an Asset
Sale, the Company, at its option, may apply such Net Proceeds to the
acquisition of a controlling interest in another business, the making of a
capital expenditure or the acquisition of other assets (other than assets that
would be classified as current assets in accordance with GAAP), in each case,
in the same or a similar line of business as the Company and its Restricted
Subsidiaries, or in any business reasonably complementary, related or
incidental thereto, as determined in good faith by the Board of Directors.
Pending the final application of any such Net Proceeds, the Company may
temporarily reduce borrowings under the New Credit Facility or otherwise invest
such Net Proceeds in any manner that is not prohibited by this Indenture. Any
Net Proceeds from Asset Sales that are not applied or invested as provided in
the first sentence of this paragraph will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million,
the Company will be required to make an offer to all Holders of Notes (an
"Asset Sale Offer") to purchase the maximum principal amount of Notes that may
be purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the date of purchase, in accordance
with the procedures set forth in this Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
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Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of an Asset Sale Offer, the amount of Excess Proceeds shall be reset
at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or such Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with
an unrelated Person and (ii) the Company delivers to the Trustee (a) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $3.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) except in the case of
the provision of services in the ordinary course of business to, or the receipt
of services in the ordinary course of business from, any Person who is an
Affiliate of the Company solely by reason of an Investment in such Person by
the Company or its Subsidiaries, with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $5.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.
The foregoing provisions will not prohibit (i) any employment
agreement or other compensation plan or arrangement in the ordinary course of
business and either consistent with past practice or approved by a majority of
the disinterested members of the Board of Directors; (ii) transactions between
or among the Company and/or its Restricted Subsidiaries; (iii) any Permitted
Investment or any Restricted Payment that is permitted by Section 4.07 hereof;
(iv) sales of Equity Interests (other than Disqualified Stock) to Affiliates of
the Company; (v) transactions with Haul Insurance Limited, provided that no
less than once each calendar year, the Company delivers to the Trustee a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such transactions are in the ordinary course of business and
consistent with past practices and prudent insurance underwriting standards;
(vi) transactions in existence on the Closing Date, and any modifications
thereof or extensions thereto the terms of which are not materially more
adverse to the Company than those in existence on the Closing Date, including,
in each case, all future payments pursuant thereto; and (vii) sales of accounts
receivable and other related assets customarily transferred in an asset
securitization transaction involving accounts receivable to a Receivables
Subsidiary in a Qualified Receivables Transaction.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned
or hereafter acquired, or any income or profits therefrom or assign or convey
any right to receive income therefrom, except Permitted Liens, unless the Notes
are equally and ratably secured with the obligations so secured until such time
as such obligations are no longer secured by a Lien.
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SECTION 4.13. ADDITIONAL SUBSIDIARY GUARANTEES.
If the Company or any of its Restricted Subsidiaries shall acquire or
create another Domestic Restricted Subsidiary after the Closing Date, or any
Unrestricted Subsidiary shall cease to be an Unrestricted Subsidiary and shall
become a Domestic Restricted Subsidiary, then such Subsidiary shall execute a
Subsidiary Guarantee of the Notes and deliver an Opinion of Counsel, in
accordance with the terms of this Indenture.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article Five 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 other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall be
obligated to make an offer (a "Change of Control Offer") to each Holder of
Notes to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes at an offer price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following a Change of Control, the Company will mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"). Such notice, which shall govern the terms of the Change of
Control offer, shall state: (i) that the Change of Control Offer is being made
pursuant to this Section 4.15 and that all Notes tendered will be accepted for
payment; (ii) the purchase price and the purchase date; (iii) that any Note not
tendered will continue to accrue interest; (iv) that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date; (v) that Holders electing to
have any Notes purchased pursuant to a Change of Control Offer will be required
to surrender the Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (vi) that Holders
will be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and (vii) 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, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple thereof.
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
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such laws and regulations are applicable in connection with the repurchase of
the Notes as a result of a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Company. The Paying Agent will promptly mail to each Holder
of Notes so tendered the Change of Control Payment for such Notes, and the
Trustee will promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Note equal in principal amount to any unpurchased
portion of the Notes surrendered, if any; provided that each such new Note will
be in a principal amount of $1,000 or an integral multiple thereof. The
Company shall publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
SECTION 4.16. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Restricted Subsidiaries shall, pay
or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder of any Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this Indenture or the
Notes unless such consideration is offered to be paid or is paid to all Holders
of the Notes that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
Neither the Company nor any Guarantor will consolidate or merge with
or into (whether or not the Company or such Guarantor, as the case may be, is
the surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another Person unless (i) the Company or
such Guarantor, as the case may be, is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if other than the
Company or such Guarantor) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation organized
or existing under the laws of the United States, any state thereof or the
District of Columbia; (ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company or a Guarantor) or the
Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Company or
such Guarantor, as the case may be, under the Notes or such Guarantor's
Guarantee thereof and this Indenture pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of the Company or such Guarantor with or into another Guarantor or
a Wholly Owned Restricted Subsidiary of the Company, or a merger of a Guarantor
with or into another Person in connection with a Permitted Investment in such
Person, the Company or the Person formed by or surviving any such consolidation
or merger (if other than the Company), or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made (A)
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will have Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of the Company immediately preceding
the transaction and (B) will, at the time of such transaction and after giving
pro forma effect thereto as if such transaction had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio
test set forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes;
(b) default in payment when due of the principal of or premium, if
any, on the Notes;
(c) failure by the Company or any of its Restricted Subsidiaries to
comply with Section 4.15 hereof;
(d) failure by the Company or any of its Restricted Subsidiaries to
comply with Sections 4.07, 4.09, 4.10 or 5.01 hereof, which default continues
for 60 days;
(e) failure by the Company or any of its Restricted Subsidiaries for
60 days after written notice by the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes to comply with any of its other
agreements in this Indenture or the Notes;
(f) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists
or is created after the Closing Date, which default:
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(i) is caused by a failure to pay principal of or premium, if
any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such
default (a "Payment Default") or
(ii) results in the acceleration of such Indebtedness prior to
its express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or
more;
(g) failure by the Company or any of its Restricted Subsidiaries lo
pay final judgments aggregating in excess of $5.0 million and either:
(i) any creditor commences enforcement proceedings upon any such
judgment or
(ii) such judgments are not paid, discharged or stayed for a
period of 60 days;
(h) except as permitted by this Indenture, any Subsidiary Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect, or any Guarantor, or
any Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guarantee; and
(i) the Company or any of its Significant Subsidiaries or any group
of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case,
(iii) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(j) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an involuntary
case;
(ii) Restricted appoints a Custodian of the Company or any of
its Significant Subsidiaries or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary or
for all or substantially all of the property of the Company or any of
its Significant Subsidiaries or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary; or
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(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising under clauses (i) and (j)
of Section 6.01 with respect to the Company, any of its Significant
Subsidiaries or any group of Restricted Subsidiaries that, taken together,
would constitute a Significant Subsidiary, all outstanding Notes will become
due and payable without further action or notice. Holders of the Notes may not
enforce this Indenture or the Notes except as provided in this Indenture.
Subject to certain limitations, Holders of a majority in principal amount of
the then outstanding Notes may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the
acceleration of the Notes.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision
of the Notes or this Indenture.
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 Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that
the Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). 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
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purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
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SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes 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, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize
the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article Six, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
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litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii)the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
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(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes
or any other document in connection with the sale of the Notes or pursuant to
this Indenture other than its certificate of authentication.
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SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA Section 313(d).
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of an Event of Default specified in Section
6.01(i) or Section 6.01(j) hereof, such expenses are intended to constitute
expenses of administration under any Bankruptcy Law.
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To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(i) or (j) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of
a majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10 hereof, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The
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retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, provided all sums owing to the Trustee hereunder have
been paid and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the benefit
of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of at least $100
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by
a resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the
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same), except for the following provisions which shall survive until otherwise
terminated or discharged hereunder: (a) the rights of Holders of outstanding
Notes to receive solely from the trust fund described in Section 8.04 hereof,
and as more fully set forth in such Section, payments in respect of the
principal of, premium and Liquidated Damages, if any, and interest on such
Notes when such payments are due, (b) the Company's obligations with respect to
such Notes under Article Two and Section 4.02 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Article Eight, the Company may exercise its option under
this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13 and 4.15
hereof with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Notes shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company 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 of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.01 hereof of the option applicable to this Section
8.03 hereof, subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not constitute
Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
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 of the Notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of and premium, interest and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of Legal Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States 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
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Closing Date, there has been a change in the applicable federal income tax law,
in either case to the effect that, and based thereon such opinion of counsel
shall confirm that, the Holders of the outstanding Notes 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 Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit) or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than this Indenture) to which the Company 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 opinion of
counsel to the effect that 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;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Notes over the other creditors of the
Company with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding 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 (including the Company acting as 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 interest, but
such money need not be segregated from other funds except to the extent
required by law.
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The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the
Company makes any payment of principal of, premium, if any, or interest on any
Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
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Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture, the Notes or the Subsidiary
Guarantees without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place
of certificated Notes;
(c) to provide for the assumption of the Company's or the
Guarantors' obligations to the Holders of the Notes in the case of a merger or
consolidation pursuant to Article Five hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10
and 4.15 hereof) and the Notes may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof,
any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture, the Notes or the
Subsidiary Guarantees may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
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It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of
a majority in aggregate principal amount of the Notes then outstanding may
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Notes. However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to Sections 3.09, 4.10 and 4.15);
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, interest or Liquidated Damages, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority
in aggregate principal amount of the Notes and a waiver of the payment default
that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, interest or Liquidated Damages, if any, on the
Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 3.09, 4.10 and 4.15 hereof);
(h) release any Guarantor from its Subsidiary Guarantee of the Notes
(other than as provided for in Section 10.04); or
(i) make any change in the foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion
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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. However, any such Holder of a
Note or subsequent Holder of a Note may revoke the consent as to its Note if
the Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
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 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Company may not sign an amendment or supplemental Indenture until
the Board of Directors approves it. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive and (subject to Section
7.01) shall be fully protected in relying upon, an Officer's Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture.
ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.01. SUBSIDIARY GUARANTEES.
Each of the Guarantors hereby, jointly and severally, unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of this Indenture, the Notes or the Obligations of the
Company hereunder or thereunder, that: (a) the principal of and interest,
premium, if any, and Liquidated Damages, if any, on the Notes shall be promptly
paid in full when due, whether at maturity, by acceleration, redemption,
repurchase or otherwise, and interest on the overdue principal of and interest,
premium, if any, and Liquidated Damages, if any, on the Notes, if lawful, and
all other Obligations of the Company to the Holders or the Trustee hereunder or
thereunder shall be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, that same
shall be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at Stated Maturity, by acceleration,
redemption, repurchase or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately. The
Guarantors hereby agree that their 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
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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 covenant that this Subsidiary Guarantee shall
not be discharged except by complete performance of the Obligations contained
in the Notes and this Indenture. If any Holder of Notes or the Trustee is
required by any court or otherwise to return to the Company or Guarantors, or
any custodian, Trustee, liquidator or other similar official acting in relation
to either the Company or Guarantors, any amount paid either to the Trustee or
such Holder, this Subsidiary Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor agrees that it
shall not be entitled to any right of subrogation in relation to the Holders of
Notes in respect of any Obligations guaranteed hereby until payment in full of
all Obligations guaranteed hereby. Each Guarantor further agrees that, as
between the Guarantors, 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 Six hereof for the purposes of this
Subsidiary 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 declaration of acceleration of such Obligations as
provided in Article Six hereof, such Obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Subsidiary Guarantee. The Guarantors shall have the right to
seek contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Subsidiary
Guarantees.
SECTION 10.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES.
To evidence its Subsidiary Guarantee set forth in Section 10.01, each
Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form of Exhibit C (executed by the manual or facsimile
signature of one of its Officers) shall be endorsed by an Officer of such
Guarantor on each Note authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of such Guarantor by an Officer of such
Guarantor.
Each Guarantor hereby agrees that its Subsidiary 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 Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee
set forth in this Indenture on behalf of the Guarantors.
SECTION 10.03. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Articles Four and Five hereof, nothing
contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a
Guarantor, as an entirety or substantially as an entirety, to the Company or to
another Guarantor.
(b) Except as provided in Section 10.03(a) or in a transaction
referred to in Section 10.04, no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving
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Person) another corporation, Person or entity whether or not affiliated with
such Guarantor, or sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of its assets to, another corporation, Person or
entity unless: (i) subject to the provisions of Section 10.04, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) shall assume all the Obligations of such Guarantor pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes and this Indenture; and (ii) immediately after giving
effect to such transaction, no Default or Event of Default exists. Subject to
Section 10.04, in case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and reasonably satisfactory in
form to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and
the due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Guarantor, such successor corporation shall
succeed to and be substituted for the Guarantor with the same effect as if it
had been named herein as a Guarantor. Such successor corporation thereupon may
cause to be signed any or all of the Subsidiary Guarantees to be endorsed upon
all of the Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee. All the Subsidiary
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Subsidiary Guarantees theretofore and thereafter
issued in accordance with the terms of this Indenture as though all of such
Subsidiary Guarantees had been issued at the date of the execution hereof.
SECTION 10.04. RELEASES FOLLOWING SALE OF ASSETS.
Concurrently with any sale or other disposition of assets of any
Guarantor (including, if applicable, all of the Capital Stock of any
Guarantor), any Liens in favor of the Trustee in the assets sold thereby shall
be released; provided that in the event of an Asset Sale, the Net Proceeds from
such sale or other disposition are treated in accordance with the provisions of
Section 4.10. In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all of the Capital Stock of any Guarantor, or in the case
the Company designates a Guarantor to be an Unrestricted Subsidiary in
accordance with this Indenture, then such Guarantor (in the event of a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the Capital Stock of such Guarantor, or in the case the Company designates a
Guarantor to be an Unrestricted Subsidiary in accordance with this Indenture)
or the Person acquiring the property (in the event of a sale or other
disposition of all of the assets of such Guarantor), shall be released and
relieved of its Obligations under its Subsidiary Guarantee and Section 10.03;
provided that in the event of an Asset Sale, the Net Proceeds from such sale or
other disposition are treated in accordance with the provisions of Section
4.10. Upon delivery by the Company to the Trustee of an Officers' Certificate
and an Opinion of Counsel to the effect that such sale or other disposition was
made by the Company in accordance with the provisions of this Indenture,
including, without limitation, Section 4.10, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Guarantor
from its Obligations under its Subsidiary Guarantee. Any Guarantor not
released from its Obligations under its Subsidiary Guarantee shall remain
liable for the full amount of principal of and interest and Liquidated Damages,
if any, on the Notes and for the other Obligations of any Guarantor under this
Indenture as provided in this Article Ten. The release of any Guarantor
pursuant to this Section 10.04 shall be effective whether or not such release
shall be noted on any Note then outstanding or thereafter authenticated and
delivered.
SECTION 10.05. LIMITATION ON GUARANTOR LIABILITY.
For purposes hereof, each Guarantor's liability shall be that amount
from time to time equal to the aggregate liability of such Guarantor
thereunder, but shall be limited to the lesser of (i) the aggregate
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amount of the Obligations of the Company under the Notes and this Indenture and
(ii) the amount, if any, which would not have (A) rendered such Guarantor
"insolvent" (as such term is defined in the federal Bankruptcy Law and in the
debtor and creditor law of the State of New York) or (B) left it with
unreasonably small capital at the time its Subsidiary Guarantee was entered
into, after giving effect to the incurrence of existing Indebtedness
immediately prior to such time; provided, that it shall be a presumption in any
lawsuit or other proceeding in which such Guarantor is a party that the amount
guaranteed pursuant to its Subsidiary Guarantee is the amount set forth in
clause (i) above unless any creditor, or representative of creditors of such
Guarantor, or debtor in possession or trustee in bankruptcy of such Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of such
Guarantor is limited to the amount set forth in clause (ii). In making any
determination as to the solvency or sufficiency of capital of a Guarantor in
accordance with the previous sentence, the right of such Guarantor to
contribution from other Guarantors and any other rights such Guarantor may
have, contractual or otherwise, shall be taken into account.
SECTION 10.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article Ten shall in such case (unless the context
shall otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Article Ten in place of the Trustee.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA Section 318(c), the imposed duties shall
control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
Allied Holdings, Inc.
160 Clairemont Avenue
Decatur, Georgia 30030
Telecopier No.: (404) 370-4342
Attention: Daniel H. Popky
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EXHIBIT 4.1
With a copy to:
Troutman Sanders LLP
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Telecopier No.: (404) 885-3900
Attention: Thomas M. Duffy
If to the Trustee:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Telecopier No.: (312) 407-1708
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection
of TIA Section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
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(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions
of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes, any Guarantee thereof, this
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
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SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in 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.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following pages]
68
<PAGE> 74
IN WITNESS WHEREOF, the parties hereto have executed this
Indenture as of the date first written above.
ALLIED HOLDINGS, INC.
By:
---------------------------------------
Name:
Title:
ALLIED AUTOMOTIVE GROUP, INC.
By:
----------------------------------------
Name:
Title:
ALLIED INDUSTRIES INCORPORATED
By:
----------------------------------------
Name:
Title:
HAUL RISK MANAGEMENT SERVICES, INC.
By:
----------------------------------------
Name:
Title:
LINK INFORMATION SYSTEMS, INC.
By:
----------------------------------------
Name:
Title:
69
<PAGE> 75
ALLIED SOUTHWOODS, INC.
By:
-------------------------------------
Name:
Title:
AXIS GROUP, INC.
By:
-------------------------------------
Name:
Title:
ALLIED SYSTEMS, LTD. (L.P.)
BY: ALLIED AUTOMOTIVE GROUP, INC.,
as general partner
By:
-------------------------------------
Name:
Title:
ALLIED, INC.
By:
-------------------------------------
Name:
Title:
INTER MOBILE, INC.
By:
-------------------------------------
Name:
Title:
70
<PAGE> 76
LEGION TRANSPORTATION, INC.
By:
-------------------------------------
Name:
Title:
INNOVATIVE CAR CARRIERS, INC.
By:
-------------------------------------
Name:
Title:
AUTOMOTIVE TRANSPORT SERVICES, INC.
By:
-------------------------------------
Name:
Title:
AUTO HAULAWAY INC.
By:
-------------------------------------
Name:
Title:
AUTO HAULAWAY RELEASING SERVICES
(1981) LIMITED
By:
-------------------------------------
Name:
Title:
AXIS INTERNATIONAL, INC.
By:
-------------------------------------
Name:
Title:
71
<PAGE> 77
AXIS TRUCK LEASING, INC.
By:
-------------------------------------
Name:
Title:
AXIS NORTH AMERICA, INC.
By:
-------------------------------------
Name:
Title:
DECATUR DRIVER EXCHANGE COMPANY, INC.
By:
-------------------------------------
Name:
Title:
CLAIREMONT DRIVER EXCHANGE
COMPANY, INC.
By:
------------------------------------
Name:
Title:
KAR-TAINER INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
A H ACQUISITION CORP.
By:
------------------------------------
Name:
Title:
72
<PAGE> 78
CANADIAN ACQUISITION CORP.
By:
-------------------------------------
Name:
Title:
AXIS NATIONAL INCORPORATED
By:
-------------------------------------
Name:
Title:
RC MANAGEMENT CORP.
By:
-------------------------------------
Name:
Title:
RYDER AUTOMOTIVE CARRIER SERVICES, INC.
By:
-------------------------------------
Name:
Title:
RYDER AUTOMOTIVE ACQUISITION, LLC
BY: CANADIAN ACQUISITION CORP.,
as member
By:
-------------------------------------
Name:
Title:
73
<PAGE> 79
MCL RYDER TRANSPORT INC.
By:
-------------------------------------
Name:
Title:
RYDER AUTOMOTIVE OPERATIONS, INC.
By:
-------------------------------------
Name:
Title:
RYDER FREIGHT BROKER, INC.
By:
-------------------------------------
Name:
Title:
QAT, INC.
By:
-------------------------------------
Name:
Title:
OSHCO, INC.
By:
-------------------------------------
Name:
Title:
TERMINAL SERVICE CO.
By:
-------------------------------------
Name:
Title:
74
<PAGE> 80
F.J. BOUTELL DRIVEAWAY CO., INC.
By:
-------------------------------------
Name:
Title:
RMX, INC.
By:
-------------------------------------
Name:
Title:
TRANSPORT SUPPORT, INC.
By:
-------------------------------------
Name:
Title:
COMMERCIAL CARRIERS, INC.
By:
-------------------------------------
Name:
Title:
B&C, INC.
By:
-------------------------------------
Name:
Title:
The First National Bank of Chicago
By: /s/ Leland Hansen
-------------------------------
Name: Leland Hansen
Title: Asst. Vice Pres.
75
<PAGE> 81
EXHIBIT A-1
(Face of Note)
================================================================================
CUSIP/CINS
------------
8 5/8% [Series A] [Series B] Senior Notes due 2007
No. $
--- ---------------
Allied Holdings, Inc.
promises to pay to
-------------------------------------------------
or registered assigns,
the principal sum of
-------------------------------------------------
Dollars on October 1, 2007.
Interest Payment Dates: April 1, and October 1
Record Dates: March 15, and September 15
Dated: , 199
--------------- -
Allied Holdings, Inc.
By:
--------------------------
Name:
Title:
By:
--------------------------
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture: (SEAL)
[TRUSTEE],
as Trustee
By:
-------------------------------
Name:
Title:
================================================================================
A1-1
<PAGE> 82
(Back of Note)
8 5/8% [Series A] [Series B] Senior Notes due 2007
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Allied Holdings, Inc. a Georgia corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 8
5/8% per annum from ________________, 199__ until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on April 1 and October 1 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be _____________, 199__.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made
by check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
day funds will be required with respect to principal of and interest, premium
and Liquidated Damages on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, _____________, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
A1-2
<PAGE> 83
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of September 30, 1997 ("Indenture") between the Company and the 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 amended (15
U.S. Code Section Section 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are unsecured obligations of the Company limited to
$125.0 million in aggregate principal amount plus amounts, if any, issued to pay
Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) Prior to October 1, 2002, the Notes will be subject to
redemption at any time at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at the Make-Whole Price, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date. On and after October 1, 2002, the Notes will be
subject to redemption at any time at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period
beginning on October 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.3125%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.8750%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.4375%
2005 and thereafter . . . . . . . . . . . . . . . . . . . . . . . 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time on or prior to
October 1, 2000, the Company may redeem up to 35% of the Notes at a redemption
price equal to 108.625% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date,
with the net proceeds of one or more sales of Equity Interests (other than
Disqualified Stock) of the Company, provided that (i) at least $97.5 million of
Notes remain outstanding immediately following each such redemption and (ii)
such redemption shall occur within 90 days of the date of the consummation of
such sale.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, the Company will be
obligated to make an offer (a "Change of Control Offer") to each Holder of
Notes to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes at an offer price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following a Change of Control,
A1-3
<PAGE> 84
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by the
Indenture and described in such notice. 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 the Notes as a result of a
Change of Control.
(b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time
of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided 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 such Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (b) any securities, notes or other
obligations received by the Company or such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) shall be deemed to be
cash for purposes of this provision.
Within 365 days of the receipt of any Net Proceeds from an Asset Sale, the
Company, at its option, may apply such Net Proceeds to the acquisition of a
controlling interest in another business, the making of a capital expenditure
or the acquisition of other assets (other than assets that would be classified
as current assets in accordance with GAAP), in each case, in the same or a
similar line of business as the Company and its Restricted Subsidiaries, or in
any business reasonably complementary, related or incidental thereto, as
determined in good faith by the Board of Directors. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce
borrowings under the New Credit Facility or otherwise invest such Net Proceeds
in any manner that is not prohibited by the Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested as provided in the first sentence
of this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of an Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions
thereof called for redemption.
A1-4
<PAGE> 85
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and
the Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date
and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include:(i) default for 30
days in the payment when due of interest on, or Liquidated Damages, if any,
with respect to, the Notes; (ii) default in payment when due of the principal
of or premium, if any, on the Notes; (iii) failure by the Company or any of its
Restricted Subsidiaries to comply Section 4.15 of the Indenture (iv) failure by
the Company or any of its Restricted Subsidiaries to comply with Sections 4.07,
4.09, 4.10 or 5.01 of the Indenture, which default continues for 60 days; (v)
failure by the Company or any of its Restricted Subsidiaries for 60 days after
written notice by the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes to comply with any of its other agreements
in the Indenture or the Notes; (vi) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company
or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee
now exists or is created after the Closing Date, which default (a) is caused by
a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more; (vii) failure by the Company or any of its Restricted
Subsidiaries lo pay final judgments aggregating in excess of $5.0 million and
either (a) any creditor commences enforcement proceedings upon any such
judgment or (b) such judgments are not paid, discharged or stayed for a period
of 60 days; (viii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect, or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee; and (ix) certain
events
A1-5
<PAGE> 86
of bankruptcy or insolvency with respect to the Company or any of its
Restricted Subsidiaries. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company, any
Significant Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Subsidiary, all outstanding Notes will
become due and payable without further action or notice. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of
the then outstanding Notes may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. In the case of any Event of Default
occurring by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company with the intention of avoiding payment of the
premium that the Company would have had to pay if the Company then had elected
to redeem the Notes pursuant to the optional redemption provisions of the
Indenture, an equivalent premium shall also become and be immediately due and
payable to the extent permitted by law upon the acceleration of the Notes. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes (provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). The Company is required
to deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Company is required upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement specifying such Default
or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Notes under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set
forth in the A/B Exchange Registration Rights Agreement dated as of September
30,
A1-6
<PAGE> 87
1997, between the Company and the parties named on the signature pages thereof
(the "Registration Rights Agreement").
18. 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 and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is
made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Allied Holdings, Inc.
160 Clairemont Avenue
Decatur, Georgia 30030
Attention: Daniel H. Popky
A1-7
<PAGE> 88
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
----------------
Your Signature:
-----------------------
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medalian Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A1-8
<PAGE> 89
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
--------------
Date: Your Signature:
------------------- ----------------------------
(Sign exactly as your name appears
on the Note)
Tax Identification No.:
--------------------
Signature Guarantee.
Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medalian Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A1-9
<PAGE> 90
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease Amount of increase of this Signature of
in in Global Note authorized officer
Principal Amount Principal Amount following such of
of this of this decrease Trustee or Note
Date of Exchange Global Note Global Note (or increase) Custodian
------------------- --------------------- --------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
A1-10
<PAGE> 91
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP/CINS
----------
8 5/8% [Series A] [Series B] Senior Notes due 2007
No. $
--- ----------
Allied Holdings, Inc.
promises to pay to
----------------------------------------------------
or registered assigns,
the principal sum of
--------------------------------------------------
Dollars on , 2007.
----------
Interest Payment Dates: April 1, and October 1
Record Dates: March 15, and September 15
Dated: , 199
---------------- -
ALLIED HOLDINGS, INC.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture: [(SEAL)]
[TRUSTEE],
as Trustee
By:
------------------------
================================================================================
A2-1
<PAGE> 92
(Back of Regulation S Temporary Global Note)
8 5/8% [Series A] [Series B] Senior Notes due 2007
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A U.S. PERSON AND
IS NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT). THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF
THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT), IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY, (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
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JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Allied Holdings, Inc. a Georgia corporation (the
"Company"), promises to pay interest on the principal amount of this Note at 8
5/8% per annum from ________________, 199__ until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on April 1 and October 1 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance; provided that if there is no existing Default in the payment of
interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be _____________, 199__.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the March 15 or September 15 next
preceding the Interest Payment Date, even if such Notes are cancelled after
such record date and on or before such Interest Payment Date, except as
provided in Section 2.12 of the Indenture with respect to defaulted interest.
The Notes will be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained for such
purpose within or without the City and State of New York, or, at the option of
the Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of Holders,
and provided that payment by wire transfer of immediately available day funds
will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, _____________, the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of September 30, 1997 ("Indenture") between the Company and the 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 amended (15
U.S. Code Section Section 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern
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and be controlling. The Notes are unsecured obligations of the Company limited
to $125.0 million in aggregate principal amount plus amounts, if any, issued to
pay Liquidated Damages on outstanding Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
(a) Prior to October 1, 2002, the Notes will be subject to
redemption at any time at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at the Make-Whole Price, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date. On and after October 1, 2002, the Notes will be
subject to redemption at any time at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period
beginning on October 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.3125%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.8750%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.4375%
2005 and thereafter . . . . . . . . . . . . . . . . . . . . . . . 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, at any time on or prior to
October 1, 2000, the Company may redeem up to 35% of the Notes at a redemption
price equal to 108.625% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date,
with the net proceeds of one or more sales of Equity Interests (other than
Disqualified Stock) of the Company, provided that (i) at least $97.5 million of
Notes remain outstanding immediately following each such redemption and (ii)
such redemption shall occur within 90 days of the date of the consummation of
such sale.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, the Company will be
obligated to make an offer (a "Change of Control Offer") to each Holder of
Notes to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes at an offer price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following a Change of Control, the Company will mail
a notice to each Holder describing the transaction or transactions that
constitute the Change of Control and offering to repurchase Notes on the date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"), pursuant to the procedures required by the Indenture and
described in such notice. The Company will comply with the requirements of
Rule 14e-1 under the Exchange Act
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and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control.
(b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time
of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; provided 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 such Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any Guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (b) any securities, notes or other
obligations received by the Company or such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received) shall be deemed to be
cash for purposes of this provision.
Within 365 days of the receipt of any Net Proceeds from an Asset Sale, the
Company, at its option, may apply such Net Proceeds to the acquisition of a
controlling interest in another business, the making of a capital expenditure
or the acquisition of other assets (other than assets that would be classified
as current assets in accordance with GAAP), in each case, in the same or a
similar line of business as the Company and its Restricted Subsidiaries, or in
any business reasonably complementary, related or incidental thereto, as
determined in good faith by the Board of Directors. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce
borrowings under the New Credit Facility or otherwise invest such Net Proceeds
in any manner that is not prohibited by the Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested as provided in the first sentence
of this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $5.0 million, the Company will be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of an Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions
thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and
the
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Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date
and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the
consent of any Holder of a Note, the Indenture or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include:(i) default for 30
days in the payment when due of interest on, or Liquidated Damages, if any,
with respect to, the Notes; (ii) default in payment when due of the principal
of or premium, if any, on the Notes; (iii) failure by the Company or any of its
Restricted Subsidiaries to comply Section 4.15 of the Indenture (iv) failure by
the Company or any of its Restricted Subsidiaries to comply with Sections 4.07,
4.09, 4.10 or 5.01 of the Indenture, which default continues for 60 days; (v)
failure by the Company or any of its Restricted Subsidiaries for 60 days after
written notice by the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes to comply with any of its other agreements
in the Indenture or the Notes; (vi) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company
or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee
now exists or is created after the Closing Date, which default (a) is caused by
a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more; (vii) failure by the Company or any of its Restricted
Subsidiaries lo pay final judgments aggregating in excess of $5.0 million and
either (a) any creditor commences enforcement proceedings upon any such
judgment or (b) such judgments are not paid, discharged or stayed for a period
of 60 days; (viii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect, or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee; and (ix) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Restricted Subsidiaries. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of
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bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. In the case of any Event of Default occurring by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to the optional redemption provisions of the Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. The Holders of a majority
in aggregate principal amount of the Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the Notes (provided, however, that the Holders of a majority in
aggregate principal amount of the then outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration). The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the
issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Notes under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set
forth in the A/B Exchange Registration Rights Agreement dated as of September
30, 1997, between the Company and the parties named on the signature pages
thereof (the "Registration Rights Agreement").
18. 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
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and the Trustee may use CUSIP numbers in notices of redemption as a convenience
to Holders. No representation is made as to the accuracy of such numbers
either as printed on the Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Allied Holdings, Inc.
160 Clairemont Avenue
Decatur, Georgia 30030
Attention: Daniel H. Popky
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ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
---------------------
Your Signature:
----------------------
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medalian Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
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OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased:
$
--------------
Date:
-------------------------- Your Signature:
--------------------------
(Sign exactly as your name
appears on the Note)
Tax Identification No.:
------------------
Signature Guarantee.
Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medalian Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
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SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary
Global Note for an interest in another Global Note, or of other Restricted
Global Notes for an interest in this Regulation S Temporary Global Note, have
been made:
<TABLE>
<CAPTION>
Amount of decrease Amount of increase Principal Amount Signature of
in in of this authorized officer
Principal Amount Principal Amount Global Note of
of this of this following such decrease Trustee or Note
Date of Exchange Global Note Global Note (or increase) Custodian
------------------- --------------------- --------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
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EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Allied Holdings, Inc.
160 Clairemont Avenue
Decatur, Georgia 30030
[Registrar address block]
Re: 8 5/8% Senior Notes Due 2007
Reference is hereby made to the Indenture, dated as of September __,
1997 (the "Indenture"), between Allied Holdings, Inc. as issuer (the
"Company"), and [Trustee], as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "Transferee"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE
144A GLOBAL NOTE OR DEFINITIVE NOTES PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the Book-Entry
Interests or Definitive Notes are being transferred to a Person that the
Transferor reasonably believes is purchasing the Book-Entry Interests or
Definitive Notes for its own account, or for one or more accounts with respect
to which such Person exercises sole investment discretion, and such Person and
each such account is a "qualified institutional buyer" within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A and such
Transfer is in compliance with any applicable blue sky securities laws of any
state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred Book-Entry Interest
or Definitive Note will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the 144A Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE
TEMPORARY REGULATION S GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR DEFINITIVE
NOTES PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and
in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of
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<PAGE> 103
Regulation S under the Securities Act, (iii) the transaction is not part of a
plan or scheme to evade the registration requirements of the Securities Act and
(iv) if the proposed transfer is being made prior to the expiration of the
Restricted Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser). Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred Book-Entry Interest or Definitive Note will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY
INTERESTS IN THE IAI GLOBAL NOTE OR DEFINITIVE NOTES PURSUANT TO ANY PROVISION
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
Book-Entry Interests in Restricted Global Notes and Definitive Notes bearing
the Private Placement Legend and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any State of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof,
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that the Transfer complies with the transfer
restrictions applicable to Book-Entry Interests in a Restricted Global Note or
Definitive Notes bearing the Private Placement Legend and the requirements of
the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and (2) an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of
which the Transferor has attached to this certification), to the effect that
(1) such Transfer is in compliance with the Securities Act and (2) such
Transfer complies with any applicable blue sky securities laws of any state of
the United States. Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred Book-Entry Interest or
Definitive Note will be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the IAI Global Note and/or the
Definitive Notes and in the Indenture and the Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF BOOK-ENTRY INTERESTS IN THE
UNRESTRICTED GLOBAL NOTE OR IN DEFINITIVE NOTES THAT DO NOT BEAR THE PRIVATE
PLACEMENT LEGEND.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer
B-2
<PAGE> 104
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred Book-Entry Interests or Definitive Notes will no longer be subject
to the restrictions on transfer enumerated in the Private Placement Legend
printed on the Restricted Global Notes, on Definitive Notes bearing the Private
Placement Legend and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state of
the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
Book-Entry Interests or Definitive Notes will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Definitive Notes bearing the Private Placement
Legend and in the Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred Book-Entry
Interests or Definitive Notes will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes or Definitive Notes bearing the Private Placement Legend and in
the Indenture.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
---------------------------
[Insert Name of Transferor]
By:
----------------------
Name:
Title:
Dated:
---------------, ------
B-3
<PAGE> 105
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] Book-Entry Interests in the:
(i) [ ] 144A Global Note (CUSIP _________), or
(ii) [ ] Regulation S Global Note (CUSIP _________), or
(iii) [ ] IAI Global Note (CUSIP ________); or
(b) [ ] Restricted Definitive Notes.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] Book-Entry Interests in the:
(i) [ ] 144A Global Note (CUSIP ________), or
(ii) [ ] Regulation S Global Note (CUSIP ________), or
(iii) [ ] IAI Global Note (CUSIP ________); or
(iv) [ ] Unrestricted Global Note (CUSIP ________); or
(b) [ ] Restricted Definitive Notes; or
(c) [ ] Definitive Notes that do not bear the Private Placement Legend,
in accordance with the terms of the Indenture.
B-4
<PAGE> 106
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Allied Holdings, Inc.
160 Clairemont Avenue
Decatur, Georgia 30030
[Registrar address block]
Re: 8 5/8% Senior Notes Due 2007
(CUSIP _____________________)
Reference is hereby made to the Indenture, dated as of
September 30, 1997 (the "Indenture"), between Allied Holdings, Inc. as issuer
(the "Company") and [Trustee], as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
______________, (the "Holder") owns and proposes to exchange
the Note[s] or interest in such Note[s] specified herein, in the principal
amount of $____________ in such Note[s] or interests (the "Exchange"). In
connection with the Exchange, the Holder hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR RESTRICTED BOOK-ENTRY
INTERESTS FOR DEFINITIVE NOTES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND OR
UNRESTRICTED BOOK-ENTRY INTERESTS
(a) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY
INTEREST TO UNRESTRICTED BOOK-ENTRY INTEREST. In connection with the Exchange
of the Holder's Restricted Book-Entry Interest for Unrestricted Book-Entry
Interests in an equal principal amount, the Holder hereby certifies (i) the
Unrestricted Book-Entry Interests are being acquired for the Holder's own
account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Global Notes and pursuant to
and in accordance with the United States Securities Act of 1933, as amended
(the "Securities Act"), (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted
Book-Entry Interests are being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY
INTEREST TO DEFINITIVE NOTES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND. In
connection with the Exchange of the Holder's Restricted Book-Entry Interests
for Definitive Notes that do not bear the Private Placement Legend, the Holder
hereby certifies (i) the Definitive Notes are being acquired for the Holder's
own account without transfer, (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the Definitive Notes are being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTES
TO UNRESTRICTED BOOK-ENTRY INTERESTS. In connection with the Holder's Exchange
of Restricted Definitive Notes for
C-1
<PAGE> 107
Unrestricted Book-Entry Interests, (i) the Unrestricted Book-Entry Interests
are being acquired for the Holder's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted
Book-Entry Interests are being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTES
TO DEFINITIVE NOTES THAT DO NOT BEAR THE PRIVATE PLACEMENT LEGEND. In
connection with the Holder's Exchange of a Restricted Definitive Note for
Definitive Notes that do not bear the Private Placement Legend, the Holder
hereby certifies (i) the Definitive Notes that do not bear the Private
Placement Legend are being acquired for the Holder's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Notes are
being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR RESTRICTED BOOK-ENTRY
INTERESTS FOR RESTRICTED DEFINITIVE NOTES OR RESTRICTED BOOK-ENTRY INTERESTS
(a) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED BOOK-ENTRY
INTERESTS TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Holder's Restricted Book-Entry Interest for Restricted Definitive Notes
with an equal principal amount, (i) the Restricted Definitive Notes are being
acquired for the Holder's own account without transfer and (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
the Restricted Global Notes and pursuant to and in accordance with the
Securities Act, and in compliance with any applicable blue sky securities laws
of any state of the United States. Upon consummation of the proposed Exchange
in accordance with the terms of the Indenture, the Restricted Definitive Notes
issued will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Definitive Notes and in the
Indenture and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTES
TO RESTRICTED BOOK-ENTRY INTERESTS. In connection with the Exchange of the
Holder's Restricted Definitive Note for Restricted Book-Entry Interests in the
[CHECK ONE] [ ] 144A Global Note, [ ] Regulation S Global Note, [ ] IAI Global
Note with an equal principal amount, (i) the Definitive Notes are being
acquired for the Holder's own account without transfer and (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to
the Restricted Definitive Note and pursuant to and in accordance with the
Securities Act, and in compliance with any applicable blue sky securities laws
of any state of the United States. Upon consummation of the proposed Exchange
in accordance with the terms of the Indenture, the Book-Entry Interests issued
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
C-2
<PAGE> 108
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
----------------------------------------
[Insert Name of Holder]
By:
-------------------------------------
Name:
Title:
Dated:
---------------, ----------
C-3
<PAGE> 109
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Allied Holdings, Inc.
160 Clairemont Avenue
Decatur, Georgia 30030
[Registrar address block]
Re: 8 5/8% Senior Notes Due 2007
Reference is hereby made to the Indenture, dated as of
September 30, 1997 (the "Indenture"), between Allied Holdings, Inc. as issuer
(the "Company"), and [Trustee], as trustee. Capitalized terms used but not
defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of:
(a) [ ] Book-Entry Interests, or
(b) [ ] Definitive Notes,
we confirm that:
1. We understand that any subsequent transfer of the
Notes or any interest therein is subject to certain restrictions and conditions
set forth in the Indenture and the undersigned agrees to be bound by, and not
to resell, pledge or otherwise transfer the Notes or any interest therein
except in compliance with, such restrictions and conditions and the United
States Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes
have not been registered under the Securities Act, and that the Notes and any
interest therein may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should sell the Notes
or any interest therein, we will do so only (A) to the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act
to a "qualified institutional buyer" (as defined therein), (C) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
you and to the Company a signed letter substantially in the form of this letter
and an Opinion of Counsel in form reasonably acceptable to the Company to the
effect that such transfer is in compliance with the Securities Act, (D) outside
the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities
Act or (F) pursuant to an effective registration statement under the Securities
Act, and we further agree to provide to any person purchasing the Definitive
Notes or Book-Entry Interests from us in a transaction meeting the requirements
of clauses (A) through (E) of this paragraph a notice advising such purchaser
that resales thereof are restricted as stated herein.
D-1
<PAGE> 110
3. We understand that, on any proposed resale of the
Notes or Book-Entry Interests, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Notes
purchased by us will bear a legend to the foregoing effect. We further
understand that any subsequent transfer by us of the Notes or Book-Entry
Interests therein acquired by us must be effected through one of the Placement
Agents.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able to bear
the economic risk of our or its investment.
5. We are acquiring the Notes or Book-Entry Interests
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
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.
----------------------------------------
[Insert Name of Accredited Investor]
By:
-----------------------------------
Name:
Title:
Dated:
-----------------, ------
D-2
<PAGE> 111
EXHIBIT E
FORM OF SUBSIDIARY GUARANTEE
Each Guarantor hereby, jointly and severally, unconditionally
guarantees to each Holder of Notes authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, irrespective of the validity
and enforceability of the Indenture, the Notes or the Obligations of the
Company under this or any other Guarantee in connection with the Notes) to the
Holders or the Trustee under the Notes or under the Indenture, that: (a) the
principal of, and premium, if any, and Liquidated Damages, if any, and interest
on the Notes shall be promptly paid in full when due, whether at maturity, by
acceleration, redemption, repurchase or otherwise, and interest on overdue
principal of and interest and Liquidated Damages if any, on any Note, if any,
if lawful and all other Obligations of the Company to the Holders or the
Trustee under the Indenture or under the Notes shall be promptly paid in full
or performed, all in accordance with the terms thereof; and (b) in case of any
extension of time of payment or renewal of any Notes or any of such other
Obligations, the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration, redemption, repurchase or otherwise; provided that
in the case of a Guarantor that is organized under the federal or provincial
laws of Canada, all of the forgoing shall constitute the Guarantee of the
Obligations of such Guarantor's immediate corporate or other parent under this
or any other Guarantee in connection with the Notes. Failing payment when due
of any amount so guaranteed, or any performance so guaranteed for whatever
reason, the Guarantors shall be jointly and severally obligated to pay the same
immediately.
The Obligations of the Guarantors to the Holders of Notes and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article Ten of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article Ten of the Indenture are incorporated herein by reference.
No director, officer, employee, incorporator or stockholder, as such,
past, present or future, of each of the Guarantors shall have any personal
liability under this Subsidiary Guarantee by reason of its status as such
director, officer, employee, incorporator or stockholder.
This is a continuing Subsidiary Guarantee and shall remain in full
force and effect and shall be binding upon each Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders of Notes and, in the event of any transfer or
assignment of rights by any Holder of Notes or the Trustee, the rights and
privileges herein conferred upon that party shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions hereof.
In certain circumstances more fully described in the Indenture, any
Guarantor may be released from its liability under this Subsidiary Guarantee,
and any such release shall be effective whether or not noted hereon.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
E-1
<PAGE> 112
For purposes hereof, each Guarantor's liability shall be that amount
from time to time equal to the aggregate liability of such Guarantor hereunder,
but shall be limited to the lesser of (i) the aggregate amount of the
Obligations of the Company under the Notes and the Indenture and (ii) the
amount, if any, which would not have (A) rendered such Guarantor "insolvent"
(as such term is defined in the federal Bankruptcy Law and in the debtor and
creditor law of the State of New York) or (B) left it with unreasonably small
capital at the time its Subsidiary Guarantee of the Notes was entered into,
after giving effect to the incurrence of existing Indebtedness immediately
prior to such time; provided, that it shall be a presumption in any lawsuit or
other proceeding in which such Guarantor is a party that the amount guaranteed
pursuant to its Subsidiary Guarantee is the amount set forth in clause (i)
above unless any creditor, or representative of creditors of such Guarantor, or
debtor in possession or trustee in bankruptcy of such Guarantor, otherwise
proves in such a lawsuit that the aggregate liability of such Guarantor is
limited to the amount set forth in clause (ii). The Indenture provides that,
in making any determination as to the solvency or sufficiency of capital of a
Guarantor in accordance with the previous sentence, the right of such Guarantor
to contribution from other Guarantors and any other rights such Guarantor may
have, contractual or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
[GUARANTOR]
By
--------------------------------------------
[Name]
[Title]
E-2
<PAGE> 113
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) _____
---------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------
ALLIED HOLDINGS, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
GEORGIA 58-0360550
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
160 CLAIREMONT AVENUE, SUITE 510
DECATUR, GEORGIA 30030
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
8-5/8% SERIES B SENIOR NOTES DUE 2007
(TITLE OF INDENTURE SECURITIES)
<PAGE> 114
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.
Comptroller of Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of the Federal
Reserve System, Washington D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST
POWERS.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF
THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the trustee now
in effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE> 115
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.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 30th day of September, 1997.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /S/ RICHARD D. MANELLA
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
* EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER
25, 1996 (REGISTRATION NO. 333-14201).
3
<PAGE> 116
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED BY
SECTION 321(b) OF THE ACT
September 30, 1997
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between Allied Holdings,
Inc. and The First National Bank of Chicago, the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by Federal
or State authorities authorized to make such examinations, may be furnished by
such authorities to the Securities and Exchange Commission upon its request
therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /S/ RICHARD D. MANELLA
RICHARD D. MANELLA
VICE PRESIDENT AND SENIOR COUNSEL
4
<PAGE> 117
EXHIBIT 7
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
C400
DOLLAR AMOUNTS IN -------
THOUSANDS RCFD BIL MIL THOU
------------------ ---- ------------
ASSETS
<S> <C> <C> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule
RC-A):
a. Noninterest-bearing balances and currency and coin(1) . . . . . . . 0081 4,415,563 1.a.
b. Interest-bearing balances(2) . . . . . . . . . . . . . . . 0071 7.049,275 1.b.
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A) 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)............ 1773 4,455,173 2.b.
3. Federal funds sold and securities purchased under agreements to
resell 1350 4,604,233 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 24,185,099 4.a.
b. LESS: Allowance for loan and lease losses . . . . . . . . RCFD 3123 423,419 4.b.
c. LESS: Allocated transfer risk reserve . . . . . . . . . . RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . 2125 23,761,680 4.d.
5. Trading assets (from Schedule RD-D) . . . . . . . . . . . . . 3545 6.930.216 5.
6. Premises and fixed assets (including capitalized leases) . . . . . . . 2145 705,704 6.
7. Other real estate owned (from Schedule RC-M) . . . . 2150 7,960 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M) . . . . . . . . . . . . . . . 2130 64,504
9. Customers' liability to this bank on acceptances outstanding . . . . . 2155 562,251 9.
10. Intangible assets (from Schedule RC-M) . . . . . . . . . . . . . . . . 2143 283,716 10.
11. Other assets (from Schedule RC-F) . . . . . . . . . . . . . . . . . . 2160 1,997,778 11.
12. Total assets (sum of items 1 through 11). . . . . . . . . . . . . . . . 2170 54,837,423 12.
</TABLE>
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE> 118
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/97 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0303 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
Thousands BIL MIL THOU
---------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1) . . . . . . . . . . . RCON 2200 21,852,164 13.a
(1) Noninterest-bearing(1) . . . . . . . . . . . . RCON 6631 9,474,510 13.a.1
(2) Interest-bearing . . . . . . . . . . . . . . . RCON 6636 12,377,654 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II) . . . . . . . . RCFN 2200 13,756,280 13.b.
(1) Noninterest bearing . . . . . . . . . . . . . RCFN 6631 330,030 13.b.1
(2) Interest-bearing RCFN 6636 13,426,250 13.b.2
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 3.827,159 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 40,307 15.a
b. Trading Liabilities(from Schedule RC-D)....................................... RCFD 3548 4,985,577 15.b
16. Other borrowed money:
a. With original maturity of one year or less . . . . RCFD 2332 2,337,018 16.a
b. With original maturity of than one year through three years . . . . . . . . A547 265,393 16.b
c. With a remaining maturity of more than three years. . . .
17. Not applicable
18. Bank's liability on acceptance executed and outstanding RCFD 2920 562,251 18
19. Subordinated notes and debentures (2) . . . . . RCFD 3200 1,700,000 19
20. Other liabilities (from Schedule RC-G) . . . . . RCFD 2930 929,875 20
21. Total liabilities (sum of items 13 through 20) . . . . . RCFD 2948 50,618,199 21
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus . . . . . RCFD 3838 0 23
24. Common stock . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24
25. Surplus (exclude all surplus related to preferred stock) RCFD 3839 2,948,616 25
26. a. Undivided profits and capital reserves . . . . . . RCFD 3632 1,059,214 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities . . . . . . . . . . . . . . . . . . . . RCFD 8434 12,788 26.b.
27. Cumulative foreign currency translation adjustments . . RCFD 3284 (2,252) 27
28. Total equity capital (sum of items 23 through 27) RCFD 3210 4,219,224 (1) 28
29. Total liabilities and equity capital (sum of items 21 and 28) . . . . . . RCFD 3300 54,837,423 (2) 29
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external
Number
auditors as of any date during 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . ..RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements
submits a report on the consolidated holding company by external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
___________________
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
6
<PAGE> 1
EXHIBIT 4.2
Execution Version
================================================================================
ALLIED HOLDINGS, INC.
AND
THE GUARANTORS NAMED ON THE SIGNATURE PAGES HERETO
$150,000,000
8 5/8% Senior Notes due 2007
Purchase Agreement
September 19, 1997
BEAR, STEARNS & CO. INC.
BT ALEX. BROWN INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
================================================================================
<PAGE> 2
ALLIED HOLDINGS, INC.
$150,000,000
8 5/8% Senior Notes due 2007
PURCHASE AGREEMENT
September 19, 1997
New York, New York
BEAR, STEARNS & CO. INC.
BT ALEX. BROWN INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies & Gentlemen:
Allied Holdings, Inc., a Georgia corporation (the "Company"),
proposes to issue and sell to Bear, Stearns & Co. Inc., BT Alex. Brown
Incorporated NationsBanc Capital Markets, Inc. (together, the "Initial
Purchasers") $150,000,000 in aggregate principal amount of 8 5/8% Series A
Senior Notes due 2007 (the "Series A Notes"), subject to the terms and
conditions set forth herein. The Series A Notes will be issued pursuant to an
indenture (the "Indenture"), to be dated the Closing Date (as defined), among
the Company, the Guarantors (as defined) and The First National Bank of
Chicago, as trustee (the "Trustee"). The Series A Notes will be fully and
unconditionally guaranteed (the "Guarantees" and, together with the Series A
Notes, the "Securities") as to payment of principal, interest, Liquidated
Damages and premium, if any, on an unsecured senior basis, jointly and
severally, by each entity listed on Exhibit A hereto (collectively, the "Allied
Guarantors") and by each entity listed on Exhibit B hereto (collectively, the
"Ryder Guarantors" and, together with the Allied Guarantors, the "Guarantors"
and, together with the Company, the "Issuers") that will be acquired by the
Company pursuant to the Acquisition (as defined). Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Indenture.
The offering of the Securities is being made in connection
with the acquisition (the "Acquisition") by the Company of Ryder Automotive
Carrier Services, Inc., RC Management Corp. and certain related assets
("Ryder"), pursuant to that certain Acquisition Agreement by and among the
Company, A H Acquisition Corp., Canadian Acquisition Corp., Axis North America,
Inc. and Ryder System, Inc. (together with all schedules, ancillary agreements
and any side- letters entered into in connection with the Acquisition, the
"Acquisition Agreement"), dated August 20, 1997.
1. Issuance of Securities. The Issuers propose, upon the terms
and subject to the conditions set forth herein, to issue and sell to the
Initial Purchasers an aggregate of $150,000,000 in principal amount of
Securities. The Series A Notes and the Series B Notes (as defined) issuable in
exchange therefor are collectively referred to herein as the "Notes."
<PAGE> 3
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act of
1933, as amended (the "Act"), the Series A Notes (and all securities issued in
exchange therefor or in substitution thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (B) IT IS NOT A
U.S. PERSON AND IS NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR
BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT
OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT. THE HOLDER OF
THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT), IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A
FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY, (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
2. Offering. The Securities will be offered and sold to the
Initial Purchasers pursuant to an exemption from the registration requirements
under the Act. The Company has prepared a preliminary offering memorandum,
dated August 28, 1997 (the "Preliminary Offering Memorandum"), and a final
offering memorandum, dated the date hereof (the "Offering Memorandum"),
relating to the Issuers, the Acquisition and the Securities.
2
<PAGE> 4
The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers (the "Exempt Resales") of the Securities on the
terms set forth in the Offering Memorandum, as amended or supplemented, solely
to (i) persons whom the Initial Purchasers reasonably believe to be "qualified
institutional buyers," as defined in Rule 144A under the Act ("QIBs"), and (ii)
non-U.S. persons outside the United States in reliance upon Regulation S
("Regulation S") under the Act ("Reg S Investors"). The QIBs and Reg S
Investors are collectively referred to herein as the "Eligible Purchasers."
The Initial Purchasers will offer the Securities to such Eligible Purchasers
initially at a price equal to 100% of the principal amount thereof. Such price
may be changed at any time without notice.
Holders (including subsequent transferees) of the Securities will have
the registration rights set forth in the registration rights agreement relating
thereto (the "Registration Rights Agreement"), to be substantially in the form
of Exhibit F hereto and dated the Closing Date, for so long as such Securities
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Issuers
will agree to file with the Securities and Exchange Commission (the
"Commission"), under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the 8 5/8% Series B Notes due 2007 (the "Series B Notes") and the guarantees
thereof by the Guarantors, (the "Series B Guarantees" and, together with the
Series B Notes, the "Exchange Securities") to be offered in exchange for the
Securities (the "Exchange Offer") and (ii) a shelf registration statement
pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, the "Registration
Statements") relating to the resale by certain holders of the Securities, and
to use their reasonable best efforts to cause such Registration Statements to
be declared effective and to consummate the Exchange Offer. This Agreement,
the Notes, the Guarantees, the Series B Guarantees, the Indenture, the
Registration Rights Agreement, the Acquisition Agreement and the New Credit
Facility (as defined in the Offering Memorandum) are hereinafter referred to
collectively as the "Operative Documents."
3. Purchase, Sale and Delivery. (a) On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to its terms and conditions, the Company and the Allied Guarantors
agree to issue and sell (and to cause the Ryder Guarantors to issue and sell)
to each Initial Purchaser, and each Initial Purchaser agrees, severally and not
jointly, to purchase from the Issuers, the principal amount of Securities set
forth opposite its name on Schedule I hereto. The purchase price for the
Securities will be $970 per $1,000 principal amount Series A Notes.
(b) Delivery of the Securities shall be made, against payment of the
purchase price therefor, at the offices of Troutman Sanders LLP, Atlanta,
Georgia or such other location as may be mutually acceptable. Such delivery
and payment shall be made at 9:00 a.m., New York City time, on September 30,
1997 or at such other time as shall be agreed upon by the Initial Purchasers
and the Company. The time and date of such delivery and payment are herein
called the "Closing Date."
(c) On the Closing Date, one or more Securities in definitive form,
registered in the name of Cede & Co., as nominee of The Depository Trust
Company ("DTC"), having an aggregate amount corresponding to the aggregate
amount of the Securities sold pursuant to Exempt Resales to Eligible Purchasers
(the "Global Note") shall be delivered by the Issuers to the Initial Purchasers
(or as the Initial Purchasers direct), against payment by the Initial
Purchasers of the purchase price therefor, by wire transfer of same day funds,
to an account designated by the Company, provided that the Company shall give
at least two business days' prior written notice to the Initial Purchasers of
the information required to effect such wire transfer. The Global Note shall
be made available to the Initial Purchasers for inspection not later than 9:30
a.m. New York City time, on the business day immediately preceding the Closing
Date.
3
<PAGE> 5
4. Agreements of the Company and the Allied Guarantors. The
Company and the Allied Guarantors, jointly and severally, covenant and agree
with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing,
(i) of the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification of
any Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities
commission or other regulatory authority and (ii) of the happening of
any event that makes any statement of a material fact made in the
Preliminary Offering Memorandum or the Offering Memorandum untrue or
that requires the making of any additions to or changes in the
Preliminary Offering Memorandum or the Offering Memorandum in order to
make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Company and the Allied
Guarantors shall use their reasonable best efforts to prevent the
issuance of any stop order or order suspending the qualification or
exemption of any Securities under any state securities or Blue Sky
laws and, if at any time any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption of any Securities under any state securities or Blue Sky
laws, the Company and the Allied Guarantors shall use their best
efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company, without charge,
as many copies of the Preliminary Offering Memorandum and the Offering
Memorandum, including all documents incorporated therein by reference,
and any amendments or supplements thereto, as the Initial Purchasers
may reasonably request. The Company and the Allied Guarantors consent
to the use of the Preliminary Offering Memorandum and the Offering
Memorandum, and any amendments and supplements thereto required
pursuant hereto, by the Initial Purchasers in connection with Exempt
Resales.
(c) Not to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum prior to the Closing Date unless
the Initial Purchasers shall previously have been advised thereof and
shall not have made a reasonable objection thereto within a reasonable
time after being furnished a copy thereof. The Company and the Allied
Guarantors shall promptly prepare, upon the Initial Purchasers'
request, any amendment or supplement to the Preliminary Offering
Memorandum or the Offering Memorandum that may be reasonably necessary
or advisable in connection with Exempt Resales.
(d) If, after the date hereof and prior to consummation of
any Exempt Resale, any event shall occur as a result of which, in the
judgment of the Company and the Allied Guarantors or in the reasonable
opinion of counsel for the Company and the Allied Guarantors or
counsel for the Initial Purchasers, it becomes necessary or advisable
to amend or supplement the Preliminary Offering Memorandum or Offering
Memorandum in order to make the statements therein, in the light of
the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser which is a prospective purchaser, not misleading,
or if it is necessary or advisable to amend or supplement the
Preliminary Offering Memorandum or Offering Memorandum to comply with
applicable law, (i) to notify the Initial Purchasers and (ii)
forthwith to prepare an appropriate amendment or supplement to such
Preliminary Offering Memorandum or Offering Memorandum so that the
statements therein as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or
so that such Preliminary Offering Memorandum or Offering Memorandum
will comply with applicable law.
4
<PAGE> 6
(e) To cooperate with the Initial Purchasers and counsel for
the Initial Purchasers in connection with the qualification or
registration of the Securities under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchasers may reasonably request
and to continue such qualification in effect so long as required for
the Exempt Resales; provided, however, that none of the Company or the
Allied Guarantors shall be required in connection therewith to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to service of
process in suits or taxation, in each case, other than as to matters
and transactions relating to the Preliminary Offering Memorandum, the
Offering Memorandum or Exempt Resales, in any jurisdiction where it is
not now so subject.
(f) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is
terminated, to pay all costs, expenses, fees and taxes incident to the
performance of the obligations of the Company and the Allied
Guarantors hereunder, including in connection with: (i) the
preparation, printing, filing and distribution of the Preliminary
Offering Memorandum and the Offering Memorandum (including, without
limitation, financial statements) and all amendments and supplements
thereto required pursuant hereto, (ii) the preparation (including,
without limitation, duplication costs) and delivery of all agreements,
correspondence and all other documents prepared and delivered in
connection herewith and with the Exempt Resales, (iii) the issuance,
transfer and delivery of the Securities to the Initial Purchasers,
(iv) the qualification or registration of the Securities for offer and
sale under the securities or Blue Sky laws of the several states
(including, without limitation, the cost of printing and mailing a
preliminary and final Blue Sky Memorandum and the reasonable fees and
disbursements of counsel for the Initial Purchasers relating thereto),
(v) furnishing such copies of the Preliminary Offering Memorandum and
the Offering Memorandum, and all amendments and supplements thereto,
as may be requested for use in connection with Exempt Resales, (vi)
the preparation of certificates for the Securities (including, without
limitation, printing and engraving thereof), (vii) the fees,
disbursements and expenses of the Issuers' counsel and accountants,
(viii) all fees and expenses (including fees and expenses of counsel)
of the Company in connection with the approval of the Notes by DTC for
"book-entry" transfer, (ix) rating the Securities by rating agencies,
(x) the fees and expenses of the Trustee and its counsel, (xi) the
performance by the Issuers of their obligations under the other
Operative Documents and (xii) "roadshow" travel and other expenses
incurred in connection with the marketing and sale of the Securities.
(g) To use the proceeds from the sale of the Securities in
the manner described in the Offering Memorandum under the caption "Use
of Proceeds."
(h) Not to voluntarily claim, and to resist actively any
attempts to claim, the benefit of any usury laws against the holders
of any Securities or Exchange Securities.
(i) To do and perform all things required to be done and
performed under this Agreement by them prior to or after the Closing
Date and to satisfy all conditions precedent on their part to the
delivery of the Securities.
(j) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
that would be integrated with the sale of the Securities in a manner
that would require the registration under the Act of the sale to the
Initial Purchasers or the Eligible Purchasers of the Securities or to
take any other action that would result in the Exempt Resales not
being exempt from registration under the Act.
5
<PAGE> 7
(k) For so long as any of the Securities remain outstanding
and during any period in which the Issuers are not subject to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to make available to any holder or beneficial owner
of Securities in connection with any sale thereof and any prospective
purchaser of such Securities from such holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Act.
(l) To comply with all of their agreements set forth in the
Registration Rights Agreement and all agreements set forth in the
representation letters of the Company to DTC relating to the approval
of the Securities by DTC for "book-entry" transfer.
(m) To effect the inclusion of the Securities in PORTAL and
to obtain approval of the Securities by DTC for "book-entry" transfer.
(n) During a period of five years following the Closing Date,
to deliver without charge to the Initial Purchasers, as they may
reasonably request, promptly upon their becoming available, copies of
(i) all reports or other publicly available information that the
Company and/or Guarantors shall mail or otherwise make available to
their securityholders and (ii) all reports, financial statements and
proxy or information statements filed by the Company and/or Guarantors
with the Commission or any national securities exchange and such other
publicly available information concerning the Company and/or
Guarantors or any of their subsidiaries, including without limitation,
press releases.
(o) Prior to the Closing Date, to furnish to the Initial
Purchasers, as soon as they have been prepared in the ordinary course
by the Company and each Guarantor, copies of any unaudited interim
financial statements for any period subsequent to the periods covered
by the financial statements appearing in the Offering Memorandum.
(p) Not to take, directly or indirectly, any action designed
to, or that might reasonably be expected to, cause or result in
stabilization or manipulation of the price of any security of the
Company or any of the Guarantors to facilitate the sale or resale of
the Securities. Except as permitted by the Act, the Company and the
Allied Guarantors will not (and will not permit the Ryder Guarantors
to) distribute any (i) preliminary offering memorandum, including,
without limitation, the Preliminary Offering Memorandum, (ii) offering
memorandum, including, without limitation, the Offering Memorandum, or
(iii) other offering material in connection with the offering and sale
of the Notes.
(q) To cause the Ryder Guarantors to authorize, execute and
deliver this Agreement, the Registration Rights Agreement, the
Guarantees and the Indenture.
(r) To use their best efforts to do and perform all things
required or necessary to be done and performed under this Agreement
prior to the Closing Date and to satisfy all conditions precedent to
the delivery of the Securities.
5. Representations and Warranties. (a) The Company and the
Allied Guarantors, jointly and severally, represent and warrant to each of the
Initial Purchasers that (all of such representations and warranties shall be
deemed to include Ryder, and all references to the Issuers and their
non-Guarantor Subsidiaries in this Section 5 shall assume that the Acquisition
has been consummated as of the date hereof in accordance with the terms and
conditions of the Acquisition Agreement):
6
<PAGE> 8
(i) All of the representations and warranties of the parties
to the Acquisition Agreement made in the Acquisition Agreement are
true and correct as if made on and as of the date hereof and the
Closing Date.
(ii) The Preliminary Offering Memorandum as of its date does
not, and the Offering Memorandum as of its date and as of the Closing
Date does not and will not, and any supplement or amendment to them
will not, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties contained in this paragraph shall
not apply to statements in or omissions from the Preliminary Offering
Memorandum and the Offering Memorandum (or any supplement or amendment
thereto) made in reliance upon and in conformity with information
relating to an Initial Purchaser furnished to the Company in writing
by such Initial Purchaser expressly for use therein. No stop order
preventing the use of the Preliminary Offering Memorandum or the
Offering Memorandum, or any amendment or supplement thereto, or any
order asserting that any of the transactions contemplated by this
Agreement are subject to the registration requirements of the Act, has
been issued.
