<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended October 4, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period from to
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Commission File Number 0-23808
METROTRANS CORPORATION
(Exact name of Registrant as specified in its charter)
GEORGIA 58-1393777
(State of Incorporation) (I.R.S. Employer
Identification No.)
777 GREENBELT PARKWAY, GRIFFIN, GEORGIA 30223
(Address of principal executive offices, including zip code)
(770) 229-5995
(Registrant's telephone number, including area code)
---------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
Class Outstanding at November 18, 1998
- -------------------------------------- --------------------------------
Common Stock, $.01 Par Value 4,098,044 shares
Page 1 of 18
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METROTRANS CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED OCTOBER 4, 1998
TABLE OF CONTENTS
-----------------
ITEM PAGE
NUMBER NUMBER
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PART I. FINANCIAL INFORMATION
1. Financial Statements:
Consolidated Balance Sheets as of October 4, 1998 and
December 31, 1997.............................................. 3
Consolidated Statements of Income for the three and nine months
ended October 4, 1998 and September 28, 1997................... 4
Consolidated Statements of Cash Flows for the nine months ended
October 4, 1998 and September 28, 1997......................... 5
Notes to Consolidated Financial Statements..................... 6
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 8
3. Quantitative and Qualitative Disclosures about Market Risk..... 13
PART II. OTHER INFORMATION
1. Legal Proceedings.............................................. 14
3. Defaults Upon Senior Securities................................ 14
5. Other Information.............................................. 15
6. Exhibits and Reports on Form 8-K............................... 16
Signature...................................................... 17
Index of Exhibits.............................................. 18
2
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PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
METROTRANS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
OCTOBER 4, DECEMBER 31,
1998 1997
---------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash............................................................ $ 0 $ 50
Accounts receivable, net of allowance for doubtful
accounts of $74 and $77 in 1998 and 1997, respectively......... 14,458 9,151
Current portion of net investment in sales-type leases.......... 296 877
Inventories..................................................... 31,456 20,932
Prepaid expenses and other...................................... 1,482 1,333
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Total current assets........................................... 47,692 32,343
PROPERTY, PLANT AND EQUIPMENT, net............................... 8,283 6,922
NET INVESTMENT IN SALES-TYPE LEASES.............................. 156 405
INTANGIBLES...................................................... 510 536
DEPOSITS AND OTHER............................................... 334 302
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$56,975 $40,508
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses........................... $ 16,895 $ 7,726
Current portion of long-term debt............................... 19,121 1,087
Customer deposits............................................... 1,367 238
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Total current liabilities...................................... 37,383 9,051
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LONG-TERM DEBT, net of current portion........................... 1,636 11,945
-------- -------
OTHER NONCURRENT LIABILITIES..................................... 300 300
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DEFERRED INCOME TAXES............................................ 183 183
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STOCKHOLDERS' EQUITY:
Preferred stock, no par value; 10,000,000 shares authorized..... 0 0
Common stock, $.01 par value; 20,000,000 shares
authorized, 4,085,544 and 4,084,294 shares issued and
outstanding in 1998 and 1997, respectively..................... 41 41
Additional paid-in capital...................................... 10,586 10,577
Deferred compensation........................................... (131) (210)
Retained earnings............................................... 6,977 8,621
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17,473 19,029
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$56,975 $40,508
======= =======
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
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METROTRANS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------------- ---------------------------
OCTOBER 4, SEPTEMBER 28, OCTOBER 4, SEPTEMBER 28,
1998 1997 1998 1997
-------- ------- ------- -------
<S> <C> <C> <C> <C>
NET REVENUE $20,282 $21,731 $59,199 $58,716
COST OF SALES 18,835 17,482 51,159 48,351
-------- ------- ------- -------
Gross Profit 1,447 4,249 8,040 10,365
SELLING, GENERAL, AND
ADMINISTRATIVE EXPENSES 4,063 2,426 9,828 7,156
-------- ------- ------- -------
Operating (Loss) Income (2,616) 1,823 (1,788) 3,209
INTEREST EXPENSE, net 365 256 919 1,048
-------- ------- ------- -------
(LOSS) INCOME BEFORE
INCOME TAXES (2,981) 1,567 (2,707) 2,161
INCOME TAX (BENEFIT)
PROVISION (1,170) 615 (1,063) 848
-------- ------- ------- -------
NET (LOSS) INCOME $(1,811) $ 952 $(1,644) $ 1,313
======== ======= ======= =======
NET (LOSS) INCOME PER SHARE
- BASIC $ (0.44) $ 0.23 $ (0.40) $ 0.32
======== ======= ======= =======
- DILUTED $ (0.44) $ 0.23 $ (0.40) $ 0.32
======== ======= ======= =======
WEIGHTED AVERAGE SHARES
OUTSTANDING
- BASIC 4,085 4,083 4,084 4,082
======== ======= ======= =======
- DILUTED 4,085 4,109 4,084 4,111
======== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
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METROTRANS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------------
OCTOBER 4, SEPTEMBER 28,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (1,644) $ 1,313