(iii) (A) The documents incorporated by reference in the
Offering Memorandum, when they became effective or were filed with the
Commission or were amended, as the case may be, did 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 not misleading; (B) the documents incorporated by reference in
the Offering Memorandum when they became effective or were filed with
the Commission or were amended, as the case may be, conformed in all
material respects to the requirements of the Exchange Act; and (C) any
further documents so filed and incorporated by reference in the
Offering Memorandum or any further amendment or supplement hereto,
when such documents become effective or are filed with the Commission,
as the case may be, will conform in all material respects to the
requirements of the Exchange Act.
(iv) Each of the Issuers and their non-Guarantor subsidiaries
(A) has been duly incorporated or otherwise formed and is validly
existing as a corporation or limited partnership, as the case may be,
in good standing under the laws of its jurisdiction of formation; (B)
has all requisite corporate or partnership power and authority, as the
case may be, to carry on its business as it is currently being
conducted and as described in the Offering Memorandum and to own,
lease and operate its properties; and (C) is duly qualified and in
good standing as a foreign corporation or limited partnership, as the
case may be, authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified could reasonably be expected to (x) result, individually or
in the aggregate, in a material adverse effect on the properties,
business, results of operations, condition (financial or otherwise),
affairs or prospects of the Issuers and their non-Guarantor
subsidiaries, taken as a whole, (y) interfere with or adversely affect
the issuance or marketability of the Securities pursuant hereto or (z)
in any manner draw into question the validity of this Agreement or any
other Operative Document or the transactions described in the Offering
Memorandum under the captions "The Acquisition" and "Use of Proceeds"
(any of the events set forth in clauses (x), (y) or (z), a "Material
Adverse Effect").
(v) The Company has no subsidiaries other than the Allied
Guarantors and the entities listed on Exhibit C (the "Allied Foreign
Subsidiaries"); after giving effect to the Acquisition, the
7
<PAGE> 9
Company will have no subsidiaries other than the Guarantors, the
Allied Foreign Subsidiaries and the entities listed on Exhibit D (the
"Ryder Foreign Subsidiaries").
(vi) All of the outstanding capital stock of each subsidiary
(other than Allied Systems, Ltd.) of the Company is owned by the
Company, free and clear of any security interest, claim, lien,
limitation on voting rights or encumbrance, except for any such
security interest, claim, lien, limitation on voting rights or
encumbrance pursuant to the New Credit Facility; and all such
securities have been duly authorized, validly issued, and are fully
paid and nonassessable and were not issued in violation of any
preemptive or similar rights. The Company owns, directly or through
its subsidiaries, the sole general partnership interest in Allied
Systems, Ltd., free and clear of any security interest, claim, lien,
limitation on voting rights or encumbrance, except for any such
security interest, claim, lien, limitation on voting rights or
encumbrance pursuant to the New Credit Facility. The Company's
general partnership interest, including the interest owned by its
subsidiaries, in Allied Systems, Ltd. represents the right to 99% of
the profits and losses of Allied Systems, Ltd. and the sole limited
partners of Allied Systems Ltd. are subsidiaries of the Company.
(vii) There are not currently any outstanding subscriptions,
rights, warrants, calls, commitments of sale or options to acquire, or
instruments convertible into or exchangeable for, any capital stock or
other equity interest of the Company's subsidiaries.
(viii) When the Securities are issued and delivered pursuant
to this Agreement, none of the Securities will be of the same class
(within the meaning of Rule 144A under the Act) as securities of any
of the Issuers that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are quoted in a
United States automated inter-dealer quotation system.
(ix) Each of the Issuers has all requisite corporate power
and authority to execute, deliver and perform its obligations under
this Agreement and each of the other Operative Documents to which it
is a party and to consummate the transactions contemplated hereby and
thereby, including, without limitation, the corporate power and
authority to issue, sell and deliver the Securities and the Exchange
Securities as provided herein and therein.
(x) This Agreement has been duly and validly authorized,
executed and delivered by each of the Company and the Allied
Guarantors and is the legal, valid and binding agreement of each of
the Company and the Allied Guarantors, enforceable against each of
them in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity.
(xi) The Indenture has been duly and validly authorized by
each of the Company and the Allied Guarantors and, when duly executed
and delivered by each of the Company and the Allied Guarantors, will
be the legal, valid and binding obligation of each of the Company and
the Allied Guarantors, enforceable against each of them in accordance
with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of
equity. On the Closing Date, the Indenture will conform in all
material respects to the requirements of the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules
and regulations of the Commission applicable to an indenture which is
qualified thereunder. The Offering Memorandum contains a summary of
the terms of the Indenture, which is accurate in all material
respects.
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<PAGE> 10
(xii) The Registration Rights Agreement has been duly and
validly authorized by each of the Company and the Allied Guarantors
and, when duly executed and delivered by each of the Company and the
Allied Guarantors, will be the legal, valid and binding obligation of
each of the Company and the Allied Guarantors, enforceable against
each of them in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject
to general principles of equity. The Offering Memorandum contains a
summary of the terms of the Registration Rights Agreement, which is
accurate in all material respects.
(xiii) The New Credit Facility has been duly and validly
authorized by each of the Company and its subsidiaries party thereto
and, when duly executed and delivered by each of the Company and such
subsidiaries, will be the legal, valid and binding obligation of each
of the Company and such subsidiaries, enforceable against each of them
in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity. The Offering Memorandum contains a summary of
the terms of the New Credit Facility, which is accurate in all
material respects. The Company will have at least $100.0 million of
borrowings available to it under the New Credit Facility (giving
effect to the borrowing base requirements of the New Credit Agreement)
after the closing of the sale of Securities hereunder, the receipt by
the Company of the proceeds therefore, initial borrowings under the
New Credit Facility (as described in the Offering Memorandum under the
caption "Capitalization") and the consummation of the Acquisition.
(xiv) The Acquisition Agreement has been duly and validly
authorized, executed and delivered by the Company and the Company's
subsidiaries that are parties thereto and is the legal, valid and
binding obligation of the Company and the Company's subsidiaries that
are parties thereto, enforceable against each of them in accordance
with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of
equity. The Offering Memorandum contains a summary of the terms of
the Acquisition Agreement, which is accurate in all material respects.
(xv) The Series A Notes have been duly and validly authorized
by the Company for issuance and sale to the Initial Purchasers
pursuant to this Agreement and, when issued and authenticated in
accordance with the terms of the Indenture and delivered against
payment therefor in accordance with the terms hereof and thereof, will
be the legal, valid and binding obligations of the Company,
enforceable against it in accordance with their terms and entitled to
the benefits of the Indenture, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws
affecting the rights of creditors generally and subject to general
principles of equity. The Offering Memorandum contains a summary of
the terms of the Notes, which is accurate in all material respects.
(xvi) The Series B Notes have been duly and validly
authorized for issuance by the Company and, when issued and
authenticated in accordance with the terms of the Exchange Offer and
the Indenture, will be the legal, valid and binding obligations of the
Company, enforceable against it in accordance with their terms and
entitled to the benefits of the Indenture, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject
to general principles of equity.
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<PAGE> 11
(xvii) The Guarantees of the Series A Notes have been duly
and validly authorized by each of the Allied Guarantors and, when
executed and delivered in accordance with the terms of the Indenture
and when the Series A Notes have been issued and authenticated in
accordance with the terms of the Indenture and delivered against
payment therefor in accordance with the terms hereof and thereof, will
be the legal, valid and binding obligations of each of the Allied
Guarantors, enforceable against each of them in accordance with their
terms and entitled to the benefits of the Indenture, subject to
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity. The Offering
Memorandum contains a summary of the terms of the Guarantees, which is
accurate in all material respects.
(xviii) The Series B Guarantees have been duly and validly
authorized by each of the Allied Guarantors and, when executed and
delivered in accordance with the terms of the Indenture and when the
Series B Notes have been issued and authenticated in accordance with
the terms of the Exchange Offer and the Indenture, will be the legal,
valid and binding obligations of each of the Allied Guarantors,
enforceable against each of them in accordance with their terms and
entitled to the benefits of the Indenture, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject
to general principles of equity.
(xix) The statistical and market-related data included in the
Offering Memorandum are based on or derived from sources which the
Company believes to be reliable and accurate in all material respects.
(xx) Each of the Company and its subsidiaries is not and,
after giving effect to the Offering and the Acquisition, will not be,
(A) in violation of its charter or bylaws: (B) in default in the
performance of any bond, debenture, note, indenture, mortgage, deed of
trust or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties is subject, which
singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect; or (C) in violation of any local, state,
federal or foreign law, statute, ordinance, rule, regulation,
requirement, judgment or court decree (including, without limitation,
environmental laws, statutes, ordinances, rules, regulations,
judgments or court decrees) applicable to it or any of its
subsidiaries or any of its or their assets or properties (whether
owned or leased), which singly or in the aggregate, could reasonably
be expected to have a Material Adverse Effect. To the best knowledge
of the Company and the Allied Guarantors, there exists no condition
that, with notice, the passage of time or otherwise, would constitute
a default under any such document or instrument.
(xxi) None of (A) the execution, delivery or performance by
any of the Issuers of this Agreement or any of the other Operative
Documents to which it is a party; (B) the consummation of the
Acquisition; (C) the issuance and sale of the Securities or the
Exchange Securities and (D) consummation by the Issuers of the
transactions described in the Offering Memorandum under the captions
"The Acquisition" and "Use of Proceeds," violates, conflicts with or
constitutes a breach of any of the terms or provisions of, or, after
giving effect to the Acquisition, will violate, conflict with or
constitute a breach of any of the terms or provisions of, or a default
under (or an event that with notice or the lapse of time, or both,
would constitute a default), or require consent under, or result in
the imposition of a lien or encumbrance on any properties of the
Company or any of its subsidiaries, or an acceleration of any
indebtedness of the Company or any of its subsidiaries pursuant to,
(1) the charter or bylaws of the Company or any of its
10
<PAGE> 12
subsidiaries, (2) any bond, debenture, note, indenture, mortgage, deed
of trust or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which any of them or their
property is or may be bound, (3) any statute, rule or regulation
applicable to the Company or any of its subsidiaries or any of their
assets or properties or (4) any judgment, order or decree of any court
or governmental agency or authority having jurisdiction over the
Company or any of its subsidiaries or any of their assets or
properties. No consent, approval, authorization or order of, or
filing, registration, qualification, license or permit of or with, (A)
any court or governmental agency, body or administrative agency or (B)
any other person is required for (1) the execution, delivery and
performance by any of the Issuers of this Agreement or any of the
other Operative Documents to which it is a party, (2) the Acquisition
or (3) the issuance and sale of the Securities, the issuance of the
Exchange Securities and the transactions contemplated hereby and
thereby, except such as have been or will be obtained and made on or
prior to the Closing Date (or, in the case of the Registration Rights
Agreement and the Exchange Securities, will be obtained and made under
the Act, the Trust Indenture Act, and state securities or Blue Sky
laws and regulations).
(xxii) There is and, after giving effect to the Acquisition,
will be (A) no action, suit, investigation or proceeding before or by
any court, arbitrator or governmental agency, body or official,
domestic or foreign, now pending or, to the best knowledge of the
Company and the Allied Guarantors, threatened or contemplated to which
the Company or any of its subsidiaries (including subsidiaries to be
acquired in the Acquisition) is or may be a party or to which the
business or property of the Company or any of its subsidiaries
(including subsidiaries to be acquired in the Acquisition), is or,
after giving effect to the Acquisition, may be subject; (B) no
statute, rule, regulation or order that has been enacted, adopted or
issued by any governmental agency or that has been proposed by any
governmental body; and (C) no injunction, restraining order or order
of any nature by a federal or state court or foreign court of
competent jurisdiction to which the Company or any of its subsidiaries
(including subsidiaries to be acquired in the Acquisition) is or may
be subject or to which the business, assets or property of the Company
or any of its subsidiaries (including subsidiaries to be acquired in
the Acquisition) is or may be subject, that, in the case of clauses
(A), (B) and (C) above, (1) is required to be disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum and that
is not so disclosed, or (2) could reasonably be expected to result in
a Material Adverse Effect.
(xxiii) No action has been taken and no statute, rule,
regulation or order has been enacted, adopted or issued by any
governmental agency that prevents the issuance of the Securities or
the Exchange Securities or prevents or suspends the use of the
Offering Memorandum; no injunction, restraining order or order of any
nature by a federal or state court of competent jurisdiction has been
issued that prevents the issuance of the Securities or the Exchange
Securities or prevents or suspends the sale of the Securities or the
Exchange Securities in any jurisdiction referred to in Section 4(e)
hereof; and every request of any securities authority or agency of any
jurisdiction for additional information has been complied with in all
material respects.
(xxiv) The Company has delivered to the Initial Purchasers
true and correct copies of all documents and agreements related to the
Acquisition and the New Credit Facility, including all amendments,
alterations, modifications or waivers thereto and all exhibits,
ancillary agreements, side-letters and schedules thereto. Any such
documents delivered to the Initial Purchasers in draft form are in
substantially final form and constitute the most current drafts
thereof.
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<PAGE> 13
(xxv) There is and, after giving effect to the Acquisition,
will be (A) no significant unfair labor practice complaint pending
against the Company or any of its subsidiaries (including subsidiaries
to be acquired in the Acquisition) nor, to the best knowledge of the
Company and the Allied Guarantors, threatened against any of them,
before the National Labor Relations Board, any state or local labor
relations board or any foreign labor relations board, and no
significant grievance or significant arbitration proceeding arising
out of or under any collective bargaining agreement is so pending
against the Company or any of its subsidiaries (including subsidiaries
to be acquired in the Acquisition) or, to the best knowledge of the
Company and the Allied Guarantors, threatened against any of them; (B)
no significant strike, labor dispute, slowdown or stoppage pending
against the Company or any of its subsidiaries (including subsidiaries
to be acquired in the Acquisition) nor, to the best knowledge of the
Company and the Allied Guarantors, threatened against the Company or
any of its subsidiaries (including subsidiaries to be acquired in the
Acquisition); and (C) to the best knowledge of the Company and the
Allied Guarantors, no union representation question existing with
respect to the employees of the Company or any of its subsidiaries
(including subsidiaries to be acquired in the Acquisition). To the
best knowledge of the Company and the Allied Guarantors, no collective
bargaining organizing activities are taking place with respect to the
Company or any of its subsidiaries (including subsidiaries to be
acquired in the Acquisition). None of the Company or any of its
subsidiaries (including subsidiaries to be acquired in the
Acquisition) has violated (A) any federal, state or local law or
foreign law relating to discrimination in hiring, promotion or pay of
employees; (B) any applicable wage or hour laws; or (C) any provision
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules and regulations thereunder, except those
violations that could not reasonably be expected to have a Material
Adverse Effect.
(xxvi) None of the Company or any of its subsidiaries
(including subsidiaries to be acquired in the Acquisition) has
violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws") which could reasonably be expected to have a
Material Adverse Effect.
(xxvii) There is no alleged liability, or to the best
knowledge of the Company and the Allied Guarantors, potential
liability (including, without limitation, alleged or potential
liability or investigatory costs, cleanup costs, governmental response
costs, natural resource damages, property damages, personal injuries
or penalties) of the Company or any of its subsidiaries (including
subsidiaries to be acquired in the Acquisition) arising out of, based
on or resulting from (a) the presence or release into the environment
of any Hazardous Material (as defined) at any location, whether or not
owned by the Company or such subsidiary, as the case may be, or (b)
any violation or alleged violation of any Environmental Law, which
alleged or potential liability is required to be disclosed in the
Offering Memorandum, other than as disclosed therein, or could
reasonably be expected to have a Material Adverse Effect. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (ii) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act, as amended, (iii) any
petroleum or petroleum product, (iv) any polychlorinated biphenyl, and
(v) any pollutant or contaminant or hazardous, dangerous or toxic
chemical, material, waste or substance regulated under or within the
meaning of any other law relating to protection of human health or the
environment or imposing liability or standards of conduct concerning
any such chemical material, waste or substance.
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<PAGE> 14
(xxviii) Each of the Company and its subsidiaries (including
subsidiaries to be acquired in the Acquisition) has and, after giving
effect to the Acquisition, will have such permits, licenses,
franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease and
operate their respective properties and to conduct their businesses
except where the failure to have such permits could not reasonably be
expected to result in a Material Adverse Effect; each of the Company
and its subsidiaries (including subsidiaries to be acquired in the
Acquisition) has and, after giving effect to the Acquisition, will
have 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, except where the failure to fulfil such
obligations or the occurrence of such event could not reasonably be
expected to result in a Material Adverse Effect; and, except as
described in the Offering Memorandum, such permits contain no
restrictions that are materially burdensome to the Company or such
subsidiary, as the case may be.
(xxix) Each of the Company and its subsidiaries (including
subsidiaries to be acquired in the Acquisition) has and, after giving
effect to the Acquisition, will have (A) good and marketable title to
all of the properties and assets described in the Offering Memorandum
as owned by it, free and clear of all liens, charges, encumbrances and
restrictions (except for Permitted Liens (as defined in the Indenture)
and taxes not yet payable); (B) peaceful and undisturbed possession
under all material leases to which any of them is a party as lessee
and each of which lease is valid and binding and no default exists
thereunder, except for defaults that could not reasonably be expected
to have a Material Adverse Effect; (C) all licenses, certificates,
permits, authorizations, approvals, franchises and other rights from,
and has made all declarations and filings with, all federal, state and
local authorities, all self-regulatory authorities and all courts and
other tribunals (each, an "Authorization") necessary to engage in the
business conducted by any of them in the manner described in the
Offering Memorandum and; (D) no reason to believe that any
governmental body or agency is considering limiting, suspending or
revoking any such Authorization. All such Authorizations are and,
after giving effect to the Acquisition, will be valid and in full
force and effect and each of the Company and its subsidiaries
(including subsidiaries to be acquired in the Acquisition) is in
compliance in all material respects with the terms and conditions of
all such Authorizations and with the rules and regulations of the
regulatory authorities having jurisdiction with respect thereto. All
material leases to which the Company or any of its subsidiaries
(including subsidiaries to be acquired in the Acquisition) is a party
are valid and binding and no default by the Company or such
subsidiary, as the case may be, has occurred and is continuing
thereunder and, to the best knowledge of the Company and the Allied
Guarantors, no material defaults by the landlord are existing under
any such lease, except as could not reasonably be expected to have a
Material Adverse Effect.
(xxx) Each of the Company and its subsidiaries (including
subsidiaries to be acquired in the Acquisition) owns, possesses or has
and, after giving effect to the Acquisition, will have the right to
employ all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, software,
systems or procedures), trademarks, service marks and trade names,
inventions, computer programs, technical data and information
(collectively, the "Intellectual Property") presently employed by it
in connection with the businesses now operated by it or that are
proposed to be operated by it free and clear of and without violating
any right, claimed right,
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<PAGE> 15
charge, encumbrance, pledge, security interest, restriction or lien of
any kind of any other person, and none of the Company or any of its
subsidiaries (including subsidiaries to be acquired in the
Acquisition) has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing.
The use of the Intellectual Property in connection with the business
and operations of the Company or any of its subsidiaries (including
subsidiaries to be acquired in the Acquisition) does not infringe on
the rights of any person, except as could not reasonably be expected
to have a Material Adverse Effect.
(xxxi) All material tax returns required to be filed by the
Company or any of its subsidiaries (including subsidiaries to be
acquired in the Acquisition) in all jurisdictions have been, or will
be by the Closing Date, so filed. All taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due
or claimed to be due from such entities or that are due and payable
have been paid, other than those being contested in good faith and for
which adequate reserves have been provided, those currently payable
without penalty or interest or those that have been accrued in
accordance with GAAP. To the knowledge of the Company and the Allied
Guarantors, there are no material proposed additional tax assessments
against the Company or any of its subsidiaries (including subsidiaries
to be acquired in the Acquisition), or the assets or property of the
Company or any of its subsidiaries, except those tax assessments for
which adequate reserves have been established.
(xxxii) None of the Company or any of its subsidiaries
(including subsidiaries to be acquired in the Acquisition) is and,
after giving effect to the Acquisition and the closing of the offering
of the Securities and the application of the proceeds therefrom, will
be an "investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(xxxiii) There are no holders of securities of the Company or
any of its subsidiaries (including subsidiaries to be acquired in the
Acquisition) who, by reason of the execution by the Company and the
Guarantors of this Agreement or any other Operative Document or the
consummation by the Company and the Guarantors of the transactions
contemplated hereby and thereby, have the right to request or demand
that the Company or any of its subsidiaries (including subsidiaries to
be acquired in the Acquisition) register under the Act or analogous
foreign laws and regulations securities held by them.
(xxxiv) Each of the Company and its subsidiaries (including
subsidiaries to be acquired in the Acquisition) maintains a system of
internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets; (C) access to assets is permitted
only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto.
(xxxv) Each of the Company and its subsidiaries (including
subsidiaries to be acquired in the Acquisition) maintains insurance
covering its properties, operations, personnel and businesses,
insuring against such losses and risks as are consistent with industry
practice to protect the Company and its subsidiaries (including
subsidiaries to be acquired in the Acquisition) and their respective
businesses. None of the Company or any of its subsidiaries (including
subsidiaries to be acquired in the Acquisition) has received notice
from any insurer or agent of
14
<PAGE> 16
such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such insurance.
The Offering Memorandum contains a summary of the terms of all such
insurance, which is accurate in all material respects.
(xxxvi) None of the Company or any of its subsidiaries
(including subsidiaries to be acquired in the Acquisition) has (A)
taken, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company or any of its
subsidiaries (including subsidiaries to be acquired in the
Acquisition) to facilitate the sale or resale of the Securities or (B)
since the date of the Preliminary Offering Memorandum (1) sold, bid
for, purchased or paid any person any compensation for soliciting
purchases of the Securities or (2) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other
securities of the Company or any of its subsidiaries (including
subsidiaries to be acquired in the Acquisition).
(xxxvii) No registration under the Act of the Securities is
required for the sale of the Securities to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming (A) that the
purchasers who buy the Securities in the Exempt Resales are Eligible
Purchasers and the Exempt Resales will be made in the manner
contemplated by this Agreement and the Offering Memorandum (B) the
compliance by the Initial Purchasers with their obligations under this
Agreement and the accuracy of the Initial Purchasers' representations
regarding the absence of general solicitation in connection with the
sale of Securities to the Initial Purchasers and the Exempt Resales
contained herein. No form of general solicitation or general
advertising (as defined in Regulation D under the Act) was used by the
Company, any of the Guarantors or any of their respective
representatives (other than the Initial Purchasers, as to which the
Company and the Allied Guarantors make no representation or warranty)
in connection with the offer and sale of any of the Securities or in
connection with Exempt Resales, including, but not limited to,
articles, notices or other communications published in any newspaper,
magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. No securities of the
same class as any of the Securities or Exchange Securities have been
issued and sold by the Company or any of its subsidiaries (including
subsidiaries to be acquired in the Acquisition) within the six-month
period immediately prior to the date hereof.
(xxxviii) Prior to the effectiveness of any Registration
Statement, the Indenture is not required to be qualified under the
Trust Indenture Act.
(xxxix) None of the Company, the Guarantors or any of their
respective affiliates or any person acting on its or their behalf
(other than the Initial Purchasers, as to whom the Company and the
Allied Guarantors make no representation) has engaged or will engage
in any directed selling efforts within the meaning of Regulation S
with respect to any of the Securities or the Exchange Securities.
(xl) The Securities offered and sold in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions; provided that the Company and the Allied Guarantors make
no representations with respect to the Initial Purchasers.
(xli) The sale of the Securities pursuant to Regulation S
is not part of a plan or scheme to evade the registration provisions
of the Act; provided that the Company and the Allied Guarantors make
no representations with respect to the Initial Purchasers.
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<PAGE> 17
(xlii) The Company, the Guarantors and their respective
affiliates and all persons acting on their behalf (other than the
Initial Purchasers, as to whom the Company and the Allied Guarantors
make no representation) have complied with and will comply with the
offering restrictions requirements of Regulation S in connection with
the offering of the Securities outside the United States and, in
connection therewith, the Preliminary Offering Memorandum and the
Offering Memorandum contains or will contain the disclosure required
by Rule 902(h).
(xliii) Subsequent to the respective dates as of which
information is given in the Offering Memorandum and up to the Closing
Date, except as set forth in the Offering Memorandum, (A) none of the
Company or any of its subsidiaries (including subsidiaries to be
acquired in the Acquisition) has incurred any liabilities or
obligations, direct or contingent, which are or, after giving effect
to the Acquisition, will be material, individually or in the
aggregate, to the Company and its subsidiaries (including subsidiaries
to be acquired in the Acquisition), taken as a whole, nor entered into
any transaction not in the ordinary course of business; (B) there has
not been any change or development which, singly or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect;
and (C) there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(xliv) None of the execution, delivery and performance of
this Agreement, the issuance and sale of the Securities, the
application of the proceeds from the issuance and sale of the
Securities and the consummation of the transactions contemplated
thereby as set forth in the Offering Memorandum, will violate
Regulations G, T, U or X promulgated by the Board of Governors of the
Federal Reserve System or analogous foreign laws and regulations.
(xlv) The accountants who have certified or will certify the
financial statements included or to be included as part of the
Offering Memorandum are independent certified public accountants
within the meaning of the Act. The historical financial statements,
together with related schedules and notes thereto, comply as to form
in all material respects with the requirements applicable to
registration statements on Form S-2 under the Act and present fairly
in all material respects the financial position and results of
operations of the Company and its subsidiaries, or of Ryder and its
subsidiaries, as the case may be, at the dates and for the periods
indicated. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent
basis throughout the periods presented. The pro forma financial
statements included in the Offering Memorandum have been prepared on a
basis consistent with such historical statements of the Company,
except for the pro forma adjustments specified therein, and give
effect to assumptions made on a reasonable basis and present fairly in
all material respects the historical and proposed transactions
contemplated by this Agreement and the other Operative Documents; and
such pro forma financial statements comply as to form in all material
respects with the requirements applicable to pro forma financial
statements included in registration statements on Form S-2 under the
Act, except as expressly stated therein. The other financial and
statistical information and data included in the Offering Memorandum,
historical and pro forma, are accurately presented in all material
respects and prepared on a basis consistent with the financial
statements, historical and pro forma, included in the Offering
Memorandum and the books and records of the Company and its
subsidiaries.
(xlvi) None of the Company or any of the Guarantors intends
to, nor does it believe that it will, incur debts beyond its ability
to pay such debts as they mature. The present fair saleable value of
the assets of each of the Company and the Guarantors exceeds the
amount that will be required to be paid on or in respect of its
existing debts and other liabilities (including contingent
16
<PAGE> 18
liabilities) as they become absolute and matured. The assets of each
of the Company and the Guarantors do not constitute unreasonably small
capital to carry out its business as conducted or as proposed to be
conducted. Upon the issuance of the Securities and consummation of
the Acquisition, the present fair saleable value of the assets of each
of the Company and the Guarantors will exceed the amount that will be
required to be paid on or in respect of its existing debts and other
liabilities (including contingent liabilities) as they become absolute
and matured. Upon the issuance of the Securities and the consummation
of the Acquisition, the assets of each of the Company and the
Guarantors will not constitute unreasonably small capital to carry out
its business as now conducted, including the capital needs of each of
the Company and the Guarantors, taking into account any anticipated
capital requirements and capital availability.
(xlvii) Except pursuant to this Agreement, there are no
contracts, agreements or understandings between the Company and its
subsidiaries (including subsidiaries to be acquired in the
Acquisition) and any other person that would give rise to a valid
claim against the Company or any of its subsidiaries (including
subsidiaries to be acquired in the Acquisition) or the Initial
Purchasers for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Securities.
(xlviii) There exist no conditions that would constitute a
default (or an event which with notice or the lapse of time, or both,
would constitute a default) under any of the Operative Documents.
(xlix) Each of the Company and its subsidiaries (including
subsidiaries to be acquired in the Acquisition) has complied with all
of the provisions of Florida H.B. 1771, codified as Section 517.075 of
the Florida statutes, and all regulations promulgated thereunder
relating to doing business with the Government of Cuba or with any
person or any affiliate located in Cuba.
(l) Each certificate signed by any officer of the Company or
any of the Guarantors and delivered to the Initial Purchasers or
counsel for the Initial Purchasers shall be deemed to be a
representation and warranty by the Company or such Guarantor, as the
case may be, to the Initial Purchasers as to the matters covered
thereby.
The Company and the Allied Guarantors acknowledge that the
Initial Purchasers and, for purposes of the opinions to be delivered to the
Initial Purchasers pursuant to Section 8 hereof, counsel for the Issuers and
counsel for the Initial Purchasers, will rely upon the accuracy and truth of
the foregoing representations and hereby consent to such reliance.
(b) Each of the Initial Purchasers, severally and not jointly,
represents, warrants and covenants to the Issuers and agrees that:
(i) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as are necessary in order
to evaluate the merits and risks of an investment in the Securities.
(ii) Such Initial Purchaser (A) is not acquiring the
Securities with a view to any distribution thereof that would violate
the Act or the securities laws of any state of the United States or
any other applicable jurisdiction and (B) will be reoffering and
reselling the Securities only to QIBs in reliance on the exemption
from the registration requirements of the Act provided by Rule 144A
and in offshore transactions in reliance upon Regulation S under the
Act.
17
<PAGE> 19
(iii) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) has been or will be
used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of any of the Securities,
including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(iv) In connection with the Exempt Resales, it will solicit
offers to buy the Securities only from, and will offer to sell the
Securities only to, Eligible Purchasers. Each of the Initial
Purchasers further (A) agrees that it will offer to sell the
Securities only to, and will solicit offers to buy the Securities only
from (1) Eligible Purchasers that the Initial Purchasers reasonably
believes are QIBs and (2) Reg S Investors and (B) that, in the case of
such QIBs and such Reg S Investors, acknowledges and agrees that such
Securities will not have been registered under the Act and may be
resold, pledged or otherwise transferred only (x)(I) to a person whom
the seller reasonably believes is a QIB purchasing for its own account
or for the account of a QIB in a transaction meeting the requirements
of Rule 144A, (II) in an offshore transaction (as defined in Rule 902
under the Act) meeting the requirements of Rule 904 under the Act,
(III) in a transaction meeting the requirements of Rule 144 under the
Act or (IV) in accordance with another exemption from the registration
requirements of the Act (and based upon an opinion of counsel if the
Company so requests), (y) to the Company or any of its subsidiaries,
(z) pursuant to an effective registration statement under the Act and,
in each case, in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction and
(C) that the holder will, and each subsequent holder is required to,
notify any purchaser of the security evidenced thereby of the resale
restrictions set forth in (B) above.
(v) Such Initial Purchaser agrees that 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 of the Securities pursuant
hereto and the Closing Date, only in accordance with Rule 903 of
Regulation S or another exemption from the registration requirements
of the Act. Such Initial Purchaser agrees that, during such 40-day
restricted period, it will not cause any advertisement with respect to
the Securities (including any "tombstone" advertisement") to be
published in any newspaper or periodical or posted in any public place
and will not issue any circular relating to the Securities, except
such advertisements as are permitted by and include the statements
required by Regulation S.
(vi) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Series A Notes sold pursuant
hereto in reliance on Regulation S (A) as part of its distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Series A Notes pursuant hereto and
the Closing Date, to a U.S. person (as defined in Rule 902 of the Act)
or for the account or benefit of a U.S. person (other than a
distributor (as defined in Rule 902 of the Act)).
(vii) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Securities by it to any distributor, dealer
or person receiving a selling concession, fee or other remuneration
during the 40-day restricted period referred to in Rule 903(c)(2)
under the Act, it will send to such distributor, dealer or person
receiving a selling concession, fee or other remuneration a
confirmation or notice to substantially the following effect:
18
<PAGE> 20
"The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933, as
amended (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 your distribution at any time or (ii)
otherwise until 40 days after the later of the
commencement of the offering and the Closing Date,
except in either case in accordance with Regulation S
under the Securities Act (or Rule 144A in
transactions that are exempt from the registration
requirements of the Securities Act), and in
connection with any subsequent sale by you of the
Securities covered hereby in reliance on Regulation S
during the period referred to above to any
distributor, dealer or person receiving a selling
concession, fee or other remuneration, you must
deliver a notice to substantially the foregoing
effect. Terms used above have the meanings assigned
to them in Regulation S."
The Initial Purchasers understand that the Company and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 8 hereof, counsel for the Issuers and counsel for the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
6. Indemnification.
(a) The Company and the Allied Guarantors, jointly and
severally, agree, and will cause the Ryder Guarantors to agree
(by executing the signature page attached hereto as Exhibit G hereto),
to indemnify and hold harmless (i) each of the Initial Purchasers,
(ii) each person, if any, who controls either of the Initial
Purchasers within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and (iii) the respective officers,
directors, partners, employees, representatives and agents of each of
the Initial Purchasers or any controlling person to the fullest extent
lawful, from and against any and all losses, liabilities, claims,
damages and expenses whatsoever (including but not limited to
reasonable attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum, or in any
supplement thereto or amendment thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Issuers will not be liable
in any such case to the extent, but only to the extent, that any such
loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity
with information relating to either of the Initial Purchasers
furnished to the Company in writing by or on behalf of such Initial
Purchaser expressly for use therein. This indemnity agreement will be
in addition to any liability which the Issuers may otherwise have,
including under this Agreement.
(b) Each of the Initial Purchasers, severally and not
jointly, agrees to indemnify and hold harmless (i) the Issuers, (ii)
each person, if any, who controls the Issuers within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, and (iii)
the respective officers,
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<PAGE> 21
directors, partners, employees, representatives and agents of the
Issuers or any controlling person, against any losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to
reasonable attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum, or in any
amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, in each case to the extent, but only to the extent,
that any such loss, liability, claim, damage or expense arises out of
or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with information relating to such Initial Purchaser
furnished to the Company in writing by or on behalf of such Initial
Purchaser expressly for use therein; provided, however, that in no
case shall either of the Initial Purchasers be liable or responsible
for any amount in excess of the discounts and commissions received by
such Initial Purchaser, as set forth on the cover page of the Offering
Memorandum. This indemnity will be in addition to any liability which
the Initial Purchasers may otherwise have, including under this
Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify each party against whom indemnification is to be sought in
writing of the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it
may have under this Section 6 except to the extent that it has been
prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is
brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified
party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless
(i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed
counsel to take charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from
or additional to those available to one or all of the indemnifying
parties (in which case the indemnifying party or parties shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and
expenses of counsel shall be borne by the indemnifying parties;
provided, however, that the indemnifying party under subsection (a) or
(b) above shall only be liable for the legal expenses of one counsel
(in addition to any local counsel) for all indemnified parties in each
jurisdiction in which any claim or action is brought. Anything in
this subsection to the contrary notwithstanding, an
20
<PAGE> 22
indemnifying party shall not be liable for any settlement of any claim
or action effected without its prior written consent, provided that
such consent was not unreasonably withheld.
7. Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 6 is for any
reason held to be unavailable from the Issuers or is insufficient to hold
harmless a party indemnified thereunder, the Issuers, on the one hand, and each
Initial Purchaser, on the other hand, shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages, liabilities and expenses suffered by the
Issuers, any contribution received by the Issuers from persons, other than the
Initial Purchasers, who may also be liable for contribution, including persons
who control the Issuers within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act) to which the Company, the Guarantors and such
Initial Purchaser may be subject, in such proportion as is appropriate to
reflect the relative benefits received by the Issuers, on one hand, and such
Initial Purchaser, on the other hand, from the offering of the Series A Notes
or, if such allocation is not permitted by applicable law or indemnification is
not available as a result of the indemnifying party not having received notice
as provided in Section 6, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Issuers, on one hand, and such Initial Purchaser, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Issuers, on
one hand, and each Initial Purchaser, on the other hand, shall be deemed to be
in the same proportion as (i) the total proceeds from the offering of Series A
Notes (net of discounts but before deducting expenses) received by the Issuers
and (ii) the discounts and commissions received by such Initial Purchaser,
respectively, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the Issuers, on one hand, and of
each Initial Purchaser, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Guarantors or such Initial
Purchaser and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Guarantors and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 7, (i) in no case shall either of the Initial
Purchasers be required to contribute any amount in excess of the amount by
which the discounts and commissions applicable to the Series A Notes purchased
by such Initial Purchaser pursuant to this Agreement exceeds the amount of any
damages which such Initial Purchaser has otherwise been required to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7, (A) each person, if any, who controls either of the Initial
Purchasers within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and (B) the respective officers, directors, partners, employees,
representatives and agents of each of the Initial Purchasers or any controlling
person shall have the same rights to contribution as such Initial Purchaser,
and (A) each person, if any, who controls the Issuers within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the
respective officers, directors, partners, employees, representatives and agents
of the Issuers shall have the same rights to contribution as the Issuers,
subject in each case to clauses (i) and (ii) of this Section 7. Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim
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<PAGE> 23
for contribution may be made against another party or parties under this
Section 7, notify such party or parties from whom contribution may be sought,
but the failure to so notify such party or parties shall not relieve the party
or parties from whom contribution may be sought from any obligation it or they
may have under this Section 7 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent, provided that such written consent was not unreasonably
withheld.
8. Conditions of Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase and pay for the Securities,
as provided herein, shall be subject to the satisfaction of the following
conditions:
(a) All of the representations and warranties of the Company
and the Allied Guarantors contained in this Agreement shall be true
and correct on the date hereof and on the Closing Date (after giving
effect to the Acquisition) with the same force and effect as if made
on and as of the date hereof and the Closing Date, respectively. Each
of the Company and the Allied Guarantors shall have performed or
complied with all of the agreements herein contained and required to
be performed or complied with by it at or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and
copies distributed to the Initial Purchasers not later than 10:00
a.m., New York City time, on the day following the date of this
Agreement or at such later date and time as to which the Initial
Purchasers may agree, and no stop order suspending the qualification
or exemption from qualification of the Securities in any jurisdiction
referred to in Section 4(e) shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
(c) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency which would, as of the Closing Date, prevent the
issuance of the Securities or the consummation of the Acquisition; no
action, suit or proceeding shall have been commenced and be pending
against or affecting or, to the best knowledge of the Company and the
Allied Guarantors, threatened against, the Company or any of its
subsidiaries (including subsidiaries to be acquired in the
Acquisition) before any court or arbitrator or any governmental body,
agency or official that, if adversely determined, could reasonably be
expected to result in a Material Adverse Effect; and no stop order
shall have been issued preventing the use of the Offering Memorandum,
or any amendment or supplement thereto, or which could reasonably be
expected to have a Material Adverse Effect.
(d) Since the dates as of which information is given in the
Offering Memorandum, (i) there shall not have been any material
adverse change, or any development that is reasonably likely to result
in a material adverse change, in the capital stock or the long-term
debt, or material increase in the short-term debt, of the Company or
any of its subsidiaries (including subsidiaries to be acquired in the
Acquisition) from that set forth in the Offering Memorandum, (ii) no
dividend or distribution of any kind shall have been declared, paid or
made by the Company or any of its subsidiaries (including subsidiaries
to be acquired in the Acquisition) on any class of its capital stock
and (iii) none of the Company or any of its subsidiaries (including
subsidiaries to be acquired in the Acquisition) shall have incurred
any liabilities or obligations, direct or contingent, that are or,
after giving effect to the Acquisition, will be material, individually
or in the aggregate, to the Company and its subsidiaries (including
subsidiaries to be acquired in the Acquisition), taken as a whole, and
that are required to be disclosed on a balance sheet or notes thereto
in accordance with generally accepted accounting principles and
22
<PAGE> 24
are not disclosed on the latest balance sheet or notes thereto
included in the Offering Memorandum. Since the date hereof and since
the dates as of which information is given in the Offering Memorandum,
there shall not have occurred any material adverse change in the
business, prospects, financial condition or results of operation of
the Company and its subsidiaries (including subsidiaries to be
acquired in the Acquisition), taken as a whole.
(e) The Initial Purchasers shall have received certificates,
dated the Closing Date, signed on behalf of the Issuers, in form and
substance satisfactory to the Initial Purchasers, confirming, as of
the Closing Date, the matters set forth in paragraphs (a), (b), (c)
and (d) of this Section 8 and that, as of the Closing Date, the
obligations of the Company and the Allied Guarantors to be performed
hereunder on or prior thereto have been duly performed.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel for the Initial
Purchasers, of Troutman Sanders LLP (or local counsel or bank counsel,
as appropriate), counsel for the Issuers, substantially in the form of
Exhibit E hereto.
(g) At the time this Agreement is executed and at the Closing
Date, the Initial Purchasers shall have received from Arthur Andersen,
LLP and KPMG Peat Marwick LLP, independent public accountants, dated
as of the date of this Agreement and as of the Closing Date, customary
comfort letters addressed to the Initial Purchasers and in form and
substance satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers with respect to the financial statements and
certain financial information of the Company and its subsidiaries, and
of Ryder and its subsidiaries, contained in the Offering Memorandum
and/or incorporated therein by reference.
(h) The Initial Purchasers shall have received an opinion,
dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchasers, of Latham & Watkins, counsel for the
Initial Purchasers, covering such matters as are customarily covered
in such opinions.
(i) The Initial Purchasers shall have received a certificate
of the Company, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel for the Initial
Purchasers, as to the solvency of the Company following consummation
of the Acquisition.
(j) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass
upon the matters referred to in this Section 8 and in order to
evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions
herein contained.
(k) Prior to the Closing Date, the Issuers shall have
furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
(l) The Issuers and the Trustee shall have entered into the
Indenture and the Initial Purchasers shall have received counterparts,
conformed as executed, thereof.
(m) The Issuers shall have entered into the Registration
Rights Agreement and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
23
<PAGE> 25
(n) The Acquisition and the New Credit Facility shall be
consummated prior to, or simultaneously with, the Closing of the
Offering on substantially the terms described in the Offering
Memorandum and the Initial Purchasers shall have received
counterparts, conformed as executed, of the Acquisition Agreement and
the New Credit Facility and such other documentation as they deem
necessary to evidence the consummation thereof.
(o) All of the opinions to be delivered by the Company and it
subsidiaries (including subsidiaries to be acquired in the
Acquisition) pursuant to the New Credit Facility and the Acquisition
Agreement shall be addressed and delivered to the Initial Purchasers.
(p) There shall not have been any announcement by any
"nationally recognized statistical rating organization," as defined
for purposes of Rule 463(g) under the Securities Act, that (i) it is
downgrading its rating assigned to any class of securities of the
Company or (ii) it is reviewing its ratings assigned to any class of
securities of the Company with a view to possible downgrading, or with
negative implications, or direction not determined.
(q) The Securities shall have been approved for trading on
PORTAL.
All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by the Company and its subsidiaries
(including subsidiaries to be acquired in the Acquisition) will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers. The Company it subsidiaries
(including subsidiaries to be acquired in the Acquisition) shall furnish the
Initial Purchasers with such conformed copies of such opinions, certificates,
letters and other documents as they shall reasonably request.
9. Initial Purchasers' Information. The Company and the Allied
Guarantors acknowledge that the statements with respect to the offering of the
Securities set forth in the last paragraph of the cover page and the third
paragraph and the third sentence of the fourth paragraph under the caption
"Plan of Distribution" in the Offering Memorandum constitute the only
information relating to any of the Initial Purchasers furnished to the Company
in writing by or on behalf of any of the Initial Purchasers expressly for use
in the Offering Memorandum.
10. Survival of Representations and Agreements. All
representations and warranties, covenants and agreements of the Initial
Purchasers, the Company and the Allied Guarantors contained in this Agreement,
including the agreements contained in Sections 4(f) and 11(d), the indemnity
agreements contained in Section 6 and the contribution agreements contained in
Section 7, shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of either of the Initial Purchasers, any
controlling person thereof, or by or on behalf of the Company and the Allied
Guarantors or any controlling person thereof, and shall survive delivery of and
payment for the Securities to and by the Initial Purchasers. The
representations contained in Section 5 and the agreements contained in Sections
4(f), 6, 7 and 11(d) shall survive the termination of this Agreement, including
any termination pursuant to Section 11.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution and
delivery of a counterpart hereof by each of the parties hereto.
24
<PAGE> 26
(b) The Initial Purchasers shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice to the
Company from the Initial Purchasers, without liability (other than
with respect to Sections 6 and 7) on the Initial Purchasers' part to
the Company or any of the Guarantors if, on or prior to such date, (i)
the Company or any of the Guarantors shall have failed, refused or
been unable to perform in any material respect any agreement on their
part to be performed hereunder, (ii) any other condition to the
obligations of the Initial Purchasers hereunder as provided in Section
8 is not fulfilled when and as required in any material respect, (iii)
in the reasonable judgment of the Initial Purchasers, any material
adverse change shall have occurred since the respective dates as of
which information is given in the Offering Memorandum in the condition
(financial or otherwise), business, properties, assets, liabilities,
prospects, net worth, results of operations or cash flows of the
Company and its subsidiaries, taken as a whole, other than as set
forth in the Offering Memorandum, or (iv)(A) any domestic or
international event or act or occurrence has materially disrupted, or
in the opinion of the Initial Purchasers will in the immediate future
materially disrupt, the market for the Company's securities or for
securities in general; or (B) trading in securities generally on the
New York or American Stock Exchange shall have been suspended or
materially limited, or minimum or maximum prices for trading shall
have been established, or maximum ranges for prices for securities
shall have been required, on such exchange, or by such exchange or
other regulatory body or governmental authority having jurisdiction;
or (C) a banking moratorium shall have been declared by federal or
state authorities, or a moratorium in foreign exchange trading by
major international banks or persons shall have been declared; or (D)
there is an outbreak or escalation of armed hostilities involving the
United States on or after the date hereof, or if there has been a
declaration by the United States of a national emergency or war, the
effect of which shall be, in the Initial Purchasers' judgment, to make
it inadvisable or impracticable to proceed with the offering or
delivery of the Securities on the terms and in the manner contemplated
in the Offering Memorandum; or (E) there shall have been such a
material adverse change in general economic, political or financial
conditions or if the effect of international conditions on the
financial markets in the United States shall be such as, in the
Initial Purchasers' judgment, makes it inadvisable or impracticable to
proceed with the delivery of the Securities as contemplated hereby.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone or telephonic facsimile and, in either case,
confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than pursuant to clause (iv) of
Section 11(b), in which case each party will be responsible for its
own expenses), or if the sale of the Securities provided for herein is
not consummated because any condition to the obligations of the
Initial Purchasers set forth herein is not satisfied or because of any
refusal, inability or failure on the part of the Company or any of the
Guarantors to perform any agreement herein or comply with any
provision hereof, the Issuers shall reimburse the Initial Purchasers
for all out-of-pocket expenses (including the reasonable fees and
expenses of the Initial Purchasers' counsel), incurred by the Initial
Purchasers in connection herewith.
12. Notice. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to the
Initial Purchasers shall be mailed, delivered, telecopied and confirmed in
writing or sent by a nationally recognized overnight courier service
guaranteeing delivery on the next business day to Bear, Stearns & Co. Inc., 245
Park Avenue, New York, New York 10167, Attention: Corporate Finance Department,
telecopy number: (212) 272-3092, with a copy to Latham &
25
<PAGE> 27
Watkins, 885 Third Avenue, Suite 1000, New York, New York 10022, Attention:
Ian B. Blumenstein, telecopy number: (212) 751-4864; and if sent to the Company
or any of the Guarantors, shall be mailed, delivered, telecopied and confirmed
in writing or sent by a nationally recognized overnight courier service
guaranteeing delivery on the next business day to Allied Holdings, Inc., 160
Clairemont Avenue, Suite 510, Decatur, Georgia 30030, Attention: Daniel H.
Popky, telecopy number: (404) 370-4342, with a copy to Troutman Sanders LLP,
600 Peachtree Street, N.E., Atlanta, Georgia 30308-2216, Attention: Thomas M.
Duffy, telecopy number: (404) 885-3900.
13. Parties. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the Initial Purchasers, the Company and the Allied
Guarantors and the controlling persons and agents referred to in Sections 6 and
7, and their respective successors and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or claim under or
in respect of or by virtue of this Agreement or any provision herein contained.
The term "successors and assigns" shall not include a purchaser, in its
capacity as such, of Securities from the Initial Purchasers.
14. CONSTRUCTION. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. TIME IS OF THE ESSENCE IN
THIS AGREEMENT.
15. Captions. The captions included in this Agreement are
included solely for convenience of reference and are not to be considered a
part of this Agreement.
16. Counterparts. This Agreement may be executed in various
counterparts which together shall constitute one and the same instrument.
[Signature pages follow]
26
<PAGE> 28
If the foregoing correctly sets forth the understanding among
the Initial Purchasers, the Company and the Allied Guarantors please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
ALLIED HOLDINGS, INC.
By:
---------------------------------------------
Name:
Title:
ALLIED AUTOMOTIVE GROUP, INC.
By:
---------------------------------------------
Name:
Title:
ALLIED INDUSTRIES INCORPORATED
By:
---------------------------------------------
Name:
Title:
HAUL RISK MANAGEMENT SERVICES, INC.
By:
---------------------------------------------
Name:
Title:
LINK INFORMATION SYSTEMS, INC.
By:
---------------------------------------------
Name:
Title:
<PAGE> 29
ALLIED SOUTHWOODS, INC.
By:
---------------------------------------------
Name:
Title:
AXIS GROUP, INC.
By:
---------------------------------------------
Name:
Title:
ALLIED SYSTEMS, LTD. (L.P.)
BY: ALLIED AUTOMOTIVE GROUP, INC.,
as general partner
By:
---------------------------------------------
Name:
Title:
ALLIED, INC.
By:
---------------------------------------------
Name:
Title:
INTER MOBILE, INC.
By:
---------------------------------------------
Name:
Title:
LEGION TRANSPORTATION, INC.
By:
---------------------------------------------
Name:
Title:
<PAGE> 30
INNOVATIVE CAR CARRIERS, INC.
By:
---------------------------------------------
Name:
Title:
AUTOMOTIVE TRANSPORT SERVICES, INC.
By:
---------------------------------------------
Name:
Title:
AUTO HAULAWAY INC.
By:
---------------------------------------------
Name:
Title:
AUTO HAULAWAY RELEASING SERVICES (1981) LIMITED
By:
---------------------------------------------
Name:
Title:
AXIS INTERNATIONAL, INC.
By:
---------------------------------------------
Name:
Title:
AXIS TRUCK LEASING, INC.
By:
---------------------------------------------
Name:
Title:
<PAGE> 31
AXIS NORTH AMERICA, INC.
By:
---------------------------------------------
Name:
Title:
DECATUR DRIVER EXCHANGE COMPANY, INC.
By:
---------------------------------------------
Name:
Title:
CLAIREMONT DRIVER EXCHANGE COMPANY, INC.
By:
---------------------------------------------
Name:
Title:
KAR-TAINER INTERNATIONAL, INC.
By:
---------------------------------------------
Name:
Title:
A H ACQUISITION CORP.
By:
---------------------------------------------
Name:
Title:
CANADIAN ACQUISITION CORP.
By:
---------------------------------------------
Name:
Title:
<PAGE> 32
AXIS NATIONAL INCORPORATED
By:
---------------------------------------------
Name:
Title:
Accepted and agreed to as of
the date first above written:
BEAR, STEARNS & CO. INC.
BT ALEX. BROWN INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
BY: BEAR STEARNS & CO., INC.
By: /s/ James B. Nish
---------------------------------
Name: James B. Nish
Title: Senior Managing Director
<PAGE> 33
Ryder Guarantor Signature Page
We hereby agree to be bound by the terms of the Purchase Agreement,
dated as of September 19, 1997, by and among Allied Holdings, Inc., the
Guarantors named on the signature page thereto and Bear, Stearns & Co., Inc.,
BT Alex. Brown Incorporated and NationsBanc Capital Markets, Inc. and to
cooperate with Allied Holdings, Inc. and Guarantors in complying with their
obligations thereunder.
Dated: September 30, 1997
RC MANAGEMENT CORP.
By:
-----------------------------------
Name:
Title:
RYDER AUTOMOTIVE CARRIER SERVICES, INC.
By:
-----------------------------------
Name:
Title:
RYDER AUTOMOTIVE ACQUISITION, LLC
BY: CANADIAN ACQUISITION CORP.,
AS MEMBER
By:
-----------------------------------
Name:
Title:
MCL RYDER TRANSPORT INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 34
RYDER AUTOMOTIVE OPERATIONS, INC.
By:
-----------------------------------
Name:
Title:
RYDER FREIGHT BROKER, INC.
By:
-----------------------------------
Name:
Title:
QAT, INC.
By:
-----------------------------------
Name:
Title:
OSHCO, INC.
By:
-----------------------------------
Name:
Title:
TERMINAL SERVICE CO.
By:
-----------------------------------
Name:
Title:
F.J. BOUTELL DRIVEAWAY CO., INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 35
RMX, INC.
By:
-----------------------------------
Name:
Title:
TRANSPORT SUPPORT, INC.
By:
-----------------------------------
Name:
Title:
COMMERICAL CARRIERS, INC.
By:
-----------------------------------
Name:
Title:
B&C, INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 36
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
Initial Purchaser of Securities
- ----------------- -------------------
<S> <C>
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . $105,000,000
BT Alex. Brown Incorporated . . . . . . . . . . . . . . . . . . $ 30,000,000
NationsBanc Capital Markets, Inc. . . . . . . . . . . . . . . . $ 15,000,000
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . $150,000,000
============
</TABLE>
<PAGE> 37
EXHIBIT A
List of Allied Guarantors
1. Allied Automotive Group, Inc.
2. Allied Industries Incorporated
3. Haul Risk Management Services, Inc.
4. Link Information Systems, Inc.
5. Allied Southwoods, Inc.
6. Axis Group, Inc.
7. Allied Systems, Ltd. (L.P.)
8. Allied, Inc.
9. Inter Mobile, Inc.
10. Legion Transportation, Inc.
11. Innovative Car Carriers, Inc.
12. Automotive Transport Services, Inc.
13. Auto Haulaway Inc.
14. Auto Haulaway Releasing Services (1981) Limited
15. Axis International, Inc.
16. Axis Truck Leasing, Inc.
17. Axis North America, Inc.
18. Decatur Driver Exchange Company, Inc.
19. Clairemont Driver Exchange Company, Inc.
20. Kar-Tainer International, Inc.
21. A H Acquisition Corp.
22. Canadian Acquisition Corp.
23. Axis National Incorporated
A-1
<PAGE> 38
EXHIBIT B
List of Ryder Guarantors
1. RC Management Corp.
2. Ryder Automotive Carrier Services, Inc.
3. Ryder Automotive Acquisition, LLC
4. MCL Ryder Transport Inc.
5. Ryder Automotive Operations, Inc.
6. Ryder Freight Broker, Inc.
7. QAT, Inc.
8. OSHCO, Inc.
9. Terminal Service Co.
10. F.J. Boutell Driveaway Co., Inc.
11. RMX, Inc.
12. Transport Support, Inc.
13. Commercial Carriers, Inc.
14. B&C, Inc.
B-1
<PAGE> 39
EXHIBIT C
List of Allied Foreign Subsidiaries
1. AH Industries Inc.
2. Haul Insurance Limited
3. Kar-Tainer International Limited
4. Kar-Tainer International (Pty) Limited
C-1
<PAGE> 40
EXHIBIT D
List of Ryder Foreign Subsidiaries
None
D-1
<PAGE> 41
EXHIBIT E
Form of Opinion of Troutman Sanders LLP
1. Each of the Issuers (a) is duly incorporated and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, (b) has all requisite corporate
power and authority to carry on its business as it is currently being
conducted and as described in the Offering Memorandum and to own,
lease and operate its properties, and (c) is duly qualified and in
good standing as a foreign corporation, authorized to do business in
each jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect.
2. Each of the Issuers has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and each of the other Operative Documents to which it is a
party and to consummate the transactions contemplated hereby and
thereby, including, without limitation, the corporate power and
authority to issue, sell and deliver the Notes and to issue and
deliver the Guarantees as provided herein.
3. All of the outstanding capital stock of each subsidiary of
the Company is owned by the Company, free and clear of any security
interest, claim, lien, limitation on voting rights or encumbrance; and
all such securities have been duly authorized, validly issued, and are
fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
4. This Agreement has been duly and validly authorized,
executed and delivered by each of the Company and the Allied
Guarantors.
5. The Registration Rights Agreement has been duly and
validly authorized, executed and delivered by each of the Issuers, and
is the valid and binding obligation of each of the Issuers,
enforceable against each of them in accordance with its terms, except
to the extent that (a) enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity); and
(b) the enforceability of indemnification and contribution provisions
may be limited by Federal and state securities laws and the policies
underlying such laws.
6. The Indenture has been duly and validly authorized,
executed and delivered by each of the Issuers, and is the valid and
binding obligation of each of the Issuers, enforceable against each of
them in accordance with its terms (assuming the due authorization,
execution and delivery of the Indenture by the Trustee), except to the
extent that (a) enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); and (b) the waiver
contained in Section 4.06 of the Indenture may be deemed
unenforceable.
7. The New Credit Facility has been duly and validly
authorized, executed and delivered by each of the Company and its
subsidiaries party thereto, and is the valid and binding obligation of
each of the Company and such subsidiaries, enforceable against each of
them in accordance with its terms, except to the extent that (a)
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating
E-1
<PAGE> 42
to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity) and (b) the waiver contained in Section 25 of the New
Credit Facility may be deemed unenforceable.
8. The Acquisition Agreement has been duly and validly
authorized, executed and delivered by the Company, A H Acquisition
Corp., Canadian Acquisition Corp. and Axis North America, Inc., and is
the valid and binding obligation of the Company, A H Acquisition Corp.,
Canadian Acquisition Corp. and Axis North America, Inc., enforceable
against its in accordance with its terms, except to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
9. The Series A Notes have been duly and validly authorized
and executed by the Company for issuance and sale to the Initial
Purchasers pursuant to this Agreement, and, when authenticated in
accordance with the terms of the Indenture and delivered against
payment therefor in accordance with the terms hereof and thereof, the
Series A Notes will be the valid and binding obligations of the
Company, enforceable against it in accordance with their terms and
entitled to the benefits of the Indenture, except to the extent that
(a) enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); and (b) the waiver
contained in Section 4.06 of the Indenture may be deemed unenforceable.
The Offering Memorandum contains a summary of the terms of the Series A
Notes, which is accurate in all material respects.
10. The Series B Notes have been duly and validly authorized
for issuance by the Company, and, when issued and authenticated in
accordance with the terms of the Exchange Offer and the Indenture, the
Series B Notes will be the valid and binding obligations of the
Company, enforceable against it in accordance with their terms and
entitled to the benefits of the Indenture, except to the extent that
(a) enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); and (b) the waiver
contained in Section 4.06 of the Indenture may be deemed unenforceable.
The Offering Memorandum contains a summary of the terms of the Series B
Notes, which is accurate in all material respects.
11. The Guarantees have been duly and validly authorized and
executed by each of the Guarantors, and when the Series A Notes have
been issued and authenticated in accordance with the terms of the
Indenture and delivered against payment therefor in accordance with the
terms hereof and thereof, the Guarantees will be the valid and binding
obligations of each of the Guarantors, enforceable against each of them
in accordance with their terms and entitled to the benefits of the
Indenture, except to the extent that (a) enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity); and (b) the waiver contained in Section 4.06 of the Indenture
may be deemed unenforceable. The Offering Memorandum contains a summary
of the terms of the Guarantees, which is accurate in all material
respects.
E-2
<PAGE> 43
12. The Series B Guarantees have been duly and validly
authorized by each of the Guarantors, and when executed and delivered
in accordance with the terms of the Indenture, and when the Series B
Notes have been issued and authenticated in accordance with the terms
of the Exchange Offer and the Indenture, the Series B Guarantees will
be the valid and binding obligations of each of the Guarantors,
enforceable against each of them in accordance with their terms and
entitled to the benefits of the Indenture, except to the extent that
(a) enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); and (b) the waiver
contained in Section 4.06 of the Indenture may be deemed unenforceable.
The Offering Memorandum contains a summary of the terms of the Series B
Guarantees which is accurate in all material respects.
13. The Offering Memorandum contains a summary of the terms of
each of the Indenture, the Registration Rights Agreement, the New
Credit Facility and the Acquisition Agreement which, in each case, is
accurate in all material respects. The statements under the captions
"Description of Notes," "Notice to Investors" and "Plan of
Distribution" in the Offering Memorandum, insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, present fairly in all material respects, such
legal matters, documents and proceedings.
14. To the best of such counsel's knowledge, neither the
Company nor any of its subsidiaries is (a) in violation of its charter
or bylaws or (b) in default in the performance of any bond, debenture,
note, indenture, mortgage, deed of trust or other agreement or
instrument to which it is a party or by which it is bound or to which
any of its properties is subject, which, in the case of clause (b),
singly or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
15. No registration under the Act of the Securities is
required for the sale of the Securities to the Initial Purchasers as
contemplated hereby or for the Exempt Resales assuming (a) that each of
the Initial Purchasers is a QIB, (b) that the purchasers who buy the
Securities in the Exempt Resales are either QIBs or Reg S Investors,
(c) the accuracy of the Initial Purchasers' representations regarding
the absence of general solicitation in connection with the sale of
Securities to the Initial Purchasers and the Exempt Resales contained
herein and (d) the accuracy of the Company's and the Allied Guarantors'
representations in Sections 5(a)(viii) and (xxxvi) (other than with
respect to the first sentence).
16. Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement
thereto, as of its date (except for the financial statements and
related notes, the financial statement schedules and other financial
and statistical data included therein or omitted therefrom, as to which
no opinion need be expressed), contains the information specified in,
and meets the requirements of, Rule 144A(d)(4) under the Act.
17. When the Securities are issued and delivered pursuant to
this Agreement, no Securities will be of the same class (within the
meaning of Rule 144A under the Act) as securities of the Company or of
any of the Guarantors that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are quoted in a
United States automated inter-dealer quotation system.
E-3
<PAGE> 44
18. None of (a) the execution, delivery or performance by the
Company or any of the Guarantors of this Agreement or any of the other
Operative Documents to which it is a party, (b) the consummation of the
Acquisition, (c) the issuance and sale of the Notes and the issuance of
the Guarantees and (d) consummation by the Company of the transactions
described in the Offering Memorandum under the caption "Use of
Proceeds," violates, conflicts with or constitutes a breach of any of
the terms or provisions of, or a default under (or an event that with
notice or the lapse of time, or both, would constitute a default), or
requires consent under, or results in the imposition of a lien or
encumbrance on any properties of the Company or any of its
subsidiaries, or an acceleration of any indebtedness of the Company or
any of its subsidiaries pursuant to, (i) the charter or bylaws of the
Company or any of its subsidiaries, (ii) any bond, debenture, note,
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which any
of them or their property is or may be bound that has been filed or
incorporated by reference as an exhibit to any filing by the Company or
any of its subsidiaries with the Commission, (iii) any statute, rule or
regulation applicable to the Company or any its subsidiaries or any of
their assets or properties or (iv) to the best of such counsel's
knowledge, any judgment, order or decree of any court or governmental
agency or authority having jurisdiction over the Company or any of its
subsidiaries or any of their assets or properties. Assuming compliance
with applicable state securities and Blue Sky laws, as to which such
counsel need express no opinion, and except for the filing of a
registration statement under the Act and qualification of the Indenture
under the Trust Indenture Act, or in connection with the Registration
Rights Agreement, no consent, approval, authorization or order of, or
filing, registration, qualification, license or permit of or with, (a)
any court or governmental agency, body or administrative agency or (b)
any other person is required for (i) the execution, delivery and
performance by the Company or any of the Guarantors of this Agreement
or any of the other Operative Documents to which it is a party, (ii)
the Acquisition or (iii) the issuance and sale of the Notes and the
issuance of the Guarantees and the transactions contemplated hereby and
thereby, except such as have been obtained and made or have been
disclosed in the Offering Memorandum.
19. To the best of such counsel's knowledge, there is (a) no
action, suit, investigation or proceeding before or by any court,
arbitrator or governmental agency, body or official, domestic or
foreign, now pending or threatened or contemplated to which the Company
or any of its subsidiaries is or may be a party or to which the
business or property of the Company or any of its subsidiaries, is or
may be subject, (b) no statute, rule, regulation or order that has been
enacted, adopted or issued by any governmental agency or that has been
proposed by any governmental body and (c) no injunction, restraining
order or order of any nature by a federal or state court or foreign
court of competent jurisdiction to which the Company or any of its
subsidiaries is or may be subject or to which the business, assets, or
property of the Company or any of its subsidiaries is or may be
subject, that, in the case of clauses (a), (b) and (c) above, is
required to be disclosed in the Preliminary Offering Memorandum and the
Offering Memorandum and that is not so disclosed.
20. None of the Company or any of its subsidiaries is an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act.
21. To the best of such counsel's knowledge, there are no
holders of securities of the Company or any of its subsidiaries who, by
reason of the execution by the Company and the Guarantors of this
Agreement or any other Operative Document or the consummation by the
Company and the Guarantors of the transactions contemplated hereby and
thereby, have the right
E-4
<PAGE> 45
to request or demand that the Company or any of its subsidiaries
register under the Act or analogous foreign laws and regulations
securities held by them.
22. To the best of such counsel's knowledge, there are not
currently any outstanding subscriptions, rights, warrants, calls,
commitments of sale or options to acquire, or instruments convertible
into or exchangeable for, any capital stock or other equity interest of
any subsidiary of the Company.
23. To the best of such counsel's knowledge, no stop order
preventing the use of the Preliminary Offering Memorandum or the
Offering Memorandum, or any amendment or supplement thereto, or any
order asserting that any of the transactions contemplated by this
Agreement are subject to the registration requirements of the Act, has
been issued.
24. The documents incorporated by reference in the Offering
Memorandum, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Exchange Act.
25. The Indenture complies as to form in all material respects
with the requirements of the Trust Indenture Act and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder. Prior to the Exchange Offer or the effectiveness
of the Shelf Registration Statement, the Indenture is not required to
be qualified under the Trust Indenture Act.
In addition, such counsel shall state that it has participated in
conferences with officers and other representatives of the Company, Ryder
System, Inc. and the Guarantors, representatives of the independent certified
public accountants of the Company, Ryder System, Inc. and the Guarantors and the
Initial Purchasers and their representatives at which the contents of the
Preliminary Offering Memorandum and the Offering Memorandum and related matters
were discussed and, although it has not undertaken to investigate or verify
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Preliminary Offering
Memorandum or the Offering Memorandum (except as indicated above), on the basis
of the foregoing (relying as to materiality to the extent such counsel deems
appropriate upon facts provided to such counsel by officers or other
representatives of the Company and the Ryder Guarantors and without independent
verification of such facts), no facts have come to its attention which led it to
believe that the Preliminary Offering Memorandum or the Offering Memorandum (in
each case, including the documents incorporated by reference therein), as of its
date or the Closing Date, contained an untrue statement of a material fact or
omitted to state any 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 as to financial statements and related notes, the
financial statement schedules and other financial and statistical data included
therein).
E-5
<PAGE> 46
EXHIBIT G
Form of Ryder Guarantor Signature Page
We hereby agree to be bound by the terms of the Purchase Agreement,
dated as of September 19, 1997, by and among Allied Holdings, Inc., the
Guarantors named on the signature page thereto and Bear, Stearns & Co., Inc., BT
Alex. Brown Incorporated and NationsBanc Capital Markets, Inc. and to cooperate
with Allied Holdings, Inc. and the Guarantors in complying with their
obligations thereunder.
Dated: September 30, 1997
RC MANAGEMENT CORP.
By:
----------------------------------
Name:
Title:
RYDER AUTOMOTIVE CARRIER SERVICES, INC.
By:
----------------------------------
Name:
Title:
RYDER AUTOMOTIVE ACQUISITION, LLC
BY: CANADIAN ACQUISITION CORP.,
AS MEMBER
By:
----------------------------------
Name:
Title:
MCL RYDER TRANSPORT INC.
By:
----------------------------------
Name:
Title:
G-1
<PAGE> 47
RYDER AUTOMOTIVE OPERATIONS, INC.
By:
----------------------------------
Name:
Title:
RYDER FREIGHT BROKER, INC.
By:
----------------------------------
Name:
Title:
QAT, INC.
By:
----------------------------------
Name:
Title:
OSHCO, INC.
By:
----------------------------------
Name:
Title:
TERMINAL SERVICE CO.
By:
----------------------------------
Name:
Title:
F.J. BOUTELL DRIVEAWAY CO., INC.
By:
----------------------------------
Name:
Title:
G-2
<PAGE> 48
RMX, INC.
By:
----------------------------------
Name:
Title:
TRANSPORT SUPPORT, INC.
By:
----------------------------------
Name:
Title:
COMMERCIAL CARRIERS, INC.
By:
----------------------------------
Name:
Title:
B&C, INC.
By:
----------------------------------
Name:
Title:
G-3
<PAGE> 49
EXIBIT F
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of September 30, 1997
by and among
Allied Holdings, Inc.,
the Guarantors Named on the Signature Pages Hereto
and
Bear, Stearns & Co. Inc.,
BT Alex. Brown Incorporated
NationsBanc Capital Markets, Inc.
================================================================================
<PAGE> 50
This Registration Rights Agreement (this "Agreement") is made and
entered into as of September 30, 1997 by and among Allied Holdings, Inc., a
Georgia corporation (the "Company"), the guarantors named on the signature pages
hereto (collectively, the "Guarantors" and, together with the Company, the
"Issuers"), and Bear, Stearns & Co., BT Alex. Brown Incorporated and NationsBanc
Capital Markets, Inc. (collectively, the "Initial Purchasers"), who have agreed
to purchase the Company's 85/8% Series A Senior Notes due 2007 (together with
the guarantees thereof by the Guarantors, the "Series A Notes") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
September 19, 1997 (the "Purchase Agreement"), by and among the Issuers and the
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Series A Notes, the Issuers have agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 3 of
the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement as continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (c) the delivery by the Issuers to
the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each Interest
Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Issuers under the Act of the
Series B Notes pursuant to the Exchange Offer Registration Statement pursuant to
which the Issuers offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities held by such Holders for Series B Notes in an aggregate principal
amount equal to the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
<PAGE> 51
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Series A Notes to (a) certain other "qualified institutional
buyers," as such term is defined in Rule 144A under the Act and (b) non-U.S.
persons outside the United States in reliance upon Regulation S under the Act.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of the date hereof, among the
Issuers and The First National Bank of Chicago, as trustee (the "Trustee"),
pursuant to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement,
including, without limitation, the Exchange Offer Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date relating to
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuers
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
Series B Notes: The Company's 85/8% Series B Senior Notes due 2007
(together with the guarantees thereof by the Guarantors) to be issued pursuant
to the Indenture (a) in the Exchange Offer or (b) pursuant to a Shelf
Registration Statement, in each case, in exchange for Series A Notes.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
2
<PAGE> 52
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur
of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (b) the date on which such Note
has been effectively registered under the Act and disposed of in accordance with
a Shelf Registration Statement and (c) the date on which such Note is
distributed to the public pursuant to Rule 144 under the Act or by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Issuers are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be
a holder of Transfer Restricted Securities (each, a "Holder") whenever such
Person owns Transfer Restricted Securities of record.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Issuers shall (i) cause to be filed with the
Commission on or prior to the 30th day after the Closing Date, the Exchange
Offer Registration Statement, (ii) use their reasonable best efforts to cause
such Exchange Offer Registration Statement to become effective on or prior to
the 90th day after the Closing Date, (iii) in connection with the foregoing,
file (A) all pre-effective amendments to such Exchange Offer Registration
Statement as may be necessary in order to cause such Exchange Offer Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Exchange Offer Registration Statement pursuant to Rule 430A under the Act
and (C) cause all necessary filings in connection with the registration and
qualification of the Series B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Series B Notes to be offered in
exchange for the Transfer Restricted Securities and to permit resales of Notes
held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Issuers shall cause the Exchange Offer Registration Statement
to be effective continuously and shall keep the Exchange Offer open for a period
of not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 business days after the date notice of
the Exchange Offer has been mailed to Holders. The Issuers shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Notes shall be included in the Exchange Offer
Registration Statement. The Issuers shall use their reasonable best efforts to
cause
3
<PAGE> 53
the Exchange Offer to be Consummated on or prior to the 30th business day after
the Exchange Offer Registration Statement has become effective.
(c) The Issuers shall indicate in a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement that any
Broker-Dealer who holds Series A Notes that are Transfer Restricted Securities
and that were acquired for its own account as a result of market-making
activities or other trading activities (other than Transfer Restricted
Securities acquired directly from the Issuers) may exchange such Series A Notes
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an "underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with any resales of
the Series B Notes received by such Broker-Dealer in the Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such resales by Broker-Dealers that the Commission
may require in order to permit such resales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Notes held by any such Broker-Dealer except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.
The Issuers shall use their reasonable best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that it conforms with the requirements
of this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of one year from the
date on which the Exchange Offer Registration Statement is declared effective.
The Issuers shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Issuers are not required to file an
Exchange Offer Registration Statement or permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy now or hereafter existing (after the procedures set forth in
Section 6(a) below have been complied with) or (ii) any Holder of Transfer
Restricted Securities notifies the Company on or prior to the 20th business day
following the Consummation of the Exchange Offer (A) that such Holder is
prohibited by applicable law or Commission policy from participating in the
Exchange Offer, or (B) that such Holder may not resell the Series B Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and that the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder, or
(C) that such Holder is a Broker-Dealer and holds Series A Notes acquired
directly from the Issuers or one of their affiliates, then the Issuers shall:
(x) Use their reasonable best efforts to file a shelf
registration statement with the Commission pursuant to Rule 415 under
the Act, which may be an amendment to the Exchange Offer Registration
Statement (in either event, the "Shelf Registration Statement") on or
prior to the earliest to occur of (1) the 30th day after the date on
which the Issuers determine that they are not required to file the
Exchange Offer Registration Statement and (2) the 30th day after the
date on which the Company receives notice from a Holder of Transfer
Restricted
4
<PAGE> 54
Securities as contemplated by clause (ii) above (such earliest date
being the "Shelf Filing Deadline"), which Shelf Registration Statement
shall provide for resales of all Transfer Restricted Securities the
Holders of which shall have provided the information required pursuant
to Section 4(b) hereof; and
(y) Cause such Shelf Registration Statement to be declared
effective by the Commission on or prior to the 60th day after the Shelf
Filing Deadline.
The Issuers shall use their best efforts to keep such Shelf Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for resales of Notes by the Holders of Transfer Restricted
Securities entitled to the benefit of this Section 4(a), and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years following the Closing Date.
(b) Provision by Holders of Certain Information in Connection
with the Shelf Registration Statement. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 business days after receipt of a
request therefor, such information as the Issuers may reasonably request for
use in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein. No Holder of Transfer Restricted
Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof
unless and until such Holder shall have used its best efforts to provide all
such reasonably requested information. Each Holder as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Issuers all information required to be disclosed in order to make the
information previously furnished to the Issuers by such Holder not misleading.
SECTION 5. LIQUIDATED DAMAGES
If (a) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such filing
in this Agreement, (b) any of such Registration Statements has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (d) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (a) through (d), a "Registration Default"), the Issuers hereby
jointly and severally agree to pay Liquidated Damages to each Holder of Transfer
Restricted Securities with respect to the first 90-day period immediately
following the occurrence of the first Registration Default, in an amount equal
to $.05 per week per $1,000 principal amount of Transfer Restricted Securities
held by such Holder for each week or portion thereof that the Registration
Default continues. The amount of the Liquidated Damages shall increase by an
additional $.05 per week per $1,000 in principal amount of Transfer Restricted
Securities with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages of $.50
per week per $1,000 principal amount of Transfer Restricted Securities. All
accrued Liquidated Damages shall be paid by the Issuers on each Damages Payment
Date to Record Holders by wire transfer of immediately available funds or by
federal funds check and to Holders of Certificated Securities by wire transfers
to the accounts specified
5
<PAGE> 55
by them or by mailing checks to their registered addresses if no such accounts
have been specified on each Damages Payment Date, as provided in the Indenture.
Following the cure of all Registration Defaults relating to any particular
Transfer Restricted Securities, the accrual of Liquidated Damages with respect
to such Transfer Restricted Securities will cease.
All obligations of the Issuers set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such security shall have
been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Issuers shall comply with all of the provisions of Section
6(c) below, shall use their reasonable best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:
(i) If in the reasonable opinion of counsel to the Issuers there
is a question as to whether the Exchange Offer is permitted by applicable
law, the Issuers hereby agree to seek a no-action letter or other
favorable decision from the Commission allowing the Issuers to Consummate
an Exchange Offer for such Series A Notes. Each of the Issuers hereby
agrees to pursue the issuance of such a decision to the Commission staff
level but shall not be required to take commercially unreasonable action
to effect a change of Commission policy. Each of the Issuers hereby
agrees, however, to (A) participate in telephonic conferences with the
Commission, (B) deliver to the Commission staff an analysis prepared by
counsel to the Issuers setting forth the legal bases, if any, upon which
such counsel has concluded that such an Exchange Offer should be permitted
and (C) diligently pursue a resolution (which need not be favorable) by
the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Issuers,
prior to the Consummation thereof, a written representation to the Issuers
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of any Issuer, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Series B Notes to be issued in the
Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary
course of business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Issuers'preparations for the
Exchange Offer. Each Holder, by its acceptance of Series A Notes, shall be
deemed to have acknowledged and agreed that any Broker-Dealer and any
such Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including any
no-action letter obtained pursuant to clause (i) above), and (2) must
comply with the registration and prospectus delivery requirements of the
Act in connection with a secondary resale transaction and that such a
secondary resale transaction should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or 508, as applicable, of Regulation S-K if the
resales are of Series B Notes
6
<PAGE> 56
obtained by such Holder in exchange for Series A Notes acquired by such
Holder directly from the Issuers.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Issuers shall provide a supplemental letter
to the Commission (A) stating that the Issuers are registering the
Exchange Offer in reliance on the position of the Commission enunciated
in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any
no-action letter obtained pursuant to clause (i) above and (B)
including a representation that none of the Issuers has entered into
any arrangement or understanding with any Person to distribute the
Series B Notes to be received in the Exchange Offer and that, to the
best of the Issuers' information and belief, each Holder participating
in the Exchange Offer is acquiring the Series B Notes in its ordinary
course of business and has no arrangement or understanding with any
Person to participate in the distribution of the Series B Notes
received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the
Shelf Registration Statement, the Issuers shall comply with all the provisions
of Section 6(c) below and shall use their reasonable best efforts to effect
such registration to permit the sale of the Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof, and pursuant thereto the Issuers will as expeditiously as possible
prepare and file with the Commission a Registration Statement relating to the
registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance with
the intended method or methods of distribution thereof.
(c) General Provisions. In connection with any
Registration Statement and any Prospectus required by this Agreement to permit
the sale or resale of Transfer Restricted Securities (including, without
limitation, any Registration Statement and the related Prospectus required to
permit resales of Notes by Broker-Dealers), the Issuers shall:
(i) use their reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements (including, if required by the Act or any
regulation thereunder, financial statements of the Guarantors) for the
period specified in Section 3 or 4 hereof, as applicable; upon the
occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by
this Agreement, the Issuers shall file promptly an appropriate
amendment to such Registration Statement, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of
either clause (A) or (B), use their reasonable best efforts to cause
such amendment to be declared effective and such Registration Statement
and the related Prospectus to become usable for their intended
purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as applicable, or
such shorter period as will terminate when all Transfer Restricted
Securities covered by such Registration Statement have been sold; cause
the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Act in a timely manner; and comply with
the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
7
<PAGE> 57
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or
that requires the making of any additions to or changes in the
Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes
in the Prospectus in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If at any
time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Issuers shall use their reasonable best efforts to promptly obtain
the withdrawal or lifting of such order;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, (all of whom shall be deemed to have
acknowledged the confidentiality of the information contained in the
foregoing documents) before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders and underwriter(s),
if any, for a period of at least five business days, and the Issuers
will not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or
Prospectus (including all such documents incorporated by reference) to
which a selling Holder of Transfer Restricted Securities covered by
such Registration Statement or the underwriter(s), if any, shall
reasonably object within five business days after the receipt thereof.
A selling Holder or underwriter, if any, shall be deemed to have
reasonably objected to such filing if such Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission or fails to comply
with the applicable requirements of the Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Issuers' representatives available for
discussion of such document and other customary due diligence matters,
and include such information in such document prior to the filing
thereof as such selling Holders or underwriter(s), if any, reasonably
may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant
retained by such selling Holders or any of the underwriter(s), all
financial and other records, pertinent corporate documents and
properties of the Issuers and cause the Issuers' officers, directors
and employees to supply all information reasonably requested by any
such Holder, underwriter, attorney or accountant in connection with
such Registration Statement subsequent to the filing thereof and prior
to its effectiveness;
8
<PAGE> 58
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly include in any Registration Statement
or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such selling Holders and underwriter(s),
if any, may reasonably request to have included therein, including,
without limitation, information relating to the "Plan of Distribution"
of the Transfer Restricted Securities, information with respect to the
principal amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to be sold
in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Issuers are notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(viii) in the case of a Shelf Registration Statement, cause
the Transfer Restricted Securities covered by the Registration
Statement to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of
Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Issuers
hereby consent to the use of the Prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto; provided, that such use of the
Prospectus and any amendment or supplement thereto and such offering
and sale conforms to the "Plan of Distribution" section contained in
the Prospectus and complies with this Agreement and all applicable laws
and regulations;
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all
such other customary actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Shelf Registration Statement contemplated by
this Agreement, all to such extent as may be requested by the Initial
Purchasers or by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any Shelf
Registration Statement contemplated by this Agreement; and whether or
not an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Issuers shall:
(A) furnish to each of the Initial Purchasers, each
selling Holder and each underwriter, if any, in such substance
and scope as they may request and as are customarily made by
issuers to underwriters in primary underwritten offerings,
upon the effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of
effectiveness of the Shelf Registration Statement,
signed by (x) an authorized executive officer and (y)
a principal financial or accounting officer of each
of the Issuers, confirming, as of the date thereof,
the matters set forth in paragraphs (a), (b), (c) and
(d) of Section 8 of the Purchase Agreement and such
other matters as such parties may reasonably request;
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<PAGE> 59
(2) an opinion, dated the date of
effectiveness of the Shelf Registration Statement, of
counsel for the Issuers, covering the matters set
forth in paragraphs (1) through (25) of Exhibit E to
the Purchase Agreement and such other matters as such
parties may reasonably request, and in any event
including a statement to the effect that such counsel
has participated in conferences with officers and
other representatives of the Issuers, representatives
of the independent public accountants for the
Issuers, the Initial Purchasers' representatives and
the Initial Purchasers' counsel in connection with
the preparation of such Registration Statement and
the related Prospectus and have considered the
matters required to be stated therein and the
statements contained therein, although such counsel
has not independently verified the accuracy,
completeness or fairness of such statements; and that
such counsel advises that, on the basis of the
foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by
officers and other representatives of the Issuers and
without independent check or verification), no facts
came to such counsel's attention that caused such
counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or
any post-effective amendment thereto became
effective, contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading, or that the
Prospectus contained in such Registration Statement
as of its date and, contained an untrue statement of
a material fact or omitted 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. Without limiting the foregoing,
such counsel may state further that such counsel
assumes no responsibility for, and has not
independently verified, the accuracy, completeness or
fairness of the financial statements, notes and
schedules and other financial data included in any
Registration Statement contemplated by this Agreement
or the related Prospectus; and
(3) a customary comfort letter, dated as of
the date of Consummation of the Exchange Offer or the
date of effectiveness of the Shelf Registration
Statement, as the case may be, from the Issuers'
independent accountants, in the customary form and
covering matters of the type customarily covered in
comfort letters by underwriters in connection with
primary underwritten offerings, and affirming the
matters set forth in the comfort letters delivered
pursuant to Section 8 of the Purchase Agreement,
without exception;
(B) set forth in full or incorporate by reference in
the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof (and any other
customary indemnification provisions and procedures that any
underwriters may reasonably request) with respect to all
parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as
may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Issuers pursuant to this clause
(xi), if any.
If at any time the representations and warranties of the
Issuers contemplated in clause (A)(1) above cease to be true and
correct, the Issuers shall so advise the Initial Purchasers and the
underwriter(s), if any, and each selling Holder promptly and, if
requested by such Persons, shall confirm such advice in writing;
(xii) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in connection
with the
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registration and qualification of the Transfer Restricted Securities
under the securities or Blue Sky laws of such jurisdictions as the
selling Holders or underwriter(s) may request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
Shelf Registration Statement; provided, however, that none of the
Issuers shall be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation,
other than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(xiii) shall issue, upon the request of any Holder of Series A
Notes covered by the Shelf Registration Statement, Series B Notes,
having an aggregate principal amount equal to the aggregate principal
amount of Series A Notes surrendered to the Issuers by such Holder in
exchange therefor or being sold by such Holder; such Series B Notes to
be registered in the name of such Holder or in the name of the
purchaser(s) of such Notes, as the case may be; in return, the Series A
Notes held by such Holder shall be surrendered to the Issuers for
cancellation;
(xiv) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any,
may request at least two business days prior to any sale of Transfer
Restricted Securities made by such underwriter(s);
(xv) use their best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may
be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause
(viii) above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D)
above shall exist or have occurred, prepare a supplement or
post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration
Statement and provide the Trustee under the Indenture with printed
certificates for the Transfer Restricted Securities which are in a form
eligible for deposit with the Depositary Trust Company;
(xviii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use its reasonable best efforts
to cause such Registration Statement to become effective and approved
by such governmental agencies or authorities as may be necessary to
enable the Holders selling Transfer Restricted Securities to consummate
the disposition of such Transfer Restricted Securities;
11
<PAGE> 61
(xix) otherwise use their reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration
Statement;
(xx) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement, and, in connection therewith, cooperate
with the Trustee and the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use their
reasonable best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by
the Registration Statement to be listed on each securities exchange on
which similar securities issued by the Issuers are then listed if
requested by the Holders of a majority in aggregate principal amount of
Series A Notes or the managing underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of
Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Issuers of the existence of
any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will
keep such notice confidential and forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing
(the "Advice") by the Issuers that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus. If so directed by the Issuers,
each Holder will deliver to the Issuers (at the Issuers' expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Transfer Restricted Securities that was current at the
time of receipt of such notice. In the event the Issuers shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including
the date when each selling Holder covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 6(c)(xvi) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' performance of or
compliance with this Agreement will be borne by the Issuers, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchasers or Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter"
and its counsel that may be required by the rules and regulations of the
NASD)); (ii) all fees and expenses of compliance with federal securities and
state Blue Sky or securities
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laws; (iii) all expenses of printing (including printing certificates for the
Series B Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Issuers and, subject to Section 7(b) below, the Holders of
Transfer Restricted Securities; (v) all application and filing fees in
connection with listing Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Issuers
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Issuers will, in any event, bear their internal expenses
(including, without limitation, all salaries and expenses of their officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Issuers.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins or such other counsel as may be chosen by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities for
whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless (i) each Holder, (ii) each person, if any, who controls any Holder
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and (iii) the respective officers, directors, partners, employees,
representatives and agents of each Holder or any controlling person to the
fullest extent lawful, from and against any and all losses, liabilities, claims,
damages and expenses whatsoever (including but not limited to attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any investigation or litigation, commenced or threatened, or
any claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus, or in any
supplement thereto or amendment thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Issuers will not be liable in any such case to the extent, but only to
the extent, that any such loss, liability, claim, damage or expense arises out
of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with information relating to any Holder furnished to the Issuers in writing by
or on behalf of such Holder expressly for use therein. This indemnity agreement
will be in addition to any liability which the Issuers may otherwise have,
including, under this Agreement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless (i) the Issuers, (ii) each person, if any, who controls the
Issuers within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and (iii) each person, if any, who controls any Issuer, against any
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losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation), joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, in
each case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with information relating to any Holder
furnished to the Issuers in writing by or on behalf of such Holder expressly for
use therein; provided, however, that in no case shall any Holder be liable or
responsible for any amount in excess of the dollar amount of the proceeds
received by such Holder upon the sale of the Notes giving rise to such
indemnification obligation. This indemnity will be in addition to any liability
which any Holder may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may
otherwise have). In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action, (ii) the indemnifying parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying party or parties shall not
have the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses of counsel
shall be borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above shall only be liable for
the legal expenses of one counsel (in addition to any local counsel) for all
indemnified parties in each jurisdiction in which any claim or action is
brought. Anything in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its prior written consent; provided, however, that such consent
was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in which
the indemnification provided for in this Section 8 is for any reason held to be
unavailable from the Issuers or is insufficient to hold harmless a party
indemnified hereunder, the Issuers, on the one hand, and each Holder, on the
other hand, shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature
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<PAGE> 64
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Issuers, any contribution received by the Issuers from persons,
other than the Holders, who may also be liable for contribution, including
persons who control the Issuers within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) to which the Issuers and such Holder may be
subject, in such proportion as is appropriate to reflect the relative benefits
received by the Issuers, on one hand, and such Holder, on the other hand, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in this Section 8, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Issuers, on the one hand, and such Holder, on the other hand, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Issuers, on one hand, and each Holder, on
the other hand, shall be deemed to be in the same proportion as (i) the total
proceeds from the offering of the Notes (net of discounts but before deducting
expenses) received by the Issuers and (ii) the total proceeds received by such
Holder upon the sale of the Notes giving rise to such indemnification
obligation. The relative fault of the Issuers, on the one hand, and of each
Holder, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers or such Holder and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Issuers and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 8(d), (i) in no case shall any Holder be required to
contribute any amount in excess of the dollar amount by which the proceeds
received by such Holder upon the sale of the Notes exceeds the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8(d),
(A) each person, if any, who controls any Holder within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and (B) the respective
officers, directors, partners, employees, representatives and agents of each
Holder or any controlling person shall have the same rights to contribution as
such Holder, and each person, if any, who controls the Issuers within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have
the same rights to contribution as the Issuers, subject in each case to clauses
(i) and (ii) of this Section 8(d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 8(d), notify such
party or parties from whom contribution may be sought, but the failure to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8(d) or otherwise. No party shall be liable for contribution with
respect to any action or claim settled without its prior written consent;
provided, however, that such written consent was not unreasonably withheld.
SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as (i) the
Company is not subject to the reporting requirements of Section 13 or 15 of the
Exchange Act and (ii) any Transfer Restricted Securities remain outstanding, to
make available to any Holder or beneficial owner of Transfer Restricted
Securities
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<PAGE> 65
in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities from such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Act in order to permit resales
of such Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lockup letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Issuers.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Issuers agree that monetary damages (including the
Liquidated Damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuers will not, on or after the
date of this Agreement, enter into any agreement with respect to their
respective securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
None of the Issuers has previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Issuers' securities
under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. None of the Issuers will take
any action with respect to the Notes that would materially and adversely affect
the ability of the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless the Issuers have obtained
the written consent of Holders of a majority of the outstanding principal
amount of Transfer Restricted Securities. Notwithstanding the foregoing, a
waiver or consent to departure from the provisions hereof that relates
exclusively to the rights of Holders whose securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose securities are not being tendered pursuant to
such Exchange Offer may be given
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<PAGE> 66
by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to the any of the Issuers:
Allied Holdings, Inc.
160 Clairemont Avenue
Decatur, Georgia 30030
Telecopy No.: (404) 370-4206
Attention: Daniel H. Popky
With copies to:
Troutman Sanders LLP
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Telecopy No.: (404) 885-3900
Attention: Thomas M. Duffy
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(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,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(I) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
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<PAGE> 67
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement, together with the other Operative
Documents (as defined in the Purchase Agreement), is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Issuers with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
[signature pages follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ALLIED HOLDINGS, INC.
By:
-------------------------
Name:
Title:
ALLIED AUTOMOTIVE GROUP, INC.
By:
-------------------------
Name:
Title:
ALLIED INDUSTRIES INCORPORATED
By:
-------------------------
Name:
Title:
HAUL RISK MANAGEMENT SERVICES, INC.
By:
-------------------------
Name:
Title:
LINK INFORMATION SYSTEMS, INC.
By:
-------------------------
Name:
Title:
ALLIED SOUTHWOODS, INC.
By:
-------------------------
Name:
Title:
S-1
<PAGE> 69
AXIS GROUP, INC.
By:
-------------------------
Name:
Title:
ALLIED SYSTEMS, LTD. (L.P.)
BY: ALLIED AUTOMOTIVE GROUP, INC.,
as general partner
By:
-------------------------
Name:
Title:
ALLIED, INC.
By:
-------------------------
Name:
Title:
INTER MOBILE, INC.
By:
-------------------------
Name:
Title:
LEGION TRANSPORTATION, INC.
By:
-------------------------
Name:
Title:
INNOVATIVE CAR CARRIERS, INC.
By:
-------------------------
Name:
Title:
S-2
<PAGE> 70
AUTOMOTIVE TRANSPORT SERVICES, INC.
By:
-------------------------
Name:
Title:
AUTO HAULAWAY INC.
By:
-------------------------
Name:
Title:
AUTO HAULAWAY RELEASING SERVICES
(1981) LIMITED
By:
-------------------------
Name:
Title:
AXIS INTERNATIONAL, INC.
By:
-------------------------
Name:
Title:
AXIS TRUCK LEASING, INC.
By:
-------------------------
Name:
Title:
AXIS NORTH AMERICA, INC.
By:
-------------------------
Name:
Title:
S-3
<PAGE> 71
DECATUR DRIVER EXCHANGE COMPANY, INC.
By:
-------------------------
Name:
Title:
CLAIREMONT DRIVER EXCHANGE COMPANY, INC.
By:
-------------------------
Name:
Title:
KAR-TAINER INTERNATIONAL, INC.
By:
-------------------------
Name:
Title:
A H ACQUISITION CORP.
By:
-------------------------
Name:
Title:
CANADIAN ACQUISITION CORP.
By:
-------------------------
Name:
Title:
AXIS NATIONAL INCORPORATED
By:
-------------------------
Name:
Title:
S-4
<PAGE> 72
RC MANAGEMENT CORP.
By:
-------------------------
Name:
Title:
RYDER AUTOMOTIVE CARRIER SERVICES, INC.
By:
-------------------------
Name:
Title:
RYDER AUTOMOTIVE ACQUISITION, LLC
BY: CANADIAN ACQUISITION CORP.,
as member
By:
-------------------------
Name:
Title:
MCL RYDER TRANSPORT INC.
By:
-------------------------
Name:
Title:
RYDER AUTOMOTIVE OPERATIONS, INC.
By:
-------------------------
Name:
Title:
RYDER FREIGHT BROKER, INC.
By:
-------------------------
Name:
Title:
S-5
<PAGE> 73
QAT, INC.
By:
-------------------------
Name:
Title:
OSHCO, INC.
By:
-------------------------
Name:
Title:
TERMINAL SERVICE CO.
By:
-------------------------
Name:
Title:
F.J. BOUTELL DRIVEAWAY CO., INC.
By:
-------------------------
Name:
Title:
RMX, INC.
By:
-------------------------
Name:
Title:
TRANSPORT SUPPORT, INC.
By:
-------------------------
Name:
Title:
S-6
<PAGE> 74
COMMERCIAL CARRIERS, INC.
By:
-------------------------
Name:
Title:
B&C, INC.
By:
-------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
BT ALEX. BROWN INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
BY: BEAR, STEARNS & CO. INC.
By:
-------------------------
Name:
Title:
S-7
<PAGE> 1
EXHIBIT 4.4
Execution Version
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of September 30, 1997
by and among
Allied Holdings, Inc.,
the Guarantors Named on the Signature Pages Hereto
and
Bear, Stearns & Co. Inc.,
BT Alex. Brown Incorporated
NationsBanc Capital Markets, Inc.
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and
entered into as of September 30, 1997 by and among Allied Holdings, Inc., a
Georgia corporation (the "Company"), the guarantors named on the signature
pages hereto (collectively, the "Guarantors" and, together with the Company,
the "Issuers"), and Bear, Stearns & Co., BT Alex. Brown Incorporated and
NationsBanc Capital Markets, Inc. (collectively, the "Initial Purchasers"), who
have agreed to purchase the Company's 8 5/8% Series A Senior Notes due 2007
(together with the guarantees thereof by the Guarantors, the "Series A Notes")
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
September 19, 1997 (the "Purchase Agreement"), by and among the Issuers and the
Initial Purchasers. In order to induce the Initial Purchasers to purchase the
Series A Notes, the Issuers have agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchasers set forth in Section 3
of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange
Act.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Registration Statement as continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof, and (c) the delivery by the
Issuers to the Registrar under the Indenture of Series B Notes in the same
aggregate principal amount as the aggregate principal amount of Series A Notes
that were tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each
Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Issuers under the Act of the
Series B Notes pursuant to the Exchange Offer Registration Statement pursuant
to which the Issuers offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities held by such Holders for Series B Notes in an aggregate principal
amount equal to the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
<PAGE> 3
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Series A Notes to (a) certain other "qualified
institutional buyers," as such term is defined in Rule 144A under the Act and
(b) non-U.S. persons outside the United States in reliance upon Regulation S
under the Act.
Holders: As defined in Section 2(b) hereof.
Indenture: The Indenture, dated as of the date hereof, among the
Issuers and The First National Bank of Chicago, as trustee (the "Trustee"),
pursuant to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement,
including, without limitation, the Exchange Offer Registration Statement, as
amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date relating to
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuers
relating to (a) an offering of Series B Notes pursuant to an Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed pursuant to the provisions of
this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Series B Notes: The Company's 8 5/8% Series B Senior Notes due 2007
(together with the guarantees thereof by the Guarantors) to be issued pursuant
to the Indenture (a) in the Exchange Offer or (b) pursuant to a Shelf
Registration Statement, in each case, in exchange for Series A Notes.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
2
<PAGE> 4
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Act, (b) the date on which
such Note has been effectively registered under the Act and disposed of in
accordance with a Shelf Registration Statement and (c) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act or by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Issuers are sold to an underwriter for reoffering to
the public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed
to be a holder of Transfer Restricted Securities (each, a "Holder") whenever
such Person owns Transfer Restricted Securities of record.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Issuers shall (i) cause to be filed
with the Commission on or prior to the 30th day after the Closing Date, the
Exchange Offer Registration Statement, (ii) use their reasonable best efforts
to cause such Exchange Offer Registration Statement to become effective on or
prior to the 90th day after the Closing Date, (iii) in connection with the
foregoing, file (A) all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange
Offer Registration Statement to become effective, (B) if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings in connection
with the registration and qualification of the Series B Notes to be made under
the Blue Sky laws of such jurisdictions as are necessary to permit Consummation
of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of the
Series B Notes to be offered in exchange for the Transfer Restricted Securities
and to permit resales of Notes held by Broker-Dealers as contemplated by
Section 3(c) below.
(b) The Issuers shall cause the Exchange Offer Registration
Statement to be effective continuously and shall keep the Exchange Offer open
for a period of not less than the minimum period required under applicable
federal and state securities laws to Consummate the Exchange Offer; provided,
however, that in no event shall such period be less than 20 business days after
the date notice of the Exchange Offer has been mailed to Holders. The Issuers
shall cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Notes shall be included in the
Exchange Offer Registration Statement. The Issuers shall use their reasonable
best efforts to cause
3
<PAGE> 5
the Exchange Offer to be Consummated on or prior to the 30th business day after
the Exchange Offer Registration Statement has become effective.
(c) The Issuers shall indicate in a "Plan of Distribution" section
in the Prospectus contained in the Exchange Offer Registration Statement that
any Broker-Dealer who holds Series A Notes that are Transfer Restricted
Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Issuers) may exchange such
Series A Notes pursuant to the Exchange Offer; however, such Broker-Dealer may
be deemed to be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with any resales of the Series B Notes received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales
by Broker-Dealers that the Commission may require in order to permit such
resales pursuant thereto, but such "Plan of Distribution" shall not name any
such Broker-Dealer or disclose the amount of Notes held by any such
Broker-Dealer except to the extent required by the Commission as a result of a
change in policy after the date of this Agreement.
The Issuers shall use their reasonable best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities
or other trading activities, and to ensure that it conforms with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of one year from
the date on which the Exchange Offer Registration Statement is declared
effective.
The Issuers shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Issuers are not required to file
an Exchange Offer Registration Statement or permitted to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law or
Commission policy now or hereafter existing (after the procedures set forth in
Section 6(a) below have been complied with) or (ii) any Holder of Transfer
Restricted Securities notifies the Company on or prior to the 20th business day
following the Consummation of the Exchange Offer (A) that such Holder is
prohibited by applicable law or Commission policy from participating in the
Exchange Offer, or (B) that such Holder may not resell the Series B Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and that the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder, or
(C) that such Holder is a Broker-Dealer and holds Series A Notes acquired
directly from the Issuers or one of their affiliates, then the Issuers shall:
(x) Use their reasonable best efforts to file a shelf
registration statement with the Commission pursuant to Rule 415 under the
Act, which may be an amendment to the Exchange Offer Registration
Statement (in either event, the "Shelf Registration Statement") on or
prior to the earliest to occur of (1) the 30th day after the date on which
the Issuers determine that they are not required to file the Exchange
Offer Registration Statement and (2) the 30th day after the date on which
the Company receives notice from a Holder of Transfer Restricted
4
<PAGE> 6
Securities as contemplated by clause (ii) above (such earliest date being
the "Shelf Filing Deadline"), which Shelf Registration Statement shall
provide for resales of all Transfer Restricted Securities the Holders of
which shall have provided the information required pursuant to Section
4(b) hereof; and
(y) Cause such Shelf Registration Statement to be declared
effective by the Commission on or prior to the 60th day after the Shelf
Filing Deadline.
The Issuers shall use their best efforts to keep such Shelf Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for resales of Notes by the Holders of Transfer Restricted
Securities entitled to the benefit of this Section 4(a), and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years following the Closing Date.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Issuers may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Issuers all
information required to be disclosed in order to make the information
previously furnished to the Issuers by such Holder not misleading.
SECTION 5. LIQUIDATED DAMAGES
If (a) any of the Registration Statements required by this Agreement
is not filed with the Commission on or prior to the date specified for such
filing in this Agreement, (b) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (d) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (a) through (d), a "Registration Default"), the Issuers hereby
jointly and severally agree to pay Liquidated Damages to each Holder of
Transfer Restricted Securities with respect to the first 90-day period
immediately following the occurrence of the first Registration Default, in an
amount equal to $.05 per week per $1,000 principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues. The amount of the Liquidated Damages shall
increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.50 per week per $1,000 principal amount of Transfer
Restricted Securities. All accrued Liquidated Damages shall be paid by the
Issuers on each Damages Payment Date to Record Holders by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Securities by wire transfers to the accounts specified
5
<PAGE> 7
by them or by mailing checks to their registered addresses if no such accounts
have been specified on each Damages Payment Date, as provided in the Indenture.
Following the cure of all Registration Defaults relating to any particular
Transfer Restricted Securities, the accrual of Liquidated Damages with respect
to such Transfer Restricted Securities will cease.
All obligations of the Issuers set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such security shall
have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Issuers shall comply with all of the provisions of Section
6(c) below, shall use their reasonable best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:
(i) If in the reasonable opinion of counsel to the Issuers
there is a question as to whether the Exchange Offer is permitted by
applicable law, the Issuers hereby agree to seek a no-action letter or
other favorable decision from the Commission allowing the Issuers to
Consummate an Exchange Offer for such Series A Notes. Each of the Issuers
hereby agrees to pursue the issuance of such a decision to the Commission
staff level but shall not be required to take commercially unreasonable
action to effect a change of Commission policy. Each of the Issuers
hereby agrees, however, to (A) participate in telephonic conferences with
the Commission, (B) deliver to the Commission staff an analysis prepared
by counsel to the Issuers setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursue a resolution (which need not be
favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Issuers,
prior to the Consummation thereof, a written representation to the Issuers
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of any Issuer, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Series B Notes to be issued in the
Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary
course of business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Issuers' preparations for the
Exchange Offer. Each Holder, by its acceptance of Series A Notes, shall
be deemed to have acknowledged and agreed that any Broker-Dealer and any
such Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including any
no-action letter obtained pursuant to clause (i) above), and (2) must
comply with the registration and prospectus delivery requirements of the
Act in connection with a secondary resale transaction and that such a
secondary resale transaction should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or 508, as applicable, of Regulation S-K if the
resales are of Series B Notes
6
<PAGE> 8
obtained by such Holder in exchange for Series A Notes acquired by such
Holder directly from the Issuers.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers shall provide a supplemental letter to the
Commission (A) stating that the Issuers are registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co.,
Inc. (available June 5, 1991) and, if applicable, any no-action letter
obtained pursuant to clause (i) above and (B) including a representation
that none of the Issuers has entered into any arrangement or understanding
with any Person to distribute the Series B Notes to be received in the
Exchange Offer and that, to the best of the Issuers' information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B Notes in its ordinary course of business and has no arrangement
or understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Issuers shall comply with all the provisions of
Section 6(c) below and shall use their reasonable best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof,
and pursuant thereto the Issuers will as expeditiously as possible prepare and
file with the Commission a Registration Statement relating to the registration
on any appropriate form under the Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof.
(c) General Provisions. In connection with any Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Registration Statement and the related Prospectus required to permit resales of
Notes by Broker-Dealers), the Issuers shall:
(i) use their reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements (including, if required by the Act or any regulation
thereunder, financial statements of the Guarantors) for the period
specified in Section 3 or 4 hereof, as applicable; upon the occurrence of
any event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain a material misstatement or
omission or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Issuers shall file promptly an appropriate amendment to such Registration
Statement, in the case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use their
reasonable best efforts to cause such amendment to be declared effective
and such Registration Statement and the related Prospectus to become
usable for their intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as applicable, or such shorter
period as will terminate when all Transfer Restricted Securities covered
by such Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
7
<PAGE> 9
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when the
same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement under the Act or of the suspension by any
state securities commission of the qualification of the Transfer
Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws,
the Issuers shall use their reasonable best efforts to promptly obtain the
withdrawal or lifting of such order;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, (all of whom shall be deemed to have acknowledged
the confidentiality of the information contained in the foregoing
documents) before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Holders and underwriter(s), if any, for a period of at
least five business days, and the Issuers will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which a selling Holder of Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s), if any, shall reasonably object within five business days
after the receipt thereof. A selling Holder or underwriter, if any, shall
be deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains a material misstatement or omission or fails to
comply with the applicable requirements of the Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s), if any, make the Issuers' representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as
such selling Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuers and
cause the Issuers' officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney
or accountant in connection with such Registration Statement subsequent to
the filing thereof and prior to its effectiveness;
8
<PAGE> 10
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such selling Holders and underwriter(s), if
any, may reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the principal
amount of Transfer Restricted Securities being sold to such
underwriter(s), the purchase price being paid therefor and any other terms
of the offering of the Transfer Restricted Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Issuers are
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(viii) in the case of a Shelf Registration Statement, cause the
Transfer Restricted Securities covered by the Registration Statement to be
rated with the appropriate rating agencies, if so requested by the Holders
of a majority in aggregate principal amount of Notes covered thereby or
the underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Issuers hereby consent
to the use of the Prospectus and any amendment or supplement thereto by
each of the selling Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto; provided, that such use of the Prospectus and any amendment or
supplement thereto and such offering and sale conforms to the "Plan of
Distribution" section contained in the Prospectus and complies with this
Agreement and all applicable laws and regulations;
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all
such other customary actions in connection therewith in order to expedite
or facilitate the disposition of the Transfer Restricted Securities
pursuant to any Shelf Registration Statement contemplated by this
Agreement, all to such extent as may be requested by the Initial
Purchasers or by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any Shelf
Registration Statement contemplated by this Agreement; and whether or not
an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Issuers shall:
(A) furnish to each of the Initial Purchasers, each selling
Holder and each underwriter, if any, in such substance and scope as
they may request and as are customarily made by issuers to
underwriters in primary underwritten offerings, upon the
effectiveness of the Shelf Registration Statement:
(1) a certificate, dated the date of effectiveness of the
Shelf Registration Statement, signed by (x) an authorized
executive officer and (y) a principal financial or accounting
officer of each of the Issuers, confirming, as of the date
thereof, the matters set forth in paragraphs (a), (b), (c) and
(d) of Section 8 of the Purchase Agreement and such other
matters as such parties may reasonably request;
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(2) an opinion, dated the date of effectiveness of the
Shelf Registration Statement, of counsel for the Issuers,
covering the matters set forth in paragraphs (1) through (25) of
Exhibit E to the Purchase Agreement and such other matters as
such parties may reasonably request, and in any event including
a statement to the effect that such counsel has participated in
conferences with officers and other representatives of the
Issuers, representatives of the independent public accountants
for the Issuers, the Initial Purchasers' representatives and the
Initial Purchasers' counsel in connection with the preparation
of such Registration Statement and the related Prospectus and
have considered the matters required to be stated therein and
the statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the
basis of the foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by officers and other
representatives of the Issuers and without independent check or
verification), no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective, contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus
contained in such Registration Statement as of its date and,
contained an untrue statement of a material fact or omitted 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. Without limiting the foregoing, such
counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated as of the date of
Consummation of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may be, from
the Issuers' independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 8 of the Purchase
Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof (and any other customary
indemnification provisions and procedures that any underwriters may
reasonably request) with respect to all parties to be indemnified
pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Issuers
pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Issuers
contemplated in clause (A)(1) above cease to be true and correct, the
Issuers shall so advise the Initial Purchasers and the underwriter(s), if
any, and each selling Holder promptly and, if requested by such Persons,
shall confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the
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registration and qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as the selling
Holders or underwriter(s) may request and do any and all other acts or
things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however, that none of the Issuers shall
be required to register or qualify as a foreign corporation where it is
not now so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) shall issue, upon the request of any Holder of Series A
Notes covered by the Shelf Registration Statement, Series B Notes, having
an aggregate principal amount equal to the aggregate principal amount of
Series A Notes surrendered to the Issuers by such Holder in exchange
therefor or being sold by such Holder; such Series B Notes to be
registered in the name of such Holder or in the name of the purchaser(s)
of such Notes, as the case may be; in return, the Series A Notes held by
such Holder shall be surrendered to the Issuers for cancellation;
(xiv) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and
not bearing any restrictive legends; and enable such Transfer Restricted
Securities to be in such denominations and registered in such names as the
Holders or the underwriter(s), if any, may request at least two business
days prior to any sale of Transfer Restricted Securities made by such
underwriter(s);
(xv) use their best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s),
if any, to consummate the disposition of such Transfer Restricted
Securities, subject to the proviso contained in clause (viii) above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration Statement
and provide the Trustee under the Indenture with printed certificates for
the Transfer Restricted Securities which are in a form eligible for
deposit with the Depositary Trust Company;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that
is required to be retained in accordance with the rules and regulations of
the NASD, and use its reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies
or authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
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(xix) otherwise use their reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing at
the end of any fiscal quarter in which Transfer Restricted Securities are
sold to underwriters in a firm or best efforts Underwritten Offering or
(B) if not sold to underwriters in such an offering, beginning with the
first month of the Company's first fiscal quarter commencing after the
effective date of the Registration Statement;
(xx) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required
by this Agreement, and, in connection therewith, cooperate with the
Trustee and the Holders of Notes to effect such changes to the Indenture
as may be required for such Indenture to be so qualified in accordance
with the terms of the TIA; and execute and use their reasonable best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents required
to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Issuers are then listed if requested by
the Holders of a majority in aggregate principal amount of Series A Notes
or the managing underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Issuers of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will keep
such notice confidential and forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing
(the "Advice") by the Issuers that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus. If so directed by the Issuers,
each Holder will deliver to the Issuers (at the Issuers' expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Transfer Restricted Securities that was current at the
time of receipt of such notice. In the event the Issuers shall give any such
notice, the time period regarding the effectiveness of such Registration
Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including
the date when each selling Holder covered by such Registration Statement shall
have received the copies of the supplemented or amended Prospectus contemplated
by Section 6(c)(xvi) hereof or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' performance of or
compliance with this Agreement will be borne by the Issuers, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchasers or Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter"
and its counsel that may be required by the rules and regulations of the
NASD)); (ii) all fees and expenses of compliance with federal securities and
state Blue Sky or securities
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laws; (iii) all expenses of printing (including printing certificates for the
Series B Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Issuers and, subject to Section 7(b) below,
the Holders of Transfer Restricted Securities; (v) all application and filing
fees in connection with listing Notes on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Issuers (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Issuers will, in any event, bear their internal expenses
(including, without limitation, all salaries and expenses of their officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Issuers.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins or such other counsel as may be chosen by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
for whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless (i) each Holder, (ii) each person, if any, who controls any Holder
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act and (iii) the respective officers, directors, partners, employees,
representatives and agents of each Holder or any controlling person to the
fullest extent lawful, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or in any supplement thereto or amendment thereof, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, that the Issuers will not be liable in any such case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information relating to any Holder furnished to the
Issuers in writing by or on behalf of such Holder expressly for use therein.
This indemnity agreement will be in addition to any liability which the Issuers
may otherwise have, including, under this Agreement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless (i) the Issuers, (ii) each person, if any, who controls the
Issuers within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and (iii) each person, if any, who controls any Issuer, against
any
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losses, liabilities, claims, damages and expenses whatsoever (including but not
limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information relating to any
Holder furnished to the Issuers in writing by or on behalf of such Holder
expressly for use therein; provided, however, that in no case shall any Holder
be liable or responsible for any amount in excess of the dollar amount of the
proceeds received by such Holder upon the sale of the Notes giving rise to such
indemnification obligation. This indemnity will be in addition to any
liability which any Holder may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there
may be defenses available to it or them which are different from or additional
to those available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of counsel shall be borne by the indemnifying
parties; provided, however, that the indemnifying party under subsection (a) or
(b) above shall only be liable for the legal expenses of one counsel (in
addition to any local counsel) for all indemnified parties in each jurisdiction
in which any claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written consent;
provided, however, that such consent was not unreasonably withheld.
(d) In order to provide for contribution in circumstances in which
the indemnification provided for in this Section 8 is for any reason held to be
unavailable from the Issuers or is insufficient to hold harmless a party
indemnified hereunder, the Issuers, on the one hand, and each Holder, on the
other hand, shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature
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contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but after
deducting in the case of losses, claims, damages, liabilities and expenses
suffered by the Issuers, any contribution received by the Issuers from persons,
other than the Holders, who may also be liable for contribution, including
persons who control the Issuers within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) to which the Issuers and such Holder may be
subject, in such proportion as is appropriate to reflect the relative benefits
received by the Issuers, on one hand, and such Holder, on the other hand, if
such allocation is not permitted by applicable law or indemnification is not
available as a result of the indemnifying party not having received notice as
provided in this Section 8, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Issuers, on the one hand, and such Holder, on the other hand, in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Issuers, on one hand,
and each Holder, on the other hand, shall be deemed to be in the same
proportion as (i) the total proceeds from the offering of the Notes (net of
discounts but before deducting expenses) received by the Issuers and (ii) the
total proceeds received by such Holder upon the sale of the Notes giving rise
to such indemnification obligation. The relative fault of the Issuers, on the
one hand, and of each Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Issuers or such Holder and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Issuers and the Holders
agree that it would not be just and equitable if contribution pursuant to this
Section 8(d) were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8(d), (i) in
no case shall any Holder be required to contribute any amount in excess of the
dollar amount by which the proceeds received by such Holder upon the sale of
the Notes exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8(d), (A) each person, if any,
who controls any Holder within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and (B) the respective officers, directors, partners,
employees, representatives and agents of each Holder or any controlling person
shall have the same rights to contribution as such Holder, and each person, if
any, who controls the Issuers within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
the Issuers, subject in each case to clauses (i) and (ii) of this Section 8(d).
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 8(d), notify such party or parties from whom contribution
may be sought, but the failure to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 8(d) or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its prior written consent; provided, however, that such written consent
was not unreasonably withheld.
SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as (i) the
Company is not subject to the reporting requirements of Section 13 or 15 of the
Exchange Act and (ii) any Transfer Restricted Securities remain outstanding, to
make available to any Holder or beneficial owner of Transfer Restricted
Securities
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in connection with any sale thereof and any prospective purchaser of such
Transfer Restricted Securities from such Holder or beneficial owner, the
information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Transfer Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Issuers.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Issuers agree that monetary damages (including
the Liquidated Damages contemplated hereby) would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuers will not, on or after
the date of this Agreement, enter into any agreement with respect to their
respective securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
None of the Issuers has previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Issuers' securities
under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. None of the Issuers will take
any action with respect to the Notes that would materially and adversely affect
the ability of the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Issuers have
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being
tendered pursuant to the Exchange Offer and that does not affect directly or
indirectly the rights of other Holders whose securities are not being tendered
pursuant to such Exchange Offer may be given
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by the Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the any of the Issuers:
Allied Holdings, Inc.
160 Clairemont Avenue
Decatur, Georgia 30030
Telecopy No.: (404) 370-4206
Attention: Daniel H. Popky
With copies to:
Troutman Sanders LLP
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Telecopy No.: (404) 885-3900
Attention: Thomas M. Duffy
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(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, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
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(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement, together with the other
Operative Documents (as defined in the Purchase Agreement), is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Issuers with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
[signature pages follow]
18
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
ALLIED HOLDINGS, INC.
By:
---------------------------------------------
Name:
Title:
ALLIED AUTOMOTIVE GROUP, INC.
By:
---------------------------------------------
Name:
Title:
ALLIED INDUSTRIES INCORPORATED
By:
---------------------------------------------
Name:
Title:
HAUL RISK MANAGEMENT SERVICES, INC.
By:
---------------------------------------------
Name:
Title:
LINK INFORMATION SYSTEMS, INC.
By:
---------------------------------------------
Name:
Title:
ALLIED SOUTHWOODS, INC.
By:
---------------------------------------------
Name:
Title:
S-1
<PAGE> 21
AXIS GROUP, INC.
By:
---------------------------------------------
Name:
Title:
ALLIED SYSTEMS, LTD. (L.P.)
BY: ALLIED AUTOMOTIVE GROUP, INC.,
as general partner
By:
---------------------------------------------
Name:
Title:
ALLIED, INC.
By:
---------------------------------------------
Name:
Title:
INTER MOBILE, INC.
By:
---------------------------------------------
Name:
Title:
LEGION TRANSPORTATION, INC.
By:
---------------------------------------------
Name:
Title:
INNOVATIVE CAR CARRIERS, INC.
By:
---------------------------------------------
Name:
Title:
S-2
<PAGE> 22
AUTOMOTIVE TRANSPORT SERVICES, INC.
By:
---------------------------------------------
Name:
Title:
AUTO HAULAWAY INC.
By:
---------------------------------------------
Name:
Title:
AUTO HAULAWAY RELEASING SERVICES (1981) LIMITED
By:
---------------------------------------------
Name:
Title:
AXIS INTERNATIONAL, INC.
By:
---------------------------------------------
Name:
Title:
AXIS TRUCK LEASING, INC.
By:
---------------------------------------------
Name:
Title:
AXIS NORTH AMERICA, INC.
By:
---------------------------------------------
Name:
Title:
S-3
<PAGE> 23
DECATUR DRIVER EXCHANGE COMPANY, INC.
By:
---------------------------------------------
Name:
Title:
CLAIREMONT DRIVER EXCHANGE COMPANY, INC.
By:
---------------------------------------------
Name:
Title:
KAR-TAINER INTERNATIONAL, INC.
By:
---------------------------------------------
Name:
Title:
A H ACQUISITION CORP.
By:
---------------------------------------------
Name:
Title:
CANADIAN ACQUISITION CORP.
By:
---------------------------------------------
Name:
Title:
AXIS NATIONAL INCORPORATED
By:
---------------------------------------------
Name:
Title:
S-4
<PAGE> 24
RC MANAGEMENT CORP.
By:
---------------------------------------------
Name:
Title:
RYDER AUTOMOTIVE CARRIER SERVICES, INC.
By:
---------------------------------------------
Name:
Title:
RYDER AUTOMOTIVE ACQUISITION, LLC
BY: CANADIAN ACQUISITION CORP.,
as member
By:
---------------------------------------------
Name:
Title:
MCL RYDER TRANSPORT INC.
By:
---------------------------------------------
Name:
Title:
RYDER AUTOMOTIVE OPERATIONS, INC.
By:
---------------------------------------------
Name:
Title:
RYDER FREIGHT BROKER, INC.
By:
---------------------------------------------
Name:
Title:
S-5
<PAGE> 25
QAT, INC.
By:
---------------------------------------------
Name:
Title:
OSHCO, INC.
By:
---------------------------------------------
Name:
Title:
TERMINAL SERVICE CO.
By:
---------------------------------------------
Name:
Title:
F.J. BOUTELL DRIVEAWAY CO., INC.
By:
---------------------------------------------
Name:
Title:
RMX, INC.
By:
---------------------------------------------
Name:
Title:
TRANSPORT SUPPORT, INC.
By:
---------------------------------------------
Name:
Title:
S-6
<PAGE> 26
COMMERCIAL CARRIERS, INC.
By:
---------------------------------------------
Name:
Title:
B&C, INC.
By:
---------------------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
BT ALEX. BROWN INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
BY: BEAR, STEARNS & CO. INC.
By:
------------------------
Name:
Title:
S-7
<PAGE> 27
COMMERCIAL CARRIERS, INC.
By:
---------------------------------------------
Name:
Title:
B&C, INC.
By:
---------------------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
BT ALEX. BROWN INCORPORATED
NATIONSBANC CAPITAL MARKETS, INC.
BY: BEAR, STEARNS & CO. INC.
By: /s/ JBM
------------------------
Name:
Title:
S-7
<PAGE> 1
EXHIBIT 4.5
$230,000,000 REVOLVING CREDIT AGREEMENT
among
ALLIED HOLDINGS, INC.
and
AUTO HAULAWAY INC.
and
The Lending Institutions Listed on Schedule 1.1 hereto
and
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
and
ABN AMRO BANK N.V., AS DOCUMENTATION AGENT
and
THE FIRST NATIONAL BANK OF CHICAGO, AS CO-AGENT
and
NATIONSBANK, N.A., AS CO-AGENT
and
BANCBOSTON SECURITIES INC., AS ARRANGER
dated as of September 30, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section PAGE
- -------- ----
<S> <C> <C>
Section 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. THE CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.1. Commitment to Lend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.1.1. Domestic Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 2.1.2. Canadian Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . 28
Section 2.1.3. Limitation on Borrowings . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.2. Termination; Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.3. Reallocation of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.4. The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.5. Interest on Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.6. Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.7. Interest Rate Conversion Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.8. Optional Prepayments of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . 35
Section 2.9. Mandatory Prepayments of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.10. Funds for Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 2.11. Maturity of the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 2.12. The Domestic Swing Line Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.13. The Canadian Swing Line Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.1. Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.2. Effects of Drawings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.3. Letter of Credit Loan Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.4. Obligations of the Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4. BANKERS' ACCEPTANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.1. Acceptance and Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.2. Refunding Bankers' Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.3. Acceptance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.4 Circumstances Making Bankers' Acceptances Unavailable . . . . . . . . . . . . . . . . . 51
Section 5. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.1. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.2. Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.3. Closing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.4. Administrative Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6. CERTAIN GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6.1. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
<PAGE> 3
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<TABLE>
<S> <C> <C>
Section 6.2. Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 6.3. Interest Rate Upon Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.4. Interest Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.5. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.6. Additional Costs, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.7. Bank Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.8. Payments to be Free of Deductions . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.9. Inability to Determine Eurodollar Rate . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.10. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.11. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.12. Currency of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.13. Currency Fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.14. Replacement of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7. SECURITY AND GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.1. Existence and Good Standing, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.2. Power; Consents; Absence of Conflict with Other Agreements . . . . . . . . . . . . . . 61
Section 8.3. Binding Effect of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.4. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.5. Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 8.6. No Material Changes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.7. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.8. No Materially Adverse Contracts, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 8.9. Compliance with Other Instruments, Laws, Etc. . . . . . . . . . . . . . . . . . . . . . 66
Section 8.10. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.11. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 8.12. Location of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.13. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.14. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.15. Title and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.16. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 8.17. Holding Company and Investment Company Acts . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.18. Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.19. Operating Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 8.20. Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.21. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.22. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 8.23. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.24. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.25. Subordinated Debt Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.26. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.27. Perfection of Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
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<TABLE>
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Section 8.28. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.29. Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.30. Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.1. Delivery of Loan Documents; Payment of Fees . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.2. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.3. Performance; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.4. Requisite Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.5. Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.6. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.7. Banking Law Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.8. Delivery of Charter and Other Documents . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.9. Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.10. Perfection Certificates and UCC Search Results . . . . . . . . . . . . . . . . . . . . 76
Section 9.11. Balance Sheet; Compliance Certificate; Borrowing Base Certificate . . . . . . . . . . . 76
Section 9.12. Senior Notes; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.13. Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 9.14. Concerning the ACD Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 9.15. Satisfactory Completion of Due Diligence; Etc. . . . . . . . . . . . . . . . . . . . . 77
Section 9.16. Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 9.17. Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 9.18. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 9.19. No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 9.20. Capital Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 9.21. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 9.22. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 9.23. Other Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 9.24. Solvency Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 9.25. Payoff Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10. CONDITIONS OF SUBSEQUENT BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 10.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 10.2. Performance; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11.1. Punctual Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11.2. Maintenance of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11.3. Records and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.4. Financial Statements, Certificates and Information . . . . . . . . . . . . . . . . . . 81
Section 11.5. Business and Legal Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.6. Compliance with Laws, Contracts, Licenses and Permits . . . . . . . . . . . . . . . . . 81
Section 11.7. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.8. Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
</TABLE>
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Section 11.9. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.10. Inspection of Properties and Books . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.11. Title and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.12. Notice of Material Claims and Litigation . . . . . . . . . . . . . . . . . . . . . 85
Section 11.13. Funding of Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.14. Copies of Pension Plan Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.15. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.16. Payment of Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.17. Operating Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.18. Environmental Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.19. Line of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.20. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 11.21. Commercial Finance Examinations . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.1. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 12.2. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 12.3. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 12.4. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 12.5. Merger, Consolidation or Sale of Assets; Acquisitions . . . . . . . . . . . . . . 93
Section 12.6. No Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 12.7. Leases; Leases with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 12.8. Consolidated Cash Flow Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 12.9. Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 12.10. Funded Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 12.11. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 12.12. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 12.13. Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 12.14. Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 12.15. ACD Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 12.16. Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 13. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 13.1. Events of Default and Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 13.2. Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 14. NOTICE AND WAIVERS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 14.1. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 14.2. Waivers of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 15. REMEDIES ON DEFAULT, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 15.1. Rights of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 15.2. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 15.3. Distribution of Collateral Proceeds . . . . . . . . . . . . . . . . . . . . . . . 105
</TABLE>
<PAGE> 6
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<TABLE>
<S> <C> <C>
Section 16. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 16.1. Sharing of Information with Section 20 Subsidiary . . . . . . . . . . . . . . . . . . . 106
Section 16.2. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 16.3. Prior Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Section 16.4. Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 17. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 17.1. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 17.2. Employees and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 17.3. No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 17.4. No Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 17.5. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 17.6. Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 17.7. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 17.8. Agents as Banks; Documentation Agent; Co-Agents . . . . . . . . . . . . . . . . . . . . 110
Section 17.9. Resignation; Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 17.10.Notification of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . 111
Section 18. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 18.1. Conditions to Assignment by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 18.2. Certain Representations and Warranties;
Limitations; Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Section 18.3. Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 18.4. New Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 18.5. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Section 18.6. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 18.7. Assignee or Participant Affiliated with the Borrower . . . . . . . . . . . . . . . . . 114
Section 18.8. Miscellaneous Assignment Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Section 18.9. Assignment by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Section 19. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Section 20. SURVIVAL OF COVENANTS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Section 21. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Section 22. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Section 23. ENTIRE AGREEMENT, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Section 24. CONSENTS, AMENDMENTS, WAIVERS, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Section 25. WAIVER AND RELEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Section 26. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
</TABLE>
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<TABLE>
<S> <C> <C>
Section 27. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Section 28. CANADIAN GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 29. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Section 30. WITHHOLDING TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Section 31. PARI PASSU TREATMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
</TABLE>
<PAGE> 8
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LIST OF EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
Exhibits:
--------
<S> <C>
Exhibit A-1 Form of Domestic Revolving Credit Note
Exhibit A-2 Form of Canadian Revolving Credit Note
Exhibit A-3 Form of Domestic Swing Line Note
Exhibit A-4 Form of Canadian Swing Line Note
Exhibit B Form of Intercompany Note
Exhibit C Form of Reimbursement Agreement
Exhibit D Form of Loan Request
Exhibit E-1 Form of Opinion of Borrower's Counsel
Exhibit E-2 Form of Opinion of Borrower's Canadian Counsel
Exhibit F Form of Compliance Certificate
Exhibit G Form of Borrowing Base Certificate
Exhibit H Form of Guaranty
Exhibit I Form of Assignment and Acceptance
Exhibit J Form of Bankers' Acceptance Notice
Exhibit K Form of Solvency Certificate
</TABLE>
<TABLE>
<CAPTION>
Schedules:
----------
<S> <C>
Schedule 1.1 Banks; Commitments; Commitment Percentages; Domestic Lending Offices; Eurodollar Lending
Offices
Schedule 1.2 Depreciation Schedule
Schedule 1.3 Management Group
Schedule 1.4 Existing Letters of Credit
Schedule 8.1 Qualifications to do Business
Schedule 8.2 Conflicts
Schedule 8.5(a) Financial Statements
Schedule 8.6 Changes
Schedule 8.7 Litigation
Schedule 8.10 Taxes
Schedule 8.12 Chief Executive Offices
Schedule 8.13 Business
Schedule 8.15 Re-registrations
Schedule 8.16(a) Subsidiaries of the Borrower
Schedule 8.16(b) Subsidiaries of the Borrower's Subsidiaries
Schedule 8.18 Certain Transactions
Schedule 8.19(a) Operating Rights
Schedule 8.19(b) Canadian Operating Authorizations
Schedule 8.20 Material Contracts
</TABLE>
<PAGE> 9
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<TABLE>
<S> <C>
Schedule 8.21 Hazardous Substances
Schedule 8.24 Insurance
Schedule 8.27 Perfection of Security Interest
Schedule 8.28 Bank Accounts
Schedule 12.1 Existing Indebtedness
Schedule 12.2 Existing Liens
Schedule 12.3 Existing Investments
</TABLE>
<PAGE> 10
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT, dated as of September 30, 1997, is among
ALLIED HOLDINGS, INC. (the "Borrower"), a Georgia corporation having its
principal place of business at 160 Clairemont Avenue, Suite 510, Decatur,
Georgia 30030, AUTO HAULAWAY INC., a corporation organized under the laws of
Ontario, having its principal place of business at 4320 Harvester Road,
Burlington, Ontario L7L 5S4 (together with its successors, the "Canadian
Borrower"), BANKBOSTON, N.A. ("BKB") and the other lending institutions
identified as Banks herein, BKB, as administrative agent for the Banks (the
"Administrative Agent"), ABN AMRO BANK, N.V., as Documentation Agent (the
"Documentation Agent"), THE FIRST NATIONAL BANK OF CHICAGO, as co-agent
("FNBC") and NATIONSBANK, N.A. (together with FNBC, the "Co-Agents").