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Depreciation and amortization 492 499
Compensation under restricted stock award 79 78
Changes in assets and liabilities:
Accounts receivable (5,307) (1,334)
Inventories (10,524) (2,393)
Other assets (181) 176
Accounts payable and accrued expenses 9,169 1,443
Customer deposits 1,129 (44)
-------- -------
Total adjustments (5,143) (1,575)
-------- -------
Net cash used in operating activities (6,787) (262)
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,852) (1,476)
Net decrease in property held for lease 25 64
Net decrease in investment in sales-type leases 830 553
-------- -------
Net cash used in investing activities (997) (859)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) under line of credit 0 (7,297)
Net (decrease) in collateralized borrowings (711) 0
Net borrowing of long-term debt 8,436 9,050
Net proceeds from issuance of common stock 9 0
-------- -------
Net cash provided by financing
activities 7,734 1,753
-------- -------
(DECREASE) INCREASE IN CASH (50) 632
CASH AT BEGINNING OF PERIOD 50 22
-------- -------
CASH AT END OF PERIOD $ 0 $ 654
======== =======
CASH PAID FOR INTEREST $ 845 $ 1,032
======== =======
CASH PAID FOR TAXES $ 0 $ 88
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
5
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METROTRANS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 4, 1998
(UNAUDITED)
1. Basis of Presentation
---------------------
The financial statements include the accounts of Metrotrans Corporation and
Subsidiaries (the "Company"). The financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and, therefore, omit certain information and footnotes required by
generally accepted accounting principles for complete financial statements.
Accordingly, these statements should be read in conjunction with the Company's
audited financial statements included in its Annual Report on Form 10-K for the
year ended December 31, 1997, filed with the Securities and Exchange Commission.
In the opinion of management, the financial statements contain all
adjustments necessary for a fair presentation of the financial position, results
of operations and cash flows for the periods presented. The adjustments were of
a normal recurring nature. Results presented for the three-month and nine-month
periods ended October 4, 1998, are not necessarily indicative of results that
may be expected for the full fiscal year.
2. Inventories
-----------
Inventories consist of (in thousands):
October 4, 1998 December 31, 1997
--------------- -----------------
Chassis awaiting conversion.. $ 2,778 $ 3,437
Raw materials................ 5,484 4,549
Work in process.............. 3,878 1,524
Finished goods............... 12,019 6,287
Used vehicles................ 7,297 5,135
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$31,456 $20,932
======= =======
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3. Commitments and Contingencies
-----------------------------
The Company enters into various leasing arrangements with customers and
leasing companies. Certain leases contingently obligate the Company to indemnify
the leasing company for any losses it incurs up to a specified amount on the
lease in the event the lessee defaults. In addition, the Company enters into
certain agreements with financial institutions whereby the Company guarantees
varying amounts of customers' purchase debt obligations. The Company's
obligation under these guarantees becomes effective in the case of default in
payments or certain other defined conditions. The Company's aggregate potential
liability under these arrangements as of October 4, 1998 and December 31, 1997
was $13.6 million and $12.0 million, respectively. During the nine months ended
October 4, 1998, the Company purchased buses totaling approximately $2.0 million
related to 1997 lease defaults and litigation settlements. Purchases to date
have been or are expected to be sold to third parties for amounts approximating
the purchase price.
The Company is involved in certain legal matters primarily arising in the
normal course of business. In the opinion of management, the Company's liability
in any of these matters will not have a material adverse effect on its financial
condition or results of operations.
4. New Accounting Pronouncements
-----------------------------
The Company has no Other Comprehensive Income Items as defined by SFAS No.
130.
In July 1998, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 133 "Accounting for Derivative Instruments and for Hedging Activities".
The Company must adopt the provisions of SFAS No. 133 January 1, 2000. The
Company has not yet determined the impact of the adoption of SFAS No. 133.
In 1997, the FASB issued SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information." The Company must adopt the provisions of
SFAS No. 131 December 31, 1998. The Company believes the application of SFAS No.
131 will not significantly affect its financial statement disclosures.
5. Long-Term Debt
--------------
As a result of the third quarter loss, the Company was not in compliance
with certain financial covenants contained in its unsecured credit facility. The
Company is in discussions with its lender seeking a waiver of the non-compliance
and a forbearance of the lender's rights and remedies under the credit facility
with respect to the non-compliance. Unless the Company obtains the waiver and
forbearance agreement, the lender will be entitled to exercise its rights and
remedies under the credit facility which include ceasing additional advances
under the credit facility and/or demanding payment in full of the outstanding
borrowings under the credit facility. If the lender were to take any of these
actions, the Company's operations and financial condition will be materially and
adversely affected unless it is able to secure new third party financing under
terms and conditions reasonably satisfactory to the Company.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Act of 1995 provides for the use of
cautionary statements. Disclosures provided in this Report contain forward
looking statements concerning among other things, production issues and year
2000 issues.