Section 1. DEFINITIONS. (a) The following terms shall have the meanings
assigned to them below in this Section 1 or in the provisions of this Agreement
or the Exhibits and the Schedules hereto referred to below:
"AAGI" - Allied Automotive Group, Inc., a Georgia corporation and a
wholly-owned Subsidiary of the Borrower.
"Acceptance Fee" - see Section 4.3.
"ACD" - collectively, Ryder Automotive Carrier Services, Inc., RC
Management Corp., Ryder Automotive Acquisition LLC and each of their
subsidiaries.
"ACD Acquisition" - the acquisition by (i) AH Acquisition Corp. of one
hundred percent (100%) of the capital stock of Ryder Automotive Carrier
Services, Inc.; (ii) Axis National Incorporated of one hundred percent (100%)
of the capital stock of RC Management Corp., Terminal Service Co. and OSHCO,
Inc.; and (iii) Canadian Acquisition Corp. of one hundred percent (100%) of the
equity interests of Ryder Automotive Acquisition LLC, pursuant to the ACD
Acquisition Documents.
"ACD Acquisition Documents" - the Acquisition Agreement, together with all
schedules thereto, dated as of August 20, 1997, among the Borrower, AH
Acquisition Corp., Canadian Acquisition Corp., Axis National Incorporated and
Ryder System, Inc., and each of the related Allied/Ryder Restrictive Covenant
Agreement, Intellectual Property License Agreement, ILM Technology Agreement,
Cooperation and Preservation Agreement, Transitional Agreement and License and
Joint Defense and Cooperation Agreement, each dated as of September 30, 1997,
each in the form delivered to the Administrative Agent on or prior to the
Closing Date.
"Adjustment Date" - the first day of the month immediately following the
month in which a Compliance Certificate is delivered by the Borrower pursuant
to Section 11.4(e) hereof.
<PAGE> 11
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"Administrative Agent" - see the preamble.
"Administrative Agent's Fee" - as defined in the Fee Letter.
"Administrative Agent's Special Counsel" - Bingham, Dana & Gould LLP, or
such other counsel as may be approved by the Administrative Agent.
"Affected Bank" - see Section 6.14.
"Affiliate" - any Person that would be considered to be an affiliate of
another Person under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if such other Person
were issuing securities.
"Agents" - the Administrative Agent and the Canadian Agent.
"Agreement" - this Revolving Credit Agreement, with all Exhibits and
Schedules hereto, as originally executed, or if this Revolving Credit Agreement
is amended, restated or supplemented from time to time, as so amended, restated
or supplemented.
"AH" - AH Industries Inc., an Alberta corporation and a wholly-owned
Subsidiary of the Borrower.
"Allied Systems" - Allied Systems, Ltd. (L.P.), a Georgia limited
partnership of which AAGI is the managing general partner and of which any one
or more of the Borrower or its wholly-owned Subsidiaries which is a Guarantor
is a general partner.
"Applicable Acceptance Fee Rate" - at any time, the rate per annum equal
to the Applicable Margin with respect to Eurodollar Rate Loans.
"Applicable BA Discount Rate" - with respect to any Bankers' Acceptance
being purchased by a Canadian Bank on any day, the average Bankers' Acceptance
discount rate for the term of such Bankers' Acceptance as quoted on Reuters
Service Page CDOR at or about 10:00 a.m. (Toronto, Ontario time) on such day.
"Applicable Margin" - for each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable percentage
set forth below with respect to the Borrower's Funded Debt Ratio, as determined
at the end of the fiscal quarter of the Borrower and its Subsidiaries ending
immediately prior to the applicable Rate Adjustment Period:
<PAGE> 12
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<TABLE>
<CAPTION>
EURODOLLAR RATE
LOANS AND LETTER OF
LEVEL FUNDED DEBT RATIO BASE RATE LOANS CREDIT FEES COMMITMENT FEE
<S> <C> <C> <C> <C>
I Greater than or equal to 3.50 to 1.00 1.00% 2.00% 0.375%
II Less than 3.50 to 1.00 and greater 0.75% 1.75% 0.375%
than or equal to 3.00 to 1.00
III Less than 3.00 to 1.00 and greater 0.50% 1.50% 0.375%
than or equal to 2.75 to 1.00
IV Less than 2.75 to 1.00 and greater 0.25% 1.25% 0.25%
than or equal to 2.50 to 1.00
V Less than 2.50 to 1.00 0% 1.00% 0.25%
</TABLE>
Notwithstanding the foregoing, (a) subject to clause (c) hereof, for the period
commencing on the Closing Date through the end of the month in which the
quarterly compliance certificate for the fiscal quarter ending March 31, 1998
is delivered pursuant to Section 11.4(e) hereof, the Applicable Margin shall be
that percentage corresponding to Level II in the table above; (b) if the
Borrower fails to deliver any Compliance Certificate pursuant to Section
11.4(e) hereof, then for the period commencing on the first day of the month
immediately following the date such Compliance Certificate was due through the
date immediately preceding the Adjustment Date that occurs immediately
following the date on which such Compliance Certificate is delivered, the
Applicable Margin shall be that percentage corresponding to Level I in the
table above; and (c) in the event that the Borrower shall, at any time, receive
Net Cash Proceeds from the sale of equity securities in an amount in excess of
$20,000,000, then the Borrower may deliver a pro forma Compliance Certificate
to the Administrative Agent and the Banks, based on the most recently ended
fiscal quarter for which financial statements have been prepared and giving
effect to such issuance of equity securities, and the Applicable Margin shall
be subject to adjustment as of the first day of the calendar month immediately
succeeding the date such Compliance Certificate is delivered to the
Administrative Agent and the Banks.
"Arranger" - BancBoston Securities, Inc..
"Assignment and Acceptance" - see Section 18 hereof.
"Assignment of Acquisition Documents" - the Collateral Assignment of
Acquisition Documents, dated as of the date hereof, among the Borrower, AH
Acquisition Corp., Canadian Acquisition Corp., Axis National Incorporated and
the Administrative Agent.
"BA Discount Proceeds" - with respect to any Bankers' Acceptance to be
accepted and purchased by a Canadian Bank, an amount (rounded to the nearest
whole Canadian cent, and with one-half of one Canadian cent being rounded up)
calculated on such day by multiplying (a) the face amount of such Bankers'
Acceptance times (b) the quotient equal to (such quotient being rounded up or
down to the nearest fifth decimal place and .000005 being rounded up) (i) one
divided by (ii) the sum of (A) one plus (B) the product of (1) the Applicable
BA Discount Rate
<PAGE> 13
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(expressed as a decimal) applicable to such Bankers' Acceptance times (2) the
quotient equal to (aa) the number of days remaining in the term of such
Bankers' Acceptance divided by (bb) 365.
"Balance Sheet Date" - December 31, 1996.
"Bankers' Acceptance" - a bill of exchange denominated in Canadian Dollars
drawn on, and accepted by, a Canadian Bank pursuant to Section 4 hereof.
"Bankers' Acceptance Notice" - see Section 4.1.
"Banks" - collectively, the Domestic Banks, the Canadian Banks, the Swing
Line Banks and the Letter of Credit Bank.
"Base Rate Loans" - collectively, the Canadian Base Rate Loans and the
Domestic Base Rate Loans.
"BKB" - see the preamble.
"Borrower" - see the preamble.
"Borrowing" - a borrowing hereunder consisting of the making of a
Revolving Credit Loan, a Swing Line Loan, the issuance of a Letter of Credit or
the purchase and acceptance of a Bankers' Acceptance.
"Borrowing Base Amount" - as at any date of determination, an amount,
determined by the Administrative Agent by reference to the most recent
Borrowing Base Certificate, which is equal to the sum of (a) 80% of the Net
Receivables Value, plus (b) 80% of the Net Equipment Value of all Borrowing
Base Equipment. For purposes of determining the Borrowing Base Amount (i) the
Net Equipment Value of any Borrowing Base Equipment acquired in connection with
the ACD Acquisition or a Permitted Acquisition shall be determined on a
historical basis in accordance with Generally Accepted Accounting Principles
without regard to any purchase accounting adjustments until an appraisal of
such Borrowing Base Equipment reasonably satisfactory to the Administrative
Agent in all respects supporting a different Net Equipment Value of such
Borrowing Base Equipment has been delivered and a write-up in the net book
value of such Borrowing Base Equipment shall have been effected in accordance
with Generally Accepted Accounting Principles, and (ii) assets which are valued
in Canadian Dollars shall be converted to a value in United States Dollars at
an exchange rate of $0.75 United States Dollars for each Canadian Dollar,
provided that if the actual exchange rate on the date of any Borrowing Base
Certificate (as quoted in The Wall Street Journal) equals or exceeds $0.80
United States Dollars for each Canadian Dollar or is less than or equal to
$0.70 United States Dollars for each Canadian Dollar, then such assets shall be
valued on such date using the actual exchange rate in effect for such date.
"Borrowing Base Certificate" - see Section 11.4(e) hereof.
<PAGE> 14
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"Borrowing Base Equipment" - Motor Vehicle Equipment in which the Borrower
or any of the Guarantors has title and in which the Administrative Agent has a
first priority perfected lien and security interest or, as to Motor Vehicle
Equipment of any Person acquired pursuant to a Permitted Acquisition, with
respect to which all Indebtedness secured by such Motor Vehicle Equipment has
been repaid in full in connection with such Permitted Acquisition and
arrangements reasonably satisfactory to the Administrative Agent in all
respects have been made for the termination of record of all liens on and
security interests in such Motor Vehicle Equipment and all steps have been
taken to perfect a first priority lien and security interest in favor of the
Administrative Agent.
"Business Day" - when used in connection with (a) a Domestic Loan, a
Domestic Business Day; (b) a Eurodollar Rate Loan, a Eurodollar Business Day;
and (c) a Canadian Revolving Credit Loan or a Bankers' Acceptance, a Canadian
Business Day.
"Canadian Agent" - the Canadian Bank that shall have agreed, pursuant to
Section 2.3 hereof, at the request of the Borrower and the Canadian Borrower
and with the consent of the Administrative Agent, which consent will not be
unreasonably withheld or delayed, to act as Canadian Agent hereunder.
"Canadian Banks" - the financial institutions or banks resident in Canada
(each of which must be a Qualifying Bank) that shall have agreed, pursuant to
Section 2.3 hereof, at the request of the Borrower and the Canadian Borrower
and with the consent of the Administrative Agent, which consent will not be
unreasonably withheld or delayed, to make Canadian Revolving Credit Loans to
the Canadian Borrower and to purchase and accept Bankers' Acceptances, as
evidenced by such Bank having a positive figure beside its name in the column
titled "Canadian Commitment" on Schedule 1.1 hereto, as such Schedule may be
updated from time to time.
"Canadian Base Rate" - (a) with respect to a Canadian Swing Line Loan, the
greater of (i) the annual rate of interest announced from time to time by the
Canadian Swing Line Bank as its prime commercial rate then in effect for
determining interest rates for commercial loans made in Canadian Dollars by the
Canadian Swing Line Bank in Canada and (ii) the average rate for 30 day
Canadian Dollar bankers' acceptances as quoted on Reuters Screen CDOR Page at
10:00 a.m. (Toronto time) on the Drawdown Date thereof plus 0.75% per annum and
(b) with respect to a Canadian Revolving Credit Loan, the greater of (i) the
annual rate of interest announced from time to time by the Canadian Agent as
its prime commercial rate then in effect for determining interest rates for
commercial loans made in Canadian Dollars by the Canadian Agent in Canada and
(ii) the average rate for 30 day Canadian Dollar bankers' acceptances as quoted
on Reuters Screen CDOR Page at 10:00 a.m. (Toronto time) on the Drawdown Date
thereof plus 0.75% per annum.
"Canadian Base Rate Loans" - Canadian Loans bearing interest calculated by
reference to the Canadian Base Rate.
"Canadian Borrower" - see preamble.
<PAGE> 15
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"Canadian Business Day" - any day other than a Saturday, Sunday, or any
day on which banking institutions in Toronto, Ontario, Canada, Boston,
Massachusetts or New York, New York are authorized or required by law to be
closed.
"Canadian Commitment" - with respect to each Canadian Bank, the amount set
forth on Schedule 1.1 hereto (as such Schedule may be updated from time to
time) as the amount of such Canadian Bank's commitment to make Canadian
Revolving Credit Loans to and to accept Bankers' Acceptances for, the Canadian
Borrower, as the same may be reduced or increased from time to time, pursuant
to Section Section 2.2, 2.3 or 2.9 hereof; or if such commitment is terminated
pursuant to Section Section 2.2 or 13.2 hereof, zero.
"Canadian Commitment Fee" - see Section 5.1 hereof.
"Canadian Commitment Percentage" - with respect to each Canadian Bank, the
percentage set forth on Schedule 1.1 hereto, as such Schedule may be updated
from time to time, as such Canadian Bank's percentage of the Total Canadian
Commitment.
"Canadian Dollar Equivalent" - with respect to an amount of U.S. Dollars
on any date, the amount of Canadian Dollars that may be purchased with such
amount of U.S. Dollars at the Exchange Rate with respect to U.S. Dollars on
such date.
"C$ or Canadian Dollars" - dollars in lawful currency of Canada.
"Canadian Facility Effective Date" - see Section 2.3 hereof.
"Canadian Guaranty" - the guaranty by the Borrower set forth in Section 28
hereof of the Canadian Borrower's obligations in respect of Canadian Swing Line
Loans, Canadian Revolving Credit Loans and Bankers' Acceptances.
"Canadian Loans" - collectively, the Canadian Revolving Credit Loans and
the Canadian Swing Line Loans.
"Canadian Plans" - see Section 8.11 hereof.
"Canadian Revolving Credit Loan(s)" - collectively, revolving credit loans
made to the Canadian Borrower by the Canadian Banks pursuant to Section 2.1.2
hereof.
"Canadian Revolving Credit Note" - see Section 2.4.
"Canadian Security Documents" - collectively, (i) the several General
Security Agreements, each dated as of the date hereof, entered into between,
respectively, the Canadian Borrower and the other Canadian Subsidiaries (other
than AH) and the Administrative Agent, (ii) the several Hypothec on Movables
agreements, each dated as of the date hereof, entered into between,
respectively, the Canadian Borrower and the other Canadian Subsidiaries (other
than AH) and the Administrative Agent, (iii) the several Debenture agreements,
each dated as of the
<PAGE> 16
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date hereof, entered into between, respectively, the Canadian Borrower and the
other Canadian Subsidiaries (other than AH) and the Administrative Agent, and
(iv) the several Assignment of Book Debts agreements, each dated as of the date
hereof, entered into between, respectively, the Canadian Borrower and the other
Canadian Subsidiaries (other than AH) and the Administrative Agent.
"Canadian Subsidiaries" - each Subsidiary (direct and indirect, existing
on the date hereof or acquired or formed hereafter in accordance with the
provisions hereof) of the Borrower which is incorporated under the laws of
Canada or a political subdivision thereof.
"Canadian Swing Line Bank" - The Bank of Nova Scotia.
"Canadian Swing Line Loan" - any loan made by the Canadian Swing Line Bank
pursuant to Section 2.13 hereof.
"Canadian Swing Line Note" - see Section 2.13 hereof.
"Capital Assets" - fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, trademarks,
copyrights, franchises and goodwill), provided that capital assets shall not
include any Investment permitted pursuant to Section 12.3 hereof or any item
customarily charged directly to expense or depreciated over a useful life of 12
months or less in accordance with Generally Accepted Accounting Principles.
"Capital Expenditures" - for any period, amounts paid or Indebtedness
(including, without limitation, Indebtedness in respect of Operating Lease
Obligations (determined at the time of each initiation or extension of each
Rental Agreement), other than Operating Lease Obligations arising from the
lease of the Borrower's headquarters at 160 Clairemont Avenue, Decatur, Georgia
30030) incurred or assumed by the Borrower or any of its Subsidiaries or for
which any of such Persons becomes liable in connection with the purchase or
lease by the Borrower or any of its Subsidiaries of Capital Assets during such
period, but not including the aggregate of all amounts paid (whether in cash,
stock or a combination thereof), all Indebtedness assumed by the Borrower or
any of its Subsidiaries in connection with the ACD Acquisition or a Permitted
Acquisition and any fees, expenses and transaction costs incurred in connection
with the ACD Acquisition or such Permitted Acquisition which would be required
to be capitalized in accordance with Generally Accepted Accounting Principles.
"CERCLA" - see Section 8.21 hereof.
"Closing Date" - see Section 9 hereof.
"Co-Agent(s)" - see the preamble.
"Collateral" - all of the property rights and interests of the Borrower
and its Subsidiaries that are, or are intended pursuant to this Agreement and
the Security Documents to be, subject to the security interests created by the
Security Documents.
<PAGE> 17
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"Commercial Finance Examination" - an examination by employees, agents or
consultants of the Administrative Agent of the assets of the Borrower and its
Subsidiaries which, without limiting the generality of the foregoing, may
include a review of the Borrower's books and records and the books and records
of the Borrower's Subsidiaries.
"Commitment(s)" - with respect to any Bank, its Domestic Commitment and/or
Canadian Commitment.
"Commitment Fee" - the Domestic Commitment Fee and/or the Canadian
Commitment Fee.
"Commitment Percentage" - with respect to each Bank, the percentage set
forth beside its name on Schedule 1.1 hereto, as such Bank's percentage of the
Total Commitment.
"Compliance Certificate" - see Section 11.4(e) hereof.
"Consolidated" or "consolidated" - with reference to any term used in this
Agreement, the relevant figures for the Borrower and its Subsidiaries on a
consolidated basis determined in accordance with Generally Accepted Accounting
Principles.
"Consolidated Cash Flow" - for any fiscal period of the Borrower, an
amount equal to the remainder of (a) Consolidated EBITDA for such period, minus
(b) Capital Expenditures of the Borrower and its Subsidiaries during such
period, provided that for purposes of calculating the Consolidated Cash Flow
Ratio for any period, there shall be deducted from the actual amount of Capital
Expenditures for such period an amount equal to the aggregate amount of Net
Cash Proceeds received by the Borrower and its Subsidiaries from the sale of
Capital Assets during such period.
"Consolidated Cash Flow Ratio" - for any period, the ratio of (a) the
Consolidated Cash Flow for such period to (b) the aggregate amount of
Consolidated Interest Charges for such period, each as determined in accordance
with Generally Accepted Accounting Principles.
"Consolidated EBITDA" - for any fiscal period of the Borrower, an amount
equal to the sum of (a) Consolidated Net Income for such period, plus (b)
interest expense of the Borrower and its Subsidiaries for such period, plus (c)
without duplication, all prepayment penalties, make-whole amounts and similar
prepayment fees incurred in connection with any repayment, prepayment,
redemption, retirement, or repurchase of the Subordinated Debt or the Senior
Notes pursuant to Section Section 12.13 or 12.14, to the extent such costs are
paid from the proceeds of the sale of equity securities used to repay such
Subordinated Debt or Senior Notes, as the case may be, plus (d) the aggregate
amount of income tax expense of the Borrower and its Subsidiaries deducted in
the calculation of Consolidated Net Income for such period, plus (e) the
aggregate amount of consolidated depreciation and amortization of the Borrower
and its Subsidiaries deducted in the calculation of Consolidated Net Income for
such period, minus (f) to the extent included in the calculation of
Consolidated Net Income for such period, interest income of the Borrower and
its
<PAGE> 18
-9-
Subsidiaries for such period, minus (g) with respect to any income of a
non-wholly-owned Subsidiary which is included in the calculation of
Consolidated Net Income, and to the extent so included, if the ability of such
Subsidiary to distribute all or a portion of such income to the Borrower or a
Guarantor is restricted (whether by contract, law, constitutive document or
otherwise) an amount equal to the amount of income so restricted, minus (h) to
the extent included in the calculation of Consolidated Net Income for such
period, income of any Person which is not a Subsidiary of the Borrower for such
period to the extent such income has not actually been distributed to the
Borrower or a Guarantor, plus (i) to the extent deducted in the calculation of
Consolidated Net Income for such period, the aggregate amount of severance and
other cash expenses incurred by the Borrower and its Subsidiaries in connection
with or resulting from the ACD Acquisition within 365 days of the Closing Date
which have been offset by a commensurate reduction in the cash component of the
purchase price payable by the Borrower and its Subsidiaries in connection with
the ACD Acquisition; provided that such cash expenses shall have been approved
by the Administrative Agent, plus (j) without duplication, to the extent
deducted in the calculation of Consolidated Net Income for such period, the
aggregate amount of severance and other cash expenses incurred by the Borrower
and its Subsidiaries in connection with or resulting from the ACD Acquisition
within 365 days of the Closing Date; provided that (i) such cash expenses shall
have been approved by the Administrative Agent and (ii) the amount of cash
expenses added pursuant to this clause (j) shall not exceed $2,500,000.
"Consolidated Funded Indebtedness" - as at any date of determination, an
amount equal to the sum (without duplication) of (a) the aggregate amount of
Indebtedness of the Borrower and its Subsidiaries determined on a consolidated
basis, related to the borrowing of money or in respect of capitalized leases,
plus (b) the Maximum Drawing Amount of all Letters of Credit and any other
letters of credit outstanding (other than the Haul Insurance L/Cs so long as
such letters of credit are not guaranteed by the Borrower or any of its other
Subsidiaries), plus (c) all Indebtedness guaranteed by the Borrower and its
Subsidiaries, less (d) the amount of cash and cash equivalents (other than cash
or cash equivalents of Non-Guarantor Subsidiaries, including, without
limitation, Haul Insurance) reflected on the consolidated balance sheet of the
Borrower and its Subsidiaries as at such date in excess of $3,000,000, in each
case as determined in accordance with Generally Accepted Accounting Principles.
"Consolidated Interest Charges" - for any fiscal period, the remainder of
(a) the consolidated expenses of the Borrower and its Subsidiaries paid or
accrued for such period for interest (including the finance charges applicable
to capitalized leases) on Indebtedness (including the current portion thereof),
as determined in accordance with Generally Accepted Accounting Principles,
minus (b) non-cash interest expense of the Borrower and its Subsidiaries
accrued during such period, minus (c) interest income of the Borrower and its
Subsidiaries during such period, minus (d) to the extent included in the
calculation of interest expense for such period, all prepayment penalties,
make-whole amounts and similar prepayment fees incurred in connection with any
repayment, prepayment, redemption, retirement, or repurchase of the
Subordinated Debt or the Senior Notes pursuant to Section Section 12.13 or
12.14, to the extent such costs are paid from the proceeds of the sale of
equity securities used to repay such Subordinated Debt or Senior Notes, as the
case may be.
<PAGE> 19
-10-
"Consolidated Net Income" - the consolidated net income of the Borrower
and its Subsidiaries for any period as determined in accordance with Generally
Accepted Accounting Principles.
"Consolidated Net Worth" - with respect to the Borrower and its
Subsidiaries, the remainder of (a) all assets of the Borrower and its
Subsidiaries on a consolidated basis which are properly classified as assets in
accordance with Generally Accepted Accounting Principles, minus (b) all
liabilities of the Borrower and its Subsidiaries on a consolidated basis which
are properly classified as liabilities in accordance with Generally Accepted
Accounting Principles. For purposes of the calculation of Consolidated Net
Worth hereunder there shall be disregarded (i) the foreign currency translation
adjustment component of shareholders' equity made in accordance with Financial
Accounting Standards Board Statement No. 52 and (ii) any adjustments to
shareholders' equity as a result of any unrealized gains or losses resulting
from hedging obligations in accordance with Financial Accounting Standards
Board Statement No. 80.
"Conversion Request" - a notice given by the Borrower or the Canadian
Borrower to the appropriate Agent of the Borrower's or the Canadian Borrower's
election to convert or continue a Loan in accordance with Section 2.7 hereof.
"Consolidated Revenues" - for any fiscal period, the consolidated revenues
of the Borrower and its Subsidiaries as determined in accordance with Generally
Accepted Accounting Principles.
"Default(s)" - see Section 13.1 hereof.
"Delinquent Bank" - see Section 17.5 hereof.
"Distribution" - the declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of any Person, other than
dividends payable solely in shares of common stock of such Person; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of any Person, directly or indirectly through a Subsidiary of such Person
or otherwise; the return of capital by any Person to its shareholders as such;
or any other distribution on or in respect of any shares of any class of
capital stock of any Person.
"Documentation Agent" - see preamble.
"Dollar Equivalent" - with respect to an amount of Canadian Dollars on any
date, the amount of U.S. Dollars that may be purchased with such amount of
Canadian Dollars at the Exchange Rate applicable to Canadian Dollars on such
date.
"Domestic Bank(s)" - the Banks that shall have agreed to make Domestic
Loans to the Borrower and to participate in the risk associated with Canadian
Swing Line Loans and Letters of Credit, as evidenced by such Bank having a
positive figure beside its name in the column titled "Domestic Commitment" on
Schedule 1.1 hereto, as such Schedule may be updated from time to time.
<PAGE> 20
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"Domestic Base Rate" - for any day, a fluctuating rate per annum (rounded
upwards, if necessary, to the next 1/8 of 1%) equal to the greater of (a) the
rate of interest announced from time to time by the Administrative Agent at its
Head Office as its "base rate", as in effect on such day, or (b) the Federal
Funds Effective Rate in effect on such day plus 1/2%. "Federal Funds Effective
Rate" shall mean, for any day, a fluctuating interest rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by it.
For purposes of this Agreement, any change in the Domestic Base Rate due to a
change in the Administrative Agent's "base rate" or the Federal Funds Effective
Rate shall be effective on the effective day of such change in the
Administrative Agent's "base rate" or the Federal Funds Effective Rate, as
applicable. If the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including, without
limitation, the inability or failure of the Administrative Agent to obtain
sufficient bids or publications in accordance with the terms hereof, the
Domestic Base Rate shall be the Administrative Agent's "base rate" as in effect
at the applicable time until the circumstances giving rise to such inability no
longer exist.
"Domestic Base Rate Loans" - Domestic Loans bearing interest calculated by
reference to the Domestic Base Rate.
"Domestic Business Day" - any day other than Saturday, Sunday, or any day
on which banking institutions in Boston, Massachusetts or New York, New York
are authorized or required by law to be closed.
"Domestic Commitment" - with respect to each Domestic Bank, the amount set
forth on Schedule 1.1 hereto (as such Schedule may be updated from time to
time) as the amount of such Domestic Bank's commitment to make Domestic Loans
to the Borrower and to participate in the risk associated with Canadian Swing
Line Loans and Letters of Credit, as the same may be reduced or increased from
time to time, pursuant to Section Section 2.2, 2.3 or 2.9 hereof; or if such
commitment is terminated pursuant to Section Section 2.2 or 13.2 hereof, zero.
"Domestic Commitment Fee" - see Section 5.1 hereof.
"Domestic Commitment Percentage" - with respect to each Domestic Bank, the
percentage set forth on Schedule 1.1 hereto, as such Schedule may be updated
from time to time, as such Domestic Bank's percentage of the Total Domestic
Commitment.
"Domestic Eurodollar Rate" - for any Interest Period with respect to a
Domestic Eurodollar Rate Loan, the rate of interest equal to (a) the rate per
annum at which the Administrative Agent's Eurodollar Lending Office is offered
Dollar deposits two Eurodollar
<PAGE> 21
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Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations of such Eurodollar Lending Office are customarily conducted, for
delivery on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of the Domestic
Eurodollar Rate Loan to which such Interest Period applies, divided by (b) a
number equal to 1.00 minus the Eurocurrency Reserve Rate.
"Domestic Eurodollar Rate Loans" - Domestic Revolving Credit Loans bearing
interest calculated by reference to the Domestic Eurodollar Rate.
"Domestic Lending Office" - initially, the office of each Bank designated
as such in Schedule 1.1 attached hereto; thereafter such other office of such
Bank, if any, that will be making or maintaining Base Rate Loans.
"Domestic Loans" - collectively, the Domestic Revolving Credit Loans and
the Domestic Swing Line Loans.
"Domestic Revolving Credit Loan(s)" - collectively, revolving credit loans
made to the Borrower by the Domestic Banks pursuant to Section 2.1.1 hereof.
"Domestic Revolving Credit Note" - see Section 2.4.
"Domestic Subsidiaries" - each Subsidiary (direct and indirect, existing
on the date hereof or acquired or formed hereafter in accordance with the
provisions hereof) of the Borrower which is incorporated under the laws of a
State of the United States of America.
"Domestic Swing Line Bank" - BKB.
"Domestic Swing Line Loan" - any Loan made by the Domestic Swing Line Bank
pursuant to Section 2.12 hereof.
"Domestic Swing Line Note" - see Section 2.12 hereof.
"Drawdown Date" - the date on which any Revolving Credit Loan or Swing
Line Loan is made or is to be made, and the date on which any Revolving Credit
Loan is converted or continued in accordance with Section 2.7 hereof.
"Eligible Assignee" - any Qualifying Bank that is (a) a commercial bank
organized under the laws of the United States or any State thereof or the
District of Columbia or the laws of Canada, and having total assets in excess
of $1,000,000,000; (b) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof or the District of
Columbia, and having a net worth of at least $100,000,000, calculated in
accordance with Generally Accepted Accounting Principles; (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having total
<PAGE> 22
-13-
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of the OECD; (d) the central bank of any country
which is a member of the OECD; or (e) if, but only if, any Event of Default has
occurred and is continuing, any other bank, insurance company, commercial
finance company or other financial institution approved by the Administrative
Agent, such approval not to be unreasonably withheld.
"Environmental Laws" - see Section 8.21 hereof.
"ERISA" - the Employees Retirement Income Security Act of 1974, as amended
from time to time.
"Eurocurrency Reserve Rate" - for any day with respect to a Domestic
Eurodollar Rate Loan, the maximum rate (expressed as a decimal) at which any
lender which is a member bank of the Federal Reserve System with deposits
exceeding $5,000,000,000 would be required by law to maintain reserves under
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor or similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D), if such
liabilities were outstanding.
"Eurodollar Business Day" - any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or
such other eurodollar interbank market as may be selected by the Administrative
Agent in its sole discretion acting in good faith, in the case of Domestic
Eurodollar Rate Loans.
"Eurodollar Lending Office" - initially, the office of each Bank
designated as such in Schedule 1.1 attached hereto; thereafter, such other
office of such Bank, if any, that shall be making or maintaining Eurodollar
Rate Loans.
"Eurodollar Rate Loans" - the Domestic Eurodollar Rate Loans.
"Event(s) of Default" - see Section 13.1 hereof.
"Exchange Rate" - on any day (a) with respect to Canadian Dollars in
relation to U.S. Dollars, the spot rate as quoted by the Canadian Swing Line
Bank as its noon spot rate at which U.S. Dollars are generally offered on such
day for Canadian Dollars at such time and (b) with respect to U.S. Dollars in
relation to Canadian Dollars, the spot rate as quoted by the Administrative
Agent as its noon spot rate at which Canadian Dollars are generally offered on
such day at such time for U.S. Dollars.
"Existing Letters of Credit" - the letters of credit outstanding on the
Closing Date and listed on Schedule 1.4 attached hereto.
"Fee Letter" - that certain Fee Letter, dated as of July 18, 1997, between
the Borrower and the Administrative Agent, as the same may be amended and in
effect from time to time.
<PAGE> 23
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"Foreign Subsidiaries" - each Subsidiary (direct and indirect, existing on
the date hereof or acquired or formed hereafter in accordance with the
provisions hereof) of the Borrower which is incorporated under the laws of a
jurisdiction other than a State of the United States of America.
"Fronting Fee" - see Section 5.2.
"Funded Debt Ratio" - with respect to the Borrower and its Subsidiaries,
as at any date of determination, the ratio of (a) Consolidated Funded
Indebtedness as of such date to (b) Consolidated EBITDA for the period of the
four (4) consecutive fiscal quarters of the Borrower then ending.
"Generally Accepted Accounting Principles"- (i) when used in Section 12
hereof, whether directly or indirectly through reference to a capitalized term
used therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date,
and (B) to the extent consistent with such principles, the accounting practice
of the Borrower and its Subsidiaries reflected in the financial statements for
the year ended on the Balance Sheet Date, (ii) when used in general, other than
as provided above, means principles that are (A) consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, as in effect from time to time, and (B) consistently applied with
past financial statements of the Borrower and its Subsidiaries adopting the
same principles, provided that in each case referred to in this definition of
"generally accepted accounting principles" a certified public accountant would,
insofar as the use of such accounting principles is pertinent, be in a position
to deliver an unqualified opinion (other than a qualification regarding changes
in generally accepted accounting principles) as to financial statements in
which such principles have been properly applied.
"Guaranteed Obligations" - see Section 28(a).
"Guaranteed Pension Plan" - any pension plan (other than a Multiemployer
Plan) maintained by the Borrower or any entity treated as a single employer
with the Borrower pursuant to Section 414(b) or (c) of the Internal Revenue
Code of 1986, as amended (a "Related Entity"), or to which any of them
contributes, with respect to which the Borrower or any Related Entity is
required to pay plan termination insurance premiums to the Pension Benefit
Guaranty Corporation.
"Guarantor(s)" - collectively, all of and, individually, each of, the
Borrower's Subsidiaries which have executed and delivered a Guaranty or which
have, from and after the Closing Date, executed and delivered a guaranty
pursuant to the terms of Section 7(c) hereof.
"Guaranties, Guaranty" - see Section 7(b) hereof.
"Haul Insurance" - Haul Insurance Limited, a Cayman Islands corporation
doing business as an insurance company regulated by the laws of the Cayman
Islands.
<PAGE> 24
-15-
"Haul Insurance L/Cs" - letters of credit issued for the account of Haul
Insurance.
"Hazardous Substances" - see Section 8.21 hereof.
"Head Office" - when used in connection with (a) the Administrative Agent,
the Administrative Agent's head office located in Boston, Massachusetts, or at
such other location as the Administrative Agent may designate from time to time
and (b) the Canadian Agent, such location as the Canadian Agent may designate
from time to time.
"Indebtedness" - all obligations, contingent and otherwise, which in
accordance with Generally Accepted Accounting Principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should
be made by footnotes thereto, including, without limitation, in any event and
whether or not so classified: (a) all debt and similar monetary obligations,
whether direct or indirect; (b) all liabilities secured by any mortgage,
pledge, security interest, lien, charge, or other encumbrance existing on
property owned or acquired subject thereto, whether or not the liability
secured thereby shall have been assumed; and (c) all guarantees, endorsements
and other contingent obligations, whether direct or indirect, in respect of
Indebtedness of others, including any obligation to supply funds to or in any
manner to invest in, directly or indirectly, the debtor, to purchase
Indebtedness, or to assure the owner of Indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the Indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer in respect of any letters of
credit.
"Independent Accountant(s)" - a firm of independent public accountants
selected by the Board of Directors of the Borrower, which is "independent" as
that term is defined in Rule 2-01 of Regulation S-X promulgated by the
Securities and Exchange Commission.
"Ineligible Securities" - securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1993 (12 U.S.C. Section 24, Seventh), as amended.
"Intercompany Note" - a demand note in the form of Exhibit B attached
hereto issued by a Guarantor to the order of the Borrower or to the order of AH
and, in the case of each demand note payable to the Borrower, unless endorsed
to AH, pledged by the Borrower to the Administrative Agent, for the benefit of
the Banks, pursuant to the Pledge Agreement.
"Interest Payment Date" - (a) as to any Base Rate Loan, the last day of
the calendar quarter which includes the Drawdown Date thereof; and (b) as to
any Eurodollar Rate Loan in respect of which the Interest Period is (i) three
(3) months or less, the last day of such Interest Period and (ii) more than
three (3) months, the date that is three (3) months from the first day of such
Interest Period and, in addition, the last day of such Interest Period.
"Interest Period" - with respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such Loan through the
last day of one of the periods set
<PAGE> 25
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forth below, as selected by the Borrower in a Loan Request (A) for any Base
Rate Loan the last day of the calendar quarter; and (B) for any Eurodollar Rate
Loan, 1, 2, 3, or 6 months; and (b) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to such Revolving
Credit Loan through the last day of one of the periods set forth above, as
selected by the Borrower in a Conversion Request; provided that all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
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 Eurodollar Business Day;
(ii) if any Interest Period with respect to a Base Rate Loan would
end on a day that is not a Business Day, that Interest Period shall end
on the next succeeding Business Day;
(iii) if the Borrower shall fail to give notice as provided in
Section 2.6 hereof, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan to a Base Rate Loan and
the continuance of all Base Rate Loans as Base Rate Loans on the last day
of the then current Interest Period with respect thereto;
(iv) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar 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
Eurodollar Business Day of a calendar month; and
(v) any Interest Period relating to any Loan that would otherwise
extend beyond the Maturity Date shall end on the Maturity Date.
"Investments" - the aggregate of all expenditures made and all liabilities
incurred (contingently or otherwise) for the acquisition of stock (except
redemptions or repurchases by a corporation of any shares of its capital stock)
or Indebtedness of, or for loans, advances, capital contributions or transfers
of property to, or in respect of any guarantees (or other commitments as
described under Indebtedness), or obligations of, any Person (including,
without limitation, a joint venture or partnership), except transfers or
deliveries made against receipt of full value in cash or made in the ordinary
course of business. In determining the aggregate amount of Investments
outstanding at any particular time, (a) the amount of any Investment
represented by a guarantee shall be taken at not less than the aggregate amount
of the obligations guaranteed and still outstanding, (b) there shall be
included as an Investment all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is paid, (c) there
shall be deducted in respect of each such Investment any amount received as a
return of capital, (d) there shall not be deducted in respect of any Investment
any amounts received as earnings on such Investment, whether as dividends,
interest or otherwise, except that accrued interest included as
<PAGE> 26
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provided in the foregoing clause (b) may be deducted when paid, and (e) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
"Letter(s) of Credit" - standby letters of credit issued by the Letter of
Credit Bank from time to time for the account of the Borrower, including,
without limitation, the Existing Letters of Credit.
"Letter of Credit Bank" - BKB.
"Letter of Credit Fee" - see Section 5.2 hereof.
"Loan Documents" - collectively, this Agreement, the Notes, the Security
Documents, the Reimbursement Agreements, the Fee Letter, and any other
instruments or documents required to be delivered pursuant hereto or thereto,
in each case as amended, restated, modified or supplemented and in effect from
time to time.
"Loan Request" - see Section 2.6 hereof.
"Loan(s)" - individually, a Revolving Credit Loan or a Swing Line Loan and
collectively, the Revolving Credit Loans and the Swing Line Loans.
"Majority Banks" - as of any date, Banks holding at least 51% of the
outstanding principal amount of the Notes on such date; and if no such
principal is outstanding, Banks whose Commitment Percentages add up to at least
51%.
"Management Group" - collectively, those Persons (individually, a
"Management Person") listed on Schedule 1.3 attached hereto and each successor
or assignee of a Management Person's interest in the Borrower if such successor
or assignee is also a member of the Permitted Management Class.
As used herein, "Permitted Management Class" means (i) each
Management Person's spouse, descendants and spouses of his or her
descendants, and any trust for the benefit of any one or more of the
foregoing; (ii) any corporation, partnership or limited liability company
in which one or more members of the Management Group owns, directly or
indirectly, fifty-one percent (51%) or more of the voting equity of such
entity; and (iii) any charitable entity which is exempt from federal
income tax, to which contributions are deductible for federal income tax,
to which contributions are not subject to federal gift tax and to which
one or more members of the Management Group contribute at least
twenty-five percent (25%) of the annual contributions received by such
charitable entity and as to which members of the Management Group and
their spouses and descendants constitute the majority of the trustees and
have voting control over such entities.
"Maturity Date" - September 30, 2002.
<PAGE> 27
-18-
"Maximum Canadian Swing Line Loan Amount" - see Section 2.13.
"Maximum Domestic Swing Line Loan Amount" - see Section 2.12.
"Maximum Drawing Amount" - on the date as of which the maximum drawing
amount is to be determined, the aggregate of the maximum amounts which the
beneficiaries may draw from time to time under Letters of Credit issued for the
account of the Borrower pursuant to Section 3.1 hereof.
"Motor Vehicle Equipment" - all trucks, trailers, tractors, service
vehicles, automobiles, tires, and all related equipment and accessions, and all
prepaid tire inventory, with respect to which the Borrower or any of its
Subsidiaries now or hereafter has full and unencumbered title (except for liens
permitted under Section Section 12.2 (a) and (d) hereof), which are used or
usable by the Borrower and its Subsidiaries in their business operations.
"Multiemployer Plan" - a pension plan as defined in Section 3(37) of ERISA
to which the Borrower or any Related Entity contributes.
"Net Cash Proceeds" - if from a sale of assets or of equity by the
Borrower or any of its Subsidiaries, the cash proceeds received from such sale,
net of all costs of sale (other than taxes), underwriting or brokerage costs,
and if from the incurrence of Indebtedness, the cash proceeds received from
such incurrence of Indebtedness, net of all costs thereof incurred and fees and
all expenses payable in connection therewith.
"Net Equipment Value" - with respect to either Borrowing Base Equipment or
Motor Vehicle Equipment, an aggregate amount equal to the net book value of
such equipment, as determined in accordance with Generally Accepted Accounting
Principles applied on a basis consistent with the consolidated balance sheet of
the Borrower and its Subsidiaries as of the Balance Sheet Date and as reported
on each Compliance Certificate delivered to the Banks pursuant to Section
11.4(e) hereof. All such equipment shall be depreciated no more slowly and to
a residual value no greater than that resulting from the applicable method of
depreciation set forth on Schedule 1.2 attached hereto.
"Net Receivables Value" - the net amount of Receivables outstanding, as
determined in accordance with Generally Accepted Accounting Principles, after
deducting from the aggregate face amount of Receivables all payments,
adjustments, offsetting accounts payable of a material nature owed to account
debtors, and all credits applicable thereto.
"Non-Guarantor Subsidiaries" - each Subsidiary (direct and indirect) of
the Borrower which has not delivered a Guaranty of the Obligations pursuant to
Section 7 hereof.
"Note Record" - the grid attached to a Note, or the continuation of such
grid, or any other similar record, including computer records, maintained by
any Bank with respect to any Loan referred to in such Note.
<PAGE> 28
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"Notes" - collectively, the Revolving Credit Notes, the Domestic Swing
Line Note and the Canadian Swing Line Note.
"Obligations" - all indebtedness, obligations and liabilities of the
Borrower and the Canadian Borrower to the Agents and the Banks, existing on the
date of this Agreement or arising thereafter, direct or indirect, joint or
several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law or
otherwise, arising or incurred (i) under this Agreement, (ii) in respect of
Loans made, Letters of Credit, Bankers' Acceptances and the Notes or other
instruments at any time evidencing any thereof and (iii) in respect of any
foreign exchange or derivative arrangements entered into among the Borrower
and/or the Canadian Borrower and any Agent or Bank.
"Officer's Certificate" - a certificate signed by the President, the
Treasurer, the Chief Financial Officer, the Senior Vice President or the
Assistant Treasurer of the Person on whose behalf the certificate is executed.
"Operating Lease Obligations" - at any time an amount equal to the
aggregate of all obligations under Rental Agreements that (a) have an initial
term of one year or longer and (b) call for annual rental or lease payments of
$10,000 or more, in each case calculated as an amount equal to the lesser of
(i) the net present value (calculated at a discount rate of 10%) of the minimum
future rental payments due over the term of all such Rental Agreements which
may not be terminated, or (ii) the minimum cost to terminate (including rental
payments applicable to any notice periods) any such Rental Agreements which may
be terminated.
"Partnership Agreement" - the Agreement of Limited Partnership of Allied
Systems, as such Agreement of Limited Partnership is in effect from time to
time.
"Partnership Certificate" - the Certificate of Limited Partnership of
Allied Systems filed in either the Office of the Secretary of State of the
State of Georgia or the office of the Clerk of DeKalb County, as required by
law, on June 7, 1988, as such Certificate of Limited Partnership is in effect
from time to time.
"Patent Security Agreements" - collectively, the several Patent Collateral
Assignment and Security Agreements, each dated as of the date hereof, between,
respectively, the Borrower, certain other Subsidiaries party thereto and the
Administrative Agent, and each other Patent Collateral Assignment and Security
Agreement executed after the date hereof pursuant to which the Borrower or any
of its Subsidiaries grants a security interest in its patents and related
rights to the Administrative Agent, for the benefit of the Banks.
"Pension Benefit Guaranty Corporation" - the Pension Benefit Guaranty
Corporation created by Section 4002 of ERISA and any successor entities having
similar responsibilities.
"Permitted Acquisition" - see Section 12.5(e) hereof.
<PAGE> 29
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"Permitted Liens" - mortgages, liens, charges, security interests or other
encumbrances on any real or personal property which are permitted pursuant to
Section 12.2 hereof.
"Person" - any individual, corporation, partnership, trust, unincorporated
association, joint stock company, limited liability company or other legal
entity or organization and any government or agency or political subdivision
thereof.
"Pledge Agreement" - the Pledge Agreement, dated as of the date hereof,
between the Borrower and the Administrative Agent.
"Pro Forma Basis" - (a) in connection with any proposed Permitted
Acquisition after the Closing Date, the calculation of compliance with the
financial covenants described in Section 12.5(e) hereof by the Borrower and its
Subsidiaries (including the Person to be acquired) with reference to the
audited historical financial results of such Person and the Borrower and its
Subsidiaries for the applicable Test Period after giving effect on a pro forma
basis to such Permitted Acquisition in the manner described in (i), (ii) and
(iii) below; and, following a Permitted Acquisition, the calculation of
compliance with the financial covenant set forth in Section 12.10 for the
fiscal quarter in which such Permitted Acquisition occurred and each of the
three fiscal quarters immediately following such Permitted Acquisition with
reference to the audited historical financial results of the Person so acquired
and the Borrower and its Subsidiaries for the applicable Test Period after
giving effect on a pro forma basis to such Permitted Acquisition in the manner
described in (i), (ii) and (iii) below:
(i) all Indebtedness (whether under this Agreement or otherwise)
and any other balance sheet adjustments incurred or made in connection
with the Permitted Acquisition shall be deemed to have been incurred or
made on the first day of the Test Period, and all Indebtedness of the
Person acquired or to be acquired in such Permitted Acquisition which was
or will have been repaid in connection with the consummation of the
Permitted Acquisition shall be deemed to have been repaid concurrently
with the incurrence of the Indebtedness incurred in connection with the
Permitted Acquisition;
(ii) all Indebtedness assumed to have been incurred pursuant to the
preceding clause (i) shall be deemed to have borne interest at the sum of
(a) the arithmetic mean of (x) the Eurodollar Rate for Eurodollar Rate
Loans having an Interest Period of one month in effect on the first day
of the Test Period and (y) the Eurodollar Rate for Eurodollar Rate Loans
having an Interest Period of one month in effect on the last day of the
Test Period plus (b) the Applicable Margin then in effect (after giving
effect to the Permitted Acquisition on a Pro Forma Basis); and
(iii) other reasonable cost savings, expenses and other income
statement or operating statement adjustments which are attributable to
the change in ownership and/or management resulting from such Permitted
Acquisition as may be approved by the Administrative Agent in writing
(which approval shall not be unreasonably withheld) shall be deemed to
have been realized on the first day of the Test Period; and
<PAGE> 30
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(b) in connection with any Investment pursuant to Section 12.3(g) after
the Closing Date, the calculation of compliance with Section 12.10 hereof by
the Borrower and its Subsidiaries after giving effect on a pro forma basis to
any Indebtedness incurred in connection with such Investment.
"Qualifying Bank" - with respect to (a) any Domestic Bank, a bank or other
financial institution that is incorporated or organized under the laws of the
United States of America or a state thereof or the District of Columbia or that
is exempt from deduction or withholding of United States federal income taxes;
and (b) any Canadian Bank, a bank or other financial institution which is
resident in Canada and which is named in Schedule I or Schedule II to the Bank
Act (Canada).
"Rate Adjustment Period" - see Applicable Margin.
"RCRA" - see Section 8.21 hereof.
"Reallocation" - a transfer of a portion of the Total Domestic Commitment
to the Total Canadian Commitment or a transfer of all or a portion of the Total
Canadian Commitments to the Total Domestic Commitment in accordance with
Section 2.3 hereof.
"Receivables" - trade accounts receivable of the Borrower and any of the
Guarantors (as entered on the books of the Borrower and its Subsidiaries in
accordance with Generally Accepted Accounting Principles, after eliminating all
intercompany receivables), (a) which have arisen with respect to sales of
products or services of the Borrower or any of the Guarantors, (b) which have
not been outstanding for more than 90 days past the invoice date, (c) in which
the Administrative Agent has a valid and perfected first priority security
interest, (d) that, unless the Administrative Agent otherwise agrees, are
payable in either United States Dollars or Canadian Dollars, (e) that, unless
the Administrative Agent otherwise agrees, are payable from an office in either
the United States of America or Canada, (f) that the Borrower reasonably and in
good faith determines to be collectible, and (g) that are not subject to any
pledge, restriction, security interest or other lien or encumbrance, other than
the security interest in favor of the Administrative Agent.
"Refunding Bankers' Acceptance" - see Section 4.2.
"Register" - see Section 18.3 hereof.
"Reimbursement Agreements" - the applications made and agreements entered
into between the Letter of Credit Bank and the Borrower relating to Letters of
Credit, substantially in the form of Exhibit C attached hereto, as the same are
in effect from time to time.
"Related Entity" - see Guaranteed Pension Plan.
"Rental Agreements" - rental agreements or leases of real or personal
property, other than (a) capitalized lease obligations, (b) obligations which
can be terminated by the giving of notice without liability to such Person or
its Subsidiaries in excess of the liability for rent due as
<PAGE> 31
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of the date such notice is given and under which no penalty or premium is paid
as a result of any such termination, and (c) with respect to the Borrower and
any of its Subsidiaries, obligations to brokers or owner-operators of vehicles
used in connection with such Person's business.
"Replacement Bank" - see Section 6.14.
"Reset Date" - see Section 6.13.
"Revolving Credit Loans" - collectively, the Canadian Revolving Credit
Loans and the Domestic Revolving Credit Loans.
"Revolving Credit Notes" - collectively, the Canadian Revolving Credit
Notes and the Domestic Revolving Credit Notes.
"SARA" - see Section 8.21 hereof.
"Sale-Leaseback" - see Section 12.6 hereof.
"Section 20 Subsidiary" - a Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
"Secured Property Indebtedness" - (a) with respect to the Borrower and its
Subsidiaries, all Indebtedness (other than Operating Lease Obligations) which
is secured by any security interest, mortgage, charge, deed of trust, or other
similar lien on any non-current tangible property used by the Borrower and its
Subsidiaries in their business operations, including, without limitation, Motor
Vehicle Equipment and Indebtedness with respect to capitalized leases of Motor
Vehicle Equipment; provided that in each case such Indebtedness was incurred in
connection with the purchase or lease of such property or Motor Vehicle
Equipment by such Person and (b) all such secured Indebtedness of any Person
acquired in a Permitted Acquisition; provided that such Indebtedness was not
incurred by such Person in contemplation of or in connection with such
Permitted Acquisition.
"Security Agreement" - the Security Agreement, dated as of the date
hereof, among the Borrower, each of the Domestic Subsidiaries and the
Administrative Agent.
"Security Documents" - the Assignment of Acquisition Documents, the Pledge
Agreement, the Stock Pledge Agreement, the Security Agreement, the Canadian
Security Documents, the Guaranties, the Trademark Security Agreements, the
Patent Security Agreements, each of the guaranties delivered pursuant to
Section 7(c) hereof, and any other instruments and documents delivered pursuant
thereto, in each case as amended and in effect from time to time.
<PAGE> 32
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"Senior Note Indenture" - the Indenture, dated as of September 30, 1997,
between the Borrower and The First National Bank of Chicago, as Trustee, in the
form delivered to the Administrative Agent on or prior to the Closing Date.
"Senior Notes" - the 8-5/8% Series A and Series B Senior Notes Due 2007,
in the aggregate original principal amount of $150,000,000, issued by the
Borrower pursuant to the Senior Note Indenture, in the form delivered to the
Administrative Agent on or prior to the Closing Date.
"Stock Pledge Agreement" - the Securities Pledge Agreement, dated as of
the date hereof, among the Borrower, the Administrative Agent and the
Subsidiaries of the Borrower party thereto, as the same may be amended and in
effect from time to time.
"Subordinated Debt" - the unsecured Indebtedness of the Borrower and
certain of its Subsidiaries under the Subordinated Debt Documents.
"Subordinated Debt Documents" - the Note Purchase Agreement dated as of
January 15, 1996 executed and delivered by the Borrower to The Northwestern
Mutual Life Insurance Company, the John Hancock Mutual Life Insurance Company,
and Barnett & Co., the unsecured 12% Senior Subordinated Notes due February 1,
2003 issued thereunder, the Subordinated Guaranty Agreements in favor of the
holders of such notes executed and delivered by certain Subsidiaries of the
Borrower in connection therewith (the "Subordinated Guaranty Agreements") and
all other documents issued and/or delivered in connection therewith, each of
which documents and instruments shall be in the form delivered to the
Administrative Agent prior to the Closing Date.
"Subordinated Guaranty Agreements" - see the definition of Subordinated
Debt Documents.
"Subsidiary" - in relation to any particular Person, any corporation,
association or other business entity, a majority (by number of votes) of the
outstanding voting stock or other comparable equity interest of which is at the
time owned or controlled by such Person, or by one or more subsidiaries of such
Person or by such Person and one or more subsidiaries of such Person and which
property would be included in such Person's consolidated balance sheet. All
Subsidiaries of the Borrower are listed on Schedule 8.16(a) and Schedule
8.16(b) attached hereto, as such Schedules may be updated from time to time in
accordance with the provisions hereof.
"Swing Line Banks" - collectively, the Domestic Swing Line Bank and the
Canadian Swing Line Bank.
"Swing Line Loans" - collectively, the Domestic Swing Line Loans and the
Canadian Swing Line Loans.
<PAGE> 33
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"Swing Line Loan Maturity Date" - with respect to any Swing Line Loan, the
date specified by the Borrower or the Canadian Borrower, as applicable, in the
Loan Request relating thereto as the maturity date of such Swing Line Loan.
"Test Period" - (a) in connection with the calculation of financial
covenant compliance on a Pro Forma Basis as required by Section 12.5(e) with
respect to any proposed Permitted Acquisition, the period of four fiscal
quarters most recently ended prior to such Permitted Acquisition for which
financial information is available, and (b) in connection with the calculation
of the financial covenant set forth in Section 12.10 hereof following any
Permitted Acquisition, the period of all fiscal quarters (and any portion of a
fiscal quarter) prior to the date of such Permitted Acquisition included in the
calculation of such financial covenant.
"Total Canadian Commitment" - the sum of the Canadian Commitments of the
Canadian Banks, as in effect from time to time.
"Total Commitment" - the sum of the Total Canadian Commitment and the
Total Domestic Commitment, each as in effect from time to time; provided that
such sum shall not exceed $230,000,000. As of the date hereof, the Total
Commitment is $230,000,000.
"Total Commitment Percentage" - with respect to each Bank, the percentage
set forth next to such Bank on Schedule 1.1 hereto, as such Schedule may be
updated from time to time, as such Bank's percentage of the Total Commitment.
"Total Domestic Commitment" - the sum of the Domestic Commitments of the
Domestic Banks, as in effect from time to time.
"Trademark Security Agreements" - collectively, the several Trademark
Collateral Security and Pledge Agreements, each dated as of the date hereof,
between, respectively, the Borrower, certain other Subsidiaries party thereto
and the Administrative Agent, and each other Trademark Collateral Security and
Pledge Agreement executed after the date hereof pursuant to which the Borrower
or any of its Subsidiaries grants a security interest in its trademarks and
related rights to the Administrative Agent, for the benefit of the Banks.
"Type" - as to any Loan, its nature as a Base Rate Loan or a Eurodollar
Rate Loan.
"Uniform Act" - the Revised Uniform Limited Partnership Act of the State
of Georgia, as such act may be amended and in effect from time to time.
(b) All terms of an accounting character not specifically defined herein
shall have the meanings assigned thereto by Generally Accepted Accounting
Principles. All terms not specifically defined herein which are defined in the
Uniform Commercial Code as in effect in the Commonwealth of Massachusetts shall
have the same meanings herein as therein. Each reference herein to a
particular Person (including, without limitation, the Agents or any Bank) shall
include a reference to such Person's successors and permitted assigns. The
words "herein",
<PAGE> 34
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"hereof", "hereunder" and words of like import shall refer to this Agreement as
a whole and not to any particular Section or subdivision of this Agreement.
SECTION 2. THE CREDIT FACILITIES.
SECTION 2.1. COMMITMENT TO LEND.
SECTION 2.1.1. DOMESTIC LOANS. Subject to the terms and
conditions set forth in this Agreement, each of the Domestic Banks severally
agrees to lend to the Borrower and the Borrower may borrow, repay, and reborrow
from time to time from the Closing Date until the Maturity Date, upon notice by
the Borrower to the Administrative Agent given in accordance with this Section
2, such sums in Dollars as are equal to such Domestic Bank's Domestic Commitment
Percentage of the Domestic Revolving Credit Loan requested by the Borrower in
such notice; provided that the sum of (a) the aggregate principal amount of all
Domestic Revolving Credit Loans outstanding plus (b) the aggregate principal
amount of all Domestic Swing Line Loans outstanding plus (c) the Dollar
Equivalent of the aggregate principal amount of all Canadian Swing Line Loans
outstanding plus (d) the aggregate Maximum Drawing Amount of all Letters of
Credit outstanding shall not, at any time and after giving effect to all amounts
requested, exceed the Total Domestic Commitment.
In addition to the foregoing, each of the Domestic Banks will, from the
Closing Date until the Maturity Date, and regardless of whether the conditions
set forth in Section Section 9 and 10 are satisfied, make Domestic Revolving
Credit Loans to the Borrower solely for the purposes of (i) repaying Swing Line
Loans pursuant to Section Section 2.12 and 2.13 hereof or (ii) repaying
Indebtedness of the Borrower to the Domestic Banks in respect of drawings under
Letters of Credit pursuant to Section 3.2 hereof. Sections 2.12 and 2.13
hereof shall govern the Borrower's obligations with respect to Swing Line
Loans, and Section 3.2 hereof shall govern the Borrower's obligations with
respect to drawings under Letters of Credit.
SECTION 2.1.2. CANADIAN REVOLVING CREDIT LOANS. Subject
to the terms and conditions set forth in this Agreement (including, without
limitation, Section 2.3 hereof), each of the Canadian Banks severally agrees to
lend to the Canadian Borrower in Canadian Dollars, and the Canadian Borrower may
borrow, repay, and reborrow from time to time in Canadian Dollars from the
Canadian Facility Effective Date until the Maturity Date, upon notice by the
Canadian Borrower to the Canadian Agent given in accordance with this Section 2,
such sums in Canadian Dollars as are equal to such Bank's Canadian Commitment
Percentage of the Canadian Revolving Credit Loan requested by the Canadian
Borrower in such notice; provided that the sum of (a) the Dollar Equivalent of
the aggregate principal amount of the Canadian Revolving Credit Loans
outstanding, plus (b) the Dollar Equivalent of the aggregate face amount of
Bankers' Acceptances then outstanding shall not, at any time and after giving
effect to all amounts requested, exceed the Total Canadian Commitment.
SECTION 2.1.3. LIMITATION ON BORROWINGS. Notwithstanding
any other provision of this Agreement, no Bank shall have any obligation to make
any Loan, issue, renew or extend any Letter of Credit, or purchase or accept any
Bankers' Acceptance if, after giving effect to such
<PAGE> 35
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Borrowing, the sum of (a) the aggregate principal amount of all Domestic
Revolving Credit Loans outstanding plus (b) the aggregate principal amount of
all Domestic Swing Line Loans outstanding plus (c) the aggregate Maximum
Drawing Amount of all Letters of Credit outstanding plus (d) the Dollar
Equivalent of the aggregate principal amount of all Canadian Revolving Credit
Loans outstanding plus (e) the Dollar Equivalent of all Canadian Swing Line
Loans outstanding plus (f) the Dollar Equivalent of the aggregate face amount
of Bankers' Acceptances outstanding exceeds the lesser of (i) the Borrowing
Base Amount and (ii) the Total Commitment.
SECTION 2.2. TERMINATION, REDUCTION OF COMMITMENTS.
(a) The Borrower may at any time prior to the Maturity Date, terminate the
Total Commitment in full by giving three Business Days' prior written notice
thereof to the Banks. A termination of the Total Commitment shall be
accompanied by the repayment in full of the Revolving Credit Loans, the Swing
Line Loans and the cash collateralization of the Bankers' Acceptances then
outstanding, the payment in full of all interest and fees due hereunder, and
the deposit with the Administrative Agent of cash collateral in an amount equal
to the Maximum Drawing Amount of all Letters of Credit then outstanding
pursuant to cash collateral arrangements in form and substance satisfactory to
the Administrative Agent.
(b) The Borrower may at any time prior to the Maturity Date, reduce the
unused portion of the Total Commitment in part in integral multiples of
$5,000,000 by giving three Business Days' prior written notice thereof to the
Banks. Each such reduction shall be made pro rata (i) among each Bank
according to such Bank's Total Commitment and Total Commitment Percentage (such
that each Bank will have the same Total Commitment Percentage both before and
after such reduction) and (ii) between the Total Domestic Commitment and the
Total Canadian Commitment. Notwithstanding the foregoing, (i) at no time shall
the Total Domestic Commitment be reduced to an amount less than the sum of the
Maximum Domestic Swing Line Loan Amount plus the Maximum Canadian Swing Line
Loan Amount plus the aggregate Maximum Drawing Amount of all Letters of Credit
then outstanding.
(c) Each reduction of the Total Commitment shall be accompanied by (i) the
payment by the Borrower to the Administrative Agent of the amount, if any, by
which the sum of the aggregate unpaid principal amount of the Domestic
Revolving Credit Loans plus the aggregate unpaid principal amount of all
Domestic Swing Line Loans outstanding plus the Dollar Equivalent of the
aggregate unpaid principal amount of all Canadian Swing Line Loans outstanding
plus the Maximum Drawing Amount of all Letters of Credit outstanding exceeds
the then reduced Total Domestic Commitment and (ii) the payment by the Canadian
Borrower to the Canadian Agent of the amount, if any, by which the sum of the
Dollar Equivalent of the aggregate unpaid principal amount of the Canadian
Revolving Credit Loans outstanding plus the Dollar Equivalent of the aggregate
face amount of Bankers' Acceptances then outstanding exceeds the then reduced
Total Canadian Commitment.
(d) As an alternative to depositing cash collateral under the
circumstances described in the foregoing paragraph (a), and under Section 2.9
hereof, the Borrower may deliver to the
<PAGE> 36
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Administrative Agent letters of credit issued by banks which are acceptable to
the Domestic Banks in their reasonable discretion which will reimburse the
Domestic Banks for all amounts payable by the Domestic Banks under and with
respect to the outstanding Letters of Credit, provided that such back-up
letters of credit contain terms and conditions which are satisfactory to the
Domestic Banks in all respects in their reasonable business judgment, to allow
the Domestic Banks to be reimbursed in the event a Letter of Credit is drawn.
(e) In addition, upon any such termination or reduction, (i) the Borrower
shall pay to the Administrative Agent, for the pro rata accounts of the
Domestic Banks, the full amount of the accrued and unpaid Domestic Commitment
Fee on the amount of the Total Domestic Commitment so reduced or, as the case
may be, terminated and (ii) the Canadian Borrower shall pay to the Canadian
Agent, for the pro rata accounts of the Canadian Banks, the full amount of the
accrued and unpaid Canadian Commitment Fee on the amount of the Total Canadian
Commitment so reduced or, as the case may be, terminated.
(f) Subject to Section 6.11 hereof, any such termination or reduction may
be effected by the Borrower without penalty. Without conflict with the
provisions of Section 2.3 hereof, no termination or reduction of the Total
Commitment, the Total Domestic Commitment or the Total Canadian Commitment
shall be subject to reinstatement.
(g) Promptly after the effectiveness of any partial reduction in the Total
Commitment pursuant to this Section 2.2, the Administrative Agent shall
distribute to each Bank an updated Schedule 1.1 hereto reflecting such
reduction.
SECTION 2.3. REALLOCATION OF COMMITMENTS.
(a) As of the Closing Date, the Total Canadian Commitment is $0, there are
no Canadian Banks, there is no Canadian Agent, and no Bank has any obligation
to make, and neither the Borrower nor the Canadian Borrower may request,
Canadian Revolving Credit Loans and no Bank has any obligation to purchase or
accept Bankers' Acceptances. Subject to the conditions hereinafter set forth,
the Borrower and the Canadian Borrower shall have the right from time to time
upon twenty (20) Business Days prior written notice to each of the Agents to
(i) increase the Total Canadian Commitment to an aggregate amount not more than
the Canadian Dollar Equivalent of $40,000,000 by reducing and reallocating by
an equivalent amount a portion of the Total Domestic Commitment to the Total
Canadian Commitment (the date that the first such increase in the Total
Canadian Commitment is effective referred to herein as the "Canadian Facility
Effective Date") and (ii) increase the Total Domestic Commitment (to the extent
a portion of the same has been previously reallocated to the Total Canadian
Commitment) by reducing and reallocating by an equivalent amount all or a
portion of the Total Canadian Commitment to the Total Domestic Commitment.
(b) The effectiveness of the initial Reallocation pursuant to Section 2.3
shall be subject to the following conditions:
<PAGE> 37
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(i) One or more Domestic Banks who are Qualifying Banks or
Canadian Banks who are Qualifying Banks shall have agreed, at the request of the
Borrower, to transfer all or a portion of their Domestic Commitments to the
Canadian Commitments and become Canadian Banks who shall make Canadian Revolving
Credit Loans to, and purchase and accept Bankers' Acceptances for the account
of, the Canadian Borrower.
(ii) The Borrower and the Canadian Borrower, with the prior
approval of the Administrative Agent, which approval shall not be unreasonably
withheld or delayed, shall have appointed one such Canadian Bank to be, and one
such Canadian Bank shall have agreed to act as, the Canadian Agent, and such
Canadian Agent, if not already a party hereto, shall become a party to this
Credit Agreement.
(iii) The Borrower and the Canadian Borrower shall have provided
the Administrative Agent and the Banks with forty-five (45) days prior written
notice of their intent to reallocate a portion of the Total Domestic Commitment
(it being understood that such forty-five (45) day notice shall include, and
shall not be in addition to, the twenty (20) Business Day notice required under
Section 2.3(a) and Section 2.3(c)(i)).
(iv) The Borrower and the Canadian Borrower shall have delivered
to each Bank which shall have become a Canadian Bank as a result of such
Reallocation a Canadian Revolving Credit Note, in accordance with Section 2.4
hereof.
(c) Each Reallocation shall also be subject to the following additional
conditions:
(i) The Borrower and the Canadian Borrower shall have provided
the Administrative Agent and the Banks with twenty (20) days prior written
notice of their intent to reallocate a portion of the Total Domestic Commitment
or the Total Canadian Commitment.
(ii) The increase in the Total Canadian Commitment, if any, shall
be offset by a corresponding and equivalent reduction in the Total Domestic
Commitment and the increase in the Total Domestic Commitment, if any, shall be
offset by a corresponding and equivalent reduction in the Total Canadian
Commitment, such that the Total Commitment in effect immediately before a
Reallocation shall be equal to the Total Commitment immediately after, and after
giving effect to, a Reallocation.
(iii) No Reallocation shall increase (A) the Total Domestic
Commitment in excess of $230,000,000, (B) the Total Canadian Commitment in
excess of the Canadian Dollar Equivalent of $40,000,000 or (C) the Total
Commitment in excess of $230,000,000.
(iv) No Reallocation shall, without the prior consent of the Bank
affected thereby, result in (A) any Domestic Bank having a positive Canadian
Commitment if such Domestic Bank, or its affiliate, did not have such positive
Canadian Commitment immediately prior to such Reallocation or (B) any increase
in the Total Commitment of any Bank and its affiliates.
<PAGE> 38
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(v) Subject to Section 2.3(c)(v), each Reallocation shall be made pro
rata among the Banks whose Commitments are being reallocated from one type of
Commitment to another, but shall not cause the Commitments of any other Banks to
change.
(vi) In no event shall (A) the Total Domestic Commitment be reduced
to an amount less than the sum of (1) the aggregate amount of all Domestic
Revolving Credit Loans then outstanding, plus (2) the aggregate amount of
Domestic Swing Line Loans then outstanding, plus (3) the aggregate Maximum
Drawing Amount of all Letters of Credit then outstanding, plus (4) the Dollar
Equivalent of the aggregate amount of Canadian Swing Line Loans then outstanding
or (B) the Total Canadian Commitment be reduced to an amount less than the sum
of (1) the Dollar Equivalent of the aggregate amount of Canadian Revolving
Credit Loans outstanding plus (2) the Dollar Equivalent of the aggregate face
amount of all Bankers' Acceptances then outstanding.
(vii) There shall not be more than one (1) Reallocation in any fiscal
quarter of the Borrower.
(viii) Each Reallocation shall be effective as of the end of a fiscal
quarter of the Borrower.
(d) The Administrative Agent shall, promptly upon the effectiveness of
each Reallocation, distribute to each Bank an updated Schedule 1.1 hereto,
reflecting the changes in the respective Commitments of the Banks.
SECTION 2.4. THE NOTES.
(a) The Domestic Revolving Credit Loans shall be evidenced by separate
promissory notes of the Borrower in substantially the form of Exhibit A-1
hereto (each, a "Domestic Revolving Credit Note"), dated as of the Closing Date
and completed with appropriate insertions. One Domestic Revolving Credit Note
shall be payable to the order of each Domestic Bank in an amount equal to its
Total Commitment, and shall represent the obligation of the Borrower to pay
such Domestic Bank such principal amount or, if less, the outstanding principal
amount of all Domestic Revolving Credit Loans made by such Domestic Bank, plus
interest accrued thereon, as set forth herein.
(b) The Canadian Revolving Credit Loans shall be evidenced by separate
promissory notes of the Canadian Borrower in substantially the form of Exhibit
A-2 hereto (each, a "Canadian Revolving Credit Note"), dated as of the Canadian
Facility Effective Date and completed with appropriate insertions. One
Canadian Revolving Credit Note shall be payable to the order of each Canadian
Bank in an amount equal to its Canadian Commitment, and shall represent the
obligation of the Canadian Borrower to pay such Canadian Bank such principal
amount or, if less, the outstanding principal amount of all Canadian Revolving
Credit Loans made by such Canadian Bank, plus interest accrued thereon, as set
forth herein.
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(c) Each of the Borrower and the Canadian Borrower irrevocably authorizes
each Bank to make, or cause to be made, in connection with a Drawdown Date of
any Revolving Credit Loan and at the time of receipt of any payment of
principal on any Note, an appropriate notation on such Bank's records or on the
schedule attached to such Bank's Note, or a continuation of such schedule
attached thereto, reflecting the making of such Loan or the receipt of such
payment (as the case may be). Each Bank may, prior to any transfer of any
Note, endorse on the reverse side thereof the outstanding principal amount of
the Loans evidenced thereby. The outstanding amount of the Loans set forth on
such Bank's records shall be prima facie evidence of the principal amount
thereof owing and unpaid to such Bank, but the failure to record, or any error
in so recording, any such amount shall not limit or otherwise affect the
obligations of the Borrower or the Canadian Borrower hereunder or under such
Notes to make payments of principal of or interest on any such Notes when due.
SECTION 2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as provided in
Section 6.3 hereof:
(a) Each Domestic Revolving Credit Loan shall bear interest at the rate
per annum equal to (i) the Domestic Base Rate plus the Applicable Margin on all
Domestic Base Rate Loans and (ii) the Domestic Eurodollar Rate plus the
Applicable Margin on all Domestic Eurodollar Rate Loans.
(b) Each Canadian Revolving Credit Loan shall bear interest at the rate
per annum equal to the Canadian Base Rate plus the Applicable Margin on all
Canadian Base Rate Loans.
(c) The Borrower and the Canadian Borrower promise to pay interest on the
Revolving Credit Loans made to such Person on each Interest Payment Date with
respect thereto. Each of the Borrower and the Canadian Borrower authorizes the
Administrative Agent and the Canadian Agent, as applicable, to charge and
subtract from its account maintained with such Agent on each day on which
interest is due and payable under this Agreement an amount equal to the
interest then due and payable, and to apply such amount to pay such interest.
The Administrative Agent and the Canadian Agent shall notify the Borrower and
the Canadian Borrower, respectively, of the amount of such deduction at such
time as statements of account are customarily given to such Person.
SECTION 2.6. PROCEDURE FOR BORROWING. The Borrower shall give to the
Administrative Agent and the Canadian Borrower shall give the Canadian Agent
written notice (with a copy to the Administrative Agent) in the form of Exhibit
D attached hereto (or telephonic notice confirmed in a writing in such form) of
each Revolving Credit Loan requested hereunder (a "Loan Request") no less than
(a) one (1) Business Day prior to the proposed Drawdown Date of any Base Rate
Loan (other than a Swing Line Loan), and (b) three (3) Eurodollar Business Days
prior to the proposed Drawdown Date of any Eurodollar Rate Loan. Each such
notice shall specify (i) the principal amount of the Revolving Credit Loan
requested, (ii) the proposed Drawdown Date of such Revolving Credit Loan, (iii)
the Interest Period for such Revolving Credit Loan, and (iv) the Type of such
Revolving Credit Loan. Promptly upon receipt of any such notice, the
Administrative Agent shall notify each of the Domestic Banks and the Canadian
Agent shall notify each of the Canadian Banks thereof. Each Loan Request shall
be irrevocable and binding
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on the Borrower or, as the case may be, the Canadian Borrower, and shall
obligate the Borrower or the Canadian Borrower to accept the Revolving Credit
Loan requested from such Banks on the proposed Drawdown Date. Each Loan
Request with respect to Domestic Revolving Credit Loans shall be in an
aggregate amount of at least $2,000,000. Each Loan Request with respect to
Canadian Revolving Credit Loans shall be in an aggregate amount of at least
C$1,000,000. Upon satisfaction of the applicable conditions set forth in this
Agreement, on the proposed Drawdown Date such Agent shall credit the funds to
the Borrower's or the Canadian Borrower's account maintained with such Agent at
its Head Office.
SECTION 2.7. INTEREST RATE CONVERSION OPTIONS.
(a) The Borrower or the Canadian Borrower may elect from time to time
to convert any outstanding Revolving Credit Loan to a Loan of another Type,
provided that (i) with respect to any such conversion of a Eurodollar Rate Loan
to a Base Rate Loan, the Borrower shall give the Administrative Agent and the
Canadian Borrower shall give the Canadian Agent (with a copy to the
Administrative Agent) at least one (1) Business Day prior written notice of such
election; (ii) with respect to any such conversion of a Base Rate Loan to a
Eurodollar Rate Loan, the Borrower shall give the Administrative Agent and the
Canadian Borrower shall give the Canadian Agent (with a copy to the
Administrative Agent) at least three (3) Eurodollar Business Days' prior written
notice of such election; (iii) with respect to any such conversion of a
Eurodollar Rate Loan into a Base Rate Loan, such conversion shall only be made
on the last day of the Interest Period with respect thereto, and (iv) no Base
Rate Loan may be converted into a Eurodollar Rate Loan when any Default or Event
of Default has occurred and is continuing. On the date on which such conversion
is being made each Bank affected thereby shall take such action as is necessary
to transfer its portion of such Loans to its Domestic Lending Office or its
Eurodollar Lending Office, as the case may be. Any outstanding Revolving Credit
Loans of any Type may be converted into a Revolving Credit Loan of another Type
as provided herein, provided that any partial conversion shall be in an
aggregate principal amount of at least $2,000,000 with respect to Domestic
Revolving Credit Loans and C$1,000,000 with respect to Canadian Revolving Credit
Loans. Each Conversion Request relating to the conversion of a Base Rate Loan
to a Eurodollar Rate Loan shall be irrevocable by the Borrower and the Canadian
Borrower.
(b) Any Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest Period with
respect thereto by compliance by the Borrower and the Canadian Borrower with the
notice provisions contained in Section 2.7(a) hereof; provided that no
Eurodollar Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be automatically converted to
a Base Rate Loan on the last day of the first Interest Period relating thereto
ending during the continuance of any Default or Event of Default of which
officers of the Administrative Agent or the Canadian Agent active upon the
Borrower's or the Canadian Borrower's account have actual knowledge. The
Administrative Agent and the Canadian Agent shall notify the Banks promptly when
any such automatic conversion contemplated by this Section 2.7(b) is scheduled
to occur.
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(c) Any conversion to or from Eurodollar Rate Loans shall be in such
amounts and be made pursuant to such elections so that, after giving effect
thereto, the aggregate principal amount of all Eurodollar Rate Loans having the
same Interest Period shall not be less than $2,000,000 or a whole multiple of
$1,000,000 in excess thereof with respect to Domestic Revolving Credit Loans or
C$1,000,000 or a whole multiple of C$500,000 in excess thereof with respect to
Canadian Revolving Credit Loans. No more than twelve (12) Eurodollar Rate
Loans with different interest periods shall be outstanding at one time.
SECTION 2.8. OPTIONAL PREPAYMENTS OF REVOLVING CREDIT LOANS. The
Borrower shall have the right, at its election, to repay the outstanding amount
of the Domestic Revolving Credit Loans and the Canadian Borrower shall have the
right, at its election, to repay the outstanding amount of the Canadian
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, provided that any full or partial prepayment of the outstanding amount
of any Eurodollar Rate Loans pursuant to this Section 2.8 may be made only on
the last day of the Interest Period relating thereto. The Borrower shall give
the Administrative Agent and the Canadian Borrower shall give the Canadian
Agent (with a copy to the Administrative Agent), in each case no later than
12:00 noon (local time for such Agent) at least one (1) Business Day prior
written notice of any proposed prepayment pursuant to this Section 2.8 of
Revolving Credit Loans, specifying the proposed date of prepayment of Revolving
Credit Loans and the principal amount to be prepaid. Each such partial
prepayment of the Revolving Credit Loans shall be in the minimum principal
amount of $2,000,000 or a larger integral multiple of $1,000,000 with respect
to Domestic Revolving Credit Loans or C$1,000,000 or a larger multiple of
C$500,000 with respect to Canadian Revolving Credit Loans, shall be accompanied
by the payment of accrued interest on the principal prepaid to the date of
prepayment and shall be applied, in the absence of instruction by the Borrower
or the Canadian Borrower, first to the principal of Base Rate Loans and then to
the principal of Eurodollar Rate Loans. Each partial prepayment shall be
allocated among the Banks, in proportion, as nearly as practicable, to the
respective unpaid principal amount of each Bank's Note, with adjustments to the
extent practicable to equalize any prior repayments not exactly in proportion.
Subject to the borrowing limitations set forth in Section 2.1 hereof, amounts
prepaid prior to the Maturity Date may be reborrowed.
SECTION 2.9. MANDATORY PREPAYMENTS OF LOANS.
(a) DOMESTIC FACILITY. If at any time the sum of the aggregate principal
amount of the Domestic Revolving Credit Loans outstanding plus the aggregate
principal amount of the Domestic Swing Line Loans outstanding plus the Dollar
Equivalent of the aggregate principal amount of the Canadian Swing Line Loans
outstanding plus the aggregate Maximum Drawing Amount of all Letters of Credit
outstanding exceeds the lesser of (i) the Total Domestic Commitment in effect
from time to time or (ii) the remainder of (A) the Borrowing Base Amount then
in effect minus (B) the Dollar Equivalent of the aggregate principal amount of
the Canadian Revolving Credit Loans outstanding minus (C) the Dollar Equivalent
of the aggregate face amount of Bankers' Acceptances then outstanding, whether
due to a reduction of the Total Domestic Commitment or as a result of currency
exchange fluctuations, or otherwise, then the Borrower shall immediately pay
the amount of such excess to the Administrative Agent, for the benefit of the
Domestic Banks, together with all interest accrued on such principal amounts of
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the Domestic Revolving Credit Loans and/or Swing Line Loans prepaid, for
application first to the pro rata payment of Domestic Swing Line Loans and
Canadian Swing Line Loans outstanding, second to the payment of any Domestic
Revolving Credit Loans outstanding, and third to be held by the Letter of
Credit Bank as cash collateral for all Letters of Credit outstanding; provided
that if after repaying all Swing Line Loans and Domestic Revolving Credit
Loans, the aggregate Maximum Drawing Amount of all Letters of Credit
outstanding exceeds the lesser of the Total Domestic Commitment then in effect
or the Borrowing Base Amount then in effect, the Borrower shall, subject to
Section 2.2 hereof, deposit with the Administrative Agent, in pledge, cash or
other readily marketable securities acceptable to the Administrative Agent
pursuant to pledge agreements acceptable to the Administrative Agent such that
the aggregate amount of collateral so pledged is at least equal to the amount
of such excess.
(b) CANADIAN FACILITY. If at any time the sum of the Dollar Equivalent of
the aggregate principal amount of the Canadian Revolving Credit Loans
outstanding plus the Dollar Equivalent of the aggregate face amount of Bankers'
Acceptances outstanding exceeds the lesser of (i) the Total Canadian Commitment
in effect from time to time or (ii) the remainder of (A) Borrowing Base Amount
then in effect minus (B) the aggregate principal amount of the Domestic
Revolving Credit Loans outstanding minus (C) the aggregate principal amount of
the Domestic Swing Line Loans outstanding minus (D) the Dollar Equivalent of
the aggregate principal amount of the Canadian Swing Line Loans outstanding
minus (E) the aggregate Maximum Drawing Amount of all Letters of Credit,
whether due to a reduction of the Total Canadian Commitment or as a result of
currency exchange fluctuations, or otherwise, then the Canadian Borrower shall
immediately pay the amount of such excess to the Canadian Agent, for the
benefit of the Canadian Banks, together with all interest accrued on such
principal amounts of the Canadian Revolving Credit Loans prepaid, for
application first to the payment of any Canadian Revolving Credit Loans
outstanding, and second to be held by the Canadian Agent as cash collateral for
all Banker's Acceptances outstanding; provided that if after repaying all
Canadian Revolving Credit Loans, the Dollar Equivalent of the aggregate face
amount of Bankers' Acceptances outstanding exceeds the lesser of the Total
Canadian Commitment then in effect or the Borrowing Base Amount then in effect,
the Canadian Borrower shall, subject to Section 2.2 hereof, deposit with the
Canadian Agent, in pledge, cash or other readily marketable securities
acceptable to the Canadian Agent pursuant to pledge agreements acceptable to
the Canadian Agent such that the aggregate amount of collateral so pledged is
at least equal to the amount of such excess.
(c) MANDATORY REPAYMENTS FROM ASSET SALES. In the event that the Borrower
or any of its Subsidiaries shall sell any of their assets or group of related
assets (other than assets sold pursuant to Section Section 12.5(c) or (d)),
whether by sale of assets or stock, for consideration with a value in excess of
$2,500,000 in any one calendar year, where such asset sale is either permitted
pursuant to Section 12.5 or is previously consented to in writing by the
Administrative Agent, then, immediately upon the receipt thereof, the Borrower
shall repay the Obligations in an amount equal to the amount of the net cash
proceeds of such asset sale (after taxes calculated at the effective book tax
rate in accordance with Generally Accepted Accounting Principles) in excess of
$2,500,000, such repayment of the Obligations to be in the manner set forth in
Section 2.9(a). Simultaneously with any such required repayment, the Total
Commitment shall be automatically
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and permanently reduced by an amount equal to the amount of Obligations so
repaid or required to be repaid.
(d) MANDATORY PREPAYMENTS FROM NEW EQUITY. In the event that the Borrower
or any of its Subsidiaries shall, after the first anniversary of the Closing
Date, sell or issue any shares of their stock, options or warrants for the
purchase of its stock or other equity or equity instruments (other than (i)
stock, warrants and options awarded to employees and directors pursuant to
incentive compensation plans operated by such Persons and (ii) equity and
equity instruments issued to the Borrower or any of its Subsidiaries) in an
aggregate amount of Net Cash Proceeds for all such sales after the first
anniversary of the Closing Date, in excess of $20,000,000, then, immediately
upon the receipt thereof, the Borrower shall, or shall cause such Subsidiary
to, repay the Obligations in an amount equal to fifty percent (50%) of the Net
Cash Proceeds of such sale or issuance of new equity in excess of $20,000,000,
such repayment of the Obligations to be in the manner set forth in Section
2.9(a). Simultaneously with any such required repayment, the Total Commitment
shall be automatically and permanently reduced by an amount equal to the amount
of Obligations so repaid or required to be repaid.
Section 2.10. FUNDS FOR LOANS. Not later than 12:00 noon (local time for
each Agent) on the proposed Drawdown Date of a Revolving Credit Loan each of
the Domestic Banks will make available to the Administrative Agent and each of
the Canadian Banks will make available to the Canadian Agent, at such Agent's
Head Office, in immediately available funds, the amount of its Commitment
Percentage of the amount of the requested Revolving Credit Loan. Upon receipt
from each Bank of such amount (or upon fulfillment of the conditions precedent
to the making of a Domestic Swing Line Loan pursuant to Section 2.12 or a
Canadian Swing Line Loan pursuant to Section 2.13, as applicable), and upon the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Administrative Agent will make available to the Borrower the
aggregate amount of such Loans made available by the Domestic Banks, the
Canadian Agent will make available to the Canadian Borrower the aggregate
amount of such Loans made available by the Canadian Banks, the Domestic Swing
Line Bank shall make available to the Borrower the aggregate amount of funds
otherwise available under Section 2.12, if any, and the Canadian Swing Line
Bank will make available to the Canadian Borrower the aggregate amount of funds
otherwise available under Section 2.13, if any, in each case, not later than
3:00 p.m. (local time for such Agent or such Bank). The failure or refusal of
any Bank to make available to such Agent at the aforesaid time and place on any
Drawdown Date the amount of its Commitment Percentage of the requested
Revolving Credit Loan shall not relieve any other Bank from its several
obligations hereunder to make available to such Agent the amount of such Bank's
Commitment Percentage of any requested Revolving Credit Loan.
Section 2.11. MATURITY OF THE LOANS. The Loans shall be due and payable
on the Maturity Date. The Borrower irrevocably promises to pay to the
Administrative Agent, for the pro rata accounts of the Domestic Banks, the
outstanding amount of all Domestic Revolving Credit Loans and Domestic Swing
Line Loans outstanding on the Maturity Date. The Canadian Borrower irrevocably
promises to pay to (i) the Canadian Agent, for the pro rata accounts of the
Canadian Banks, the aggregate amount of all Canadian Revolving Credit Loans and
Bankers' Acceptances outstanding on the Maturity Date and (ii) the Canadian
Swing Line Bank the
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outstanding amount of all Canadian Swing Line Loans outstanding on the Maturity
Date. All such payments shall be made together with any and all accrued and
unpaid interest thereon, the accrued and unpaid Commitment Fees with respect
thereto, and any Letter of Credit Fees, Fronting Fees and other fees and other
amounts owing hereunder.
Section 2.12. THE DOMESTIC SWING LINE LOANS. (a) Subject to the terms
and conditions hereinafter set forth, upon notice by the Borrower made to the
Domestic Swing Line Bank in accordance with Section 2.12(b) hereof, the
Domestic Swing Line Bank agrees to lend to the Borrower Domestic Swing Line
Loans on any Business Day from the Closing Date until the Maturity Date in an
aggregate principal amount not to exceed $10,000,000 (the "Maximum Domestic
Swing Line Loan Amount"). Each Domestic Swing Line Loan shall be in a minimum
amount equal to $1,000 or an integral multiple thereof. Notwithstanding any
other provisions of this Agreement and in addition to the limit set forth
above, at no time shall the aggregate principal amount of all outstanding
Domestic Swing Line Loans plus the Dollar Equivalent of the aggregate principal
amount of all Canadian Swing Line Loans outstanding exceed the Total Domestic
Commitment then in effect minus the sum of (i) the aggregate principal amount
of all Domestic Revolving Credit Loans outstanding and (ii) the aggregate
Maximum Drawing Amount of all Letters of Credit outstanding; provided however
that subject to the limitations set forth in this Section 2.12(a) from time to
time the sum of the aggregate outstanding Domestic Swing Line Loans plus all
outstanding Revolving Credit Loans made by BKB plus the Maximum Drawing Amount
of all Letters of Credit issued by BKB as Letter of Credit Issuing Bank may
exceed BKB's Commitment Percentage of the Total Domestic Commitment then in
effect.
(b) NOTICE OF BORROWING. When the Borrower desires the Domestic Swing
Line Bank to make a Domestic Swing Line Loan, it shall send to the
Administrative Agent and the Domestic Swing Line Bank a Loan Request, which
shall set forth the principal amount of the proposed Domestic Swing Line Loan
and the Swing Line Loan Maturity Date relating thereto, which shall in no event
be later than the Maturity Date. Each such Loan Request must be received by
the Domestic Swing Line Bank not later than 12:00 p.m. (Boston time) on the
date of the proposed borrowing. Each Loan Request shall be irrevocable and
binding on the Borrower and shall obligate the Borrower to borrow the Domestic
Swing Line Loan from the Domestic Swing Line Bank on the proposed Drawdown Date
thereof. Upon satisfaction of the applicable conditions set forth in this
Agreement, on the proposed Drawdown Date the Domestic Swing Line Bank shall
make the Domestic Swing Line Loan available to the Borrower no later than 3:00
p.m. (Boston time) on the proposed Drawdown Date by crediting the amount of the
Domestic Swing Line Loan to the Borrower's account maintained with the
Administrative Agent at the Head Office; provided that the Domestic Swing Line
Bank shall not advance any Domestic Swing Line Loans after it has received
notice from any Bank that a Default or Event of Default has occurred and
stating that no new Domestic Swing Line Loans are to be made until such Default
or Event of Default has been cured or waived in accordance with the provisions
of this Agreement. The Domestic Swing Line Bank shall not be obligated to make
any Domestic Swing Line Loans at any time when any Bank is a Delinquent Bank
unless the Domestic Swing Line Bank has entered into arrangements satisfactory
to it to eliminate the Domestic Swing Line Bank's risk with respect to such
Delinquent Bank, including by cash collateralizing such
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Delinquent Bank's Commitment Percentage of the outstanding Domestic Swing Line
Loans and any such additional Domestic Swing Line Loans to be made.
(c) INTEREST ON DOMESTIC SWING LINE LOANS. Each Domestic Swing Line Loan
shall be a Base Rate Loan and, except as otherwise provided in Section 6.3
hereof, shall bear interest from the Drawdown Date thereof until repaid in full
at the rate per annum equal to the Domestic Base Rate plus the Applicable
Margin, which shall be paid quarterly in arrears on the last day of each
calendar quarter.
(d) REPAYMENT OF DOMESTIC SWING LINE LOANS. The Borrower shall repay
each outstanding Domestic Swing Line Loan on or prior to the Swing Line Loan
Maturity Date relating thereto. Upon notice by the Domestic Swing Line Bank on
any Business Day (whether before or on the Maturity Date), each of the Domestic
Banks hereby agrees to make payments to the Administrative Agent, for the
account of the Domestic Swing Line Bank, on the next succeeding Business Day
following such notice, in an amount equal to such Bank's Commitment Percentage
of the aggregate amount of all Domestic Swing Line Loans outstanding. The
parties hereto agree that such payments made to the Administrative Agent for
the account of the Domestic Swing Line Bank shall constitute Domestic Revolving
Credit Loans made to the Borrower hereunder, and shall be a Base Rate Loan.
The proceeds thereof shall be applied directly to the Domestic Swing Line Bank
to repay the Domestic Swing Line Bank for such outstanding Domestic Swing Line
Loans. Each Domestic Bank hereby absolutely, unconditionally and irrevocably
agrees to make such Domestic Revolving Credit Loans upon one Business Day's
notice as set forth above, notwithstanding (i) that the amount of such Loan may
not comply with the applicable minimums set forth in Section 2.3 hereof, (ii)
the failure of the Borrower to meet the conditions set forth in Section Section
9 or 10 hereof, (iii) the occurrence or continuance of a Default or an Event of
Default hereunder, (iv) the date of such Loan, and (v) the Total Domestic
Commitment in effect at such time. In the event that it is impracticable for
such amounts to be paid to the Administrative Agent or the Domestic Swing Line
Bank or such Loan to be made for any reason on the date otherwise required
above, then each Domestic Bank hereby agrees that it shall forthwith purchase
(as of the date such payment and such Loan would have been made, but adjusted
for any payments received from the Borrower on or after such date and prior to
such purchase) from the Domestic Swing Line Bank, and the Domestic Swing Line
Bank shall sell to each Domestic Bank, such participations in the Domestic
Swing Line Loans (including all accrued and unpaid interest thereon)
outstanding as shall be necessary to cause the Domestic Banks to share in such
Domestic Swing Line Loans pro rata based on their respective Domestic
Commitment Percentages (without regard to any termination of the Total Domestic
Commitment) by making available to the Domestic Swing Line Bank an amount equal
to such Domestic Bank's participation in the Domestic Swing Line Loans;
provided that (x) all interest payable on the Domestic Swing Line Loans shall
be for the account of the Domestic Swing Line Bank as a funding and
administrative fee until the date as of which the respective participation is
purchased (unless paid to the Domestic Swing Line Bank pursuant to clause (y)
below), and (y) at the time any purchase of such participation is actually
made, the purchasing Bank shall be required to pay the Domestic Swing Line Bank
interest on the principal amount of the participation so purchased for each day
from and including the date such Loan would otherwise
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have been made until the date of payment for such participation at the rate of
interest in effect applicable to Base Rate Loans during such period.
(e) THE DOMESTIC SWING LINE NOTE. The obligation of the Borrower to
repay the Domestic Swing Line Loans made pursuant to this Agreement and to pay
interest thereon as set forth in this Agreement shall be evidenced by a
promissory note of the Borrower with appropriate insertions substantially in
the form of Exhibit A-3 attached hereto (the "Domestic Swing Line Note"), dated
the Closing Date and payable to the order of the Domestic Swing Line Bank in a
principal amount stated to be the lesser of (i) the Maximum Domestic Swing Line
Loan Amount, or (ii) the aggregate principal amount of Domestic Swing Line
Loans at any time advanced by the Domestic Swing Line Bank and outstanding
thereunder. The Borrower irrevocably authorizes the Domestic Swing Line Bank
to make or cause to be made, at or about the time of the Drawdown Date of any
Domestic Swing Line Loan or at the time of receipt of any payment of principal
on the Domestic Swing Line Note, an appropriate notation on the Note Record
reflecting the making of such Domestic Swing Line Loan or (as the case may be)
the receipt of such payment. The outstanding amount of the Domestic Swing Line
Loans set forth on such Note Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to the Domestic Swing Line Bank, but
the failure to record, or any error in so recording, any such amount on such
Note Record shall not limit or otherwise affect the actual amount of the
obligations of the Borrower hereunder or under the Domestic Swing Line Note to
make payments of principal of or interest on the Domestic Swing Line Note when
due.
Section 2.13. THE CANADIAN SWING LINE LOANS. (a) Subject to the terms
and conditions hereinafter set forth, upon notice by the Canadian Borrower made
to the Canadian Swing Line Bank in accordance with Section 2.13(b) hereof, the
Canadian Swing Line Bank agrees to lend to the Canadian Borrower Canadian Swing
Line Loans on any Business Day from the Closing Date until the Maturity Date in
an aggregate principal amount not to exceed C$10,000,000 (the "Maximum Canadian
Swing Line Loan Amount"). Each Canadian Swing Line Loan shall be in a minimum
amount equal to C$1,000 or an integral multiple thereof. Notwithstanding any
other provisions of this Agreement and in addition to the limit set forth
above, at no time shall the aggregate principal amount of the Domestic Swing
Line Loans outstanding plus the Dollar Equivalent of the aggregate principal
amount of the Canadian Swing Line Loans outstanding exceed the Total Domestic
Commitment then in effect minus the sum of the aggregate amount of Domestic
Revolving Credit Loans then outstanding plus the aggregate Maximum Drawing
Amount of all Letters of Credit outstanding; provided however that subject to
the limitations set forth in this Section 2.13(a) from time to time the sum of
the aggregate outstanding Canadian Swing Line Loans plus all outstanding
Canadian Revolving Credit Loans made by the Canadian Swing Line Bank may exceed
the Canadian Swing Line Bank's Commitment Percentage of the Total Canadian
Commitment then in effect.
(b) NOTICE OF BORROWING. When the Canadian Borrower desires the Canadian
Swing Line Bank to make a Canadian Swing Line Loan, it shall send to the
Canadian Swing Line Bank (with a copy to the Administrative Agent) a Loan
Request, which shall set forth the principal amount of the proposed Canadian
Swing Line Loan and the Swing Line Loan Maturity Date relating thereto, which
shall in no event be later than the Maturity Date. Each such Loan Request
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must be received by the Canadian Swing Line Bank not later than 12:00 p.m.
(Toronto, Ontario time) on the date of the proposed borrowing. Each such Loan
Request shall be irrevocable and binding on the Canadian Borrower and shall
obligate the Canadian Borrower to borrow the Canadian Swing Line Loan from the
Canadian Swing Line Bank on the proposed Drawdown Date thereof. Upon
satisfaction of the applicable conditions set forth in this Agreement, on the
proposed Drawdown Date the Canadian Swing Line Bank shall make the Canadian
Swing Line Loan available to the Canadian Borrower no later than 3:00 p.m.
(Toronto, Ontario time) on the proposed Drawdown Date by crediting the amount
of the Canadian Swing Line Loan to the Canadian Borrower's account maintained
with the Canadian Swing Line Bank at an office designated by the Canadian
Borrower by written notice to the Canadian Agent; provided that the Canadian
Swing Line Bank shall not advance any Canadian Swing Line Loans after it has
received notice from any Bank that a Default or Event of Default has occurred
and stating that no new Canadian Swing Line Loans are to be made until such
Default or Event of Default has been cured or waived in accordance with the
provisions of this Agreement. The Canadian Swing Line Bank shall not be
obligated to make any Canadian Swing Line Loans at any time when any Bank is a
Delinquent Bank unless the Canadian Swing Line Bank has entered into
arrangements satisfactory to it to eliminate the Canadian Swing Line Bank's
risk with respect to such Delinquent Bank, including by cash collateralizing
such Delinquent Bank's Commitment Percentage of the outstanding Canadian Swing
Line Loans and any such additional Canadian Swing Line Loans to be made.
(c) INTEREST ON CANADIAN SWING LINE LOANS. Each Canadian Swing Line Loan
shall be a Canadian Base Rate Loan and, except as otherwise provided in Section
6.3 hereof, shall bear interest from the Drawdown Date thereof until repaid in
full at the rate per annum equal to the Canadian Base Rate plus the Applicable
Margin, which shall be paid quarterly in arrears on the last day of each
calendar quarter.
(d) REPAYMENT OF CANADIAN SWING LINE LOANS. The Canadian Borrower shall
repay each outstanding Canadian Swing Line Loan on or prior to the Swing Line
Loan Maturity Date relating thereto. Upon notice by the Canadian Swing Line
Bank on any Business Day (whether before or on the Maturity Date), each of the
Domestic Banks hereby agrees to make payments in Dollars to the Administrative
Agent, for the account of the Canadian Swing Line Bank, on the next succeeding
Business Day following such notice, in an amount equal to such Bank's Domestic
Commitment Percentage of the Dollar Equivalent of the aggregate amount of all
Canadian Swing Line Loans outstanding. The parties hereto agree that such
payments made to the Administrative Agent for the account of the Canadian Swing
Line Bank shall constitute Domestic Revolving Credit Loans made to the Borrower
hereunder, and shall be deemed to have been requested by the Borrower as
Domestic Revolving Credit Loans for the purpose of repaying the Borrower's
obligations under the Canadian Guaranty to the Canadian Swing Line Bank, and
shall constitute a Domestic Base Rate Loan. The proceeds thereof shall be
applied directly to the Canadian Swing Line Bank to repay the Canadian Swing
Line Bank for such outstanding Canadian Swing Line Loans and the Borrower
hereby authorizes such direct payment. Each Domestic Bank hereby absolutely,
unconditionally and irrevocably agrees to make such Domestic Revolving Credit
Loans upon one Business Day's notice as set forth above, notwithstanding (i)
that the amount of such Loan may not comply with the applicable minimums
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set forth in Section 2.3 hereof, (ii) the failure of the Borrower to meet the
conditions set forth in Section Section 9 or 10 hereof, (iii) the occurrence or
continuance of a Default or an Event of Default hereunder, (iv) the date of
such Loan, and (v) the Total Domestic Commitment in effect at such time. In
the event that it is impracticable for such payments to be made to the
Administrative Agent or the Canadian Swing Line Bank or such Loan to be made
for any reason on the date otherwise required above, then each Domestic Bank
hereby agrees that it shall forthwith purchase (as of the date such Loan would
have been made, but adjusted for any payments received from the Canadian
Borrower or the Borrower on or after such date and prior to such purchase) from
the Canadian Swing Line Bank, and the Canadian Swing Line Bank shall sell to
each Domestic Bank, such participations in Dollars in the Canadian Swing Line
Loans (including all accrued and unpaid interest thereon) outstanding as shall
be necessary to cause the Domestic Banks to share in such Canadian Swing Line
Loans pro rata based on their respective Domestic Commitment Percentages
(without regard to any termination of the Total Domestic Commitment) by making
available to the Canadian Swing Line Bank an amount in Dollars equal to such
Bank's Dollar Equivalent of its participation in the Canadian Swing Line Loans;
provided that (x) all interest payable on the Canadian Swing Line Loans shall
be for the account of the Canadian Swing Line Bank as a funding and
administrative fee until the date as of which the respective participation is
purchased (unless paid to the Canadian Swing Line Bank pursuant to clause (y)
below), and (y) at the time any purchase of such participation is actually
made, the purchasing Bank shall be required to pay the Canadian Swing Line Bank
interest on the principal amount of the participation so purchased for each day
from and including the date such Loan would otherwise have been made until the
date of payment for such participation at the rate of interest in effect
applicable to Base Rate Loans during such period.
(e) THE CANADIAN SWING LINE NOTE. The obligation of the Canadian
Borrower to repay the Canadian Swing Line Loans made pursuant to this Agreement
and to pay interest thereon as set forth in this Agreement shall be evidenced
by a promissory note of the Canadian Borrower with appropriate insertions
substantially in the form of Exhibit A-4 attached hereto (the "Canadian Swing
Line Note"), dated the Closing Date and payable to the order of the Canadian
Swing Line Bank in a principal amount stated to be the lesser of (i) the
Maximum Canadian Swing Line Loan Amount, or (ii) the aggregate principal amount
of Canadian Swing Line Loans at any time advanced by the Canadian Swing Line
Bank and outstanding thereunder. The Canadian Borrower irrevocably authorizes
the Canadian Swing Line Bank to make or cause to be made, at or about the time
of the Drawdown Date of any Canadian Swing Line Loan or at the time of receipt
of any payment of principal on the Canadian Swing Line Note, an appropriate
notation on the Note Record reflecting the making of such Canadian Swing Line
Loan or (as the case may be) the receipt of such payment. The outstanding
amount of the Canadian Swing Line Loans set forth on such Note Record shall be
prima facie evidence of the principal amount thereof owing and unpaid to the
Canadian Swing Line Bank, but the failure to record, or any error in so
recording, any such amount on such Note Record shall not limit or otherwise
affect the actual amount of the obligations of the Canadian Borrower hereunder
or under the Canadian Swing Line Note to make payments of principal of or
interest on the Canadian Swing Line Note when due.
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Section 3. LETTERS OF CREDIT.
Section 3.1. LETTERS OF CREDIT. Subject to the terms and conditions set
forth in this Agreement, upon written request of the Borrower delivered to the
Letter of Credit Bank and upon the execution and delivery by the Borrower of
Reimbursement Agreements with the Letter of Credit Bank (with a copy to the
Administrative Agent), the Letter of Credit Bank shall issue, extend and renew
at any time from the Closing Date until the Maturity Date, and subject to the
satisfaction of the conditions precedent set forth in Section Section 9 and 10
hereof, Letters of Credit in such form as the Borrower and the Letter of Credit
Bank may agree for the account of the Borrower or any of its Subsidiaries,
provided that at no time shall the Maximum Drawing Amount of all Letters of
Credit outstanding exceed $100,000,000 or, if less, the Total Domestic
Commitment, and provided further that at no time shall the sum of (a) the
aggregate principal amount of all Domestic Revolving Credit Loans outstanding,
plus (b) the aggregate principal amount of all Domestic Swing Line Loans
outstanding, plus (c) the Dollar Equivalent of the aggregate principal amount
of all Canadian Swing Line Loans outstanding, plus (d) the aggregate Maximum
Drawing Amount of all Letters of Credit outstanding exceed the lesser of (A)
the remainder of (i) the Borrowing Base Amount then in effect minus (ii) the
Dollar Equivalent of the aggregate amount of Canadian Revolving Credit Loans
then outstanding minus (iii) the Dollar Equivalent of the aggregate face amount
of Bankers' Acceptances then outstanding or (B) the Total Domestic Commitment
then in effect. Each written request for the issuance of a Letter of Credit
hereunder shall be received by the Letter of Credit Bank at least ten (10)
Business Days prior to the proposed date of issuance, provided that the Letter
of Credit Bank shall use its best efforts to issue such Letter of Credit within
five (5) Business Days following its receipt of any written request therefor.
The expiry dates, amounts and beneficiaries of the Letters of Credit will be as
agreed by the Borrower and the Letter of Credit Bank in the applicable
Reimbursement Agreement. The Borrower may request, and the Letter of Credit
Bank upon terms and conditions approved by the Borrower shall issue, substitute
Letters of Credit for the Letters of Credit to reflect reductions in the amount
of the Borrower's obligations supported by such Letters of Credit. Each Letter
of Credit issued by the Letter of Credit Bank hereunder shall identify: (i)
the dates of issuance and expiry of such Letter of Credit, (ii) the amount of
such Letter of Credit (which shall be a sum certain), (iii) the beneficiary and
account party of such Letter of Credit, and (iv) the drafts and other documents
necessary to be presented to the issuing bank upon drawing thereunder. Each
Letter of Credit issued hereunder shall expire one year after its date of
issuance unless renewed by the Letter of Credit Bank in accordance with the
terms of such Letter of Credit. In no event shall any Letter of Credit issued
hereunder expire after the Maturity Date.
Section 3.2. EFFECTS OF DRAWINGS. Upon the payment by the Letter of
Credit Bank in respect of each drawing under a Letter of Credit, the
unreimbursed amount of the payment shall be deemed to be a Revolving Credit
Loan that is a Base Rate Loan, made on the date of such payment by the Letter
of Credit Bank, for all purposes of this Agreement. The liability of the
Borrower under this Agreement to repay the Banks in respect of drawings under
Letters of Credit shall be Obligations hereunder and shall be secured pursuant
to the Security Documents.
Section 3.3. LETTER OF CREDIT LOAN OBLIGATIONS ABSOLUTE. (a) The
obligations of the Borrower to repay the Letter of Credit Bank and the Banks as
provided hereunder in respect of drawings
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under Letters of Credit shall rank pari passu with the obligations of the
Borrower to repay the Loans hereunder, and shall be absolute and unconditional
under any and all circumstances. Without limiting the generality of the
foregoing, the Borrower's obligation to repay the Borrower's obligations in
respect of drawings under Letters of Credit, or any renewals or extensions
thereof, shall not be subject to any defense based on the non-application or
misapplication by the beneficiary of the proceeds of any such payment or the
legality, validity, regularity or enforceability of the Letter of Credit, or
any renewal or extension thereof, or any other document whatsoever. Subject to
the limitations of the following sentence, the Letter of Credit Bank may accept
or pay any draft presented to it under any Letter of Credit, or any renewal or
extension thereof, regardless of when drawn or made and whether or not
negotiated, if such draft, accompanying certificate or documents and any
transmittal advice are presented on or before the expiry date of the Letter of
Credit, or the renewal or extension thereof then in effect. Furthermore,
neither the Letter of Credit Bank nor any of its correspondents shall be
responsible, as to any document presented under a Letter of Credit or any
renewal or extension thereof which appears to be regular on its face, and
appears on its face to conform to the terms of the Letter of Credit and to make
reasonable reference thereto, for the validity or sufficiency of any signature
or endorsement, for delay in giving any notice or failure of any instrument to
bear adequate reference to the Letter of Credit or to any renewal or extension
thereof, or failure of documents not clearly specified in the Letter of Credit
to accompany any instrument at negotiation, or for failure of any person to
note the amount of any draft on the reverse of the Letter of Credit or on any
renewal or extension thereof.
(b) Any action, inaction or omission on the part of the Letter of Credit
Bank or any of its correspondents under or in connection with any Letter of
Credit, or any renewal or extension thereof, or the related instruments,
documents or property, if in good faith and in conformity with such laws,
regulations or customs as are applicable and the terms of this Section 3.3,
shall be binding upon the Borrower and shall not place the Letter of Credit
Bank or any of its correspondents under any liability to the Borrower, in the
absence of gross negligence or willful misconduct by the Letter of Credit Bank
or its correspondents. The Letter of Credit Bank's rights, powers, privileges
and immunities specified in or arising under this Agreement are in addition to
any heretofore or at any time hereafter otherwise created or arising, whether
by statute or rule of law or contract. All Letters of Credit issued hereunder
will, except to the extent otherwise expressly provided hereunder, be governed
by the Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce, Publication No. 500, and any subsequent
revisions thereof.
Section 3.4. OBLIGATIONS OF THE BANKS. (a) Each Domestic Bank and the
Borrower hereby acknowledge that each Letter of Credit issued by the Letter of
Credit Bank pursuant to this Agreement is issued by the Letter of Credit Bank
on behalf of all of the Domestic Banks. Each Domestic Bank (other than the
Letter of Credit Bank) absolutely, unconditionally and irrevocably agrees to
reimburse the Letter of Credit Bank in an amount equal to such Bank's Domestic
Commitment Percentage of each drawing under any Letter of Credit made in
accordance with this Section 3 and to be responsible for its Commitment
Percentage of all liabilities incurred by the Letter of Credit Bank in respect
of each Letter of Credit opened or extended by the Letter of Credit Bank for
the account of the Borrower pursuant to this Agreement. In the
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event that for any reason (including without limitation as a result of the
commencement of any proceedings under any bankruptcy, reorganization,
insolvency or other similar law with respect to the Borrower) it is
impracticable for any Domestic Bank to reimburse the Letter of Credit Bank in
an amount equal to such Bank's Domestic Commitment Percentage of any drawing
under any Letter of Credit, then each such Bank agrees that at the option of
the Letter of Credit Bank it shall purchase a participation in, or take an
assignment from the Letter of Credit Bank of, the Borrower's obligation to
repay the Letter of Credit Bank in respect of such drawing under such Letter of
Credit in an amount equal such Bank's Domestic Commitment Percentage of such
drawing under the Letter of Credit. The obligations of the Domestic Banks
hereunder are several and the failure of any Domestic Bank to fulfill its
obligations shall not result in any Bank becoming obligated to advance more
than its Domestic Commitment Percentage of such drawing under such Letter of
Credit.
(b) The Letter of Credit Bank, upon receipt of any draft drawn under a
Letter of Credit, shall promptly examine such draft and any accompanying
certificate or other document in accordance with this Section 3 and with its
customary procedures for conformity to the requirements of such Letter of
Credit. In the event the Letter of Credit Bank determines to pay such draft in
accordance with the foregoing, each Bank shall, and hereby absolutely,
unconditionally and irrevocably agrees, to contemporaneously provide to the
Letter of Credit Bank, in funds immediately available to the Letter of Credit
Bank, such Bank's Commitment Percentage of the funds necessary to pay such
draft.
(c) Each Bank agrees with the Letter of Credit Bank and the other Banks
(other than the Letter of Credit Bank) that its obligations to provide to the
Letter of Credit Bank its Domestic Commitment Percentage of the amount of any
draft drawn under any Letter of Credit in accordance with this Section 3.4
shall be absolute, irrevocable and unconditional and further agrees that such
obligations shall not be affected in any way by any intervening circumstances
occurring before or after the making of such payment by the Letter of Credit
Bank pursuant to any Letter of Credit, including without limitation:
(i) any modification or amendment of, or any consent, waiver,
release or forbearance with respect to, any of the terms of this
Agreement or any other instrument or document referred to herein;
(ii) any other act or omission to act of any kind by the Letter of
Credit Bank;
(iii) the existence of any Default or Event of Default; or
(iv) any change of any kind whatsoever in the financial position or
creditworthiness of the Borrower or any of its Subsidiaries or any other
Person.
Section 4. BANKERS' ACCEPTANCES.
Section 4.1. ACCEPTANCE AND PURCHASE. Subject to the terms and
conditions hereof, each Canadian Bank severally agrees to accept and purchase
Bankers' Acceptances drawn upon it by
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the Canadian Borrower denominated in Canadian Dollars. The Canadian Borrower
shall notify the Canadian Agent by irrevocable written notice (each a "Bankers'
Acceptance Notice") at least one (1) Business Day prior to the date of any
borrowing by way of Bankers' Acceptances. Each borrowing by way of Bankers'
Acceptances shall be in a minimum aggregate face amount of C$1,000,000 or an
integral multiple of C$100,000 thereof. The face amount of each Bankers'
Acceptance shall be C$100,000 or any integral multiple thereof. Each Bankers'
Acceptance Notice shall be in the form of Exhibit J. In no event shall the
Dollar Equivalent of the aggregate face amount of all outstanding Bankers'
Acceptances exceed the lesser of (a) the remainder of (i) Borrowing Base Amount
then in effect minus (ii) the aggregate principal amount of the Domestic
Revolving Credit Loans outstanding minus (iii) the aggregate principal amount
of the Domestic Swing Line Loans outstanding minus (iv) the Dollar Equivalent
of the aggregate principal amount of the Canadian Swing Line Loans outstanding
minus (v) the aggregate Maximum Drawing Amount of all Letters of Credit and (b)
the remainder of (1) the Total Canadian Commitment minus (2) the Dollar
Equivalent of the outstanding amount of all Canadian Revolving Credit Loans.
(a) Term. Each Bankers' Acceptance shall be issued and shall mature on a
Canadian Business Day. Each Bankers' Acceptance shall have a term of 30, 60,
90 or 180 days, shall mature no later than five (5) days prior to the Maturity
Date, and shall be in form and substance reasonably satisfactory to the
Canadian Bank which is accepting such Bankers' Acceptance.
(b) Bankers' Acceptances in Blank. To facilitate the acceptance of
Bankers' Acceptances under this Agreement, the Canadian Borrower shall, on the
Canadian Facility Effective Date and from time to time as required, provide to
the Canadian Agent bills of exchange, in form satisfactory to the Canadian
Agent, duly executed and endorsed in blank by the Canadian Borrower in
quantities sufficient for each Canadian Bank to fulfill its obligations
hereunder. In addition, the Canadian Borrower hereby appoints each Canadian
Bank as its attorney to sign and endorse on its behalf, in handwriting or by
facsimile or mechanical signature as and when deemed necessary by such Canadian
Bank, blank forms of Bankers' Acceptances. The Canadian Borrower recognizes
and agrees that all Bankers' Acceptances signed and/or endorsed on its behalf
by a Canadian Bank shall bind the Canadian Borrower as fully and effectually as
if signed in the handwriting of and duly issued by the proper signing officers
of the Canadian Borrower. Each Canadian Bank is hereby authorized to issue
such Bankers' Acceptances endorsed in blank in such face amounts as may be
determined by such Canadian Bank provided that the aggregate amount thereof is
equal to the aggregate amount of Bankers' Acceptances required to be accepted
by such Bank pursuant to clause (d) below. Neither any Canadian Bank nor the
Canadian Agent shall be responsible or liable for its failure to accept a
Bankers' Acceptance if the cause of such failure is, in whole or in part, due
to the failure of the Canadian Borrower to provide duly executed and endorsed
bills of exchange to the Canadian Agent on a timely basis nor shall any
Canadian Bank or the Canadian Agent be liable for any damage, loss or other
claim arising by reason of any loss or improper use of any such instrument
except loss or improper use arising by reason of the negligence or willful
misconduct of such Bank or the Canadian Agent, its officers, employees, agents
or representatives. Each Canadian Bank shall maintain a record with respect to
Bankers' Acceptances (i) received by it from the Canadian Agent in blank
hereunder, (ii) voided by it for any reason, (iii) accepted by it
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hereunder, (iv) purchased by it hereunder, and (v) cancelled at their
respective maturities. Each Canadian Bank further agrees to retain such
records in the manner and for the statutory periods provided in the various
Canadian provincial or federal statutes and regulations which apply to such
Bank.
(c) Execution of Bankers' Acceptances. Bills of exchange of the Canadian
Borrower to be accepted as Bankers' Acceptances hereunder shall be duly
executed by one or more duly authorized officers on behalf of the Canadian
Borrower. Notwithstanding that any person whose signature appears on any
Bankers' Acceptance as a signatory for the Canadian Borrower may no longer be
an authorized signatory for the Canadian Borrower at the date of issuance of a
Bankers' Acceptance, such signature shall nevertheless be valid and sufficient
for all purposes as if such authority had remained in force at the time of such
issuance and any such Bankers' Acceptance so signed shall be binding on the
Canadian Borrower, unless the Canadian Bank accepting such Bankers' Acceptance
has actual knowledge that such signatory is no longer an authorized signatory.
(d) Issuance of Bankers' Acceptances. Promptly following receipt of a
Bankers' Acceptance Notice, the Canadian Agent shall so advise the Canadian
Banks of the face amount of each Bankers' Acceptance to be accepted by it and
the term thereof. The aggregate face amount of Bankers' Acceptances to be
accepted by a Canadian Bank shall be determined by the Canadian Agent by
reference to the respective Canadian Commitments of the Canadian Banks, except
that, if the face amount of a Bankers' Acceptance, which would otherwise be
accepted by a Canadian Bank, would not be C$100,000 or an integral multiple
thereof, such face amount shall be increased or reduced by the Canadian Agent
in its sole and absolute discretion to the nearest integral multiple of
C$100,000.
(e) Acceptance of Bankers' Acceptances. Each Bankers' Acceptance to be
accepted by a Canadian Bank shall be accepted at such Bank's office shown on
Schedule 1.1 hereof or as otherwise designated by said Canadian Bank from time
to time.
(f) Purchase of Bankers' Acceptances. On the relevant date of borrowing,
each Canadian Bank severally agrees to purchase from the Canadian Borrower, at
the face amount thereof discounted by the Applicable BA Discount Rate, any
Bankers' Acceptance accepted by it and provide to the Canadian Agent, for the
account of the Canadian Borrower, the BA Discount Proceeds in respect thereof
after deducting therefrom the amount of the Acceptance Fee payable by the
Canadian Borrower to such Bank under Section 4.3 in respect of such Bankers'
Acceptance.
(g) Sale of Bankers' Acceptances. Each Canadian Bank may at any time and
from time to time hold, sell, rediscount or otherwise transfer, in each case to
a financial institution or bank resident in Canada, any or all Bankers'
Acceptances accepted and purchased by it.
(h) Waiver of Presentment and Other Conditions. The Canadian Borrower
waives presentment for payment and any other defense to payment of any amounts
due to a Canadian Bank in respect of a Bankers' Acceptance accepted by such
Canadian Bank pursuant to this Agreement which might exist solely by reason of
such Bankers' Acceptance being held, at the
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maturity thereof, by such Bank in its own right. The Canadian Borrower shall
not claim or require any days of grace or require the Canadian Agent or any
Canadian Bank to claim any days of grace for the payment of any Bankers'
Acceptance.
Section 4.2. REFUNDING BANKERS' ACCEPTANCES. With respect to each
Bankers' Acceptance, the Canadian Borrower, except during the occurrence and
continuation of an Event of Default, may give irrevocable telephone or written
notice (or such other method of notification as may be agreed upon between the
Canadian Agent and the Canadian Borrower) to the Canadian Agent on the Business
Day prior to such maturity date of such Bankers' Acceptance of the Canadian
Borrower's intention to issue one or more Bankers' Acceptances on such maturity
date (each a "Refunding Bankers' Acceptance") to provide for the payment of
such maturing Bankers' Acceptance (it being understood that payments by the
Canadian Borrower and fundings by the Canadian Banks in respect of each
maturing Bankers' Acceptance and each related Refunding Bankers' Acceptance
shall be made on a net basis reflecting the difference between the face amount
of such maturing Bankers' Acceptance and the BA Discount Proceeds (net of the
applicable Acceptance Fee) of such Refunding Bankers' Acceptance). Any funding
on account of any maturing Bankers' Acceptance must be made at or before 12:00
noon (Toronto, Ontario time) on the maturity date of such Bankers' Acceptance.
If the Canadian Borrower fails to give such notice, the Canadian Borrower shall
be irrevocably deemed to have requested and to have been advanced a Canadian
Revolving Credit Loan bearing interest at the Canadian Base Rate in the face
amount of such maturing Bankers' Acceptance on the maturity date of such
maturing Bankers' Acceptance from the Canadian Bank which accepted such
maturing Bankers' Acceptance, which Loan shall thereafter bear interest as such
in accordance with the provisions hereof and otherwise shall be subject to all
provisions of this Agreement applicable to Canadian Revolving Credit Loans
until paid in full.
Section 4.3. ACCEPTANCE FEE. An acceptance fee (the "Acceptance Fee")
shall be payable by the Canadian Borrower to each Canadian Bank and each
Canadian Bank shall deduct the amount of such Acceptance Fee from the BA
Discount Proceeds (in the manner specified in Section 4.1(f) in respect of each
Bankers' Acceptance), said fee to be calculated at a rate per annum equal to
the Applicable Acceptance Fee Rate calculated on the face amount of such
Bankers' Acceptance and computed on the basis of the number of days in the term
of such Bankers' Acceptance and a year of 365 days.
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Section 4.4. CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE. If,
by reason of circumstances affecting the money market generally, there is no
market for Bankers' Acceptances (i) the right of the Canadian Borrower to
request a borrowing of Bankers' Acceptances shall be suspended until the
circumstances causing a suspension no longer exist, and (ii) any Bankers'
Acceptance Notice which is outstanding shall be cancelled and the requested
borrowing shall not be made.
Section 5. FEES.
Section 5.1. COMMITMENT FEE.
(a) The Borrower shall pay to the Administrative Agent for the respective
accounts of the Domestic Banks a commitment fee (the "Domestic Commitment Fee")
at the rate per annum equal to the Applicable Margin then in effect on the
daily average amount during each quarter or portion thereof from the date
hereof to the Maturity Date by which the Total Domestic Commitment exceeded the
sum of the aggregate principal balance of Revolving Credit Loans outstanding
plus the maximum Drawing Amount of all Letters of Credit outstanding. The
Domestic Commitment Fee shall be payable quarterly in arrears on the last day
of each March, June, September and December for the immediately preceding
quarter or portion thereof, commencing on the first such date after the Closing
Date with a final payment on the Maturity Date or any earlier date on which the
Total Domestic Commitment shall terminate.
(b) The Canadian Borrower shall pay to the Canadian Agent for the
respective accounts of the Canadian Banks a commitment fee (the "Canadian
Commitment Fee") at the rate per annum equal to the Applicable Margin then in
effect on the daily average amount during each quarter or portion thereof from
the date hereof to the Maturity Date by which the Canadian Dollar Equivalent of
the Total Canadian Commitment exceeded the sum of the aggregate principal
balance of Canadian Revolving Credit Loans outstanding plus the aggregate face
amount of Bankers' Acceptances outstanding. The Canadian Commitment Fee shall
be payable quarterly in arrears on the last day of each March, June, September
and December for the immediately preceding quarter or portion thereof,
commencing on the first such date after the Closing Date with a final payment
on the Maturity Date or any earlier date on which the Total Canadian Commitment
shall terminate.
Section 5.2. LETTER OF CREDIT FEE. The Borrower shall pay to the Letter
of Credit Bank a fee (the "Letter of Credit Fee") for each Letter of Credit
issued or renewed by the Letter of Credit Bank at a rate per annum (except as
provided in Section 6.3 hereof) equal to the Applicable Margin in effect from
time to time on the Maximum Drawing Amount of such Letter of Credit for the
period such Letter of Credit is outstanding. The Letter of Credit Bank shall,
in turn, remit to each Domestic Bank (including BKB) such Bank's Domestic
Commitment Percentage of the Letter of Credit Fee. In addition, the Borrower
will pay the Letter of Credit Bank a Fronting Fee (the "Fronting Fee") equal to
one-tenth of one percent (0.10%) per annum on the Maximum Drawing Amount of
such Letter of Credit for the period such Letter of Credit is outstanding,
which shall be retained by the Letter of Credit Bank for its own account. The
Letter of Credit
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Fee and the Fronting Fee shall be payable quarterly in arrears on the last day
of each calendar quarter.
Section 5.3. CLOSING FEE. The Borrower agrees to pay to the
Administrative Agent on the Closing Date the Closing Fee as set forth in the
Fee Letter. Without limiting the obligations of the Canadian Borrower under
the Guaranties, nothing contained in this Section 5.3 shall impose any
obligation on the Canadian Borrower.
Section 5.4. ADMINISTRATIVE AGENT'S FEE. The Borrower shall pay to the
Administrative Agent, for its own account, the Administrative Agent's Fee as
set forth in the Fee Letter. Without limiting the obligations of the Canadian
Borrower under the Guaranties, nothing contained in this Section 5.4 shall
impose any obligation on the Canadian Borrower.
Section 6. CERTAIN GENERAL PROVISIONS.
Section 6.1. PAYMENTS. All payments hereunder (whether of principal,
interest, Reimbursement Obligations, Commitment Fees, Letter of Credit Fees,
Fronting Fees, Administrative Agent's Fees or otherwise) shall be made by the
Borrower and the Canadian Borrower to the applicable Agent in immediately
available funds at the Head Office of such Agent no later than 1:00 p.m. (local
time for such Agent). Payments hereunder shall be applied as provided herein;
provided that during such time as any amounts owed by the Borrower or the
Canadian Borrower hereunder are overdue, all payments received hereunder shall
be applied first to all amounts overdue starting with amounts most overdue and
continuing with amounts next most overdue until all such overdue amounts are
paid in full, and then to all other amounts due at such time as provided
herein.
Section 6.2. COMPUTATIONS. All computations of interest on the Loans
(other than Eurodollar Rate Loans), the Commitment Fees and all other fees
shall be based on a 365-day year and paid for the actual number of days
elapsed. All computations of interest on Eurodollar Rate Loans shall be based
on a 360-day year and paid for the actual number of days elapsed. For purposes
of the Interest Act (Canada), (i) whenever any interest or fee under this
Agreement is calculated using a base rate on a year of 360 days or 365 days, as
the case may be, the rate determined pursuant to such calculation, when
expressed as an annual rate, is equivalent to (x) the applicable rate based on
a year of 360 days or 365 days, as the case may be, (y) multiplied by the
actual number of days in the calendar year in which the period for which such
interest or fee is payable (or compounded) ends, and (z) divided by 360 or 365,
as the case may be, (ii) the principle of deemed reinvestment of interest does
not apply to any interest calculation under this Agreement, and (iii) the rates
of interest stipulated in this Agreement are intended to be nominal rates and
not effective rates or yields. Except as otherwise provided in the definition
of the term "Interest Period" with respect to Eurodollar Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and interest and all applicable fees shall
accrue during such extension. The outstanding amount of the Loans as reflected
on the Note Records from time to time and any calculation of interest thereon
shall be considered correct and binding on the Borrower and the Canadian
Borrower absent manifest
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error, unless within five (5) Business Days after receipt of any notice by an
Agent or any of the Banks of such outstanding amount, such Agent or such Bank
shall notify the Borrower or the Canadian Borrower to the contrary.
Section 6.3. INTEREST RATE UPON EVENT OF DEFAULT. Upon the occurrence
and during the continuance of any Event of Default, principal and (to the
extent permitted by applicable law) interest on the Loans, the Letter of Credit
Fee(s) and all other amounts payable hereunder shall bear interest compounded
monthly and payable on demand at a rate per annum equal to 2% above the rate
otherwise in effect for such Loans or Letter(s) of Credit, to accrue from the
date any Event of Default occurs until the obligation of the Borrower and/or
the Canadian Borrower, as the case may be, with respect to the payment thereof
shall be discharged whether before or after judgment.
Section 6.4. INTEREST LIMITATION. Notwithstanding any other term of this
Agreement or any other document referred to herein, the maximum amount of
interest which may be charged to or collected from any person liable hereunder
shall be absolutely limited to, and shall in no event exceed, the maximum
amount of interest which could lawfully be charged or collected under
applicable law (including, to the extent applicable, the provisions of Section
5197 of the Revised Statutes of the United States of America, as amended, 12
U.S.C. Section 85, as amended), so that the maximum of all amounts constituting
interest under applicable law, howsoever computed, shall never exceed as to any
person liable therefor such lawful maximum, and any term of this Agreement or
any other document referred to herein which could be construed as providing for
interest in excess of such lawful maximum shall be and hereby is made expressly
subject to and modified by the provisions of this Section 6.4.
Section 6.5. CAPITAL ADEQUACY. If any change in law or any governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) or the interpretation thereof by a court or governmental
authority with appropriate jurisdiction affects the amount of capital required
or expected to be maintained by any Bank or any corporation controlling any
Bank and such Bank in good faith determines that the amount of capital required
is increased by or based upon the existence of the credit facility established
hereunder or any Loans made or Letters of Credit issued pursuant hereto, then
such Bank may notify the Borrower and/or the Canadian Borrower, as applicable,
of such fact. To the extent that the costs of such increased capital
requirements are not reflected in the Base Rate, the Borrower and/or the
Canadian Borrower and the Banks shall thereafter attempt to negotiate in good
faith an adjustment to the compensation payable hereunder which will adequately
compensate the Banks in light of these circumstances. If the Borrower and/or
the Canadian Borrower and the Banks are unable to agree to such adjustment
within 30 days of the day on which the Borrower or the Canadian Borrower
receives such notice, then commencing on the date of such notice (but not
earlier than the effective date of any such change), the fees payable hereunder
shall increase by an amount certified (with reasonably detailed calculations)
to the Borrower or the Canadian Borrower pursuant to Section 6.7 hereof which
will, in the applicable Bank's reasonable determination, provide adequate
compensation. The Banks shall allocate such cost increases among their
customers in good faith and on an equitable basis.
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Section 6.6. ADDITIONAL COSTS, ETC. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon
or otherwise issued to any Bank or Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject any Bank or Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, any Letters of Credit, such Bank's
Commitment or the Loans (other than taxes based upon or measured by the
income or profits of such Bank or Agent) which could also affect other
similar agreements, loans, letters of credit or commitments of such Bank
or Agent, as the case may be, or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of
or the interest on any Loans or any other amounts payable to any Bank or
Agent under this Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other
similar requirements (whether or not having the force of law) against
assets held by, or deposits in or for the account of, or loans by, or
letters of credit issued by, or commitments of an office of any Bank, or
(d) impose on any Bank or Agent any other conditions or requirements
with respect to this Credit Agreement, the other Loan Documents, any
Letters of Credit, the Loans, such Bank's Commitment, or any class of
loans, letters of credit or commitments of which any of the Loans, the
Letters of Credit or such Bank's Commitment forms a part, which could
also affect other similar agreements, loans, letters of credit or
commitments of such Bank or Agent, as the case may be, and the result of
any of the foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or
such Bank's Commitment or any Letter of Credit, or
(ii) to reduce the amount of principal, interest, or other
amount payable to such Bank or Agent hereunder on account of such
Bank's Commitment, any Letter of Credit or any of the Loans, or
(iii) to require such Bank or Agent to make any payment or to
forego any interest or other sum payable hereunder, the amount of
which payment or foregone interest or other sum is calculated by
reference to the gross amount of
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any sum receivable or deemed received by such Bank or Agent from
the Borrower or the Canadian Borrower hereunder,
then, and in each such case, the Borrower or the Canadian Borrower, as
applicable, will (to the extent lawful), upon demand made by such Bank or (as
the case may be) such Agent at any time and from time to time and as often as
the occasion therefor may arise, pay to such Bank or the applicable Agent such
additional amounts as will be sufficient to compensate such Bank or such Agent
for such additional cost, reduction, payment or foregone interest or other sum.
Section 6.7. BANK CERTIFICATES. A certificate signed by an officer of a
Bank, setting forth any additional amount required to be paid by the Borrower
or the Canadian Borrower to such Bank under Section Section 6.5 or 6.6 hereof
and the basis therefor, shall be delivered by a Bank to the Borrower or the
Canadian Borrower in connection with each demand made at any time by such Bank
upon the Borrower or the Canadian Borrower under such section, and each such
certificate shall constitute prima facie evidence of the additional amount
required to be paid by the Borrower or the Canadian Borrower, as applicable, to
such Bank. A claim by a Bank for all or any part of any additional amount
required to be paid by the Borrower or the Canadian Borrower under Section
Section 6.5 or 6.6 hereof may be made at any time and from time to time as
often as the occasion therefor may arise. To the extent applicable, the Banks
shall allocate all such cost increases among their customers in good faith and
on an equitable basis. The Borrower or the Canadian Borrower, as applicable,
shall not be required to pay additional amounts under Section Section 6.5 or
6.6 hereof which accrue or are incurred more than ninety (90) days before an
Agent or a Bank has given notice to the Borrower or the Canadian Borrower
pursuant to this Section 6.7.
Section 6.8. PAYMENTS TO BE FREE OF DEDUCTIONS. All payments by the
Borrower and the Canadian Borrower under this Agreement and under any of the
other Loan Documents shall be made without set-off or counterclaim.
Section 6.9. INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior
to the commencement of any Interest Period relating to any Eurodollar Rate
Loan, the Administrative Agent or the Canadian Agent shall determine or be
notified by the Majority Banks that adequate and reasonable methods do not
exist for ascertaining the Eurodollar Rate that would otherwise determine the
rate of interest to be applicable to any Eurodollar Rate Loan during any
Interest Period, the Administrative Agent or the Canadian Agent shall forthwith
give notice of such determination (which shall be conclusive and binding on the
Borrower, the Canadian Borrower and the Banks) to the Borrower, the Canadian
Borrower and the Banks. In such event (i) any Loan Request or Conversion
Request with respect to Eurodollar Rate Loans shall be automatically withdrawn
and shall be deemed a request for Base Rate Loans, (ii) each Eurodollar Rate
Loan will automatically, on the last day of the then current Interest Period
relating thereto, become a Base Rate Loan, and (iii) the obligations of the
Banks to make Eurodollar Rate Loans shall be suspended until the Administrative
Agent, the Canadian Agent or the Majority Banks determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Administrative Agent, the Canadian Agent or, as the case may be, the
Administrative Agent or the Canadian Agent upon the instruction of the Majority
Banks, shall so notify the Borrower, the Canadian Borrower and the Banks.
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Section 6.10. ILLEGALITY. Notwithstanding any other provisions herein,
if any present or future law, regulation, treaty or directive or the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice
of such circumstances to the Borrower, the Canadian Borrower and the other
Banks and thereupon (i) the commitment of such Bank to make Eurodollar Rate
Loans or convert Loans of another Type to Eurodollar Rate Loans shall forthwith
be suspended and (ii) such Bank's Loans then outstanding as Eurodollar Rate
Loans, if any, shall be converted automatically to Base Rate Loans on the last
day of each Interest Period applicable to such Eurodollar Rate Loans or within
such earlier period as may be required by law. The Borrower and the Canadian
Borrower hereby agree promptly to pay the Administrative Agent for the account
of each Domestic Bank and the Canadian Agent for the account of each Canadian
Bank, upon demand by such Bank, any additional amounts due under Section 6.11
hereof in connection with any conversion in accordance with this Section 6.10.
Section 6.11. INDEMNITY. The Borrower and the Canadian Borrower agree to
indemnify each Bank and to hold each Bank harmless from and against any loss,
cost or expense (excluding loss of anticipated profits) that such Bank may
sustain or incur as a consequence of (i) default by the Borrower or the
Canadian Borrower in payment of the principal amount of or any interest on any
Eurodollar Rate Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain its Eurodollar Rate Loans, (ii) failure by
the Borrower or Canadian Borrower in making a borrowing or conversion after the
Borrower or Canadian Borrower has given (or is deemed to have given) a Loan
Request or a Conversion Request relating thereto in accordance with Section
Section 2.6 or 2.7 hereof or (iii) the making of any payment of a Eurodollar
Rate Loan or a Bankers' Acceptance or the making of any conversion of any such
Eurodollar Rate Loan to a Base Rate Loan on a day that is not the last day of
the applicable Interest Period with respect thereto, including interest or fees
payable by such Bank to lenders of funds obtained by it in order to maintain
any such Loans.
Section 6.12. CURRENCY OF PAYMENT. Except as provided in Section 31,
payments of principal or interest with respect to any Loan or obligation with
respect to Letters of Credit or Bankers' Acceptances shall be made in the
currency in which such Loan was advanced or in which such Letter of Credit or
such Bankers' Acceptance was issued; provided, that with respect to Domestic
Revolving Credit Loans deemed made to the Borrower pursuant to Section 2.13(d)
in repayment of Canadian Swing Line Loans made to the Canadian Borrower, the
principal and interest on such Domestic Revolving Credit Loans shall be repaid
in Dollars.
Section 6.13. CURRENCY FLUCTUATIONS. (a) Not later than 1:00 p.m.
(Boston time) on the last Business Day of each calendar month or any other
Business Day if requested by the Canadian Agent before 10:00 a.m. on such day
(the "Calculation Date"), the Administrative Agent shall determine the Exchange
Rate as of such date. The Exchange Rate so determined shall become effective
on the first Business Day immediately following such determination (a "Reset
Date") and shall remain effective until the next succeeding Reset Date.
Nothing contained in this Section 6.13 shall be construed to require the
Administrative Agent to calculate compliance under this Section 6.13
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more frequently than once each month, unless requested to do so by the Canadian
Agent pursuant to the first sentence of this Section 6.13(a).
(b) Not later than 4:00 p.m. (Boston time) on each Reset Date, the
Administrative Agent shall, in consultation with the Canadian Agent, determine
the Dollar Equivalent of the outstanding Canadian Revolving Credit Loans and
Bankers' Acceptances.
(c) If, on any Reset Date and on the Maturity Date, the aggregate
outstanding amount of the Dollar Equivalent of all Canadian Revolving Credit
Loans and the Dollar Equivalent of the aggregate face amount of all Bankers'
Acceptances exceeds the Total Canadian Commitment (the amount of such excess
referred to herein as the "Canadian Excess Amount") by more than one percent
(1%) of the aggregate amount of such Commitment, then (A) the Canadian Agent
shall give notice thereof to the Canadian Borrower and the Canadian Banks and
(B) within two (2) Business Days thereafter, the Canadian Borrower shall repay
or prepay Canadian Revolving Credit Loans in accordance with this Agreement in
an aggregate principal amount such that, after giving effect thereto, the
aggregate outstanding amount of the Dollar Equivalent of all Canadian Revolving
Credit Loans and the Dollar Equivalent of the aggregate face amount of all
Bankers' Acceptances no longer exceeds the Total Canadian Commitment.
Notwithstanding the foregoing, to avoid the incurrence of breakage costs with
respect to Canadian Revolving Credit Loans which are Eurodollar Rate Loans, the
Canadian Borrower shall not be obligated to repay any Canadian Revolving Credit
Loan that is a Eurodollar Rate Loan until the end of the Interest Period
relating thereto to the extent that the unused amount of the Domestic
Commitments of the Domestic Banks which are affiliates of the Canadian Banks
shall be greater than or equal to the Canadian Excess Amount. On each Reset
Date and until the Canadian Revolving Credit Loans are repaid in accordance
with the first sentence of this paragraph (c), the Total Domestic Commitment
shall be automatically reduced by an amount equal to the Canadian Excess
Amount. Such reduction shall be made by reducing the Domestic Commitments of
each such Domestic Bank that is an affiliate of a Canadian Bank by an amount
equal to such Domestic Bank's Domestic Commitment Percentage of the Canadian
Excess Amount.
Section 6.14. REPLACEMENT OF BANKS. If any Bank (an "Affected Bank") (i)
makes demand upon the Borrower or the Canadian Borrower for (or if the Borrower
or the Canadian Borrower is otherwise required to pay) amounts pursuant to
Section Section 6.5, 6.6, 6.7 or 30, (ii) is unable to make or maintain
Eurodollar Rate Loans as a result of a condition described in Section 6.10 or
(iii) defaults in its obligation to make Loans, or accept and purchase Bankers'
Acceptances, in accordance with the terms of this Agreement (such Bank being
referred to as a "Defaulting Bank"), the Borrower or the Canadian Borrower may,
within ninety (90) days of receipt of such demand, notice (or the occurrence of
such other event causing the Borrower or the Canadian Borrower to be required
to pay such compensation or causing Section 6.10 to be applicable), or default,
as the case may be, by notice (a "Replacement Notice") in writing to the
Administrative Agent and, if a Canadian Bank, the Canadian Agent and such
Affected Bank (A) request the Affected Bank to cooperate with the Borrower or
the Canadian Borrower in obtaining a replacement bank satisfactory to the
Administrative Agent and the Borrower or the Canadian Borrower (the
"Replacement Bank"); (B) request the non-Affected Banks to acquire and assume
all of the Affected Bank's Loans and
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Commitment and accept and purchase Bankers' Acceptances, as provided herein,
but none of such Banks shall be under an obligation to do so; or (C) designate
a Replacement Bank approved by the Administrative Agent, such approval not to
be unreasonably withheld or delayed. If any satisfactory Replacement Bank
shall be obtained, and/or if any one or more of the non-Affected Banks shall
agree to acquire and assume all of the Affected Bank's Loans and Commitment and
accept and purchase Bankers' Acceptances, then such Affected Bank shall assign,
in accordance with Section 18, all of its Commitment, Loans, Bankers'
Acceptances, Letter of Credit participations, Notes and other rights and
obligations under this Agreement and all other Loan Documents to such
Replacement Bank or non-Affected Banks, as the case may be, in exchange for
payment of the principal amount so assigned and all interest and fees accrued
on the amount so assigned, plus all other Obligations then due and payable to
the Affected Bank; provided, however, that (i) such assignment shall be without
recourse, representation or warranty and shall be on terms and conditions
reasonably satisfactory to such Affected Bank and such Replacement Bank and/or
non-Affected Banks, as the case may be, and (ii) prior to any such assignment,
the Borrower or the Canadian Borrower, as the case may be, shall have paid to
such Affected Bank all amounts properly demanded and unreimbursed under Section
Section 6.5, 6.6. 6.7, 6.10 and 30. Upon the effective date of such
assignment, the Borrower or the Canadian Borrower shall issue replacement Notes
to such Replacement Bank and/or non-Affected Banks, as the case may be, and
such institution shall become a "Bank" for all purposes under this Agreement
and the other Loan Documents.
Section 7. SECURITY AND GUARANTIES. (a) The Obligations of the Borrower
and the Canadian Borrower to the Banks, the Swing Line Banks, the Letter of
Credit Bank and the Agents under the Loan Documents shall (i) be secured by a
pledge by the Borrower of all Intercompany Notes owed to the Borrower pursuant
to the terms of the Pledge Agreement, (ii) be secured by a first priority
perfected lien on and security interest in substantially all of the assets of
the Borrower as provided in the Security Documents (including, without
limitation, accounts receivable, motor vehicles, trailers and Investments but
excluding real estate), (iii) be secured by a pledge by the Borrower of one
hundred percent (100%) of the capital stock of each of the Domestic
Subsidiaries (other than Kar-Tainer International, Inc. as to which ninety-nine
percent (99%) of the capital stock will be so pledged) and the Canadian
Subsidiaries and not less than sixty-five percent (65%) of the capital stock of
each of the Foreign Subsidiaries (other than the Canadian Subsidiaries and
Kar-Tainer International Limited ("KTIL"); provided that, upon receipt of
necessary governmental approvals for the pledge of the capital stock of KTIL,
which the Borrower agrees to make good faith efforts to obtain, not less than
sixty-five percent (65%) of the capital stock of KTIL will be so pledged)
pursuant to the terms of the Stock Pledge Agreement, and (iv) be secured by an
assignment of certain acquisition documents pursuant to the Assignment of
Acquisition Documents. The Obligations of the Canadian Borrower in respect of
the Canadian Swing Line Loans, Canadian Revolving Credit Loans and Bankers'
Acceptances shall be guaranteed by the Borrower pursuant to the terms of the
Canadian Guaranty.
(b) The Obligations shall also be absolutely and unconditionally, jointly
and severally, guaranteed by each of the Borrower's Domestic Subsidiaries and
the Canadian Subsidiaries (other than AH, Auto Haulaway Releasing Services
(1981) Limited, and MCL Ryder Transport, Inc.) pursuant to a guaranty in
substantially the form of Exhibit H attached
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hereto. Auto Haulaway Releasing Services Limited and MCL Ryder Transport, Inc.
shall guaranty the guaranty obligations of, respectively, the Canadian Borrower
and Ryder Automotive Acquisition LLC pursuant to a guaranty in substantially
the form of Exhibit H attached hereto (such guaranty, together with the
guaranty by the Borrower's Domestic Subsidiaries and other Canadian
Subsidiaries referred to above, in each case, as amended, modified or
supplemented from time to time, are referred to herein, collectively, as the
"Guaranties" and individually as a "Guaranty"). The obligations of such
Subsidiaries under such Guaranties shall be secured by (i) a first priority
perfected lien on and security interest in substantially all of the assets of
each such Subsidiary as provided in the Security Documents (including, without
limitation, accounts receivable, motor vehicles, trailers and Investments but
excluding real estate and (ii) a pledge by each such Subsidiary of one hundred
percent (100%) of the capital stock of each of its Domestic Subsidiaries and
Canadian Subsidiaries and not less than sixty-five percent (65%) of the capital
stock of each of its Foreign Subsidiaries (other than the Canadian
Subsidiaries) pursuant to the terms of the Stock Pledge Agreement.
(c) The Borrower shall cause each of its Domestic Subsidiaries and
Canadian Subsidiaries acquired or formed after the Closing Date, no later than
thirty (30) days after the acquisition or formation of such Subsidiary, to (i)
execute and deliver to each of the Banks and the Administrative Agent a
guaranty which is substantially in the form of Exhibit H hereto and which is
reasonably satisfactory to the Banks and the Administrative Agent in all
respects; (ii) grant the Administrative Agent, for the benefit of the Banks a
first priority perfected lien on and security interest in substantially all of
its assets (including without limitation, accounts receivable, motor vehicles,
trailers and Investments but excluding real estate) pursuant to such documents
and instruments as shall be satisfactory to the Banks and the Administrative
Agent in all respects (it being understood that the documents and instruments
relating to the grant of a security interest by such Subsidiaries shall be
similar in form and content to the applicable Security Documents executed on
the Closing Date, with such changes as the Administrative Agent shall deem
necessary or desirable to account for additional types of collateral, local law
requirements, and such other matters as the Administrative Agent may deem
necessary or desirable in order to perfect its security interest in, or
remedies with respect to, such assets), and (iii) execute and deliver to each
of the Banks and the Administrative Agent all other documents and instruments,
including, without limitation, corporate authority documents and legal
opinions, as the Administrative Agent may reasonably request in connection with
the delivery of such guaranty and such security. The Borrower shall deliver to
the Banks an updated Schedule 8.16(a) or Schedule 8.16(b), as applicable, upon
the acquisition or formation of any Subsidiary.
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Section 8. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Banks as follows (provided that each of the following
representations and warranties of the Borrower regarding ACD and its
Subsidiaries is, solely with respect to representations and warranties made on
the Closing Date, or assets owned as of the Closing Date or periods elapsed on
or prior to the Closing Date, based upon the Borrower's knowledge and based
upon the representations and warranties of Ryder System, Inc. set forth in the
ACD Acquisition Documents):
Section 8.1. EXISTENCE AND GOOD STANDING, ETC.
(a) Each of the Borrower and its Subsidiaries (other than Allied Systems)
is (i) a corporation, duly organized and validly existing and in good standing
under the laws of its jurisdiction of incorporation, and (ii) has adequate
power to own its property and conduct its business substantially as presently
conducted. Allied Systems is a limited partnership duly organized, validly
existing under the Uniform Act and in good standing under the laws of Georgia,
and has adequate power to own its property and conduct its business
substantially as presently conducted. AAGI has adequate power to act on behalf
of Allied Systems as managing general partner of Allied Systems.
(b) The Borrower and its Subsidiaries are qualified to do business and in
good standing in each of the jurisdictions listed on Schedule 8.1 attached
hereto, which constitute all of the jurisdictions in which the nature of their
businesses and properties make such qualification necessary, except for
jurisdictions in which the failure to qualify will have no material adverse
effect on the business, assets or financial condition of the Borrower and its
Subsidiaries, considered as a whole, or the Borrower, considered individually,
or on the Borrower's or any of its Subsidiaries' ability to perform its
obligations under the Loan Documents to which such Person is a party.
Section 8.2. POWER; CONSENTS; ABSENCE OF CONFLICT WITH OTHER AGREEMENTS,
ETC. The (i) execution, delivery and performance by each of the Borrower and
its Subsidiaries (other than Allied Systems) of the Loan Documents, the Senior
Notes to which such Person is a party, and the borrowings and transactions
contemplated hereby and thereby, and (ii) the execution and delivery by AAGI on
behalf of Allied Systems and the performance by Allied Systems of the Loan
Documents and the Senior Notes to which Allied Systems is a party:
(a) are within the powers of such Person, and have been duly authorized by
all requisite corporate or partnership (as the case may be) proceedings of such
Person;
(b) do not require any approval or consent of, or filing with, any
governmental agency or authority bearing on the validity of such instruments
and borrowings which is required by applicable laws or regulations of any such
agency or authority having jurisdiction in the matter other than those
approvals and consents obtained and filings (i) made prior to the Closing Date,
(ii) under the Uniform Commercial Code and (iii) regarding the notation of the
lien in favor of the Administrative Agent on the certificates of title with
respect to motor vehicles, and are not in contravention of the corporate
charter or by-laws of any such Person, or any
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amendment thereof, or, with respect to Allied Systems, the Uniform Act, the
terms of the Partnership Agreement, Partnership Certificate or any amendment
thereof, or any law, regulation, order, judgment, writ, injunction, license or
permit, the non-compliance with which would materially adversely affect the
business, assets or financial condition of the Borrower and its Subsidiaries,
considered as a whole, or of the Borrower, considered individually; and
(c) except as described on Schedule 8.2 attached hereto, will not conflict
with or result in any breach or contravention of, or the creation of any lien
(except as contemplated by the Security Documents) under, any indenture,
agreement, lease, instrument or undertaking to which the Borrower or any of its
Subsidiaries is a party or by which the Borrower or any of its Subsidiaries is
bound. No such breaches or liens will materially adversely affect the
business, assets or financial condition of the Borrower and its Subsidiaries,
considered as a whole, or the Borrower, considered individually.
Section 8.3. BINDING EFFECT OF DOCUMENTS. The Borrower and each of its
Subsidiaries (other than Allied Systems) has duly executed and delivered each
of the Loan Documents to which such Person is a party and each of such
documents is in full force and effect. AAGI has duly executed and delivered on
behalf of Allied Systems each of the Loan Documents to which Allied Systems is
a party and each of such documents is in full force and effect. Each of the
Loan Documents to which the Borrower or any of its Subsidiaries is a party is
and will be the valid and legally binding obligation of such Person,
enforceable against such Person, in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting the enforcement of creditors' rights in general, and
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 8.4. TITLE TO PROPERTIES. The Borrower and its Subsidiaries
(other than ACD and its Subsidiaries) own all of the assets reflected on the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date and after giving effect to the ACD Acquisition, the Borrower
and its Subsidiaries own all of the assets reflected on the pro forma
consolidated balance sheet of the Borrower and its Subsidiaries dated June 30,
1997, except (i) for assets subject to the capitalized leases listed on
Schedule 12.1 attached hereto, (ii) where the failure to own such assets would
not materially adversely affect the business, assets or financial condition of
the Borrower and its Subsidiaries, taken as a whole, and (iii) for assets sold
or otherwise disposed of in the ordinary course of business since such dates,
subject in each case to no mortgages, security interests, leases, liens or
other encumbrances except those permitted by Section 12.2 hereof.
Section 8.5. FINANCIAL STATEMENTS AND PROJECTIONS.
(a) The Borrower has furnished to the Banks the audited consolidated
balance sheet of the Borrower and its Subsidiaries (other than ACD and its
Subsidiaries) dated as at the Balance Sheet Date, the unaudited consolidated
balance sheets of the Borrower and its Subsidiaries (other than ACD and its
Subsidiaries) dated as at March 31, 1997 and June 30, 1997 and the related
consolidated statements of income and retained earnings and cash flows of the
Borrower and its Subsidiaries (other than ACD and its Subsidiaries) for the
fiscal periods ended
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on such dates. Each of the balance sheets and related statements of income and
retained earnings and cash flows as at the Balance Sheet Date, March 31, 1997
and June 30, 1997, and for the fiscal periods then ended, have been prepared in
accordance with Generally Accepted Accounting Principles and present fairly the
financial position of the Borrower and its Subsidiaries (other than ACD and its
Subsidiaries) as at the dates thereof. There are no contingent liabilities of
the Borrower or any of its Subsidiaries (other than ACD and its Subsidiaries)
as of such dates involving material amounts, known to the officers of the
Borrower or its Subsidiaries, which are not disclosed in such balance sheets
and the notes related thereto except as listed and described on Schedule 8.5(a)
attached hereto.
(b) The Borrower has furnished to the Banks (i) the audited consolidated
balance sheet of ACD and its Subsidiaries dated as at the Balance Sheet Date
and the related consolidated statements of income and retained earnings and
cash flows for the fiscal year ended on such date, (ii) the unaudited
consolidated statement of income of ACD and its Subsidiaries for the fiscal
year ended on the Balance Sheet Date, and (iii) the unaudited consolidated
balance sheets of ACD and its Subsidiaries dated as at June 30, 1997 and the
related consolidated statement of income of ACD and its Subsidiaries for the
fiscal period ended on such date. Such unaudited statements of income for the
fiscal periods ending on the Balance Sheet Date and June 30, 1997 and such
unaudited balance sheet as at June 30, 1997 have been adjusted to eliminate
assets and liabilities and the results of operations not transferred in
connection with the ACD Acquisition (and all such adjusted financial statements
contain footnotes describing such elimination). Each of the balance sheets and
related statements of income and retained earnings and cash flows as at the
Balance Sheet Date and June 30, 1997, and for the fiscal periods then ended,
have been prepared in accordance with Generally Accepted Accounting Principles
and present fairly the financial position of ACD and its Subsidiaries as at the
dates thereof. There are no contingent liabilities of ACD or any of its
Subsidiaries as of such dates involving material amounts, known to the officers
of the Borrower or its Subsidiaries, which are not disclosed in such balance
sheets and the notes related thereto except as listed and described on Schedule
8.5(a) attached hereto.
(c) The projections of the consolidated balance sheets and income and cash
flow statements of the Borrower and its Subsidiaries for the 1997 through 2002
fiscal years, identified as Forecast Scenario #97 Da2Bank dated August 6, 1997,
copies of which have been delivered to the Banks, disclose all assumptions
deemed material by the Borrower which were made by the Borrower with respect to
its financial condition and the projected volume of motor vehicles to be hauled
by the Borrower and its Subsidiaries and which were used in formulating such
projections. To the knowledge of the Borrower or any of its Subsidiaries, no
facts have come to their attention that, individually or in the aggregate,
would, in accordance with the customary budgeting practices of the Borrower,
require a material change or result in a material change in any such
projections. The projections are based upon estimates and assumptions which
the Borrower believes to be reasonable, have been prepared in all material
respects on the basis of the assumptions stated therein and reflect estimates
of the Borrower and its Subsidiaries, which the Borrower believes to be
reasonable, of the results of operations and other information projected
therein. Neither the Borrower nor any Subsidiary of the Borrower makes any
representation or warranty that the projections will, in fact, be achieved.
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(d) Each of the Borrower and its Subsidiaries, both before and after
giving effect to the ACD Acquisition and the other transactions contemplated by
this Agreement and the other Loan Documents, is solvent, has assets having a
fair value in excess of the amount required to pay its probable liabilities on
their existing debts as they become absolute and matured, and has, and based on
current projections, will have, access to adequate capital for the conduct of
its business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature.
Section 8.6. NO MATERIAL CHANGES, ETC.
(a) The following representation and warranty shall be made by the
Borrower on the Closing Date: Since the Balance Sheet Date, there have
occurred no changes in the business, assets or financial condition of the
Borrower and its Subsidiaries (other than ACD and its Subsidiaries) as shown on
or reflected in the consolidated balance sheet of the Borrower as at the
Balance Sheet Date, other than the ACD Acquisition and those described on
Schedule 8.6 attached hereto, and all of such changes in the aggregate, have
not been materially adverse.
(b) The following representation and warranty shall be made by the
Borrower on each occasion on which the Borrower repeats or is deemed to repeat
the representations and warranties set forth in this Section 8: Since the
Closing Date, there have occurred no changes in the business, assets or
financial condition of the Borrower and its Subsidiaries as shown on or
reflected in the pro forma consolidated balance sheet of the Borrower as at the
Closing Date, other than those described on Schedule 8.6 attached hereto, and
all of such changes in the aggregate, have not been materially adverse.
Section 8.7. LITIGATION.
(a) The following representation and warranty shall be made by the
Borrower on the Closing Date: Except as disclosed on Schedule 8.7 attached
hereto, there are no actions, suits, proceedings or investigations of any kind
pending or, to the best of the Borrower's knowledge and after due inquiry,
threatened against (i) the Borrower or any of its Subsidiaries (other than ACD
and its Subsidiaries) or (ii) to the best of the Borrower's knowledge, ACD and
its Subsidiaries, before any court, tribunal or administrative agency or board
which, if determined adversely, might, either in any case or in the aggregate,
materially adversely affect the properties, assets, financial condition or
business of the Borrower and its Subsidiaries, considered as a whole,
materially impair the rights of the Borrower and its Subsidiaries to carry on
their businesses substantially as now conducted, result in any substantial
liability not adequately covered by insurance, or which question the validity
of this Agreement or any of the other Loan Documents or any action taken or to
be taken pursuant hereto or thereto.
(b) The following representation and warranty shall be made by the
Borrower on each occasion on which the Borrower repeats or is deemed to repeat
the representations and warranties set forth in this Section 8: Except as
disclosed on Schedule 8.7 attached hereto, there are no actions, suits,
proceedings or investigations of any kind pending or, to the best of the
Borrower's knowledge and after due inquiry, threatened against the Borrower or
any of its Subsidiaries,
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before any court, tribunal or administrative agency or board which, if
determined adversely, might, either in any case or in the aggregate, materially
adversely affect the properties, assets, financial condition or business of the
Borrower and its Subsidiaries, considered as a whole, materially impair the
rights of the Borrower and its Subsidiaries to carry on their businesses
substantially as now conducted, result in any substantial liability not
adequately covered by insurance, or which question the validity of this
Agreement or any of the other Loan Documents or any action taken or to be taken
pursuant hereto or thereto.
Section 8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower
nor any of its Subsidiaries is subject to any charter, corporate, partnership
or other legal restriction, or any judgment, decree, order, rule or regulation
which in the judgment of such Person's officers has or is expected in the
future to have a materially adverse effect on the business, assets or financial
condition of the Borrower and its Subsidiaries, considered as a whole. Neither
the Borrower nor any of its Subsidiaries is a party to any contract or
agreement which in the judgment of such Person's officers has or is expected to
have any materially adverse effect on the business of the Borrower and its
Subsidiaries, considered as a whole.
Section 8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the
Borrower nor any of its Subsidiaries is violating any provision of any charter
documents or by-laws or partnership documents, as applicable, or any agreement
or instrument by which it or any of its properties is bound, or any decree,
order, judgment, statute, license, rule or regulation, in each case in a manner
which could result in the imposition of substantial penalties or materially and
adversely affect the business, assets or financial condition of the Borrower
and its Subsidiaries, considered as a whole.
Section 8.10. TAX STATUS. Except as described in Schedule 8.10 attached
hereto, each of the Borrower and its Subsidiaries has (a) made or filed all
federal, state and provincial tax returns, reports and declarations required by
any jurisdiction to which it is subject, (b) paid all taxes and other
governmental assessments and charges, as shown or determined to be due on such
tax returns, reports and declarations, where the penalty for or the result of
any failure to do so would have a material adverse effect on the financial
condition of the Borrower and its Subsidiaries, considered as a whole, except
for taxes the amount, applicability or validity of which is currently being
contested by it in good faith by appropriate proceedings and with respect to
which it has set aside on its books reserves reasonably deemed by it to be
adequate thereto, and (c) set aside on its books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Borrower know of no basis for any such claim.
Section 8.11. EMPLOYEE BENEFIT PLANS. (a) All Guaranteed Pension Plans
have been operated and administered in all material respects in accordance with
ERISA and, to the extent applicable, the Internal Revenue Code of 1986, as
amended. The current value of all accrued benefits under all of such plans
which are subject to Title IV of ERISA as of January 1, 1995 does not exceed
the current value of the assets of such plans allocable to such accrued
benefits, based upon the actuarial assumptions used for such plans. No
Reportable Event (as defined in ERISA) has
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occurred with respect to any Guaranteed Pension Plan, and no steps have been
taken to terminate any Guaranteed Pension Plan. Each of the Borrower and each
Related Entity has made all contributions to each Multiemployer Plan required
pursuant to any applicable collective bargaining agreement. To the best of the
Borrower's knowledge after due inquiry, neither the Borrower nor any Related
Entity has taken any action to trigger any termination liability with respect
to any Multiemployer Plan or incurred any material liability as a result of a
complete or partial withdrawal, as defined in ERISA, from any Multiemployer
Plan. All contributions required under applicable Canadian tax and pension law
have been made in respect of all pension plans of the Canadian Borrower and
each Canadian Subsidiary and each such pension plan is fully funded on a timely
basis in accordance with all applicable Canadian laws and regulations.
(b) No litigation or administrative or other proceeding
is pending or, to the best of the Borrower's knowledge after due inquiry,
threatened with respect to any pension plan, welfare benefit plan, bonus plan,
stock option plan, deferred compensation plan or other similar plans for the
employees of the Canadian Subsidiaries (collectively, the "Canadian Plans")
which, if determined adversely, might, either in any case or in the aggregate,
materially adversely affect the properties, assets, financial condition or
business of any of the Canadian Subsidiaries considered as a whole, and each
Canadian Plan has been administered in all respects in compliance with all
applicable laws including but not limited to the Income Tax Act (Canada) and
the Pension Benefits Standards Act (Canada) and with the terms of such Plan.
Section 8.12. LOCATION OF OFFICE. The Borrower's and each of its
Subsidiaries' chief executive office and principal place of business and the
location where its books and records are kept is described on Schedule 8.12
attached hereto.
Section 8.13. BUSINESS. Except as disclosed on Schedule 8.13 attached
hereto, each of the Borrower and its Subsidiaries enjoys peaceful and
undisturbed possession under all leases which are material to the Borrower and
its Subsidiaries, considered as a whole, of real or personal property of which
any Person is lessee, subject to the rights of lessors, sublessors and
sublessees and other parties lawfully in possession in the ordinary course of
business, none of which contains, to the best of the Borrower's knowledge after
due inquiry, any unusual or burdensome provision which would be reasonably
likely to materially adversely affect or impair the operations of the Borrower
and its Subsidiaries, considered as a whole, and all such leases which are
material to the operations of the Borrower and its Subsidiaries are valid and
subsisting and in full force and effect. Each of the Borrower and its
Subsidiaries owns or possesses the right to use all of the franchises, rights
and licenses necessary for the conduct of its business as now conducted which
are material to the conduct of the business of the Borrower and its
Subsidiaries, considered as a whole, without any conflict with the rights of
others which would be reasonably likely to materially adversely affect such
Person's ownership of or right to use any such franchises, rights and licenses.
The Borrower and each of its Subsidiaries owns, leases or has the right to use
all properties, franchises, rights and licenses, and employs such employees
and/or engages such independent contractors, as are sufficient to operate its
business in all material respects as such business is operated on the Closing
Date. AH has no assets or liabilities other than the Intercompany Notes
payable to the Borrower and transferred by the Borrower to it, and AH does not
conduct any business activities of any kind other than such business as relates
to the
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holding of such Intercompany Notes. Haul Insurance has no assets or
liabilities other than those associated with the provision of insurance and
related services. Haul Insurance will not conduct any business activities
other than providing insurance and related services, substantially all of which
insurance and related services shall be provided for the benefit of the
Borrower and its Subsidiaries; provided that Haul Insurance may provide
insurance and related services to other Persons so long as (i) the insurance
premiums relating to such insurance are charged on a non-commingled basis and
(ii) Haul Insurance has taken appropriate steps (through reinsurance and other
appropriate means) to reduce the insurance risk relating to such third-party
insurance to an amount not in excess of the capital provided to support the
same, all in a manner reasonably acceptable to the Administrative Agent.
Section 8.14. DISCLOSURE. None of this Agreement or any of the other
Loan Documents to the knowledge of the management of the Borrower or any of its
Subsidiaries, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading. There is no fact known to the management of the
Borrower or any of its Subsidiaries which materially adversely affects, or
which is reasonably likely in the future to materially adversely affect, the
business, assets, financial condition or prospects of the Borrower and its
Subsidiaries, considered as a whole.
Section 8.15. TITLE AND REGISTRATION. All Motor Vehicle Equipment which,
under applicable law, is required to be registered is properly registered in
the name of the Borrower or the appropriate Subsidiary of the Borrower, and all
Motor Vehicle Equipment, the ownership of which, under applicable law, is
evidenced by a certificate of title, is properly titled in the name of the
Borrower or the appropriate Subsidiary of the Borrower, except, in each case,
(i) for Motor Vehicle Equipment of ACD or its Subsidiaries which is in the
process of being re-registered or re-titled as described on Schedule 8.15
attached hereto, provided that any such re-registering or re-titling does not
materially interfere with the business operation of ACD or its Subsidiaries and
(ii) for Motor Vehicle Equipment with respect to which the certificates of
title which have been lost and the net book value of which is less than
$1,000,000; provided that such certificates of title are replaced within a
reasonable time after discovery of such loss.
Section 8.16. CAPITALIZATION.
(a) Except as set forth on Schedule 8.16(a) attached hereto, on and as of
the Closing Date and after giving effect to the ACD Acquisition, the Borrower
owns or holds of record and/or beneficially (whether directly or indirectly) no
shares of any class in the capital of any other corporations and no legal
and/or beneficial interest in any Person. Except as set forth on Schedule
8.16(a) attached hereto, the Borrower has no Subsidiaries. Schedule 8.16(a)
lists the jurisdiction of incorporation of each such Subsidiary and indicates
whether such Subsidiary is a Guarantor.
(b) Except as set forth on Schedule 8.16(b) attached hereto, on and as of
the Closing Date and after giving effect to the ACD Acquisition, none of the
Borrower's Subsidiaries owns or holds of record and/or beneficially (whether
directly or indirectly) any shares of any class in the capital of any other
corporations and no legal and/or beneficial interest in any Person. Except as
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set forth on Schedule 8.16(b) attached hereto, after giving effect to the ACD
Acquisition, none of the Borrower's Subsidiaries has any Subsidiaries.
Schedule 8.16(b) lists the jurisdiction of incorporation of each such
Subsidiary and indicates whether such Subsidiary is a Guarantor.
Section 8.17. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the
Borrower nor any of its Subsidiaries is a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company", as
such terms are defined in the Public Utility Holding Company Act of 1935; nor
is it a "registered investment company", or an "affiliated company" or a
"principal underwriter" of a "registered investment company", as such terms are
defined in the Investment Company Act of 1940, as amended.
Section 8.18. CERTAIN TRANSACTIONS. Except for any transaction that (a)
is listed on Schedule 8.18 attached hereto, (b) has been approved by the
majority of the so-called "outside directors" of the Board of Directors of the
Borrower, (c) is in respect of intercompany Indebtedness or Investments between
the Borrower or any of the Guarantors or between Guarantors, or (d) does not
require payments by the Borrower or any of its Subsidiaries in excess of
$60,000 in the aggregate, none of the officers, directors, or employees of the
Borrower or any of its Subsidiaries is presently a party to any transaction
with the Borrower or any of its Subsidiaries or Affiliates (other than for
services as employees, officers and directors), including, without limitation,
any contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Borrower, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has
a substantial interest or is an officer, director, trustee or partner.
Section 8.19. OPERATING RIGHTS. (a) The Borrower and its Subsidiaries
(including ACD and its Subsidiaries) have all certificates of convenience and
necessity and operating rights necessary to conduct interstate and intrastate
transportation businesses consisting of transporting cars and trucks in and
between the states listed on Schedule 8.19(a) attached hereto. Each of such
certificates of convenience and necessity and operating rights is listed on
Schedule 8.19(a) attached hereto, and is in full force and effect.
(b) Each of the Canadian Subsidiaries has all operating authorizations
necessary or desirable for the conduct of the business of each such Person as
conducted on the Closing Date. Each of such operating authorizations is listed
on Schedule 8.19(b) attached hereto, and (except as described on Schedule
8.19(b) attached hereto) is in good standing, is in full force and effect and
is being held and operated by such Canadian Subsidiary in accordance with the
terms thereof. In the event that any Canadian Subsidiary is merged with
another Canadian Subsidiary, the Borrower shall provide the Administrative
Agent and the Banks with an updated Schedule 8.19(b) hereto.
Section 8.20. MATERIAL CONTRACTS. Neither the Borrower nor any of its
Subsidiaries is party to or bound by any contract material to such Person's
business other than the contracts listed and described on Schedule 8.20
attached hereto. Each of such contracts is in full force and effect,
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and there exists thereunder no default by the Borrower or such Subsidiary, or
to such Person's knowledge, any accrued right of rescission.
Section 8.21. ENVIRONMENTAL COMPLIANCE.
(a) Neither the Borrower nor any of its Subsidiaries is in violation of
any applicable judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters, including, without limitation, those
arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended, ("CERCLA") the Superfund Amendments and Reauthorization Act of 1986
("SARA"), the Federal Water Pollution Control Act, the Toxic Substances Control
Act or any other federal, state, provincial or local statute, regulation,
ordinance, order or decree relating to health, safety or the environment
(hereinafter "Environmental Laws"), which violation would have a material
adverse effect on the business, assets or financial condition of the Borrower
and its Subsidiaries, taken as a whole.
(b) Except as disclosed on Schedule 8.21 hereto, neither the Borrower nor
any of its Subsidiaries has received notice that it has been identified by the
United States Environmental Protection Agency as a potentially responsible
party under CERCLA with respect to a site listed on the National Priorities
List, 40 C.F.R. Part 300 Appendix B (1986) except as noted in Schedule 8.21;
nor has the Borrower or any of its Subsidiaries received any notification that
any Hazardous Waste, as defined by 42 U.S.C. Section 6903(5), any Hazardous
Substances as defined by 42 U.S.C. Section 9601(14), any "pollutant or
contaminant" as defined by 42 U.S.C. Section 9601(33) and any toxic substance,
hazardous materials, oil, or other chemicals or substances regulated by any
Environmental Laws (collectively, "Hazardous Substances") which it has disposed
of has been found at any site at which a federal, state or provincial agency is
conducting a remedial investigation or other corrective action pursuant to any
Environmental Law.
(c) Except for small quantities of solvents and cleaners and other
Hazardous Substances used or generated in the ordinary course of business in
material compliance with Environmental Laws and otherwise as set forth on
Schedule 8.21 attached hereto: (i) no portion of the Borrower's properties or
portion of any Subsidiaries' properties has been used for the handling,
processing, storage or disposal of Hazardous Substances and no underground tank
or other underground storage receptacle for Hazardous Substances is located on
such properties; (ii) in the course of its activities, neither Borrower nor any
of its Subsidiaries has generated or is generating any Hazardous Waste on any
of its properties; (iii) there have been no releases (i.e. any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, disposing or dumping) of Hazardous
Substances by the Borrower or any of its Subsidiaries on, upon, or into the
properties of the Borrower or any of its Subsidiaries, which releases would
have a material adverse effect on the business, assets or financial condition
of the Borrower and its Subsidiaries, considered as a whole, or the Borrower,
considered individually, or on the Borrower's and its Subsidiaries', taken as a
whole, ability to perform their obligations under the Loan Documents. In
addition, to the best of Borrower's knowledge, there have been no such releases
on, upon, or into any real property in the vicinity of any of the real
properties of the Borrower or any of its Subsidiaries which, through soil or
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groundwater contamination, may have come to be located on and which would have
a material adverse effect on the value of any real properties of the Borrower
or any of its Subsidiaries. Neither the Canadian Borrower nor any of its
Subsidiaries has transported, removed or disposed of any Hazardous Waste to a
location outside of Canada, except in material compliance with all applicable
Environmental Laws.
Section 8.22. COLLATERAL.
(a) Except as otherwise provided in any of the Security Documents, all of
the Obligations of the Borrower, the Canadian Borrower and the Borrower's other
Subsidiaries to the Banks, the Letter of Credit Bank and the Agents under or in
respect of the Loan Documents will at all times from and after the execution
and delivery of each of the Security Documents be entitled to all of the
benefits of and be secured by each of such Security Documents.
(b) No financing statement which names the Borrower or any of its
Subsidiaries as a debtor, or encumbers or attempts to encumber any of the
material assets or a material portion of the assets of any of the Borrower or
its Subsidiaries, has been filed in any jurisdiction in the United States or
any State thereof pursuant to Article 9 of the Uniform Commercial Code of any
State or in Canada or any province thereof, and neither the Borrower nor any of
its Subsidiaries has signed any financing statement or any security agreement
authorizing any secured party thereunder to file any such financing statement
in any such jurisdiction, other than (i) financing statements with respect to
liens, security interests and other encumbrances permitted by Section 12.2
hereof and (ii) filings for which arrangements reasonably satisfactory to the
Administrative Agent in all respects have been made for the termination of
record thereof.
(c) No mortgages, chattel mortgages, assignments, statements of
assignment, security agreements or deeds of trust have been filed by any person
or persons with respect to any material part of the property or assets of the
Borrower or any Subsidiary, except for mortgages and security agreements which
are otherwise permitted by the provisions of Section 12.2 hereof.
Section 8.23. NO DEFAULT. No Default or Event of Default exists.
Section 8.24. INSURANCE. Schedule 8.24 attached hereto lists the
policies and types and amounts of coverage (including deductibles) of theft,
fire, liability, property and casualty and other insurance (including
self-insurance as determined by the Borrower in its reasonable business
judgment) owned, held or maintained by the Borrower and its Subsidiaries on the
date hereof. Such policies of insurance (to the extent applicable) are
maintained with financially sound and reputable insurance companies (which may
include Haul Insurance), funds or underwriters and are of the kinds, cover such
risks and are in such amounts, with such deductibles and exclusions, as are
consistent with the general practices of businesses engaged in similar
activities. All such policies of insurance are in full force and effect and
are valid and enforceable policies and will remain in full force and effect
through the respective dates set forth in such schedule; and coverage
thereunder will not be reduced by, or terminate or lapse by reason of, the
transactions contemplated by this Agreement. The insurance maintained by the
Borrower and its Subsidiaries is sufficient for compliance by the Borrower and
each of its Subsidiaries with
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all requirements of law and all agreements to which the Borrower and each of
its Subsidiaries is a party, to the extent applicable. To the extent that
Allied Systems, ACD, the Canadian Borrower and any other Subsidiary of the
Borrower engaged in the auto hauling business self-insures certain of its
respective properties, such self-insurance protects against such casualties and
contingencies and is at such levels as is in accordance with sound business
practices.
Section 8.25. SUBORDINATED DEBT DOCUMENTS. The Borrower has furnished to
the Banks true, correct and complete copies of the Subordinated Debt Documents.
None of the Subordinated Debt Documents has been amended, modified or
supplemented as of the date hereof, except as permitted by Section 12.13. Each
of the representations and warranties made by the Borrower and any of its
Subsidiaries in any of the Subordinated Debt Documents to which such Person is
a party was true and correct when made and continues to be true and correct in
all respects, and no event of default, or event which, with the passage of time
or the giving of notice would be an event of default, has occurred and is
continuing under the terms of the Subordinated Debt Documents.
Section 8.26. USE OF PROCEEDS.
(A) GENERAL. The proceeds of the Loans and Bankers' Acceptances shall be
used for working capital and general corporate purposes and to provide funds
for the ACD Acquisition and Permitted Acquisitions. The Borrower will obtain
Letters of Credit solely for general corporate purposes.
(B) REGULATIONS G, U AND X. No portion of any Loan or Bankers'
Acceptance is to be used, and no portion of any Letter of Credit is to be
obtained, for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations G, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
(C) INELIGIBLE SECURITIES. No portion of the proceeds of any Loans or
Bankers' Acceptance is to be used, and no portion of any Letter of Credit is to
be obtained, for the purpose of (a) knowingly purchasing, or providing credit
support for the purchase of, Ineligible Securities from a Section 20 Subsidiary
during any period in which such Section 20 Subsidiary makes a market in such
Ineligible Securities, (b) knowingly purchasing, or providing credit support
for the purchase of, during the underwriting or placement period, any
Ineligible Securities being underwritten or privately placed by a Section 20
Subsidiary, or (c) making, or providing credit support for the making of,
payment of principal or interest on Ineligible Securities underwritten or
privately placed by a Section 20 Subsidiary and issued by or for the benefit of
the Borrower or any Subsidiary or other Affiliate of the Borrower.
Section 8.27. PERFECTION OF SECURITY INTEREST. Except as disclosed on
Schedule 8.27 hereto, all filings, assignments, pledges and deposits of
documents or instruments have been made and all other actions have been taken
that are necessary or advisable, under applicable law, to establish and perfect
the Administrative Agent's first-priority security interest in the Collateral.
The Collateral and the Administrative Agent's rights with respect to the
Collateral are not subject to any setoff, claims, withholdings or other
defenses, other than as may be held by account debtors with respect to
Collateral consisting of accounts or general intangibles. A Guarantor or the
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Borrower is the owner of the Collateral free from any lien, security interest,
encumbrance and any other claim or demand, except for Permitted Liens.
Section 8.28. BANK ACCOUNTS. Schedule 8.28 sets forth the account
numbers and location of all bank accounts of the Borrower and each of its
Subsidiaries.
Section 8.29. ACQUISITION DOCUMENTS. The Borrower has furnished to the
Banks true, correct and complete copies of the ACD Acquisition Documents. None
of the Acquisition Documents has been amended, modified or supplemented as of
the date hereof, except as permitted by Section 12.16. Each of the
representations and warranties of the Borrower and its Subsidiaries and, to the
best of the Borrower's knowledge, Ryder System, Inc., contained in the ACD
Acquisition Documents is true and correct in all materials respects as of the
Closing Date.
Section 8.30. SENIOR NOTES. The Borrower has furnished to the Banks a
true, correct and complete copy of the Senior Note Indenture. The Senior Note
Indenture has not been amended, modified or supplemented as of the date hereof,
except as permitted by Section 12.14. Each of the representations and
warranties of the Borrower contained in the Senior Note Indenture is true and
correct in all material respects as of the Closing Date.
Section 9. CLOSING CONDITIONS. This Agreement shall not become
effective, the Banks shall have no obligation to advance any Revolving Credit
Loans requested by the Borrower or the Canadian Borrower hereunder, the Swing
Line Banks shall have no obligation to advance any Swing Line Loan requested by
the Borrower or, as the case may be, the Canadian Borrower hereunder, the
Letter of Credit Bank shall have no obligation to issue, extend or renew any
Letters of Credit hereunder, and the Canadian Banks shall have no obligation to
issue, purchase or accept any Bankers' Acceptance unless and until the date
(the "Closing Date") that each of the following conditions precedent is
satisfied:
Section 9.1. DELIVERY OF LOAN DOCUMENTS; PAYMENT OF FEES. (a) Each of
the Loan Documents shall have been duly and properly authorized, executed and
delivered by the respective party or parties thereto and shall be in full force
and effect on and as of the Closing Date.
(b) Executed original counterparts of the Loan Documents shall have been
furnished to each Bank.
(c) The Banks shall have received a certificate from the Borrower as to
the matters set forth in Section Section 9.2, 9.3 and 9.4 hereof.
(d) The Administrative Agent shall have received from the Borrower the
Administrative Agent's Fee pursuant to the terms of the Fee Letter and other
fees payable by the Borrower on the Closing Date.
Section 9.2. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 8 hereof shall have been correct as of the date
on which made and shall also be correct at and
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as of the Closing Date with the same effect as if made at and as of such time,
except to the extent that the facts upon which such representations and
warranties are based may have changed in the ordinary course as a result of
transactions permitted or contemplated hereby.
Section 9.3. PERFORMANCE; NO DEFAULT. The Borrower and the Canadian
Borrower and each of their Subsidiaries shall have performed and complied with
all terms and conditions herein required to be performed or complied with by it
prior to or at the time of the Closing Date, and at the time of the Closing
Date, there shall exist no Default or Event of Default or condition which, with
either or both the giving of notice or the lapse of time, would result in a
Default or an Event of Default upon consummation of the initial borrowing of
Revolving Credit Loans or otherwise.
Section 9.4. REQUISITE ACTION. All requisite action necessary for the
valid execution, delivery and performance by the Borrower and each of its
Subsidiaries of this Agreement and the other Loan Documents to which it is or
is to become a party shall have been duly and effectively taken, and evidence
thereof satisfactory to the Banks shall have been provided to each of the
Banks.
Section 9.5. PROCEEDINGS AND DOCUMENTS. All proceedings in connection
with the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in substance and in form to the
Administrative Agent and to the Administrative Agent's Special Counsel, and the
Administrative Agent and such counsel shall have received all information and
such counterpart originals or certified or other copies of such documents as
the Administrative Agent or such counsel may reasonably request.
Section 9.6. OPINIONS OF COUNSEL. (a) The Banks shall have received from
Cohen Pollock Merlin Axelrod and Tanenbaum, P.C., counsel to the Borrower and
each of its Subsidiaries (other than the Canadian Borrower and its
Subsidiaries), a favorable opinion addressed to the Banks and dated the Closing
Date, substantially in the form of Exhibit E-1 attached hereto.
(b) The Banks shall have received from Morris/Rose/Ledgett, Canadian
counsel to the Canadian Borrower and its Subsidiaries, a favorable opinion
addressed to the Banks and dated the Closing Date, substantially in the form of
Exhibit E-2 attached hereto.
Section 9.7. BANKING LAW REQUIREMENTS. The Banks shall have received
from the Borrower signed copies of such statements, in substance and form
reasonably satisfactory to the Banks, as they shall require for purposes of
compliance with any applicable regulations of the Board of Governors of the
Federal Reserve System.
Section 9.8. DELIVERY OF CHARTER AND OTHER DOCUMENTS. The Banks shall
have received from the Borrower and each of its Subsidiaries, certified by a
duly authorized officer of such Person (or, in the case of Allied Systems, AAGI
as the managing general partner of Allied Systems) to be true and complete as
of the Closing Date, of each of (a) its charter or other incorporation
documents, or, in the case of Allied Systems, the Partnership Agreement, in
each case as in effect on such date, (b) its by-laws, or, in the case of Allied
Systems, the Partnership Certificate, in each case as in effect on such date,
(c) the records of all action taken to authorize the execution and delivery by
such Persons, or, in the case of Allied Systems, by the Borrower on behalf of
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Allied Systems, of each of the Loan Documents and the performance by such
Person of all of its agreements and obligations under each of such documents
and, in the case of the Borrower and the Canadian Borrower, the borrowings and
other transactions contemplated by this Agreement, and (d) an incumbency
certificate giving the name and bearing a specimen signature of each individual
who shall be authorized to sign, in such Person's name and on such Person's
behalf, each of the Loan Documents to which it is a party, to make application
for the Loans (in the case of the Borrower and the Canadian Borrower), and to
give notices and to take other action on such Person's behalf under the Loan
Documents to which such Person is a party.
Section 9.9. SECURITY DOCUMENTS. The Security Documents shall be
effective to create in favor of the Administrative Agent a legal, valid and
enforceable first (except for liens permitted under Section 12.2 hereof and
entitled to priority under applicable law) security interest in and lien upon
the Collateral. All filings, recordings, deliveries of instruments and other
actions necessary or desirable in the opinion of the Administrative Agent to
protect and preserve such security interests shall have been duly effected.
The Administrative Agent shall have received evidence thereof in form and
substance satisfactory to the Administrative Agent.
Section 9.10. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The
Administrative Agent shall have received from each of the Borrower and each of
its Subsidiaries a completed and fully executed Perfection Certificate and the
results of UCC searches and applicable Canadian lien searches with respect to
the Collateral, indicating no liens other than Permitted Liens and otherwise in
form and substance reasonably satisfactory to the Administrative Agent.
Section 9.11. BALANCE SHEET; COMPLIANCE CERTIFICATE; BORROWING BASE
CERTIFICATE. The Borrower shall have delivered to the Administrative Agent, in
each case, in form and substance satisfactory to the Administrative Agent,
dated as of the Closing Date and based on the most recent month-end financial
statements available to the Borrower, which in no event shall be earlier than
the fiscal month ending June 30, 1997 (a) the pro forma consolidated closing
balance sheet of the Borrower and its Subsidiaries, after giving effect to the
ACD Acquisition, the financing contemplated hereby and the issuance of the
Senior Notes; (b) a Compliance Certificate; and (c) a Borrowing Base
Certificate demonstrating the Borrowing Base Amount as of such date.
Section 9.12. SENIOR NOTES. The Borrower shall have received the
proceeds from the issuance of the Senior Notes, in an aggregate amount of at
least $110,000,000 and not more than $150,000,000, pursuant to such documents
and instruments as shall be satisfactory, in form and substance, to the
Administrative Agent.
Section 9.13. OTHER INDEBTEDNESS. The terms and conditions of any
Indebtedness (including, without limitation, maturities, interest rates,
prepayment and redemption requirements, covenants, defaults, remedies, security
provisions and subordination provisions) of the Borrower and its Subsidiaries
shall be satisfactory to the Administrative Agent in all respects, and the
Administrative Agent shall be satisfied that neither the Borrower nor its
Subsidiaries are subject to contractual or other restrictions that would be
violated by the ACD Acquisition or the
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transactions contemplated hereby, including the granting of security interests
and guarantees and payment of dividends by Subsidiaries.
Section 9.14. CONCERNING THE ACD ACQUISITION.
(a) The ACD Acquisition shall have been consummated for an aggregate
purchase price not to exceed $114,500,000, as adjusted pursuant to Sections 1.4
and 1.5 of the Acquisition Agreement referred to in the definition of "ACD
Acquisition Documents", in accordance with applicable law, pursuant to the ACD
Acquisition Documents and on such terms and conditions as shall have been
disclosed to, and approved by, the Administrative Agent.
(b) The Borrower shall have provided the Banks with a copy, certified to
be true, correct and complete of each of the ACD Acquisition Documents, and
such ACD Acquisition Documents shall be in form and substance satisfactory to
the Administrative Agent and no provision thereof shall have been amended,
supplemented, waived or otherwise modified without the consent of the
Administrative Agent.
Section 9.15. SATISFACTORY COMPLETION OF DUE DILIGENCE; ETC.
(a) The Administrative Agent shall have completed and be satisfied in all
respects with its due diligence investigation of the Borrower and its
Subsidiaries, including, without limitation, the Administrative Agent's review
and satisfaction with (i) all management industry customer and supplier
checkings, (ii) all accounting due diligence, (iii) all liabilities assumed or
created in connection with the ACD Acquisition (including, without limitation,
assumed worker's compensation, pension and product liabilities of ACD), and
(iv) all materials prepared by or for the Borrower. The Administrative Agent
shall be satisfied that the written materials furnished to the Administrative
Agent and the Arranger for their review do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements contained therein not misleading.
(b) The Administrative Agent shall have received appraisals from
commercial finance examiners satisfactory to the Administrative Agent, in form
and substance satisfactory to the Administrative Agent, with respect to certain
of the Collateral and environmental reports with respect to any real property
owned by the Borrower or its Subsidiaries.
(c) The Administrative Agent shall be satisfied with the adequacy and
condition of the assets of the Borrower and its Subsidiaries, including without
limitation, the assets to be acquired in the ACD Acquisition.
Section 9.16. CAPITAL STRUCTURE. The Administrative Agent shall be
satisfied in all respects with the financial condition, capital structure
(including, without limitation, amounts of senior and subordinated debt and
equity investments), corporate structure, assets and liabilities of the
Borrower and its Subsidiaries, after giving effect to the ACD Acquisition,
including, without limitation, the continued effectiveness of the Subordinated
Debt.
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Section 9.17. PROJECTIONS. The Administrative Agent shall be satisfied
that the financial forecast of revenues and EBITDA for the Borrower, after
giving effect to the ACD Acquisition, as presented in the Allied Holdings, Inc.
Merger and Acquisition Model prepared by the Borrower, dated August 6, 1997
(the "Projections") are based on reasonable assumptions and are derived from
financial information which is substantially correct. The Administrative Agent
shall be satisfied that the Projections do not contain any untrue statement of
a material nature or omit to state a material fact necessary in order to make
the statements contained therein not misleading. The Administrative Agent
shall be satisfied that there has occurred no material adverse change in the
financial prospects of the Borrower and its Subsidiaries, after giving effect
to the ACD Acquisition, from that contained in the Projections.
Section 9.18. NO MATERIAL ADVERSE CHANGE. The Administrative Agent shall
be satisfied that there shall have occurred no material adverse change in the
business, operations, assets, properties or condition of the Borrower or its
Subsidiaries or the business acquired pursuant to the ACD Acquisition since the
Balance Sheet Date.
Section 9.19. NO LITIGATION. No litigation, inquiry, injunction or
restraining order shall be pending, entered or threatened that, in the
reasonable opinion of the Administrative Agent, could reasonably be expected to
have a material adverse effect on (i) the transactions contemplated hereby or
the ACD Acquisition, (ii) the business, assets, liabilities (actual or
contingent) operations, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries or ACD, (iii) the ability of the Borrower and its
Subsidiaries to perform their obligations under the Loan Documents, (iv) the
rights and remedies of the Administrative Agent and the Banks under the Loan
Documents, or (v) the perfection or priority of any security interests granted
to the Administrative Agent under the Loan Documents.
Section 9.20. CAPITAL MARKETS. The Administrative Agent shall be
satisfied that a clear market exists for the syndication of the financing
contemplated hereby and that there shall have occurred no material adverse
change in the syndication or capital markets or the regulations or policies
affecting the Borrower, its Subsidiaries, the Administrative Agent, the
Arranger or the Banks.
Section 9.21. CONTRACTS. The Administrative Agent shall be satisfied
with its review of all material contracts of the Borrower and its Subsidiaries,
including without limitation, labor agreements and customer contracts
(including, without limitation, the contracts between the Borrower and its
Subsidiaries and General Motors Corporation). The Administrative Agent shall
be satisfied that there shall exist no default under any material contract or
agreement of the Borrower or its Subsidiaries or ACD.
Section 9.22. CONSENTS AND APPROVALS. All governmental and third-party
approvals (including landlords' and other consents) necessary or advisable in
connection with the ACD Acquisition, the financings contemplated hereby and the
continuing operations of the Borrower and its Subsidiaries 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 materially
adverse conditions on the Borrower and its Subsidiaries or the ACD Acquisition.
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Section 9.23. OTHER DOCUMENTATION. All other documentation, including
any tax sharing agreements or other financing arrangements of the Borrower and
its Subsidiaries, shall be reasonably satisfactory in form and substance to the
Banks.
Section 9.24. SOLVENCY CERTIFICATE. The Administrative Agent shall have
received an officer's certificate of the Borrower dated as of the Closing Date
as to the solvency of the Borrower and its Subsidiaries following the
consummation of the ACD Acquisition and the transactions contemplated herein,
substantially in the form attached hereto as Exhibit K.
Section 9.25. PAYOFF ARRANGEMENTS. The Administrative Agent shall have
received a payoff letter, in form and substance satisfactory to the
Administrative Agent, with respect to the existing credit facility of the
Borrower.
Section 10. CONDITIONS OF SUBSEQUENT BORROWINGS. The obligations of the
Banks to make any Revolving Credit Loans, the Swing Line Banks to make any
Swing Line Loans, the Letter of Credit Bank to issue, extend or renew any
Letters of Credit pursuant to Section 3 hereof, and the Canadian Banks to
issue, purchase or accept any Bankers' Acceptances subsequent to the Closing
Date are subject to the following conditions precedent:
Section 10.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Section 8 and otherwise made by the Borrower or any of
its Subsidiaries in writing in connection with the transactions contemplated by
this Agreement subsequent to the date hereof shall have been correct in all
material respects as of the date on which made and shall also be correct in all
material respects at and as of the date of such Borrowing with the same effect
as if made at and as of such time, except to the extent that the facts upon
which such representations and warranties are based may have changed in the
ordinary course of business or as a result of transactions permitted or
contemplated hereby.
Section 10.2. PERFORMANCE; NO DEFAULT. The Borrower and each of its
Subsidiaries shall have performed and complied in all material respects with
all of the terms and conditions herein required to be performed or complied
with by them prior to or at the time of such Borrowing and at the time of such
Borrowing there shall exist no Default or Event of Default or condition which
would, with either or both the giving of notice or the lapse of time, result in
a Default or an Event of Default upon consummation of such Borrowing, or
otherwise.
Section 11. AFFIRMATIVE COVENANTS. The Borrower and the Canadian
Borrower hereby covenant and agree that, so long as any Domestic Commitment or
Canadian Commitment is in effect, any Notes, Letters of Credit or Bankers'
Acceptances are outstanding, any amounts are owing pursuant to this Agreement,
the Swing Line Banks have any obligation to make any Swing Line Loan, the
Letter of Credit Bank has any obligation to issue, extend or renew any Letter
of Credit, or the Canadian Banks have any obligation to issue, purchase or
accept any Bankers' Acceptance, they will and will cause each of their
Subsidiaries to:
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Section 11.1. PUNCTUAL PAYMENT. Duly and punctually pay or cause to be
paid the principal and interest on the Loans, the Notes, the Bankers'
Acceptances, the Commitment Fee, the Letter of Credit Fee, the Fronting Fee,
the Administrative Agent's Fee and all other amounts from time to time owing
hereunder, all in accordance with the terms of this Agreement, the Notes and
the other Loan Documents.
Section 11.2. MAINTENANCE OF OFFICE. Maintain its chief executive office
and principal place of business at the location listed opposite such Person's
name on Schedule 8.12 attached hereto, unless it shall have (a) given the
Administrative Agent at least 30 days' prior written notice of such change of
chief executive office, and (b) filed in all necessary jurisdictions such UCC-3
financing statements or other documents as may be necessary to continue without
impairment or interruption the perfection and priority of the liens on the
Collateral. The Borrower and each of its Subsidiaries will retain its present
name unless it shall have complied with the provisions of clauses (a) and (b)
of the immediately preceding sentence.
Section 11.3. RECORDS AND ACCOUNTS. Keep true individual records and
books of account for each of the Borrower and its Subsidiaries, together with
worksheets to consolidate such records and books of account, in which full,
true and correct entries will be made in accordance with Generally Accepted
Accounting Principles, and maintain adequate accounts and reserves for all
taxes (including income taxes), all depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries, all
contingencies, and all other reserves.
Section 11.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION.
Furnish to the Banks:
(a) As soon as practicable and, in any event, within one hundred and
twenty (120) days after the end of each fiscal year of the Borrower, (i) the
consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal year, and the consolidated statements of income and cash flows
of the Borrower and its Subsidiaries for the fiscal year then ended, each
setting forth in comparative form the figures for the previous fiscal year, all
in reasonable detail, prepared in accordance with Generally Accepted Accounting
Principles, and accompanied by a report and unqualified opinion of the
Borrower's Independent Accountants (who shall be reasonably satisfactory to the
Banks), which report and opinion shall have been prepared in accordance with
generally accepted auditing standards and (ii) the consolidating balance sheets
of the Borrower and each of its Subsidiaries as at the end of such fiscal year,
and the consolidating statements of income and cash flows of the Borrower and
each of its Subsidiaries for the fiscal year then ended, in each case as
reflected on the unaudited worksheets prepared by the Borrower in support of
the consolidated financial statements delivered to the Banks pursuant to clause
(i) hereof. In addition, the Borrower will obtain from such Independent
Accountants and deliver to the Banks within said period of 120 days the
certified statement of such Independent Accountants that they have read a copy
of this Agreement and that, in making the examination necessary for said
certification, performing activities within the normal scope of their audit and
without further inquiry, they have obtained no knowledge of any Default then
existing by the Borrower in the fulfillment of any of the terms, covenants,
provisions or conditions hereof (insofar as the same relate to financial
matters), the Notes, or, if such accountants shall have obtained knowledge of
any then existing Default, they shall disclose in
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such statement any such Default; provided, that such accountants shall not be
liable to the Banks for failure to obtain knowledge of any Default.
(b) As soon as practicable and, in any event, within forty-five (45) days
after the end of each of the first three fiscal quarters in each fiscal year of
the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such fiscal quarter, and consolidated statements of income and
cash flows of the Borrower and its Subsidiaries for the portion of the fiscal
year then ended, each in reasonable detail, prepared in accordance with
Generally Accepted Accounting Principles consistently applied, except for
provisions for footnotes and subject to year-ended audit adjustment and
certified by an Officer's Certificate of the Borrower.
(c) Promptly upon receipt thereof, copies of all management letters of
substance and other reports of substance which are submitted to the Borrower by
its Independent Accountants in connection with any annual or interim audit of
the books of the Borrower made by such accountants.
(d) As soon as practicable but, in any event, within ten (10) Business
Days after the issuance thereof, copies of such other financial statements and
reports as the Borrower shall send to its stockholders generally and copies of
all regular and periodic reports which the Borrower may be required to file
with the Securities and Exchange Commission or any similar or corresponding
governmental commission, department or agency substituted therefor, and copies
of all regular and periodic reports which the Borrower or any of its
Subsidiaries may be required to file with the Interstate Commerce Commission or
any similar or corresponding federal governmental commission, department,
board, bureau, or agency substituted therefor.
(e) As soon as practicable and, in any event, within forty-five (45) days
after the end of each of the first three fiscal quarters in each fiscal year of
the Borrower, and within one hundred and twenty (120) days after the end of the
fourth fiscal quarter in each fiscal year of the Borrower, a certificate
substantially in the form of Exhibit F attached hereto (a "Compliance
Certificate") from the Borrower as at the end of such fiscal quarter and, as
soon as practicable and, in any event, within twenty (20) days of the end of
each calendar month, a certificate substantially in the form of Exhibit G
attached hereto showing the Borrowing Base Amount and the other information set
forth therein as at the end of the immediately preceding month (the "Borrowing
Base Certificate"); provided, that after delivery of the Borrowing Base
Certificate for the month ending March 31, 1998, the Borrower may deliver
Borrowing Base Certificates on a fiscal quarterly basis within twenty (20) days
of the end of each fiscal quarter but provided however that if, at any time
during any fiscal quarter, the sum of the aggregate principal amount of the
Domestic Revolving Credit Loans outstanding plus the aggregate principal amount
of the Domestic Swing Line Loans outstanding plus the Dollar Equivalent of the
aggregate principal amount of the Canadian Swing Line Loans outstanding plus
the Dollar Equivalent of the aggregate principal amount of the Canadian
Revolving Credit Loans outstanding plus the Dollar Equivalent of the aggregate
face amount of Bankers' Acceptances then outstanding plus the aggregate Maximum
Drawing Amount of all Letters of Credit outstanding exceeds an amount equal to
seventy five percent (75%) of the lesser of (i) the Total Commitment in effect
from time
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to time or (ii) the Borrowing Base Amount then in effect, then the Borrower
shall deliver a Borrowing Base Certificate within twenty (20) days of the end
of the then-current calendar month.
(f) As soon as practicable, and in any event, not later than February 1 of
each fiscal year of the Borrower, beginning with the 1999 fiscal year (except
if such disclosure is prohibited under applicable securities laws), the
Borrower's annual forecast for such year, prepared on a quarterly or, at the
discretion of the Borrower, monthly basis, in form and detail substantially
similar to those annual forecasts delivered to the Administrative Agent prior
to the Closing Date.
(g) Simultaneously with the issuance thereof, copies of all notices,
financial statements, reports and other communications of any kind as the
Borrower shall send to the holders of the Subordinated Debt and/or the Senior
Notes.
(h) With reasonable promptness, such other data as the Banks may
reasonably request.
Section 11.5. BUSINESS AND LEGAL EXISTENCE. The Borrower will, and will
cause each of its Subsidiaries to, keep in full force and effect its legal
existence (except for mergers and other transactions permitted by Section 12.5
hereof) and all rights, licenses, leases and franchises reasonably necessary to
the conduct of their businesses.
Section 11.6. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS. The
Borrower will, and will cause each of its Subsidiaries to, comply, in all
material respects, with (i) the applicable laws and regulations wherever its
business is conducted, including all Environmental Laws, (ii) the provisions of
its charter documents and by-laws, and, in the case of Allied Systems, the
Partnership Agreement and Partnership Certificate, (iii) all agreements and
instruments by which it or any of its properties may be bound and (iv) all
applicable laws, regulations, decrees, orders, and judgments. If any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower or any of its Subsidiaries may fulfill any of its obligations
hereunder or any of the other Loan Documents to which the Borrower or such
Subsidiary is a party, the Borrower will, or (as the case may be) will cause
such Subsidiary to, immediately take or cause to be taken all reasonably steps
within the power of the Borrower or such Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the
Administrative Agent and the Banks with evidence thereof.
Section 11.7. PAYMENT OF TAXES. Promptly pay and discharge all lawful
state, provincial and federal taxes, assessments and governmental charges or
levies imposed upon them or upon their income or profit or upon any property,
real, personal or mixed, belonging to them; provided that the Borrower and its
Subsidiaries shall not be required to pay any such tax, assessment, charge or
levy if the same shall not at the time be due and payable or can be paid
thereafter without penalty or if the validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower or such
Subsidiaries shall have set aside on their books reserves deemed by them
reasonably adequate with respect to such tax, assessment, charge or levy.
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Section 11.8. MAINTENANCE OF PROPERTY. Keep such Person's Motor Vehicle
Equipment and other properties material to the operation of such Person's
business in such condition and repair as is customary in such Person's industry
and historical practices, and make all needful and proper repairs,
replacements, additions and improvements thereto as are necessary, in the
reasonable business judgment of such Person's officers, for the conduct of such
Person's business, reasonable wear and tear excepted.
Section 11.9. INSURANCE. Maintain or cause to be maintained insurance in
accordance with historical practices (which may include reasonable
self-insurance for property damage) protecting the Borrower and its
Subsidiaries with respect to (a) fire and extended coverage, and (b) liability
for bodily injury and property damage resulting from operation of Motor Vehicle
Equipment and with respect to real property owned or leased by the Borrower or
any of its Subsidiaries, substantially as listed and described on Schedule 8.24
attached hereto; provided, that the Borrower and its Subsidiaries may, in their
reasonable discretion and consistent with past practices, change the insurances
listed on Schedule 8.24 in a manner not having a material adverse effect on the
business, assets or financial condition of the Borrower and its Subsidiaries,
considered as a whole, or the Borrower, considered individually, or on the
Borrower's or any of its Subsidiaries' ability to perform its obligations under
the Loan Documents to which such Person is a party. In the event that any of
such insurance coverages or policies shall be changed, the Borrower shall,
together with the Compliance Certificate relating to the fiscal quarter in
which such change occurs, deliver to the Administrative Agent an updated
Schedule 8.24. No policy of insurance shall be terminated or cancelled without
30 days' prior written notice to the Administrative Agent.
Section 11.10. INSPECTION OF PROPERTIES AND BOOKS. Permit the Banks, the
Administrative Agent and any designated representatives to visit and inspect
any of the properties of the Borrower and its Subsidiaries to examine the books
of account (and to make copies thereof and extracts therefrom), and to discuss
the affairs, finances and accounts of the Borrower and its Subsidiaries with,
and to be advised as to the same by, such Person's officers, all at such
reasonable times and intervals as any Bank or the Administrative Agent may
reasonably request.
Section 11.11. TITLE AND REGISTRATION. Cause all Motor Vehicle
Equipment, now owned or hereafter acquired by the Borrower or any of its
Subsidiaries, which, under applicable law, is required to be registered, to be
properly registered in the name of such Person and cause all Motor Vehicle
Equipment, now owned or hereafter acquired by the Borrower or any of its
Subsidiaries, the ownership of which, under applicable law, is evidenced by a
certificate of title, to be properly titled in the name of such Person, with
the Administrative Agent's lien noted thereon.
Section 11.12. NOTICE OF MATERIAL CLAIMS AND LITIGATION. Notify the
Banks within five (5) Business Days after becoming aware of the commencement of
any claims (other than claims under a policy of insurance in amounts which,
together with any interest accrued thereon, do not exceed the face value of
such policy), actions, suits, proceedings or investigations of any kind pending
or threatened against the Borrower or any of its Subsidiaries in an amount in
excess of
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$2,500,000, before any court, tribunal or administrative agency or board or
which, if adversely determined, might, either in any case or in the aggregate,
materially adversely affect the business, assets or financial condition of the
Borrower and its Subsidiaries, considered as a whole, or materially impair the
right of the Borrower and its Subsidiaries, considered as a whole, to carry on
their businesses substantially as now conducted, or which question the validity
of this Agreement or the Notes or any other Loan Documents or any action taken
or to be taken pursuant hereto or thereto.
Section 11.13. FUNDING OF PENSION PLANS. With respect to any Guaranteed
Pension Plan, at all times make payment of all contributions required to meet
the applicable minimum funding standards set forth in ERISA and applicable
Canadian tax and pension requirements, and make all contributions to
Multiemployer Plans required pursuant to any applicable collective bargaining
agreements. The Borrower will, and will cause each Related Entity to, prevent
any "employee pension benefit plan", as such term is defined in Section 3 of
ERISA, maintained by the Borrower or any Related Entity from engaging in any
"prohibited transaction", as such term is defined in Section 4975 of the
Internal Revenue Code of 1986, as amended, which could result in a material
liability for the Borrower or any Related Entity. The Borrower will not, nor
will any Related Entity, fail to contribute to or terminate any such pension
plan in a manner which could result in the imposition of a lien or encumbrance
on the assets of the Borrower or any Related Entity pursuant to Section Section
302(f) or 4068 of ERISA.
Section 11.14. COPIES OF PENSION PLAN REPORTS. Upon the request of the
Administrative Agent, deliver to the Administrative Agent (a) copies of all
Forms 5500, Forms 5500-C and/or Forms 5500-R relating to a Guaranteed Pension
Plan together with all attachments thereto, including any actuarial statement
required to be made under Section 103(d) of ERISA, promptly following the date
on which any such form is filed with the Internal Revenue Service and (b)
copies of all operating and governing documents pertaining to the Canadian
Plans, including without limitation summary plan descriptions, actuarial
reports (if any) and annual reports with respect thereto. The Borrower will,
and will cause each Related Entity to, deliver to the Administrative Agent
copies of any request for waiver from the funding standards or extension of the
amortization periods required by Section Section 303 and 304 of ERISA or
Section 412 of the Internal Revenue Code of 1986, as amended, promptly
following the date on which the request is submitted to the Department of Labor
or the Internal Revenue Service, as the case may be.
Section 11.15. NOTICE OF TERMINATION. Furnish to the Administrative
Agent forthwith a copy of (a) any notice of the termination of a Guaranteed
Pension Plan sent by the Borrower or any Related Entity to the Pension Benefit
Guaranty Corporation under Section 4041(a) of ERISA, (b) any notice, report, or
demand sent or received by the Borrower or any Related Entity under Section
Section 4041, 4041A, 4042, 4043, 4062, 4063, 4064, 4066, or 4068 of ERISA or
under Subtitle E of Title IV of ERISA, and (c) any notice, report or demand of
a corresponding type sent or received by the Borrower, the Canadian Borrower or
any of its Subsidiaries under applicable law with respect to any Canadian Plan.
The Borrower will, and will cause each Related Entity to, promptly notify the
Administrative Agent of any "complete withdrawal", "partial withdrawal" or
"reorganization", as such terms are defined in ERISA, with respect to any
Multiemployer Plan upon the Borrower's learning of the existence of such event.
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Section 11.16. PAYMENT OF PENSION BENEFITS. Cause each Guaranteed
Pension Plan to pay all benefits guaranteed by the Pension Benefit Guaranty
Corporation or any corresponding or similar Canadian Person, when due, except
so long as the obligation to pay such benefits is being contested in good faith
by appropriate proceedings by the Borrower or any Related Entity.
Section 11.17. OPERATING RIGHTS. Keep in full force and effect each of
the certificates of convenience and necessity, licenses, permits, operating
rights and operating authorizations listed on Schedule 8.19(a) and Schedule
8.19(b) attached hereto (collectively, "Rights"); provided that any of such
Rights may be permitted to lapse if (i) it shall no longer be necessary to the
conduct of the business of the Borrower and its Subsidiaries or (ii) the
Subsidiary owning such Right shall merge into another Subsidiary of the
Borrower. In the event of the lapse or termination of any such Right, the
Borrower shall promptly deliver to the Administrative Agent and the Banks an
updated Schedule 8.19(a) or Schedule 8.19(b), as appropriate.
Section 11.18. ENVIRONMENTAL COMPLIANCE. Comply, in all material
respects, with all Environmental Laws, including, without limitation, those
concerning the establishment and maintenance of underground tanks and other
underground storage receptacles.
Section 11.19. LINE OF BUSINESS. Continue to engage exclusively in the
businesses conducted by them on the Closing Date and in related businesses.
The Borrower shall cause Haul Insurance to engage exclusively in the business
of providing insurance and related services, substantially all of which
insurance and related services shall be provided for the benefit of the
Borrower and its other Subsidiaries, except as permitted pursuant to Section
8.13 hereof.
Section 11.20. FURTHER ASSURANCES. Cooperate with the Banks and the
Agents and execute such further instruments and documents as any Bank or Agent
shall reasonably request to carry out to its satisfaction the transactions
contemplated by this Agreement and the other Loan Documents.
Section 11.21. COMMERCIAL FINANCE EXAMINATIONS. The Borrower shall
permit the Administrative Agent's commercial finance examiners to conduct
periodic Commercial Finance Examinations (for use by the Administrative Agent
and the Banks only) and the Borrower agrees that the Commercial Finance
Examinations shall be at the Borrower's expense, provided that prior to a
Default or an Event of Default, the Borrower shall not be obligated to pay for
more than one Commercial Finance Examination during any twelve month period.
Section 11.22. NOTICE OF DEFAULT. The Borrower shall promptly notify the
Administrative Agent and each of the Banks in writing of the occurrence of any
Default or Event of Default of which the Borrower shall have actual knowledge.
Section 12. NEGATIVE COVENANTS. The Borrower and the Canadian Borrower
agree that, so long as any Commitment is in effect, any Notes, Letters of
Credit or Bankers' Acceptances are outstanding, any amounts are owing pursuant
to this Agreement, the Swing Line Banks have any obligation to make any Swing
Line Loans, the Letter of Credit Bank has any
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obligation to issue, extend or renew any Letter of Credit, or the Canadian
Banks have any obligation to issue, purchase or accept any Bankers' Acceptance,
they will not and will not permit any of their Subsidiaries to:
Section 12.1. INDEBTEDNESS. Create, incur, assume, guarantee, agree to
purchase, or repurchase or provide funds in respect of, or otherwise become or
be or remain liable with respect to, any Indebtedness of any type whatsoever
owed to any Person, except:
(a) with respect to the Notes and any other Indebtedness incurred pursuant
to the terms of this Agreement;
(b) Indebtedness and other liabilities incurred by the Borrower or any of
its Subsidiaries (other than AH or Haul Insurance) in the ordinary course of
business not incurred through (i) the borrowing of money, or (ii) the obtaining
of credit, except for credit on an open account basis customarily extended in
connection with normal purchases or leases of goods and services;
(c) Indebtedness for taxes, assessments, governmental charges or levies to
the extent that payment thereof shall not at the time be required to be made in
accordance with the provisions of Section 11.6 hereof;
(d) Secured Property Indebtedness of the Borrower or any of its
Subsidiaries (other than AH or Haul Insurance), provided that the aggregate
amount of all such Secured Property Indebtedness shall not exceed $25,000,000
at any time, and provided further, that on the date on which any such Secured
Property Indebtedness is incurred, created, assumed or guaranteed by the
Borrower or any of its Subsidiaries (other than AH or Haul Insurance), the
aggregate amount of such Secured Property Indebtedness (i) in the case of
Secured Property Indebtedness secured by Motor Vehicle Equipment, does not
exceed 100% and is not less than 80% of the Net Equipment Value of such Motor
Vehicle Equipment and (ii) in the case of Secured Property Indebtedness secured
by any other property, does not exceed 100% of the appraised value of such
property, based on appraisals reasonably satisfactory to the Administrative
Agent;
(e) Indebtedness in respect of judgments or awards which have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder, or in respect of which the Borrower or the
appropriate Subsidiary of the Borrower shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which a stay
or execution shall have been obtained pending such appeal or review;
(f) Indebtedness of a Guarantor to the Borrower or to AH and Indebtedness
of the Borrower to a Guarantor, in each case, which is evidenced by an
Intercompany Note;
(g) Indebtedness of the Borrower with respect to interest rate protection
arrangements, foreign exchange arrangements, and hedging arrangements relating
to fuel costs, provided that all such arrangements are entered into in
connection with bona fide hedging operations and not for speculation;
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(h) Indebtedness of the Borrower and its Subsidiaries (other than AH or
Haul Insurance) in respect of Sale-Leasebacks permitted under Section 12.6
hereof;
(i) the Subordinated Debt and any replacement or refinancing thereof so
long as such replacement or refinancing Indebtedness is unsecured, does not
increase the principal amount thereof, does not shorten the tenor thereof, is
on terms no more onerous to the Borrower, and is expressly subordinated and
made junior to the payment and performance in full of the Obligations pursuant
to subordination provisions in form and substance satisfactory to the
Administrative Agent;
(j) the Senior Notes and any Indebtedness of the Borrower issued in
replacement or refinancing thereof so long as such replacement or refinancing
Indebtedness is unsecured, is in an aggregate principal amount not greater
than, has a maturity not earlier than, and is on terms no more onerous to the
Borrower than, the Senior Notes;
(k) unsecured Indebtedness of the Borrower and the Guarantors, provided
that the aggregate amount of all such unsecured Indebtedness incurred under
this Section 12.1(k) shall not at any time exceed $5,000,000;
(l) other Indebtedness existing on the Closing Date and described on
Schedule 12.1 attached hereto;
(m) the Haul Insurance L/Cs, provided that none of the obligations,
contingent or otherwise, of Haul Insurance, including without limitation the
Haul Insurance L/Cs, shall be guarantied by the Borrower or any of its other
Subsidiaries;
(n) Indebtedness (which specifically shall not include obligations of the
Borrower to pay insurance premiums and related fees) of the Borrower to Haul
Insurance in a maximum aggregate amount outstanding at any time not to exceed
the amount of the Borrower's equity Investment in Haul Risk at such time;
(o) Indebtedness in respect of Operating Leases;
(p) Indebtedness of a Foreign Subsidiary (other than Foreign Subsidiaries
which are Guarantors) incurred pursuant to a local working capital line of
credit; provided that (i) the aggregate outstanding amount of such Indebtedness
shall not, at any time, exceed $10,000,000 and (ii) the sum of (x) the
aggregate outstanding amount of such Indebtedness plus (y) the aggregate amount
of Indebtedness outstanding pursuant to Section 12.1(d) shall not, at any time,
exceed $30,000,000; and
(q) Indebtedness of the Borrower and the Guarantors consisting of a
guaranty of (i) Indebtedness of a Guarantor otherwise permitted under this
Section 12.1 or (ii) Indebtedness of a Foreign Subsidiary incurred pursuant to
Section 12.1(p); provided that the liability of the Borrower and
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the Guarantors under such guaranty is limited to the equity interests in such
Foreign Subsidiary pledged by the Borrower and the Guarantors pursuant to
Section 12.2(j).
Section 12.2. LIENS. Create, incur, assume or permit to exist any
mortgage, lien, charge, security interest or other encumbrance on any real or
personal property or asset, except:
(a) liens and security interests granted to secure the Obligations, as
contemplated by Section 7 hereof;
(b) liens for taxes or assessments or governmental charges or levies if
payment shall not at the time be required to be made in accordance with Section
11.6 hereof;
(c) liens in respect of pledges or deposits by the Borrower or any of its
Subsidiaries (other than AH or Haul Insurance) (i) under workers' compensation
laws or similar legislation, (ii) in connection with surety, appeal and similar
bonds incidental to the conduct of litigation, fuel purchases, road taxes, road
use fees and customs, and (iii) in connection with bid, performance or similar
bonds which do not exceed in the aggregate $2,500,000; and mechanics',
laborers' and materialmen's and similar liens not then delinquent or which are
being contested in good faith by appropriate proceedings; and liens incidental
to the conduct of the business of the Borrower and its Subsidiaries (other than
AH or Haul Insurance) which were not incurred in connection with the borrowing
of money or the obtaining of advances or credit, all of which liens permitted
by this paragraph (c) do not in the aggregate materially detract from the value
of the property (except for any liens which are being contested in good faith
by appropriate proceedings) or materially impair the use thereof in the
operation of the business of the Borrower and its Subsidiaries as a whole;
(d) liens on Motor Vehicle Equipment or real property financed by Secured
Property Indebtedness (to the extent such Secured Property Indebtedness is
permitted by Section 12.1(d) hereof);
(e) liens in respect of judgments or awards, the Indebtedness with respect
to which is permitted by Section 12.1(e) hereof;
(f) encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens under leases
to which the Borrower or a Subsidiary of the Borrower (other than AH or Haul
Insurance) is a party, and other minor liens or encumbrances on real or
personal property of the Borrower and its Subsidiaries (other than AH or Haul
Insurance) none of which in the opinion of the Borrower interferes materially
with the use of the property affected in the ordinary conduct of the business
of the Borrower and its Subsidiaries, which defects do not individually or in
the aggregate have a material adverse effect on the business of the Borrower
individually or of the Borrower and its Subsidiaries, considered as a whole;
(g) other liens existing on the Closing Date and described on Schedule
12.2 attached hereto;
<PAGE> 90
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(h) liens on cash or cash equivalents of Haul Insurance to secure the Haul
Insurance L/Cs granted to the issuers thereof;
(i) liens on assets of Foreign Subsidiaries (other than Canadian
Subsidiaries) securing Indebtedness permitted pursuant to Section 12.1(p); and
(j) liens on the equity interests owned by the Borrower and its
Subsidiaries in Foreign Subsidiaries which are pledged to the lenders
thereunder to secure the obligations of such Foreign Subsidiaries under
Indebtedness permitted pursuant to Section 12.1(p) and the guaranty obligations
of the Borrower and the Guarantors under Section 12.1(q); provided that the
Borrower and its Subsidiaries shall provide the Administrative Agent with a
second priority lien on such equity interests.
Section 12.3. INVESTMENTS. Make, or permit to exist, any Investments,
directly or indirectly, other than:
(a) Marketable direct obligations of the United States of America which
mature within one year from the date of issue;
(b) Certificates of deposit and bankers' acceptances of any Bank or any
Affiliate of any Bank;
(c) (i) Certificates of deposit and bankers' acceptances of other domestic
banks having total assets in excess of $10,000,000,000 or Fidelity National
Bank or such other banks as may be approved by the Banks in their sole
discretion, (ii) demand and time deposits in any United States or Canadian
bank, provided that the aggregate amount of such demand and time deposits in
any one such bank shall not exceed $500,000, and (iii) demand and time deposits
by any Foreign Subsidiary in any bank; provided that the aggregate amount of
such demand and time deposits shall not, at any time, exceed $2,000,000;
(d) Securities commonly known as "commercial paper" issued by any company
organized and existing under the laws of the United States of America or any
state thereof which at the time of purchase have been rated and the ratings for
which are not less than "P-1" if rated by Moody's, and not less than "A-1" if
rated by Standard and Poor's;
(e) Investments by the Borrower and AH in the Guarantors which are
evidenced by Intercompany Notes and Investments by the Borrower and AH in the
Guarantors which are equity investments;
(f) Investments by the Borrower or any Subsidiary of the Borrower (other
than AH or Haul Insurance) consisting of acquisitions permitted by Section
12.5(e) hereof;
(g) Investments by the Borrower or any Subsidiary of the Borrower (other
than AH or Haul Insurance) to acquire a less than majority interest in another
Person, provided that (i) such Person is in the same or a similar line of
business as the Borrower or such Subsidiary, as
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applicable, (ii) no Default or Event of Default has occurred and is continuing
or would exist after giving effect thereto, (iii) the aggregate amount of all
such Investments made after the Closing Date minus the return of capital
thereon shall not exceed (A) if the ratio of Consolidated Funded Indebtedness
to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to
such Investment, is greater than or equal to 2.75:1.0, $10,000,000 and (B) if
the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA,
determined on a Pro Forma Basis after giving effect to such Investment, is less
than 2.75:1.0, $20,000,000, and (iv) if the sum of the aggregate amount of all
such Investments made by the Borrower and its Subsidiaries during the period of
three hundred sixty-five (365) days ending on the date of such Investment plus
the aggregate consideration paid or to be paid (including assumption of
liabilities) by the Borrower and its Subsidiaries in connection with
acquisitions permitted pursuant to Section 12.5(e) hereof during the period of
three hundred sixty-five (365) days ending on the date of such Investment
exceeds (A) if the ratio of Consolidated Funded Indebtedness to Consolidated
EBITDA, determined on a Pro Forma Basis after giving effect to such Investment,
is greater than or equal to 2.75:1.0, $15,000,000 and (B) if the ratio of
Consolidated Funded Indebtedness to Consolidated EBITDA, determined on a Pro
Forma Basis after giving effect to such Investment, is less than 2.75:1.0,
$30,000,000, then the Majority Banks shall have given their prior written
consent to such Investment;
(h) Other Investments described on Schedule 12.3 attached hereto;
(i) Investments by the Borrower in Haul Insurance in a maximum aggregate
amount not to exceed the amount of capital required to be maintained by Haul
Insurance under the laws of the Cayman Islands, provided that such Investments
shall be limited to the amount of capital required which arises from the
insurance risks associated with the Borrower and its Subsidiaries (and not
insurance risks relating to third parties);
(j) Investments by Haul Insurance in the Borrower corresponding to the
Indebtedness permitted by Section 12.1(n) hereof and other Investments by Haul
Insurance permitted by the insurance and/or banking laws and regulations of the
Cayman Islands incidental to the conduct of its business as an insurance
company regulated by the laws of the Cayman Islands;
(k) Investments consisting of (i) notes payable to the Borrower or any of
its Subsidiaries from an employee of such Person and resulting from the sale to
such employee of rolling stock which is used by such employee in the business
operations of the Borrower and its Subsidiaries; provided that the aggregate
amount of such Investments shall not, at any time, exceed $8,000,000 and (ii)
non-cash consideration received by the Borrower or any of its Subsidiaries in
connection with a sale of assets permitted pursuant to Section 12.5 hereof;
provided that the aggregate amount of such Investments shall not, at any time,
exceed $5,000,000;
(l) Investments consisting of non-cash consideration received by the
Borrower or any of its Subsidiaries in connection with the settlement of any
claim or litigation; and
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(m) Investments in AH by the Borrower; provided that the aggregate amount
of such Investments (including any such Investments made prior to the date
hereof) shall not, at any time, exceed C$120,000,000.
Section 12.4. DISTRIBUTIONS. (a) The Borrower will not make any
Distributions except that so long as no Default or Event of Default shall have
occurred and be continuing and none would result therefrom the Borrower may
make Distributions provided that (i) the Borrower shall have delivered to the
Administrative Agent a certificate of the appropriate officer of the Borrower
demonstrating on a pro forma basis (based on the most recently ended fiscal
quarter for which financial statements have been prepared and including any new
issuances of equity since the end of such fiscal quarter) after giving effect
to any such Distributions that the ratio of Consolidated Funded Indebtedness to
Consolidated EBITDA will be less than 2.75 to 1.00 and (ii) the sum of
aggregate amount of all Distributions made during the four fiscal quarters
immediately preceding such Distribution plus the amount of such Distribution
does not exceed the lesser of (A) thirty-three percent (33%) of the cumulative
quarterly Consolidated Net Income for such four fiscal quarters as demonstrated
by the Compliance Certificate with respect to such period delivered in
accordance with Section 11.4(e) hereof and (B) $1,500,000.
(b) None of the Borrower's Subsidiaries shall make any Distributions,
except that any Subsidiary of the Borrower may make Distributions to (i) the
Borrower or (ii) a Subsidiary of the Borrower which is the owner of the capital
stock of the Subsidiary making such Distribution; provided, however, that
non-wholly-owned Subsidiaries of the Borrower may make Distributions on a pro
rata basis among the holders of its equity interests.
(c) The Borrower shall not, and shall not permit any of its Subsidiaries
to, create or permit to exist any restriction (other than that contained in
Section 12.4(b) hereof) on the ability of any Subsidiary of the Borrower to pay
dividends to the Borrower or, in the case of a Subsidiary which is not directly
owned by the Borrower, the Subsidiary of the Borrower that is the direct owner
of the capital stock of such Subsidiary.
Section 12.5. MERGER, CONSOLIDATION OR SALE OF ASSETS; ACQUISITIONS.
Become a party to any merger, consolidation or disposition of assets, or agree
to effect any asset acquisition (other than acquisitions of capital assets in
the ordinary course of business) or stock acquisition, except:
(a) (i) mergers, consolidations or amalgamations of any Subsidiary of the
Borrower (other than AH, Haul Insurance and each other Non-Guarantor Subsidiary
of the Borrower) into another Subsidiary of the Borrower (other than AH, Haul
Insurance and each other Non-Guarantor Subsidiary of the Borrower), (ii)
mergers of a Non-Guarantor Subsidiary into another Non-Guarantor Subsidiary,
(iii) mergers or consolidations involving Subsidiaries of the Borrower with the
Borrower pursuant to which the Borrower is the surviving Person, and (iv) the
merger of a Non-Guarantor Subsidiary into the Borrower or a Guarantor so long
as (A) no Default or Event of Default shall have occurred and be continuing or
would result therefrom and (B) the Borrower or such Guarantor is the survivor
of such merger;
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(b) mergers or consolidations involving the Borrower or any Subsidiary of
the Borrower (other than AH, Haul Insurance and each other Non-Guarantor
Subsidiary of the Borrower), provided that (i) the Borrower or such Subsidiary
of the Borrower is the surviving Person and (ii) no Default or Event of Default
has occurred and is continuing or would result from such merger or
consolidation;
(c) sales, leases or rentals of property in the ordinary course of
business (which may include sales, leases or rentals of Motor Vehicle Equipment
and other equipment or real property to be upgraded, replaced or substituted
with other similar or improved property and other such sales, leases, or
rentals consistent with past practices of the Borrower and its Subsidiaries)
and the sale or other transfer of tangible personal property that, in the
reasonable good-faith judgment of the Borrower, has become obsolete or
otherwise unusable in the business or operations of the Borrower and its
Subsidiaries;
(d) sales of assets following the consummation of the ACD Acquisition
which are undertaken to eliminate redundancies (which may include sales of
terminals which are reasonably deemed to be geographically duplicative by the
Borrower); and
(e) the acquisition (whether of stock or of substantially all of the
assets of a business or business division as a going concern or by means of a
merger or consolidation) of a majority interest in any other Person (a
"Permitted Acquisition") provided that (i) such other Person is in the same or
a similar line of business as the Borrower or the acquiring Subsidiary, as
applicable, (ii) no Default or Event of Default has occurred and is continuing
or would exist after giving effect thereto, (iii) if the Borrower or the
acquiring Subsidiary merges with such other Person, the Borrower or such
Subsidiary, as the case may be, is the surviving party, (iv) if such Person is
a Domestic Subsidiary or a Canadian Subsidiary, such Person shall deliver a
guaranty as provided in Section 7(c) hereof and grant a first-priority
perfected lien on and security interest in its assets to the Administrative
Agent, for the benefit of the Banks and the Administrative Agent, (v) in
connection with any acquisition involving consideration paid or to be paid
(including assumption of liabilities) by the Borrower and its Subsidiaries in
excess of $1,000,000, the Borrower has delivered to the Administrative Agent
Compliance Certificates demonstrating, both immediately prior to and
immediately after such acquisition, compliance on a Pro Forma Basis with the
covenants set forth in Section Section 12.1, 12.2, 12.8, 12.9 and 12.10 of this
Agreement, including compliance with the highest performance ratio (in the case
of such covenants requiring a minimum level to be exceeded) or the lowest
performance ratio (in the case of such covenants setting forth a maximum level
not to be exceeded) applicable during the twelve month period immediately
succeeding the date of such Permitted Acquisition, and (vi) if any of (A) the
consideration paid or to be paid (including assumption of liabilities) by the
Borrower and/or the acquiring Subsidiary, as applicable, in connection with any
such acquisition exceeds (I) if the ratio of Consolidated Funded Indebtedness
to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to
such acquisition, is greater than or equal to 2.75:1.0, $10,000,000 and (II) if
the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA,
determined on a Pro Forma Basis after giving effect to such acquisition, is
less than 2.75:1.0, $20,000,000, (B) the aggregate consideration paid or to be
paid (including assumption of liabilities) by the Borrower and each acquiring
Subsidiary in connection with all such
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acquisitions during the period of three hundred sixty-five (365) days ending on
the date of such acquisition plus the aggregate amount of Investments of the
Borrower and its Subsidiaries made during the period of three hundred
sixty-five (365) days ending on the date of such acquisition pursuant to
Section 12.3(g), exceeds (y) if the ratio of Consolidated Funded Indebtedness
to Consolidated EBITDA, determined on a Pro Forma Basis after giving effect to
such acquisition, is greater than or equal to 2.75:1.0, $15,000,000 and (z) if
the ratio of Consolidated Funded Indebtedness to Consolidated EBITDA,
determined on a Pro Forma Basis after giving effect to such acquisition, is
less than 2.75:1.0, $30,000,000, or (C) the aggregate consideration paid or to
be paid (including assumption of liabilities) by the Borrower and each
acquiring Subsidiary in connection with all such acquisitions of Non-Guarantor
Subsidiaries after the Closing Date exceeds $25,000,000 then the Majority Banks
shall have given their prior written consent to such acquisition.
Section 12.6. NO LEASEBACKS. Become liable, directly or indirectly, as
lessee or guarantor or other surety, with respect to any lease of real or
personal property, whether now owned or hereafter acquired, (a) which is to be
sold or transferred by the Borrower or a Subsidiary of the Borrower to any
Person, or (b) which the Borrower or a Subsidiary of the Borrower intends to
use for substantially the same purpose as any other property which has been or
is to be sold or transferred by the Borrower or a Subsidiary of the Borrower to
any Person in connection with such lease (a "Sale-Leaseback"), except for (i)
Sale-Leasebacks between the Borrower and any Guarantor or between Guarantors
and (ii) other Sale-Leasebacks by the Borrower or any of its Subsidiaries
(other than AH or Haul Insurance), provided that the aggregate net book value
of the assets sold in connection with all such Sale-Leasebacks under this
clause (ii) does not exceed $5,000,000 at any time.
Section 12.7. LEASES; LEASES WITH AFFILIATES. Except for any transaction
(a) disclosed on Schedule 8.18 attached hereto, (b) approved by the majority of
the so-called "outside directors" of the Board of Directors of the Borrower, or
(c) pursuant to which the payments required by the Borrower or any of its
Subsidiaries do not exceed $60,000 in the aggregate, neither the Borrower nor
any of its Subsidiaries shall enter into any agreement to rent or lease, as
lessee or lessor, any real or personal property with any Affiliate.
Section 12.8. CONSOLIDATED CASH FLOW RATIO. Permit, as at the end of
each fiscal quarter of the Borrower ending during any period described in the
table set forth below, the Consolidated Cash Flow Ratio for the period
consisting of such fiscal quarter and the three preceding fiscal quarters to be
less than the ratio set forth opposite such period in such table:
<TABLE>
<CAPTION>
Fiscal Quarters Ending Ratio
---------------------- -----
<S> <C>
9/30/97 through 9/30/98 1.35:1.00
12/31/98 through 9/30/99 1.40:1.00
12/31/99 through 9/30/00 1.45:1.00
12/31/00 and thereafter 1.50:1.00
</TABLE>
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Section 12.9. CONSOLIDATED NET WORTH. Permit Consolidated Net Worth at
any time to be less than the sum of (a) $49,000,000, plus (b) on a cumulative
basis, 50% of the sum of positive Consolidated Net Income for each fiscal year
of the Borrower ending after December 31, 1997 with no deductions for losses in
any year, plus (c) seventy-five percent (75%) of the proceeds (net of all
customary and reasonable related expenses) received after the Balance Sheet
Date by the Borrower in connection with any sale by the Borrower of equity
securities issued by the Borrower, minus (d) the aggregate amount of (i)
non-cash charges and expenses incurred by the Borrower and its Subsidiaries in
connection with or resulting from the ACD Acquisition within 365 days of the
Closing Date and (ii) severance and other cash expenses incurred by the
Borrower and its Subsidiaries in connection with or resulting from the ACD
Acquisition within 365 days of the Closing Date and which have been offset by a
commensurate reduction in the cash component of the purchase price payable by
the Borrower and its Subsidiaries in connection with the ACD Acquisition;
provided that (i) such non-cash charges and expenses and such cash expenses
shall have been approved by the Administrative Agent and (ii) the amount of
non-cash charges and expenses and cash expenses subtracted pursuant to this
clause (d) shall not exceed $7,500,000.
Section 12.10. FUNDED DEBT TO EBITDA RATIO. Permit, as at the end of
each fiscal quarter of the Borrower ending during any period described in the
table set forth below, the ratio of Consolidated Funded Indebtedness as at date
to Consolidated EBITDA for the period consisting of such fiscal quarter and the
three preceding fiscal quarters, to be greater than the ratio set forth
opposite such period in such table:
<TABLE>
<CAPTION>
Fiscal Quarters Ending Ratio
---------------------- -----
<S> <C>
12/31/97 through 9/30/99 3.75:1.00
12/31/99 through 9/30/01 3.50:1.00
12/31/01 and thereafter 3.25:1.00
</TABLE>
provided that, for purposes of this Section 12.10 only and for the fiscal
quarter of the Borrower ending on or about (i) December 31, 1997, there shall
be added to Consolidated EBITDA an amount equal to $42,200,000 (representing
EBITDA attributed to ACD for the three quarters prior to the Closing Date),
(ii) March 31, 1998, there shall be added to Consolidated EBITDA an amount
equal to $30,555,000 (representing EBITDA attributed to ACD for the two
quarters prior to the Closing Date), and (iii) June 30, 1998, there shall be
added to Consolidated EBITDA an amount equal to $11,750,000 (representing
EBITDA attributed to ACD for the one quarter prior to the Closing Date). In
the event that the Closing Date does not occur on September 30, 1997, the
Administrative Agent shall adjust the numbers set forth in the foregoing
proviso to reflect the addition or deletion of the appropriate number of days.
<PAGE> 96
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Section 12.11. CAPITAL EXPENDITURES. If the ratio of Consolidated Funded
Indebtedness to Consolidated EBITDA as demonstrated on a Compliance Certificate
delivered in accordance with Section 11.4(e) at the end of any fiscal year of
the Borrower and its Subsidiaries is equal to or exceeds 2.50 to 1.00, the
Borrower shall not and shall not permit any of its Subsidiaries to make Capital
Expenditures during such fiscal year that exceed in the aggregate 6.5% of
Consolidated Revenues for such fiscal year; provided that (i) to the extent
that the full amount of Capital Expenditures permitted hereunder is not
expended by the Borrower and its Subsidiaries in such fiscal year, such
unexpended portion may be carried over and expended in the immediately
following fiscal year only and (ii) such unexpended portion shall be deemed
expended last in such immediately following fiscal year. For purposes of
calculating the amount of Capital Expenditures permitted under this Section
12.11, there shall be deducted from the actual amount of Capital Expenditures
for any fiscal year an amount equal to the greater of (a) $0 and (b) the
aggregate amount of Net Cash Proceeds received by the Borrower and its
Subsidiaries from the sale of assets pursuant to Section Section 12.5(c) and
(d) during such fiscal year and all Capital Expenditures made with insurance or
condemnation proceeds used to repair or replace the property damaged, destroyed
or taken. If the ratio of Consolidated Funded Indebtedness to Consolidated
EBITDA as demonstrated on Compliance Certificates delivered in accordance with
Section 11.4(e) at the end of any fiscal year of the Borrower and its
Subsidiaries is less than 2.50 to 1.00, then the Borrower and its Subsidiaries
shall be permitted to make Capital Expenditures during such fiscal year without
limitation, subject to the other provisions of this Agreement, provided that no
such permitted Capital Expenditures may be carried over to any other fiscal
year.
Section 12.12. TRANSACTIONS WITH AFFILIATES. Except for any transaction
(a) otherwise permitted by the terms of Section 8.18 hereof, (b) approved by
the majority of the so-called "outside directors" of the Board of Directors of
the Borrower or (c) pursuant to which the payments required by the Borrower or
any of its Subsidiaries do not exceed $60,000 in the aggregate, the Borrower
shall not and shall not permit any of its Subsidiaries to engage in any
transaction with any Affiliate (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
such Affiliate or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any such Affiliate has a
substantial interest or is an officer, director, trustee or partner on terms
more favorable to such Person than would have been obtainable on an
arm's-length basis in the ordinary course of business.
Section 12.13. SUBORDINATED DEBT. The Borrower will not effect or permit
any change in or amendment to any of the Subordinated Debt Documents, give any
notice of redemption or prepayment or offer to repurchase, or make any payment
of principal of or interest on or in redemption, retirement or repurchase of
any of the Subordinated Debt, provided that (i) so long as no Default or Event
of Default then exists or would result from such payment, the Borrower may make
regularly scheduled interest payments required by the terms of the Subordinated
Debt Documents, (ii) the Borrower may repay the Subordinated Debt with the
proceeds of replacement or refinancing subordinated Indebtedness incurred
pursuant to Section 12.1(i) hereof, and (iii) the Borrower may repay the
Subordinated Debt with the proceeds of the sale of equity securities to the
extent (A) such proceeds are not required to be applied to the repayment of the
Obligations
<PAGE> 97
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pursuant to Section 2.9(d) and (B) such repayment is made within three hundred
sixty-five (365) days of such sale of equity securities. It is understood by
the parties hereto that, in connection with any repayment, prepayment,
redemption, retirement, or repurchase of the Subordinated Debt pursuant to this
Section 12.13, all principal, interest (other than interest accrued or incurred
in the ordinary course), premium and other costs relating thereto (including,
without limitation, any prepayment penalty, make-whole amount and the like)
shall be paid from the proceeds of such refinancing Indebtedness or sale of
equity securities.
Section 12.14. SENIOR NOTES. The Borrower will not effect or permit any
change in or amendment to any of the Senior Note Indenture or the Senior Notes,
give any notice of redemption or prepayment or offer to repurchase, or make any
payment of principal of or interest on or in redemption, retirement or
repurchase of any of the Senior Notes, provided that so long as no Default or
Event of Default then exists or would result from such payment, (i) the
Borrower may make regularly scheduled payments required by the terms of the
Senior Notes and (ii) the Borrower may repay the Senior Notes with the proceeds
of (A) the sale by it or any of its Subsidiaries of any shares of their stock,
options or warrants for the purchase of stock or other equity or equity
instruments to the extent (I) such proceeds are not required to be applied to
repay the Obligations pursuant to Section 2.9(d) hereof and (II) such repayment
is made within three hundred sixty-five (365) days of such sale of equity
securities, and (B) the issuance of any Indebtedness permitted pursuant to
Section 12.1(j). It is understood by the parties hereto that, in connection
with any repayment, prepayment, redemption, retirement, or repurchase of the
Senior Notes pursuant to this Section 12.14(a), all principal, interest (other
than interest accrued or incurred in the ordinary course), premium and other
costs relating thereto (including, without limitation, any prepayment penalty,
make-whole amount and the like) shall be paid from the proceeds of such
refinancing Indebtedness or sale of equity securities.
Section 12.15. ACD ACQUISITION DOCUMENTS. The Borrower will not effect
or permit any material change in or material amendment to any of the ACD
Acquisition Documents without the prior written consent of the Administrative
Agent.
Section 12.16. NEGATIVE PLEDGES. The Borrower will not, and will not
permit any of its Subsidiaries to, enter into any agreement or instrument which
prohibits the Borrower or any of its Subsidiaries from granting any security
interest in or any mortgage, pledge or lien on or from otherwise encumbering
any of its property or other assets to secure the obligations of the Borrower
or any Guarantor under this Agreement or any Guaranty or any amendment,
restatement, modification, supplement, refinancing or replacement of this
Agreement or any Guaranty, except, in each case, with respect to the assets of
any Foreign Subsidiary with respect to which the security interest granted
herein is prohibited pursuant to the terms of the Indebtedness of a Foreign
Subsidiary permitted pursuant to Section 12.1(p).
<PAGE> 98
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Section 13. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 13.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the
following events ("Events of Default" or, if notice or lapse of time or notice
and lapse of time is required, then, prior to such notice and/or lapse of time,
"Defaults") shall occur:
(a) if the Borrower or the Canadian Borrower shall default in the payment
of any (i) principal hereunder or under any Note when the same shall become due
and payable, whether at maturity or at any date fixed for payment or prepayment
or by declaration as a result of a Default or Event of Default or otherwise or
(ii) interest or other amounts due hereunder or any Note within two (2)
Business Days of when the same shall become due and payable, whether at
maturity or at any date fixed for payment or prepayment or by declaration as a
result of a Default or Event of Default or otherwise; or
(b) if the Borrower shall default in the performance of or compliance with
the covenants set forth in Section 12 hereof; or
(c) if the Borrower shall default in the payment or performance of or
compliance with any other liability, obligation or covenant hereunder other
than those specifically referenced in this Section 13.1 and such default shall
not have been remedied within 20 days after written notice thereof shall have
been given to the Borrower by the Administrative Agent (which notice the
Administrative Agent shall give to the Borrower upon the written instruction of
the Majority Banks); or
(d) if any representation or warranty made by the Borrower or any of its
Subsidiaries herein or in any of the other Loan Documents or in any certificate
or other writing at any time delivered to the Banks pursuant hereto or any of
the other Loan Documents shall prove to have been false or incorrect in any
material respect on the date as of which made; or
(e) if the Borrower or any of its Subsidiaries shall default (as principal
or guarantor or other surety) in the payment of any principal of or premium, if
any, or interest on any Indebtedness for borrowed money or in respect of
capitalized leases equal to or in excess of $2,500,000 in the aggregate, or
with respect to the performance of any of the terms of any evidence of such
Indebtedness or any agreement relating thereto, such default shall continue for
longer than the applicable period of grace, if any, specified therein and no
waiver shall be in effect with respect thereto; or
(f) if the Borrower or any of its Subsidiaries shall admit in writing its
inability to pay its debts or make an assignment for the benefit of creditors,
or if any order for relief is entered in respect of the Borrower or any of its
Subsidiaries under any bankruptcy, reorganization, arrangements, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect; or
<PAGE> 99
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(g) if any order is entered in any proceeding by or against the Borrower
or any of its Subsidiaries decreeing or permitting the dissolution or split-up
of such Person or the winding up of such Person's affairs; or
(h) (i) if any petition or application for the appointment of a liquidator
or receiver or custodian (or similar official) of the Borrower or any of its
Subsidiaries or of any substantial part of such Person's assets is filed by
such Person; or any such petition or application is filed against the Borrower
or any of its Subsidiaries and such Person approves thereof, consents thereto
or acquiesces therein or such petition or application remains undismissed for a
period of sixty (60) days, or (ii) if any proceeding or case relating to the
Borrower or any of its Subsidiaries under any bankruptcy, reorganization,
arrangements, insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction is commenced by such Person; or if any such
proceeding or case is commenced against the Borrower or any of its Subsidiaries
and such Person approves thereof, consents thereto or acquiesces therein or
such proceeding or case remains undismissed for a period of sixty (60) days; or
(i) if there shall remain in force, undischarged, unsatisfied and
unstayed, for more than sixty (60) days, any final judgment against the
Borrower or any of its Subsidiaries which, together with such other outstanding
final judgments against the Borrower and its Subsidiaries, exceeds in the
aggregate $500,000; or
(j) if any judicial lien or attachment on the property of the Borrower or
any of its Subsidiaries in an amount of $500,000 or greater shall not be
released, discharged, bonded or provided for to the satisfaction of the Banks
within sixty (60) days after such lien or attachment shall have come into
existence; or
(k) if there shall occur and be continuing beyond any applicable grace
period any default under any other Loan Document, or if any of such documents
shall cease to be in full force and effect; or
(l) if the Borrower shall at any time own less than 100% of the capital
stock of any of its Subsidiaries which are listed on Schedule 8.16(a) attached
hereto; or
(m) if the Management Group , as adjusted pursuant to any stock split,
stock dividend or recapitalization or reclassification of the capital of the
Borrower; or
(n) if any person or group of persons (within the meaning of Section 13 or
14 of the Securities Exchange Act of 1934, as amended) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of either (i) thirty-five
percent (35%) or more of the outstanding shares of common stock of the Borrower
or (ii) a greater percentage of the outstanding shares of common stock of the
Borrower than is then owned by the Management Group; or, during any period of
twelve consecutive calendar months, individuals who were directors of the
Borrower on the first day of such period shall cease to constitute a majority
of the board of directors of the Borrower; or
<PAGE> 100
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(o) if at any time AH ceases to be treated as a non-resident owned
investment corporation for Canadian income tax purposes unless AH becomes a
Guarantor hereunder within thirty (30) days of such cessation and no other
Default or Event of Default shall have occurred and be continuing; or
(p) if any default or event of default under the Subordinated Debt
Documents or the Senior Notes shall have occurred and be continuing, or if the
Subordinated Debt or the Senior Notes shall be prepaid, redeemed, repurchased
or defeased in whole or in part, or a notice of redemption, repurchase or
defeasance is required to be sent thereunder; or
(q) if a "Change in Control" under and as defined in the Subordinated Debt
Documents shall have occurred, or if a "Control Change Notice" or "Declaration
Notice" under and as defined in the Subordinated Debt Documents shall have been
given; or
(r) if a "Change of Control" under and as defined in the Senior Notes
shall have occurred or if a notice of a "Change of Control Offer" under, and as
defined in the Senior Notes shall have been given; or
(s) if any representation or warranty made by the Borrower or any of its
Subsidiaries or Ryder System, Inc. or any of its affiliates in any of the ACD
Acquisition Documents or in any certificate or other writing at any time
delivered pursuant thereto shall prove to have been false or incorrect on the
date as of which made where such failure to be true and correct could
reasonably be expected to have a material adverse effect on the business,
assets or financial condition of the Borrower and its Subsidiaries, considered
as a whole, or the Borrower, considered individually, or on the Borrower's and
its Subsidiaries', considered as a whole, ability to perform their respective
obligations under the Loan Documents; or
(t) if the Borrower or any Related Entity incurs any unsatisfied
liability, as finally determined, to the Pension Benefit Guaranty Corporation
or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an aggregate
amount exceeding $2,500,000, or the Borrower or any such Person is finally
assessed (beyond any appeal or cure period) withdrawal liability pursuant to
Title IV of ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $2,500,000, or if either of the following occurs with respect to a
Guaranteed Pension Plan: (i) a reportable event within the meaning of Section
4043 of ERISA or (ii) a failure to make a required installment or other payment
(within the meaning of Section 302(f)(1) of ERISA), in each case, which has (A)
resulted in final, non-appealable liability of the Borrower or any of its
Subsidiaries to the Pension Benefit Guaranty Corporation or such Guaranteed
Pension Plan in an amount exceeding $2,500,000 or (B) has caused the
termination of such Guaranteed Pension Plan by the Pension Benefit Guaranty
Corporation, the appointment by the appropriate United States District Court of
a trustee to administer such Guaranteed Pension Plan or the imposition of a
lien in favor of such Guaranteed Pension Plan;
then, in any such event, so long as the same may be continuing, the
Administrative Agent may, and upon request of the Majority Banks, the
Administrative Agent shall, by written notice to the
<PAGE> 101
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Borrower and the Canadian Borrower, declare all amounts owing with respect to
this Agreement, the Notes and the other Loan Documents to be, and they shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived
by the Borrower; provided that in the event of any Event of Default specified
in paragraphs (f), (g) or (h) of this Section 13.1, all such amounts shall
become immediately due and payable automatically and without any requirement of
notice from the Administrative Agent.
Section 13.2. TERMINATION OF COMMITMENTS. If any one or more of the
Events of Default specified in paragraphs (f), (g) or (h) of Section 13.1 shall
occur, any unused portion of the credit hereunder shall immediately and
automatically terminate and each of the Banks shall be relieved of all further
obligations to make Loans to the Borrower or the Canadian Borrower, the Letter
of Credit Bank shall be relieved of all further obligations to issue, extend or
renew Letters of Credit and the Canadian Banks shall be relieved of all further
obligations to issue, purchase and discount Bankers' Acceptances. If any other
Event of Default shall have occurred and be continuing, the Administrative
Agent may, and at the instruction of the Majority Banks, the Administrative
Agent shall, terminate the Total Commitment by written notice to the Borrower
and the Canadian Borrower and upon such notice being given such unused portion
of the Total Commitment hereunder shall terminate immediately and each of the
Banks shall be relieved of all further obligations to make Loans to the
Borrower or the Canadian Borrower, the Letter of Credit Bank shall be relieved
of all further obligations to issue, extend or renew Letters of Credit and the
Canadian Banks shall be relieved of all further obligations to issue, purchase
and discount Bankers' Acceptances. No termination of all or any portion of the
Total Commitment shall relieve (i) the Borrower or the Canadian Borrower or any
Guarantor of any of their Obligations to the Banks or the Agents hereunder or
elsewhere or (ii) any Bank from its obligations to the other Banks and the
Agents hereunder, including, without limitation, under Section 31 hereof.
Section 14. NOTICE AND WAIVERS OF DEFAULT.
Section 14.1. NOTICE OF DEFAULT. If any Person shall give any notice or
take any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement, the Notes or under any
other note, evidence of indebtedness, indenture or other obligation for
borrowed money as to which the Borrower or any of its Subsidiaries is a party
or obligor, whether as principal or surety, the Borrower shall forthwith give
written notice thereof to the Banks, describing the notice or action and the
nature of the claimed default.
Section 14.2. WAIVERS OF DEFAULT. Any Default or Event of Default
specified in Section 13.1 hereof may be waived as provided in Section 24
hereof. Any Default or Event of Default so waived shall be deemed to have been
cured and not to be continuing during the period for which such waiver is
applicable; but no such waiver shall extend to or affect any subsequent like
default or impair any rights arising therefrom.
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Section 15. REMEDIES ON DEFAULT, ETC.
Section 15.1. RIGHTS OF BANKS. In case any one or more of the Events of
Default specified in Section 13.1 hereof shall have occurred and be continuing,
and whether or not all amounts owing with respect to the Notes have been
declared due and payable pursuant to Section 13.1 hereof, each Bank, if owed
any amount with respect to the Notes, may proceed to protect and enforce its
rights by suit in equity, action at law and/or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Agreement or the Notes including the obtaining of the ex parte appointment
of a receiver, and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any other legal or
equitable right of such Bank.
Section 15.2. SETOFF. Regardless of the adequacy of any collateral,
during the continuance of any Event of Default, any deposits or other sums
credited by or due from any of the Banks to the Borrower or the Canadian
Borrower and any securities or other property of the Borrower or the Canadian
Borrower in the possession of such Bank may be applied to or set off by such
Bank against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising, of the Borrower and the Canadian Borrower to such Bank.
Each of the Banks agrees with each other Bank that (a) if an amount to be set
off is to be applied to Indebtedness of the Borrower or the Canadian Borrower
to such Bank, other than Indebtedness evidenced by the Note held by such Bank
or by this Agreement, such amount shall be applied ratably to such other
Indebtedness and to the Indebtedness evidenced by such Note held by such Bank
or by this Agreement, and (b) if such Bank shall receive from the Borrower or
the Canadian Borrower, whether by voluntary payment, exercise of the right of
setoff, counterclaim, cross action, enforcement of the claim evidenced by the
Note held by or other Obligations hereunder owed to such Bank by proceedings
against the Borrower or the Canadian Borrower at law or in equity or by proof
thereof in bankruptcy, reorganization, liquidation, receivership or similar
proceedings, or otherwise, and shall retain and apply to the payment of the
Note held by, and Obligations hereunder owed to, such Bank any amount in excess
of its ratable portion of the payments received by all of the Banks with
respect to the Notes held by, and other amounts owed hereunder to, all of the
Banks, such Bank will make such disposition and arrangements with the other
Banks with respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Note held by it and other Obligations owed it, its
proportionate payment as contemplated by this Agreement; provided that if all
or any part of such excess payment is thereafter recovered from such Bank, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest.
15.3. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following
the occurrence or during the continuance of any Default or Event of Default,
the Administrative Agent, the Canadian Agent or any Bank, as the case may be,
receives any monies in connection with the enforcement of any the Security
Documents, or otherwise with respect to the realization upon any of the
Collateral, such monies shall be distributed for application as follows:
<PAGE> 103
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(a) First, to the payment of, or (as the case may be) the
reimbursement of the Administrative Agent and the Canadian Agent for or
in respect of all reasonable costs, expenses, disbursements and losses
which shall have been incurred or sustained by such Agent in connection
with the collection of such monies by such Agent, for the exercise,
protection or enforcement by such Agent of all or any of the rights,
remedies, powers and privileges of such Agent under this Agreement or any
of the other Loan Documents or in respect of the Collateral or in support
of any provision of adequate indemnity to such Agent against any taxes or
liens which by law shall have, or may have, priority over the rights of
such Agent to such monies;
(b) Second, to all other Obligations in respect of the Loans, the
Letters of Credit, the Bankers' Acceptances, the Notes and other
Obligations arising under this Agreement or the other Loan Documents, in
such order or preference as the Majority Banks may determine; provided,
however, that (i) distributions shall be made (A) pari passu among
Obligations with respect to the Administrative Agent's Fee and all other
Obligations and (B) with respect to each type of Obligation owing to the
Banks, such as interest, principal, fees and expenses, among the Banks
pro rata, and (ii) the Administrative Agent may in its discretion make
proper allowance to take into account any Obligations not then due and
payable;
(c) Third, to the payment and satisfaction of all other Obligations;
(d) Fourth, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Banks and the Agent of
all of the Obligations, to the payment of any obligations required to be
paid pursuant to Section 9-504(1)(c) of the Uniform Commercial Code; and
(e) Fifth, the excess, if any, shall be returned to the Borrower,
the Canadian Borrower or to such other Persons as are entitled thereto.
<PAGE> 104
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Section 16. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
Section 16.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. The
Borrower acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to the Borrower or one or
more of its Subsidiaries, in connection with this Credit Agreement or
otherwise, by a Section 20 Subsidiary. The Borrower, for itself and each of
its Subsidiaries, hereby authorizes (a) such Section 20 Subsidiary to share
with each Agent and each Bank any information delivered to such Section 20
Subsidiary by the Borrower or any of its Subsidiaries, and (b) each Agent and
each Bank to share with such Section 20 Subsidiary any information delivered to
such Agent or such Bank by the Borrower or any of its Subsidiaries pursuant to
this Credit Agreement, or in connection with the decision of such Bank to enter
into this Credit Agreement; it being understood, in each case, that any such
Section 20 Subsidiary receiving such information shall be bound by the
confidentiality provisions of this Credit Agreement. Such authorization shall
survive the payment and satisfaction in full of all of Obligations.
Section 16.2. CONFIDENTIALITY. Each of the Banks and each Agent agrees,
on behalf of itself and each of its affiliates, directors, officers, employees
and representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential
information of the same nature and in accordance with safe and sound banking
practices, any non-public information supplied to it by the Borrower or any of
its Subsidiaries pursuant to this Credit Agreement that is identified by such
Person as being confidential at the time the same is delivered to the Banks or
such Agent, provided that nothing herein shall limit the disclosure of any such
information (a) after such information shall have become public other than
through a violation of this Section 16, (b) to the extent required by statute,
rule, regulation or judicial process, (c) to counsel for any of the Banks or
either Agent, (d) to bank examiners or any other regulatory authority having
jurisdiction over any Bank or an Agent, or to auditors or accountants, (e) to
the Administrative Agent, any Bank or any Section 20 Subsidiary, (f) in
connection with any litigation to which any one or more of the Banks, an Agent
or any Section 20 Subsidiary is a party, or in connection with the enforcement
of rights or remedies hereunder or under any other Loan Document, (g) to a
Subsidiary or affiliate of such Bank as provided in Section 16.1 or (h) to any
assignee or participant (or prospective assignee or participant) so long as
such assignee or participant agrees to be bound by the provisions of Section
18.6.
Section 16.3. PRIOR NOTIFICATION. Unless specifically prohibited by
applicable law or court order, each of the Banks and the Agents shall, prior to
disclosure thereof, notify the Borrower of any request for disclosure of any
such non-public information by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of such Bank by such governmental agency) or pursuant to
legal process.
Section 16.4. OTHER. In no event shall any Bank or Agent be obligated or
required to return any materials furnished to it or any Section 20 Subsidiary
by the Borrower or any of its Subsidiaries. The obligations of each Bank under
this Section 16 shall supersede and replace the obligations of such Bank under
any confidentiality letter in respect of this financing signed and delivered by
such Bank to the Borrower prior to the date hereof and shall be binding upon
any assignee of, or
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purchaser of any participation in, any interest in any of the Loans or
Reimbursement Obligations from any Bank.
Section 17. THE AGENTS.
Section 17.1. AUTHORIZATION.
(a) Each Agent is authorized to take such action on behalf of each of the
Banks and to exercise all such powers as are hereunder and under any of the
other Loan Documents and any related documents delegated to the Agents,
together with such powers as are reasonably incident thereto, provided that no
duties or responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by the Agents.
(b) The relationship between the Agents and the Banks is and shall be that
of an independent contractor. The use of the term "Administrative Agent" or
"Canadian Agent" or "Agents" herein is for convenience only and is used to
describe, as a form of convention, the independent contractual relationship
between the Agents and each of the Banks. Nothing contained in this Agreement
or any of the other Loan Documents shall be construed to create an agency,
trust or other fiduciary relationship between either Agent and any of the
Banks.
(c) As an independent contractor empowered by the Banks to exercise
certain rights and perform certain duties and responsibilities hereunder and
under the other Loan Documents, the Agents are nevertheless a "representative"
of the Banks, as that term is defined in Article 1 of the Uniform Commercial
Code, for purposes of actions for the benefit of the Banks and the Agents with
respect to all collateral security and guaranties contemplated by the Loan
Documents. Such actions include the designation of either Agent as "secured
party", "mortgagee", "lienholder" or the like on all financing statements,
motor vehicle titles and other documents and instruments, whether recorded or
otherwise, relating to the attachment, perfection, priority or enforcement of
any security interests, mortgages, liens or deeds of trust in collateral
security intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Banks and the Agents.
Section 17.2. EMPLOYEES AND AGENTS. The Agents may exercise their powers
and execute its duties by or through employees or agents and shall be entitled
to take, and to rely on, advice of counsel concerning all matters pertaining to
its rights and duties under this Agreement and the other Loan Documents. The
Agents may utilize the services of such Persons as the Agents in their sole
discretion may reasonably determine, and all reasonable fees and expenses of
any such Persons shall be paid by the Borrower.
Section 17.3. NO LIABILITY. Neither of the Agents nor any of their
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent or employee thereof, shall be liable for any
waiver, consent or approval given or any action taken, or omitted to be taken,
in good faith by it or them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the consequences
of
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any oversight or error of judgment whatsoever, except that the Agents or such
other Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
Section 17.4. NO REPRESENTATIONS.
(a) Neither Agent shall be responsible for the execution or validity or
enforceability of this Agreement, the Notes, the Letters of Credit, the
Bankers' Acceptances, any of the other Loan Documents or any instrument at any
time constituting, or intended to constitute, collateral security for the
Notes, or for the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or
instrument hereafter furnished to it by or on behalf of the Borrower or any of
its Subsidiaries, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or
in any instrument at any time constituting, or intended to constitute,
collateral security for the Notes or to inspect any of the properties, books or
records of the Borrower or any of its Subsidiaries. Neither Agent shall be
bound to ascertain whether any notice, consent, waiver or request delivered to
it by the Borrower, the Canadian Borrower or any holder of any of the Notes
shall have been duly authorized or is true, accurate and complete. Neither
Agent has made nor does it now make any representations or warranties, express
or implied, nor does it assume any liability to the Banks, with respect to the
credit worthiness or financial conditions of the Borrower or any of its
Subsidiaries. Each Bank acknowledges that it has, independently and without
reliance upon either Agent, the Documentation Agent or any other Bank, and
based upon such information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement.
(b) For purposes of determining compliance with the conditions set forth
in Section 9, each Bank that has executed this Credit Agreement shall be deemed
to have consented to, approved or accepted, or to be satisfied with, each
document and matter either sent, or made available, by the Administrative Agent
to such Bank for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
such Bank, unless an officer of the Administrative Agent active upon the
Borrower's account shall have received notice from such Bank prior to the
Closing Date specifying such Bank's objection thereto and such objection shall
not have been withdrawn by notice to the Administrative Agent to such effect on
or prior to the Closing Date.
Section 17.5. PAYMENTS.
(a) A payment by the Borrower or the Canadian Borrower to
the appropriate Agent hereunder or any of the other Loan Documents for the
account of any Bank shall constitute a payment to such Bank. Each Agent
agrees promptly to distribute to each Bank such Bank's pro rata share of
payments received by such Agent for the account of the Banks except as
otherwise expressly provided herein or in any of the other Loan Documents.
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(b) If in the reasonable opinion of either Agent the distribution of any
amount received by it in such capacity hereunder, under the Notes or under any
of the other Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have been
adjudicated by a court of competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and distributed by such
Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to such Agent its proportionate share of the
amount so adjudged to be repaid or shall pay over the same in such manner and
to such Persons as shall be determined by such court.
(c) Notwithstanding anything to the contrary contained in this Agreement
or any of the other Loan Documents, (i) any Bank that (A) fails to make
available to the appropriate Agent its pro rata share of any Revolving Credit
Loan, or fails to make available to a Swing Line Bank its pro rata share of any
Swing Line Loan, or fails to make available to the Letter of Credit Bank its
pro rata share of each drawing under any Letter of Credit or (B) fails to
comply with the provisions of Section 15 hereof with respect to making
dispositions and arrangements with the other Banks, where such Bank's share of
any payment received, whether by setoff or otherwise, is in excess of its pro
rata share of such payments due and payable to all of the Banks, and (ii)
Canadian Bank which fails to purchase and accept Banker's Acceptances in each
case as, when and to the full extent required by the provisions of this
Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be deemed
a Delinquent Bank until such time as such delinquency is satisfied. A
Delinquent Bank shall be deemed to have assigned any and all payments due to it
from the Borrower and the Canadian Borrower, whether on account of outstanding
Loans, Letters of Credit, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their respective pro
rata shares of all outstanding Loans. The Delinquent Bank hereby authorizes
each Agent to distribute such payments to the nondelinquent Banks in proportion
to their respective pro rata shares of all outstanding Loans. A Delinquent
Bank shall be deemed to have satisfied in full a delinquency when and if, as a
result of application of the assigned payments to all outstanding Loans of the
nondelinquent Banks, the Banks' respective pro rata shares of all outstanding
Loans have returned to those in effect immediately prior to such delinquency
and without giving effect to the nonpayment causing such delinquency.
Section 17.6. HOLDERS OF NOTES. The Agents may deem and treat the payee
of any Note as the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different name by such
payee or by a subsequent holder, assignee or transferee.
Section 17.7. INDEMNITY. The Banks ratably agree hereby to indemnify and
hold harmless the Agents from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agents have not been reimbursed by the Borrower as
required by Section 19 hereof), and liabilities of every nature and character
arising out of or related to this Agreement, the Notes, or any of the other
Loan Documents or the transactions contemplated or evidenced hereby or thereby,
or the Agents' actions taken hereunder or thereunder, except to the extent that
any of the same shall be directly caused by such Agent's willful misconduct or
gross negligence.
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Section 17.8. AGENTS AS BANKS; DOCUMENTATION AGENT; CO-AGENTS. In their
individual capacity, BKB and the Canadian Bank which shall serve as Canadian
Agent shall have the same obligations and the same rights, powers and
privileges in respect to their Commitments, the Loans made by it, and, if
applicable, Bankers' Acceptances purchased and accepted by it, and as the
holder of any of the Notes, as they would have were they not also Agents. None
of the Documentation Agent or either Co-Agent shall have any obligation,
liability, responsibility or duty under this Agreement other than as applicable
to all Banks as such.
Section 17.9. RESIGNATION; REMOVAL. Each Agent may resign at any time by
giving sixty (60) days' prior written notice thereof to the Banks and the
Borrower and each Agent may be removed at any time by the Majority Banks as a
result of such Agent's willful misconduct or gross negligence upon thirty (30)
days' prior written notice thereof to the Banks, such Agent and the Borrower.
Upon any such resignation or removal, the Majority Banks shall have the right
to appoint a successor Administrative Agent or Canadian Agent. Unless a
Default or Event of Default shall have occurred and be continuing, such
successor Administrative Agent or Canadian Agent shall be reasonably acceptable
to the Borrower. If, in the case of the resignation of the Administrative
Agent or Canadian Agent, no successor Administrative Agent or Canadian Agent
shall have been so appointed by the Majority Banks and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
or Canadian Agent's giving of notice of resignation, then the retiring
Administrative Agent or Canadian Agent may, on behalf of the Banks, appoint a
successor Administrative Agent or Canadian Agent, which shall be a financial
institution having a senior debt rating of not less than A or its equivalent by
Standard & Poor's Ratings Group. Upon the acceptance of any appointment as
Administrative Agent or Canadian Agent hereunder by a successor Administrative
Agent or Canadian Agent, such successor Administrative Agent or Canadian Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Administrative Agent or
Canadian Agent, and the retiring or removed Administrative Agent or Canadian
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's or Canadian Agent's resignation or the
Administrative Agent's or Canadian Agent's removal, the provisions of this
Agreement and the other Loan Documents shall continue in effect for such
Agent's benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Administrative Agent or Canadian Agent.
Section 17.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank
hereby agrees that, upon learning of the existence of a Default or an Event of
Default, it shall promptly notify the Administrative Agent thereof. The
Administrative Agent hereby agrees that upon receipt of any notice under this
Section 17.10 it shall promptly notify the other Banks of the existence of such
Default or Event of Default.
Section 18. ASSIGNMENT AND PARTICIPATION.
Section 18.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided
herein, each Bank may assign to one or more Eligible Assignees a portion of its
interests, rights and obligations under this Agreement (including a portion of
its Domestic Commitment Percentage or Canadian Commitment Percentage); provided
that (a) each such assignment shall be of a constant, and not
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a varying, percentage of all of the assigning Bank's rights and obligations
under this Agreement, (b) the parties to such assignment shall execute and
deliver to the Administrative Agent, for recording in the Register (as
hereinafter defined), an Assignment and Acceptance, substantially in the form
of Exhibit I attached hereto (an "Assignment and Acceptance"), together with
the Note subject to such assignment, (c) the Administrative Agent and, unless a
Default or a Event of Default shall have occurred and be continuing or the
assignment is to an Affiliate of the assigning Bank, the Borrower shall have
given their prior written consent to each such assignment, which consent shall
not be unreasonably withheld, (d) each assignment shall be in a minimum amount
of not less than $5,000,000 (or, if less, such Bank's entire Commitment), and
(e) BKB (and its Affiliates) shall at all times prior to the occurrence of an
Event of Default maintain a Commitment of at least $15,000,000. Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
at least five (5) Business Days after the execution thereof, (i) 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 Bank hereunder,
and (ii) the assigning Bank shall, to the extent provided in such assignment be
released from its obligations under this Agreement.
Section 18.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS;
COVENANTS. By executing and delivering an Assignment and Acceptance, the
parties to the assignment thereunder confirm to and agree with each other and
the other parties hereto as follows: (a) other than the representation and
warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, the assigning Bank makes
no representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
the other Loan Documents or any other instrument or document furnished pursuant
hereto or the attachment, perfection or priority of any security interest or
mortgage; (b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or observance
by the Borrower and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations of any of their
obligations under this Agreement or any of the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; (c) such
assignee confirms that it has received a copy of this Agreement, together with
copies of the most recent financial statements referred to in Section 8.5 and
Section 11.4 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (d) such assignee will, independently and without
reliance upon the assigning Bank, the Agents or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (e) such assignee represents and warrants that it is an
Eligible Assignee; (f) such assignee appoints and authorizes the Agents to take
such action as Agents on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agents by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto; (g) such assignee agrees that it will perform in
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accordance with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Bank; (h) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; and (i) such assignee acknowledges that it has made
arrangements with the assigning Bank satisfactory to the assigning Bank with
respect to its pro rata share of Letter of Credit Fees in respect of
outstanding Letters of Credit.
Section 18.3. REGISTER. The Administrative Agent shall maintain a copy
of each Assignment and Acceptance delivered to it and a register or similar
list (the "Register") for the recordation of the names and addresses of the
Banks and the Commitment Percentages of, and principal amount of the Loans
owing, the Banks from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Canadian
Borrower, the Administrative Agent and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower and
the Banks at any reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Bank agrees to pay to the
Administrative Agent a registration fee in the sum of $3,500. The Borrower
shall have no liability hereunder for payment of the registration fee.
Section 18.4. RESTATED NOTES. Upon its receipt of an Assignment and
Acceptance executed by the parties to such assignment, together with the Note
subject to such assignment, the Administrative Agent shall (a) record the
information contained therein in the Register, and (b) give prompt notice
thereof to the Borrower and the Banks (other than the assigning Bank). Within
five (5) Business Days after receipt of such notice, the Borrower and the
Canadian Borrower, if applicable, at their own expense, shall execute and
deliver to the Administrative Agent, in exchange for the surrendered Note, a
restated Note to the order of such Eligible Assignee in an amount equal to the
amount assumed by such Eligible Assignee pursuant to such Assignment and
Acceptance and a restated Note to the order of the assigning Bank in an amount
equal to the amount retained by it hereunder, if any. Such restated Notes
shall provide that they are replacements for the surrendered Note, shall be in
an aggregate principal amount equal to the aggregate principal amount of the
surrendered Note, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the assigned
Note. Within five (5) days of issuance of any restated Note pursuant to this
Section 18.4, the Borrower and the Canadian Borrower, if applicable, shall
deliver an opinion of counsel, addressed to the Banks and the Agents, relating
to the due authorization, execution and delivery of such restated Notes and the
legality, validity and binding effect thereof, in form and substance
satisfactory to the Banks. The surrendered Note shall be cancelled and
returned to the Borrower.
Section 18.5. PARTICIPATIONS. Each Bank may sell participations to one
or more banks or other entities in all or a portion of such Bank's rights and
obligations under this Agreement and the other Loan Documents; provided that
(a) each such participation shall be in an amount of not less than $5,000,000,
(b) any such sale or participation shall not affect the rights and duties of
the selling Bank hereunder to the Borrower or the Canadian Borrower, and (c)
the only rights granted to the participant pursuant to such participation
arrangements with respect to waivers, amendments or modifications of the Loan
Documents shall be the rights to approve waivers, amendments or modifications
that would reduce the principal of or the interest rate on any Loans,
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extend the term or increase the amount of the Commitment of such Bank as it
relates to such participant, reduce the amount of any Commitment Fees or Letter
of Credit Fees to which such participant is entitled or extend any regularly
scheduled payment date for principal or interest. The Borrower and the
Canadian Borrower hereby agree that each such participant shall have, subject
to the terms of Section 15.2, the right of setoff that is granted to each Bank
pursuant to Section 15.2.
Section 18.6. DISCLOSURE. The Borrower for itself and on behalf of its
Subsidiaries agrees that in addition to disclosures made in accordance with
standard and customary banking practices any Bank may disclose information
obtained by such Bank pursuant to this Agreement to assignees or participants
and potential assignees or participants hereunder; provided that such assignees
or participants or potential assignees or participants shall agree (a) to treat
in confidence such information unless such information otherwise becomes public
knowledge, (b) not to disclose such information to a third party, except as
required by law or legal process and (c) not to make use of such information
for purposes unrelated to such contemplated assignment or participation.
Section 18.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If
any assignee Bank is an Affiliate of the Borrower, then any such assignee Bank
shall have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Administrative Agent pursuant to Section
13.1 and the determination of the Majority Banks shall for all purposes of this
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Loans. If any Bank sells a participating
interest in any of the Loans to a participant, and such participant is the
Borrower or an Affiliate of the Borrower, then such transferor Bank shall
promptly notify the Administrative Agent of the sale of such participation. A
transferor Bank shall have no right to vote as a Bank hereunder or under any of
the other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or modifications to any of the Loan
Documents or for purposes of making requests to the Administrative Agent
pursuant to Section 13.1 to the extent that such participation is beneficially
owned by the Borrower or any Affiliate of the Borrower, and the determination
of the Majority Banks shall for all purposes of this Agreement and the other
Loan Documents be made without regard to the interest of such transferor Bank
in the Loans to the extent of such participation.
Section 18.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank
shall retain its rights to be indemnified pursuant to Section 19 with respect
to any claims or actions arising prior to the date of such assignment. If any
assignee Bank is not incorporated under the laws of the United States of
America or any state thereof, it shall, prior to the date on which any interest
or fees are payable hereunder or under any of the other Loan Documents for its
account, deliver to the Borrower and the Administrative Agent certification as
to its exemption from deduction or withholding of any United States federal
income taxes. Anything contained in this Section 18 to the contrary
notwithstanding, any Bank may at any time pledge all or any portion of its
interest and rights under this Agreement (including all or any portion of its
Note) to any of the twelve Federal Reserve Banks organized under Section 4 of
the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or the
enforcement thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents.
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Section 18.9. ASSIGNMENT BY BORROWER. Neither the Borrower nor the
Canadian Borrower shall assign or transfer any of their rights or delegate any
of their obligations under any of the Loan Documents without the prior written
consent of each of the Banks.
Section 19. EXPENSES. Whether or not the transaction contemplated hereby
shall be consummated, the Borrower will pay (a) the cost of (i) preparing this
Agreement, the other Loan Documents and Security Documents and the instruments
used in connection with the issuance thereof, (ii) any taxes (including any
interest and penalties in respect thereof), other than the Banks' federal and
state income taxes, payable on or with respect to the transactions contemplated
by this Agreement (the Borrower hereby agreeing to indemnify the Banks with
respect thereto), and (iii) the Borrower's performance of and compliance with
the terms hereof; (b) the reasonable fees, expenses and disbursements of the
Administrative Agent's Special Counsel and any local counsel to the
Administrative Agent incurred in connection with the preparation of this
Agreement, the other Loan Documents and Security Documents and the instruments
used in connection with the issuance thereof and the syndication thereof, with
amendments, modifications, approvals, consents or waivers hereto and any
termination hereof; (c) the fees, expenses and disbursements of the
Administrative Agent and the Arranger incurred by the Administrative Agent and
the Arranger in connection with the preparation, administration, syndication
and interpretation of the Loan Documents and other instruments mentioned
herein, (d) all reasonable out-of-pocket expenses (including, without
limitation, reasonable attorney's fees and costs, which attorneys may be
employees of a Bank and reasonable consulting, accounting, appraisal,
investment banking and similar professional fees and charges) incurred by the
Administrative Agent and the Banks in connection with (i) the enforcement or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default (including engineering, appraisal and investment
banking charges) and (ii) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to the Banks' relationship with the
Borrower or any of its Subsidiaries, (e) all reasonable fees, expenses and
disbursements of the Administrative Agent incurred in connection with UCC
searches or UCC filings and applicable Canadian lien searches and filings,
motor vehicle lien notations and other collateral security searches and
filings, and (f) all reasonable costs of conducting appraisals and Commercial
Finance Examinations of the Borrower's properties, including the applicable
daily time charges of the Administrative Agent's commercial finance examiners,
agents, consultants and representatives engaged in such examinations and
appraisals as in effect from time to time, and reasonable out-of-pocket travel
and other related expenses. The covenants of this Section 19 shall survive
payment or satisfaction of payment of amounts owing with respect to this
Agreement or the Notes.
Section 20. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein and in any certificates or other
papers delivered by or on behalf of the Borrower or the Canadian Borrower
pursuant hereto are material and shall be deemed to have been relied upon by
the Banks, notwithstanding any investigation heretofore or hereafter made by
them and shall survive the making by the Banks of the Loans, the making by the
Swing Line Banks of the Swing Line Loans, and the issuance by the Letter of
Credit Bank of
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the Letters of Credit, as herein contemplated, and shall continue in full force
and effect so long as any Letter of Credit or any Loans or other amount due
under this Agreement or the Notes remains outstanding and unpaid or any Bank
has any obligation to make any Loans or the Letter of Credit Bank has any
obligation to issue, extend or renew any Letter of Credit. All statements
contained in any certificate or other paper delivered to the Banks at any time
by or on behalf of the Borrower or the Canadian Borrower pursuant hereto or in
connection with the transaction contemplated hereby shall constitute
representations and warranties by the Borrower or, as the case may be, the
Canadian Borrower hereunder.
Section 21. NOTICES. Except as otherwise specified herein, all notices
and other communications made or required to be given pursuant to this
Agreement shall be in writing and shall be either delivered by hand or mailed
by United States first-class mail, postage prepaid, or sent by telecopy,
telegraph or telex and confirmed by letter, addressed as follows:
(a) if to the Borrower or the Canadian Borrower, at 160 Clairemont
Avenue, Suite 510, Decatur, Georgia 30030, Attention: A. Mitchell Poole,
Jr., President and Chief Financial Officer;
(b) if to the Administrative Agent, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Transportation Division, Andrew K.
Michaud, Vice President, 01-08-01, or such other address for notice as
the Administrative Agent shall last have furnished in writing to the
Person giving the notice;
(c) if to the Canadian Agent, at such address as such Person shall
furnish to the parties hereto upon such Person becoming Canadian Agent
hereunder; and
(d) if to any Bank, at the address for notice as such Bank shall
last have furnished in writing to the Person giving the notice.
Except for Loan Requests and Conversion Requests, any notice so addressed
shall be deemed to have been duly given or made and to have become effective
(i) if delivered by hand to an officer of the party to which it is directed, at
the time of the receipt thereof by such officer, or (ii) if sent by first-class
mail, postage prepaid, on the earlier of (A) the fifth Business Day following
the mailing thereof, or (B) the date of its receipt, if a Business Day, or if
not a Business Day, the next succeeding Business Day or (iii) if sent by
telecopy, telex or cable, at the time of dispatch thereof (upon telephonic
confirmation from any one of Robert J. Rutland, A. Mitchell Poole, Jr., Daniel
H. Popky or David S. Forbes of receipt thereof) if in normal business hours in
the state where received or otherwise at the opening of business on the
following Business Day.
Section 22. MISCELLANEOUS. This Agreement is a contract under seal under
the laws of the Commonwealth of Massachusetts and shall for all purposes be
construed in accordance with and governed by such laws. The rights and
remedies herein expressed are cumulative and not exclusive of any other rights
which any Bank or the Agents would otherwise have. Any instruments required by
any of the provisions hereof to be in the form annexed hereto as an
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exhibit shall be substantially in such form with such changes therefrom, if
any, as may be approved by the Banks and the Borrower. The captions in this
Agreement are for convenience of reference only and shall not define or limit
the provisions hereof. This Agreement or any amendment may be executed in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one instrument. In
proving this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
Section 23. ENTIRE AGREEMENT, ETC. This Agreement and any other
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally or in writing, except as provided in Section 24
hereof.
Section 24. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise
expressly provided in this Section 24, any action to be taken or any consent or
approval required or permitted by this Agreement or any other Loan Document to
be given by the Banks may be given, and any term of this Agreement, any other
Loan Document or any other instrument, document or agreement related to this
Agreement or the other Loan Documents or mentioned therein may be amended and
the performance or observance by the Borrower or any other Person of any of the
terms thereof and any Default or Event of Default (as defined in any of the
above-referenced documents or instruments) may be waived (either generally or
in a particular instance and either retroactively or prospectively) with, but
only with, the written consent of the Majority Banks. Notwithstanding the
foregoing, (a)(i) the rate of interest on the Notes, (ii) the term of the
Notes, (iii) the amount of the Commitments of the Banks, (iv) the amount of
Commitment Fees or Letter of Credit Fees hereunder, (v) the due date of any
payment of principal of or interest on the Notes or any fees payable hereunder,
and (vi) the amount of principal owing to the Banks may not be changed without
the written consent of the Borrower and the written consent of each Bank
affected thereby; (b) the definition of Majority Banks and the definition of
Borrowing Base Amount may not be amended, any substantial portion of the
Collateral may not be released and this Section 24 may not be amended without
the written consent of all of the Banks; (c) the amount of any Letter of Credit
Fees payable for the Letter of Credit Bank's account and Section 17 may not be
amended without the written consent of the Administrative Agent or the Letter
of Credit Bank, as applicable; and (d) no amendment, waiver or consent shall,
unless in writing and signed by the Swing Line Banks in addition to the Banks
required above to take such action, affect the rights and obligations of the
Swing Line Banks under this Credit Agreement. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of any Bank in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No notice to or demand upon the Borrower or the Canadian
Borrower shall entitle the Borrower or the Canadian Borrower to other or
further notice or demand in similar or other circumstances.
Section 25. WAIVER AND RELEASE. EACH OF THE BORROWER AND THE CANADIAN
BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM ARISING OUT OF ANY DISPUTE IN
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CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. Except as prohibited by law, each of the Borrower and the
Canadian Borrower hereby waives any right it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages arising out of the credit relationship among the Borrower, the
Canadian Borrower and the Banks up to and including the date of this Agreement.
Each of the Borrower and the Canadian Borrower (a) certifies that no
representative, agent or attorney of the Banks has represented, expressly or
otherwise, that the Banks would not, in the event of litigation, seek to
enforce the foregoing waivers and (b) acknowledges that it has been induced to
enter into this Agreement, by among other things, the mutual waivers herein.
By its execution hereof and in consideration for the mutual covenants contained
herein and the accommodations granted to the Borrower and the Canadian Borrower
by the Banks herein and in the documents, instruments and agreements executed
in connection herewith, the Borrower expressly waives and releases any and all
claims and causes of actions it may have, or alleges to have (and any defenses
which may arise out of any of the foregoing), against the Banks and any of
their affiliates, employees, directors, officers and Administrative Agents,
arising out of the credit relationship between the Borrower and the Banks up to
and including the date of this Agreement. Each of the Borrower and the
Canadian Borrower agrees that any suit for the enforcement of this Agreement or
any of the Loan Documents may be brought in the courts of the Commonwealth of
Massachusetts or any federal court sitting therein and consents to the
nonexclusive jurisdiction of such court and service of process in any such suit
being made upon the Borrower and the Canadian Borrower by mail at the address
specified in Section 21. Each of the Borrower and the Canadian Borrower hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
Section 26. TERMINATION. Upon the indefeasible payment in full of all of
the Obligations (or, with respect to Letters of Credit, satisfaction of the
Letter of Credit reimbursement obligations by the provision of cash collateral
or back-up letters of credit as provided in Section 2.1(c) hereof) and the
expiration or termination in full of the Commitments and all other commitments
of the Banks, the Swing Line Banks, the Letter of Credit Bank, the
Administrative Agent and the Canadian Agent under this Agreement, the Borrower
shall be entitled to the return, at the Borrower's expense, of all collateral
for the Obligations in the possession or control of the Administrative Agent,
and the Administrative Agent shall execute and deliver such termination
statements as the Borrower reasonably shall request in order to give effect to
the foregoing.
Section 27. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Administrative Agent, the Canadian Agent, the Arranger, their
affiliates, the Banks, and their respective directors, officers, employees and
agents from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Credit
Agreement or any of the other Loan Documents or the transactions contemplated
hereby, except to the extent resulting from the gross negligence or willful
misconduct of such indemnified party, including,
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without limitation, (i) any actual or proposed use by the Borrower or any of
its Subsidiaries of the proceeds of any of the Loans or Letters of Credit, any
actual or alleged infringement of any patent, copyright, trademark, service
mark or similar right of the Borrower or any of its Subsidiaries comprised in
the Collateral, (iii) the Borrower or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan Documents or (iv)
with respect to the Borrower and its Subsidiaries and their respective
properties and assets, the violation of any Environmental Law, the presence,
disposal, escape, seepage, leakage, spillage, discharge, emission, release or
threatened release of any Hazardous Substances or any action, suit, proceeding
or investigation brought or threatened with respect to any Hazardous Substances
(including, but not limited to, claims with respect to wrongful death, personal
injury or damage to property), in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel incurred in connection with any such investigation, litigation or other
proceeding. In litigation, or the preparation therefor, the Banks, the
Administrative Agent, the Canadian Agent and the Arranger and their affiliates
shall be entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrower
under this Section 27 are unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The covenants contained
in this Section 27 shall survive payment or satisfaction in full of all other
Obligations.
Section 28. CANADIAN GUARANTY.
(a) Guaranty of Payment. The Borrower hereby irrevocably guarantees to
the Agents and the Banks, the full and punctual payment when due (whether at
stated maturity, by required pre-payment, by acceleration or otherwise) of all
of the Obligations of the Canadian Borrower, including, without limitation, the
principal and interest accruing on the Canadian Swing Line Loans, Canadian
Revolving Credit Loans, Bankers' Acceptances and all such Obligations which
would become due but for the operation of the automatic stay pursuant to
Section 362(a) of the Federal Bankruptcy Code or any similar provision of any
other bankruptcy or insolvency law and the operation of Section Section 502(b)
and 506(b) of the Federal Bankruptcy Code or any similar provision of any other
bankruptcy or insolvency law (such obligations of the Canadian Borrower being
referred to herein as the "Guaranteed Obligations"). This Canadian Guaranty is
an absolute, unconditional and continuing guaranty of the full and punctual
payment of all of the Guaranteed Obligations and not of their collectability
only and is in no way conditioned upon any requirement that the Agents or any
Bank first attempt to collect any of the Guaranteed Obligations from the
Canadian Borrower or resort to any collateral security or other means of
obtaining payment. Should an Event of Default occur as a result of a default
by the Canadian Borrower in the payment of any of the Guaranteed Obligations,
the Obligations of the Borrower hereunder with respect to such Guaranteed
Obligations in default shall, upon demand by the Administrative Agent or the
Canadian Agent, become immediately due and payable to the Administrative Agent
or the Canadian Agent, for the benefit of the Banks and the Agents, without
demand or notice of any nature, all of which are expressly waived by the
Borrower. Payments by the Borrower hereunder may be required by the Agents on
any number of occasions. All payments by the Borrower hereunder shall be made
to the Agents, in the manner
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and at the place of payment specified therefor in Section 6.1 hereof, for the
account of the Banks and the Agents.
(b) The Borrower's Agreement to Pay Enforcement Costs, etc. The Borrower
further agrees, as the principal obligor and not as a guarantor only, to pay to
the applicable Agent, on demand, all reasonable costs and expenses (including
court costs and legal expenses) incurred or expended by such Agent or any Bank
in connection with the Guaranteed Obligations, this Canadian Guaranty and the
enforcement thereof, together with interest on amounts recoverable under this
Section 28(b) from the time when such amounts become due until payment, whether
before or after judgment, at the rate of interest for overdue principal set
forth in Section 6.3 hereof, provided that if such interest exceeds the maximum
amount permitted to be paid under applicable law, then such interest shall be
reduced to such maximum permitted amount.
(c) Waivers by the Borrower; Banks' Freedom to Act. The Borrower agrees
that the Guaranteed Obligations will be paid strictly in accordance with their
respective terms, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Agents or any Bank with respect thereto. The Borrower waives promptness,
diligence, presentment, demand, protest, notice of acceptance, notice of any
Guaranteed Obligations incurred and all other notices of any kind, all defenses
which may be available by virtue of any valuation, stay, moratorium law or
other similar law now or hereafter in effect, any right to require the
marshalling of assets of the Canadian Borrower or any other entity or other
Person primarily or secondarily liable with respect to any of the Guaranteed
Obligations, and all suretyship defenses generally. Without limiting the
generality of the foregoing, the Borrower agrees to the provisions of any
instrument evidencing, securing or otherwise executed in connection with any
Guaranteed Obligation and agrees that the Guaranteed Obligations of the
Borrower hereunder shall not be released or discharged, in whole or in part, or
otherwise affected by (i) the failure of the Agents or any Bank to assert any
claim or demand or to enforce any right or remedy against the Canadian Borrower
or any other entity or other person primarily or secondarily liable with
respect to any of the Guaranteed Obligations; (ii) any extensions, compromise,
refinancing, consolidation or renewals of any Guaranteed Obligation; (iii) any
change in the time, place or manner of payment of any of the Guaranteed
Obligations or any rescissions, waivers, compromise, refinancing, consolidation
or other amendments or modifications of any of the terms or provisions of this
Agreement, the other Loan Documents or any other agreement evidencing, securing
or otherwise executed in connection with any of the Guaranteed Obligations;
(iv) the addition, substitution or release of any entity or other person
primarily or secondarily liable for any Guaranteed Obligation; (v) the adequacy
of any rights which the Agents or any Bank may have against any collateral
security or other means of obtaining repayment of any of the Guaranteed
Obligations; (vi) the impairment of any collateral securing any of the
Guaranteed Obligations, including without limitation the failure to perfect or
preserve any rights which the Agents or any Bank might have in such collateral
security or the substitution, exchange, surrender, release, loss or destruction
of any such collateral security; or (vii) any other act or omission which might
in any manner or to any extent vary the risk of the Borrower or otherwise
operate as a release or discharge of the Borrower (other than the indefeasible
payment in full, in cash, of all of the Guaranteed Obligations and the
irrevocable termination of the Commitments), all of which may be done without
notice to the Borrower. To
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the fullest extent permitted by law, the Borrower hereby expressly waives any
and all rights or defenses arising by reason of (A) any "one action" or
"anti-deficiency" law which would otherwise prevent either Agent or any Bank
from bringing any action, including any claim for a deficiency, or exercising
any other right or remedy (including any right of set-off), against the
Borrower before or after such Agent's or such Bank's commencement or completion
of any foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (B) any other law which in any other way would otherwise require
any election of remedies by either Agent or any Bank.
(d) Unenforceability of Guaranteed Obligations. If for any reason the
Canadian Borrower has no legal existence or is under no legal obligation to
discharge any of the Guaranteed Obligations, or if any of the Guaranteed
Obligations have become irrecoverable from the Canadian Borrower by reason of
such Person's insolvency, bankruptcy or reorganization or by other operation of
law or for any other reason (other than the indefeasible payment in full, in
cash, of all of the Guaranteed Obligations and the irrevocable termination of
the Total Canadian Commitment), to the extent permitted by law, this Canadian
Guaranty shall nevertheless be binding on the Borrower to the same extent as if
the Borrower at all times had been the principal obligor on all such Guaranteed
Obligations. In the event that acceleration of the time for payment of any of
the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Canadian Borrower, or for any other reason, all such
amounts otherwise subject to acceleration under the terms of this Agreement,
the other Loan Documents or any other agreement evidencing, securing or
otherwise executed in connection with any Obligation shall be immediately due
and payable by the Borrower.
(e) Subrogation; Subordination.
(i) Postponement of Rights. Until the final indefeasible payment in
full in cash of all of the Guaranteed Obligations: the Borrower shall not
exercise any rights against the Canadian Borrower arising as a result of
payment by the Borrower hereunder, by way of subrogation, reimbursement,
restitution, contribution or otherwise, and will not prove any claim in
competition with either Agent or any Bank in respect of any payment hereunder
in any bankruptcy, insolvency or reorganization case or proceedings of any
nature; the Borrower will not claim any setoff, recoupment or counterclaim
against the Canadian Borrower in respect of any liability of the Borrower to
the Canadian Borrower; and the Borrower waives any benefit of and any right to
participate in any collateral security which may be held by the Agents or any
Bank.
(ii) Subordination. The payment of any amounts due with respect to any
indebtedness of the Canadian Borrower for money borrowed or credit received now
or hereafter owed to the Borrower is hereby subordinated to the prior payment
in full in cash of all of the Guaranteed Obligations; provided that, so long as
no Event of Default has occurred and is continuing, the Canadian Borrower may
pay, and the Borrower may receive, such payment. The Borrower agrees that,
after the occurrence of any Event of Default, the Borrower will not demand, sue
for or otherwise attempt to collect any such indebtedness of the Canadian
Borrower to the Borrower until all of the Guaranteed Obligations shall have
been irrevocably paid in full in
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cash. If, notwithstanding the foregoing sentence, the Borrower shall collect,
enforce or receive any amounts in respect of such indebtedness while any
Guaranteed Obligations are still outstanding, such amounts shall be collected,
enforced and received by the Borrower as trustee for the Banks and the Agents
and be paid over to the Agents, for the benefit of the Banks and the Agents, on
account of the Guaranteed Obligations without affecting in any manner the
liability of the Borrower under the other provisions of this Canadian Guaranty.
(f) Provisions Supplemental. The provisions of this Section 28 shall be
supplemental to and not in derogation of any rights and remedies of the Banks
and the Agents under any separate subordination agreement which the Agents or
any Bank may at any time and from time to time enter into with the Borrower for
the benefit of the Banks and the Agents.
(g) Further Assurances. The Borrower agrees that it will from time to
time, at the request of the Agents, do all such things and execute all such
documents as the Agents may reasonably consider necessary or desirable to give
full effect to this Canadian Guaranty and to perfect and preserve the rights
and powers of the Banks and the Agents hereunder. The Borrower acknowledges
and confirms that it has established its own adequate means of obtaining from
the Canadian Borrower on a continuing basis all information desired by it
concerning the financial condition of such Persons and that it will look to
such Persons and not to the Agents or any Bank in order for it to keep
adequately informed of changes in any of such Person's financial condition.
(h) Reinstatement. Notwithstanding any termination of this Canadian
Guaranty upon the final and indefeasible payment in full, in cash, of the
Guaranteed Obligations, this Canadian Guaranty shall continue to be effective
or be reinstated, if at any time any payment made or value received with
respect to any Obligation is rescinded or must otherwise be returned by either
Agent or any Bank upon the insolvency, bankruptcy or reorganization of the
Canadian Borrower, or otherwise, all as though such payment had not been made
or value received.
(i) Successors and Assigns. This Canadian Guaranty shall be binding upon
the Borrower, its successors and assigns, and shall inure to the benefit of the
Agents and the Banks and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing sentence, each Bank may, in
accordance with the provisions of Section 18 and subject to the limitations set
forth therein, assign or otherwise transfer this Agreement, the other Loan
Documents or any other agreement or note held by it evidencing, securing or
otherwise executed in connection with the Guaranteed Obligations, or sell
participations in any interest therein, to any other entity or other person,
and such other entity or other person shall thereupon become vested, to the
extent set forth in the agreement evidencing such assignment, transfer or
participation, with all the rights in respect thereof granted to such Bank
herein. The Borrower may not assign any of its Guaranteed Obligations
hereunder.
(j) Currency of Payment. Except with respect to Revolving Credit Loans
deemed made to the Borrower pursuant to Section 2.13(d) the Borrower shall pay
the Guaranteed Obligations in the currency in which such Obligations were
incurred by the Canadian Borrower.
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Section 29. GOVERNING LAW. THIS CREDIT AGREEMENT AND, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE
CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). EACH OF THE BORROWER AND THE CANADIAN BORROWER AGREES THAT ANY
SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR
ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN Section 21. EACH OF THE BORROWER
AND THE CANADIAN BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH
SUIT IS BROUGHT IN AN INCONVENIENT COURT.
Section 30. WITHHOLDING TAXES. The Borrower and Canadian Borrower hereby
agree that (a) any and all payments made by the Borrower and/or the Canadian
Borrower hereunder and under the other Loan Documents shall be made free and
clear of, and without deduction for, any and all taxes, levies, fees, duties,
imposts, deductions, charges or withholdings of any nature whatsoever,
excluding, in the case of the Agents or the Banks or any holder of the Notes,
(i) taxes imposed on, or measured by, its net income or profits, (ii) franchise
taxes imposed on it, (iii) taxes imposed by any jurisdiction as a direct
consequence of it, or any of its affiliates, having a present or former
connection with such jurisdiction, including, without limitation, being
organized, existing or qualified to do business, doing business or maintaining
a permanent establishment or office in such jurisdiction, (iv) taxes imposed by
reason of its failure to comply with any applicable certification,
identification, information, documentation or other reporting requirement, or
(v) any backup withholding (all such non-excluded taxes being hereinafter
referred to as "Indemnifiable Taxes"). In the event that any withholding or
deduction from any payment to be made by the Borrower or the Canadian Borrower
hereunder is required in respect of any Indemnifiable Taxes pursuant to any
applicable law, or governmental rule or regulation, then the Borrower or the
Canadian Borrower will (i) direct to the relevant taxing authority the full
amount required to be so withheld or deducted, (ii) forward to the applicable
Agent for delivery to the applicable Bank an official receipt or other
documentation satisfactory to the applicable Agent and the applicable Bank
evidencing such payment to such taxing authority, and (iii) direct to the
applicable Agent for the account of the applicable Banks such additional amount
or amounts as is necessary to ensure that the net amount actually received by
each relevant Bank will equal the full amount such Bank would have received had
no such withholding or deduction (including any Indemnifiable Taxes on such
additional amounts) been required. Moreover, if any Indemnifiable Taxes are
directly asserted against the applicable Agent or any Bank with respect to any
payment received by the Agents or such Bank by reason of the Borrower's or the
Canadian Borrower's failure to properly deduct and withhold such Indemnifiable
Taxes from such payment, the applicable Agent or such Bank may pay such
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Indemnifiable Taxes and the Borrower or the Canadian Borrower will promptly pay
all such additional amounts (including any penalties, interest or reasonable
expenses) as are necessary in order that the net amount received by such Person
after the payment of such Indemnifiable Taxes (including any Indemnifiable
Taxes on such additional amount) shall equal the amount such Person would have
received had not such Indemnifiable Taxes been asserted. Any such payment
shall be made promptly after the receipt by the Borrower or the Canadian
Borrower from the applicable Administrative Agent or such Bank, as the case may
be, of a written statement setting forth in reasonable detail the amount of the
Indemnifiable Taxes and the basis of the claim. If the Borrower or the
Canadian Borrower shall pay any taxes or make any payments with respect to any
taxes which are not Indemnifiable Taxes, then the applicable Agent or the Bank
which has received any such payment or with respect to which any such payment
was made shall reimburse the Borrower or the Canadian Borrower, within five (5)
Business Days of request by such Person, the amount so paid by such Person,
together with interest at the rate then applicable to Base Rate Loans from the
date such amounts were paid by such Person.
(b) The Borrower and the Canadian Borrower shall pay any present or future
stamp or documentary taxes or any other excise or any other similar levies
which arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Document ("Other Taxes"), it being expressly understood that the term "Other
Taxes" does not include (without limitation) any taxes imposed on or measured
by any Bank's or Agent's assets, property, net or gross income, franchise,
receipts, gains or profits.
(c) The Borrower and the Canadian Borrower hereby indemnify and hold
harmless the Agents and each Bank for the full amount of Indemnifiable Taxes or
Other Taxes (including, without limitation, any Indemnifiable Taxes or Other
Taxes imposed on amounts payable under this Section 30) paid by the Agents or
such Bank, as the case may be, and any liability (including penalties, interest
and reasonable expenses) arising therefrom or with respect thereto, by reason
of the Borrower's or the Canadian Borrower's failure to properly deduct and
withhold Indemnifiable Taxes pursuant to paragraph (a) above or to properly pay
Other Taxes pursuant to paragraph (b) above. Any indemnification payment from
the Borrower and the Canadian Borrower under the preceding sentence shall be
made promptly after receipt by the Borrower and the Canadian Borrower from the
applicable Agent or Bank of a written statement setting forth in reasonable
detail the amount of such Indemnifiable Taxes or such Other Taxes, as the case
may be, and the basis of the claim.
(d) If the Borrower or the Canadian Borrower pays any amount under this
Section 30 to the Agents or any Bank and such payee knowingly receives a refund
of any taxes with respect to which such amount was paid, the Agents or such
Bank, as the case may be, shall pay to the Borrower or the Canadian Borrower
the amount of such refund promptly following the receipt thereof by such payee.
(e) In the event any taxing authority notifies the Borrower or the
Canadian Borrower that either of them has improperly failed to deduct or
withhold any taxes (other than
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Indemnifiable Taxes) from a payment made hereunder to the Agents or any Bank,
the Borrower or the Canadian Borrower shall timely and fully pay such taxes to
such taxing authority.
(f) The Agents or the Banks shall, upon the request of the Borrower or the
Canadian Borrower, take reasonable measures to avoid or mitigate the amount of
Indemnifiable Taxes required to be deducted or withheld from any payment made
hereunder (including, without limitation, the completion and delivery of
appropriate forms evidencing such Agent's or such Bank's exemption from
withholding taxes) if such measures can be taken without the imposition on such
Person of any costs or expenses unless the Borrower or the Canadian Borrower
has agreed to reimburse such Person therefor or result in such Person in its
reasonable judgment suffering any material legal or regulatory disadvantage;
provided that if after the date hereof, any change in applicable law,
regulation or treaty results in the imposition on the Borrower or the Canadian
Borrower of a deduction or withholding obligation with respect to amounts
payable to banks or bank holding companies, to the extent that any such change
in applicable law, regulation or treaty relates to amounts payable hereunder
and to the extent that such change results in banks or bank holding companies
receiving an undue benefit arising as a result of the payment of such
additional amount by the Borrower or the Canadian Borrower, the Borrower, the
Canadian Borrower and the Agents shall make a reasonable, good faith effort to
negotiate a change in the terms of this Agreement that would allocate the
benefits and costs (if any) of such deductions and withholdings among the
affected parties in a manner equitable to the Borrower, the Canadian Borrower
and the Banks.
(g) Without prejudice to the survival of any other agreement of the
parties hereunder, the agreements and obligations of the Borrower and the
Canadian Borrower contained in this Section 30 shall survive the payment in
full of the Obligations.
Section 31. PARI PASSU TREATMENT. (a) Notwithstanding anything to the
contrary set forth herein, each payment or prepayment of principal and interest
received after the occurrence of an Event of Default hereunder shall be
distributed pari passu among the Banks, in accordance with the aggregate
outstanding principal amount of the Obligations owing to each Bank divided by
the aggregate outstanding principal amount of all Obligations.
(b) Following the occurrence and during the continuance of any Event of
Default, each Bank agrees that if it shall, through the exercise of a right of
banker's lien, setoff or counterclaim against the Borrower or the Canadian
Borrower (pursuant to Section 15 or otherwise), including a secured claim under
Section 506 of the Bankruptcy Code or other security or interest arising from
or in lieu of, such secured claim, received by such Bank under any applicable
bankruptcy, insolvency or other similar law or otherwise, obtain payment
(voluntary or involuntary) in respect of the Notes, Loans, Bankers'
Acceptances, and other Obligations held by it as a result of which the unpaid
principal portion of the Notes and the Obligations held by it shall be
proportionately less than the unpaid principal portion of the Notes and
Obligations held by any other Bank, it shall be deemed to have simultaneously
purchased from such other Bank a participation in the Notes and Obligations
held by such other Bank, so that the aggregate unpaid principal amount of the
Notes, Obligations and participations in Notes and Obligations held by each
Bank shall be in the same proportion to the aggregate unpaid principal amount
of the Notes
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and Obligations then outstanding as the principal amount of the Notes and other
Obligations held by it prior to such exercise of banker's lien, setoff or
counterclaim was to the principal amount of all Notes and other Obligations
outstanding prior to such exercise of banker's lien, setoff or counterclaim;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 31 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustments restored without interest.
(c) Following the occurrence and during the continuance of any Event of
Default and unless and until the effectiveness of a transfer of Commitments
pursuant to Section 31(d), each Bank agrees that it shall be deemed to have,
automatically upon the occurrence of such Event of Default, purchased from each
other Bank a participation in the risk associated with the Notes and
Obligations held by such other Bank, so that the aggregate principal amount of
the Notes and Obligations held by each Bank shall be equivalent to such Bank's
Total Commitment Percentage. Upon demand by the Administrative Agent, made at
the request of the Majority Banks, each Bank that has purchased such
participation shall pay the amount of such participation to one or more Bank(s)
whose outstanding Loans and participations in Letters of Credit and Bankers'
Acceptances exceed their Total Commitment Percentages.
(d) Upon the written instruction of the Majority Banks, the Total
Canadian Commitment shall be immediately transferred by the Canadian Borrower
and the Borrower to the Total Domestic Commitment; provided that prior to
requesting any such transfer of Commitments, the Agents and the Banks shall
utilize their reasonable best efforts to avoid the imposition of withholding
tax liability on the Borrower and the Canadian Borrower which would arise as a
result of any such transfer of Commitments (including, without limitation, to
the extent useful, the use of participations pursuant to Section 31(c) and the
use of fronting banks in Canada). Upon the effectiveness of any such transfer,
the outstanding Canadian Revolving Credit Loans and Bankers' Acceptances shall
be repaid with advances made to the Borrower under the Domestic Commitments,
advanced by the Banks in such manner that after giving effect thereto, the
percentage of the outstanding Loans and Obligations of each Bank will equal
such Bank's Total Commitment Percentage of all outstanding Loans and
Obligations.
(e) Each of the Borrower and the Canadian Borrower expressly consents to
the foregoing arrangements and agrees that any Person holding such a
participation in the Notes and the Obligations deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrower and the Canadian Borrower
to such Person as fully as if such Person had made a Loan directly to the
Borrower and the Canadian Borrower in the amount of such participation.
<PAGE> 124
-115-
Signed, sealed and delivered, as of the date set forth at the beginning of
this Agreement by the Borrower, the Canadian Borrower, the Administrative Agent
and the Banks.
ALLIED HOLDINGS, INC.
By:
--------------------------------------
Title:
AUTO HAULAWAY INC.
By:
--------------------------------------
Title:
BANKBOSTON, N.A.,
individually and as Administrative Agent
By:
--------------------------------------
Title:
ABN AMRO BANK, N.V.,
individually and as Documentation Agent
By:
--------------------------------------
Title:
By:
--------------------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Co-Agent
By:
--------------------------------------
Title:
<PAGE> 125
-116-
NATIONSBANK, N.A.,
individually and as Co-Agent
By:
-----------------------------
Title:
THE BANK OF NOVA SCOTIA
By:
-----------------------------
Title:
CORESTATES BANK, N.A.
By:
-----------------------------
Title:
CREDIT LYONNAIS ATLANTA AGENCY
By:
-----------------------------
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED
By:
-----------------------------
Title:
ROYAL BANK OF CANADA
By:
-----------------------------
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
-----------------------------
Title:
<PAGE> 1
EXHIBIT 12.1
ALLIED HOLDINGS, INC. AND SUBSIDIARIES
STATEMENTS RE COMPUTATION OF EARNINGS TO FIXED CHARGES
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993, 1994, 1995, AND 1996 AND
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(In Thousands, Except Ratios)
<TABLE>
<CAPTION>
For the years ended For the six months ended
December 31, June 30,
--------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
Interest expense * 6,963 6,042 5,462 11,260 10,720 5,396 5,408
Interest element of rentals 2,017 1,162 1,071 1,785 1,658 827 823
-------- -------- -------- -------- -------- -------- --------
8,980 7,204 6,533 13,045 12,378 6,223 6,231
======== ======== ======== ======== ======== ======== ========
EARNINGS:
Net income 4,806 6,949 11,561 6,146 3,986 2,523 3,711
Extraordinary item - - 2,627 - 935 935 -
Cumulative effect of an
accounting change - 2,592 - - - - -
Income taxes 3,249 4,183 9,393 4,222 3,557 2,504 2,688
Minority interest income (loss) (1,034) (858) - - - - -
Fixed charges 8,980 7,204 6,533 13,045 12,378 6,223 6,231
-------- -------- -------- -------- -------- -------- --------
18,069 21,786 30,114 23,413 20,856 12,185 12,630
======== ======== ======== ======== ======== ======== ========
RATIO OF EARNINGS TO FIXED
CHARGES 2.0x 3.0x 4.6x 1.8x 1.7x 2.0x 2.0x
======== ======== ======== ======== ======== ======== ========
</TABLE>
* Includes amortization of debt expense.
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
and to all references to our firm included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
Atlanta, Georgia
September 30, 1997
<PAGE> 1
EXHIBIT 23.3
The Board of Directors
Allied Holdings, Inc.:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG PEAT MARWICK LLP
Miami, Florida
October 1, 1997
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER
UNREGISTERED 8 5/8% SERIES A SENIOR NOTES DUE 2007
of
ALLIED HOLDINGS, INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED , 1997
=======================================================================
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 1997 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE
OFFER IS EXTENDED BY THE COMPANY.
=======================================================================
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE FIRST NATIONAL BANK OF CHICAGO
For Information by Telephone:
(212) 240-8801
By Registered or Certified Mail or Hand or Overnight Delivery Service:
The First National Bank of Chicago
c/o First Chicago Trust Company of New York
14 Wall Street, 8th Floor, Window 2
New York, New York 10005
By Facsimile Transmission (for Eligible Institutions only):
(212) 240-8939
(Facsimile Confirmation)
(212) 240-8801
(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.)
Capitalized terms used but not defined herein shall have the same
meaning given in the Prospectus (as defined below).
The Letter of Transmittal is to be completed by holders (which term,
for purposes of this document, shall include any participant in the The
Depository Trust Company ("DTC")
<PAGE> 2
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 Old 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 Old Notes into the Exchange
Agent's account at DTC, as well as this Letter of Transmittal (or facsimile
thereof or delivery of an Agent's Message in lieu 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 of this Letter of Transmittal. The term "book-entry
confirmation" means a confirmation of a book-entry transfer of Old Notes 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 part of
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 the Company may enforce this Letter of Transmittal against
such participant.
Holders of Old Notes whose certificates (the "Certificates") for such
Old Notes 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 (as defined in the Prospectus) or who cannot complete the
procedures for book-entry transfer on a timely basis, must tender their Old
Notes according to the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering" in the Prospectus.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
IF YOU WISH TO EXCHANGE UNREGISTERED 8 5/8% SERIES A SENIOR NOTES DUE
2007 FOR AN EQUAL AGGREGATE PRINICIPAL AMOUNT OF REGISTERED 8 5/8% SERIES B
SENIOR NOTES DUE 2007, PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY TENDER
(AND NOT WITHDRAW) OLD NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
SIGNATURES MUST BE PROVIDED
DESCRIPTION OF TENDERED OLD NOTES
Name(s) and Address(es) of Registered Owner(s) Certificate
as it appears on the 8 5/8% Series A Senior Notes Number(s)
due 2007 ("Old Notes") of Old Notes
(Please fill in, if blank)
================================================================================
--------------
<PAGE> 3
--------------
--------------
--------------
--------------
Total
Principal
Amount of Old
Notes Tendered
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED ORIGINAL CAPITAL SECURITIES ARE 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 ORIGINAL CAPITAL SECURITIES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name 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 ORIGINAL
CAPITAL SECURITIES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER
SET FORTH ABOVE.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE ORIGINAL CAPITAL
SECURITIES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER
TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:
----------------------------------------------------------------------
Address:
-------------------------------------------------------------------
<PAGE> 4
LADIES AND GENTLEMEN:
1. The undersigned hereby tenders to Allied Holdings, Inc., a Georgia
corporation (the "Company"), the unregistered 8 5/8% Series A Senior Notes due
2007 (the "Old Notes"), described above pursuant to the Company's offer of
$1,000 principal amount of registered 8 5/8% Series B Senior Notes due 2007 (the
"New Notes"), in exchange for each $1,000 principal amount of the Old Notes,
upon the terms and subject to the conditions contained in the Prospectus date ,
1997 (the "Prospectus"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together constitute the "Exchange Offer").
2. The undersigned hereby represents and warrants that it has full
authority to tender the Old Notes described above. The undersigned will, upon
request, execute and deliver any additional documents deemed by the Company to
be necessary or desirable to complete the tender of Old Notes.
3. If any tendered Original Capital Securities are not exchanged
pursuant to the Exchange Offer for any reason, or if Certificates are submitted
for more Original Capital Securities than are tendered or accepted for exchange,
Certificates for such nonexchanged or nontendered Original Capital Securities
will be returned (or, in the case of Original Capital Securities tendered by
book-entry transfer, such Original Capital Securities 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.
4. The undersigned understands that the tender of the Old Notes
pursuant to all of the procedures set forth in the Prospectus will constitute an
agreement between the undersigned and the Company as to the terms and conditions
set forth in the Prospectus.
5. Unless the box under the heading "Special Registration
Instructions" is checked, the undersigned hereby represents and warrants that:
(i) the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the
undersigned, whether or not the undersigned is the holder;
(ii) neither the undersigned nor any such other person is
engaging in or intends to engage in a distribution of such
New Notes;
(iii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate
in the distribution of such New Notes; and
(iv) neither the holder nor any such other person is an
"affiliate," as such term is defined under Rule 405
promulgated under the Securities Act of
<PAGE> 5
1933, as amended (the "Securities Act"), of the Company or
any Guarantor (as hereinafter defined).
6. The undersigned may, if, and only if, unable to make all of the
representations and warranties contained in Item 4 above, elect to have its Old
Notes registered in the shelf registration described in the Registration Rights
Agreement, dated as of _________, 1997, among the Company, certain guarantors of
the obligations under the Old Notes (the "Guarantors") and the initial purchaser
of the Old Notes in the form filed as an exhibit to the Registration Statement
(the "Registration Agreement") (all terms used in this Item 6 with their initial
letters capitalized, unless otherwise defined herein, shall have the meanings
given them in the Registration Agreement). Such election may be made by checking
the box under "Special Registration Instructions" on page __. By making such
election, the undersigned agrees, as a holder of Transfer Restricted Securities
participating in a Shelf Registration, to indemnify and hold harmless the
Company, the Guarantors, their respective directors and officers and each
person, if any, who controls the Company or any of the Guarantors within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any loss, claim, damage or liability (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim), joint or several, or any action in
respect thereof, to which the Company, any Guarantor or any such director,
officer or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, (ii) or the omission or alleged omission to
the statements therein not misleading, but only with reference to such
information relating to the undersigned furnished in writing by or on behalf of
the undersigned expressly for use in the Registration Statement, the Prospectus
or any amendments or supplements thereto. Any such indemnification shall be
governed by the terms and subject to the conditions set forth in the
Registration Agreement, including, without limitation, the provisions regarding
notice, retention of counsel, contribution and payment of expenses set forth
therein. The above summary of the indemnification provision of the Registration
Agreement is not intended to be exhaustive and is qualified in its entirety by
the Registration Agreement.
7. If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such New Notes; however, by so acknowledging and delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. If the undersigned is a broker-dealer and Old
Notes held for its own account were not acquired as a result of market-making or
other trading activities, such Old Notes cannot be exchanged pursuant to the
Exchange Offer.
<PAGE> 6
8. Any obligation of the undersigned hereunder shall be binding upon
the successors, assigns, executors, administrators, trustees in bankruptcy and
legal and personal representatives of the undersigned.
9. Unless otherwise indicated herein under "Special Delivery
Instructions," please issue the certificates for the New Notes in the name of
the undersigned.
<PAGE> 7
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 1)
To be completed ONLY IF the New Notes are to be issued or sent to someone
other than the undersigned or to the undersigned at an address other than that
provided above.
Mail [ ] Issue [ ] (check appropriate boxes)
certificates to:
Name:
-------------------------------------------------------------
Address:
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
(INCLUDING ZIP CODE)
<PAGE> 8
SPECIAL REGISTRATION INSTRUCTIONS
(See Item 6)
To be completed ONLY IF (i) the undersigned satisfies the conditions set
forth in Item 6 above, (ii) the undersigned elects to register its Old Notes in
the shelf registration described in the Registration Agreement, and (iii) the
undersigned agrees to indemnify certain entities and individuals as set forth in
Item 6 above.
[ ] By checking this box the undersigned hereby (i) represents that it is
unable to make all of the representations and warranties set forth in Item 5
above, (ii) elects to have its Old Notes registered pursuant to the shelf
registration described in the Registration Agreement, and (iii) agrees to
indemnify certain entities and individuals identified in, and to the extent
provided in, Item 6 above.
<PAGE> 9
SPECIAL BROKER-DEALER INSTRUCTIONS
(See Item 6)
[ ] 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:
----------------------------------------------------
(PLEASE PRINT)
Address:
----------------------------------------------------
----------------------------------------------------
---------------------------------------------------
(INCLUDING ZIP CODE)
<PAGE> 10
SIGNATURE
To be completed by all exchanging noteholders. Must be signed by registered
holder exactly as name appears on Old Notes. If signature is by trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set forth
full title. See Instruction 3.
X
-------------------------------------------------------------------
X
-------------------------------------------------------------------
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATURE
Dated:
---------------------------------------------------------------
Name(s):
---------------------------------------------------------------
----------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
----------------------------------------------------------------------
Address:
--------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(INCLUDING ZIP CODE)
Area Code and Telephone No.:
------------------------------------------
SIGNATURE GUARANTEE (IF REQUIRED BY INSTRUCTION 1)
Certain Signatures Must be Guaranteed by an Eligible Institution
- -------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- -------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER
(INCLUDING AREA CODE) OF FIRM)
-------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
-------------------------------------------------------------------
(PRINTED NAME)
---------------------------------------------------------------------
(TITLE)
Dated:
--------------------------------------------------------------
<PAGE> 11
PLEASE READ THE INSTRUCTIONS BELOW,
WHICH FORM A PART OF THIS LETTER OR TRANSMITTAL.
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of
Transmittal must be guaranteed by an eligible guarantor institution that is a
member of or participant in the Securities Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Program, the Stock Exchange
Medallion Program, or by an "eligible guarantor institution" within the meaning
of Rule 17Ad-15 promulgated under the Exchange Act (an "Eligible Institution")
unless the box entitled "Special Registration Instructions" or "Special Delivery
Instructions" above has not been completed or the Old Notes described above are
tendered for the account of an Eligible Institution.
2. PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender the Old Notes in the
Exchange Offer. Except as set forth under "The Exchange Offer - Book Entry
Transfer," to tender in the Exchange Offer a holder must complete, sign, and
date the Letter of Transmittal, or copy thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal, and deliver the Letter of
Transmittal or a copy to the Exchange Agent prior to the Expiration Date. In
addition, either (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal, (ii) a timely confirmation
of book-entry transfer (a "Book-Entry Confirmation") of such Old Notes, if the
procedure is available, into the Exchange Agent's account at DTC (the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply with the guaranteed delivery
procedures described below. To be tendered effectively, the Letter of
Transmittal and other required documents must be received by the Exchange Agent
at the address set forth under "The Exchange Offer - Exchange Agent" prior to
the Expiration Date.
The tender by a holder is not withdrawn before the Expiration Date
will constitute an agreement between that holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OR TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND
RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD
BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
<PAGE> 12
3. SIGNATURE ON LETTER OF TRANSMITTAL, BOND POWERS AND
ENDORSEMENTS. If this Letter of Transmittal is signed by a person other than a
registered holder of any Old Notes, such Old Notes must be endorsed or
accompanied by appropriate bond powers, signed by such registered holder exactly
a such registered holder's name appears on such Old Notes.
If this Letter of Transmittal or any Old Notes or bond powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
or corporations, or others acting in a fiduciary or representative capacity,
such persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.
4. MISCELLANEOUS. All question as to the validity, form, eligibility
(including time of receipt), acceptance, and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding on all parties. The Company reserves the absolute
right to reject any or all Old Notes not properly tendered or any Old Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any defects,
irregularities, or conditions of tender as to particular Old Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in this Letter of Transmittal) will be final and
binding. Unless waived, any defects or irregularities in connection with tenders
of Old Notes must be cured within such time as the Company shall determine.
Neither the Company, the Exchange Agent, nor any other person shall be under any
duty to give notification of defects in such tenders or shall incur any
liability for failure to give such notification. Tenders of Old Notes will not
be deemed to have been made until such defects or irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the Exchange Agent to the tendering holder thereof as
soon as practicable following the Expiration Date.
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
TO TENDER
UNREGISTERED 8 5/8% SERIES A SENIOR NOTES DUE 2007
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
ALLIED HOLDINGS, INC.
PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED _______, 1997
As set forth in the Exchange Offer (as defined in the Prospectus (as
defined below)), this form or one substantially equivalent hereto must be used
to accept the Exchange Offer if certificates for unregistered 8 5/8% Series A
Senior Notes due 2007 (the "old Notes"), of Allied Holdings, Inc., are not
immediately available or time will not permit a holder's Old Notes or other
requirements documents to reach the Exchange Agent on or prior ot the Expiration
Date (as defined below), or the procedure for book-entry transfer cannot be
completed on a timely basis. This form may be delivered by facsimile
transmission, by registered or certified mail, by hand, or by overnight delivery
service to the Exchange Agent. See "The Exchange Offer - Procedures for
Tendering" in the Prospectus.
================================================================================
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON ______________, 1997 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER
IS EXTENDED BY THE COMPANY.
================================================================================
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
THE FIRST NATIONAL BANKOF CHICAGO
By Registered or Certified Mail or Hand or Overnight Delivery Service
The First National Bank of Chicago
c/o First Chicago Trust Company of New York
14 Wall Street, 8th Floor, Window 2
New York, New York 10005
By Facsimile Transmission (for Eligible Institutions only):
FAX 212/240-8938
(Facsimile Confirmation)
212/240-8801
(Originals of all documents sent by facsimile should be sent promptly
by registered or certified mail, by hand, or by overnight delivery service.)
DELIVERY OF THIS NOTICE TO AN ADDRESS OR TRANSMISSION OF INSTRUCTIONS
VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
<PAGE> 2
Gentlemen:
The undersigned hereby tenders to Allied Holdings, Inc., a Georgia
corporation (the "Company"), in accordance with the Company's offer, upon the
terms and subject to the conditions set forth in the prospectus dated _______,
1997 (the "Prospectus"), and in the accompanying Letter of Transmittal, receipt
of which is hereby acknowledge, $_____ ________ in the aggregate principal
amount of Old Notes pursuant to the guaranteed delivery procedures described in
the Prospectus.
================================================================================
Name(s) of Registered Holder(s):
------------------------------------------------
(Please Type of Print)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
-------------------------------------------------
Certificate Number(s) for Old Notes (if available):
-----------------------------
Total Principal Amount Tendered and
Represented by Certificate(s): $
------------------------------------------------
Signature of Registered Holder(s):
----------------------------------------------
Date:
-------------------------
[ ] The Depository Trust Company
(check if Old Notes will be tendered by book-entry transfer)
Account Number
-----------------------------------
================================================================================
<PAGE> 3
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
[Not to be used for signature guarantee]
The undersigned, being a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office in the United
States, hereby guarantees (a) that the above-named person(s) "own(s)" the Old
Notes tendered hereby within the meaning of Rule 14e-4 ("Rule 14e-4") under the
Securities Exchange Act of 1934, as amended, (b) that such Old Notes complies
with Rule 14e-4, and (c) to deliver to the Exchange Agent the certificates
representing the Old Notes tendered hereby or confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at The Depository
Trust Company, in proper form for transfer, together with the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, within three
New York Stock Exchange trading days after the Expiration Date.
================================================================================
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Area Code and Telephone Number:
-------------------------------------------------
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
Title:
-----------------------------------
Date:
-----------------------------------
================================================================================
NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES OF OLD
NOTES SHOULD BE SENT ONLY WITH A LETTER OF TRANSMITTAL.