Important factors that could cause actual results to differ materially from
those in the forward looking statements include, but are not limited to the
following: changes in price and demand for the Company's products; the effects
of competition; changes in accounting policies and practices; inability to
accurately estimate costs to achieve year 2000 issues; inability to obtain raw
materials particularly chassis, on a timely and cost effective basis; inability
to complete implementation of a manufacturing cost accounting system; and other
related matters.
OVERVIEW
The Company was incorporated in 1982 for the purpose of designing,
manufacturing and marketing shuttle and mid-size buses. Since the introduction
of the Classic(R) in 1986, the Company has experienced significant growth in
unit sales and revenues. The Company's product development strategy is to design
and introduce new products after clearly identifying a market need based, in
large part, on suggestions made by existing and potential customers. This
approach resulted in the introduction of the Eurotrans(R) in 1990, the Eurotrans
XLT(R) and the Classic II(R) in 1992, the Classic Commuter(R) in 1993, the
Legacy LJ by Metrotrans(TM) in 1996 the Anthem(TM) in 1997 and the Classic
XLT(TM) in 1998. Metrotrans began exclusive marketing of the Irizar Century in
1997 with the first deliveries occurring in the second quarter of 1998.
8
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RESULTS OF OPERATIONS
The following table sets forth, as a percentage of net revenue, the
relationship of selected items included in the Company's income statement for
the periods indicated.
Three Months Ended Nine Months Ended
------------------ -----------------
Oct.4, Sept.28, Oct.4, Sept.28,
1998 1997 1998 1997
----- ----- ----- -----
Net revenue................. 100.0 % 100.0% 100.0 % 100.0%
Cost of sales............... 92.9 80.4 86.4 82.3
----- ----- ----- -----
Gross profit................ 7.1 19.6 13.6 17.7
Selling, general and
administrative expenses.... 20.0 11.2 16.6 12.2
----- ----- ----- -----
Operating (loss) income..... (12.9) 8.4 (3.0) 5.5
Interest expense............ 1.8 1.2 1.6 1.8
----- ----- ----- -----
(Loss) income before
income taxes............... (14.7) 7.2 (4.6) 3.7
Income tax (benefit)
provision.................. (5.8) 2.8 (1.8) 1.4
----- ----- ----- -----
Net (loss) income........... (8.9)% 4.4% (2.8)% 2.3%
===== ===== ===== =====
NET REVENUE. Net revenue decreased 6.7% to $20.3 million for the three
months ended October 4, 1998 from $21.7 million for the comparable prior year
period and increased 0.8% during the first nine months of 1998 over the same
nine-month period in 1997 to $59.2 million from $58.7 million. The decrease in
net revenue for the 1998 quarter over the prior year third quarter resulted
primarily from the inability of the Company to build and ship orders in the
backlog. Work in process was at an all time high of approximately $3.9 million
at October 4, 1998, resulting from the inability to timely resolve normal
production related problems, and provide efficient throughput. The increase in
net revenue for the first nine months of 1998 compared to the first nine months
of 1997 resulted primarily from sales of the full-size Irizar Century motorcoach
introduced in the second quarter of 1998. The increase for the nine-month period
was offset by both a reduction in the unit volume of cutaway and other rear-
engine models and by an increase during the current year third quarter in the
mix of smaller and lesser-priced models versus the prior year third quarter.
9
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Sales of cutaway models during the third quarter of 1998 were 221 units
totaling $11.1 million compared with 282 units totaling $13.7 million in the
same prior year period. The reduced sales are attributable to the production
issues referred to above. Sales of cutaway models during the first nine months
of 1998 were 673 units totaling $33.3 million compared with 763 units totaling
$37.9 million in the first nine months of 1997.
Sales of rear-engine models during the third quarter were 38 units totaling
$5.8 million compared with 53 units totaling $5.1 million during the third
quarter of 1997 and included $2.8 million from the sale of 8 units of the full-
size Irizar Century motorcoach. Sales of rear engine models during the first
nine months of 1998 were 96 units totaling $14.5 million, including 19 units of
the Irizar Century, as compared to 115 units totaling $12.7 million in the first
nine months of 1997. Sales of rear engine units manufactured by the Company were
adversely affected by the inability of Spartan Motors, currently the Company's
sole source vendor of rear engine chassis, to deliver units in accordance with
the agreed delivery schedule.
Production backlog at October 4, 1998 was approximately $38 million,
including approximately $12 million in orders for the new Irizar Century full-
size coach, compared with $16 million at the end of the third quarter of 1997.
Sales of used buses by the Company's wholly-owned subsidiary, Bus Pro, in the
third quarter of 1998 of $1.7 million were 15.0% below sales for the third
quarter of 1997 of $2.0 million due to the change of Bus Pro's management
information system to software more compatible with the processing of data
necessary for capturing refurbishment costs for used vehicles. Due to these
changes management had less time to focus on Bus Pro's selling efforts. Bus Pro
orders have returned to traditional levels the first month of the fourth
quarter. Sales of used buses by Bus Pro were $7.5 million for the nine months
ended October 4, 1998, up 32.2% over comparable period year-to-date sales in
1997 of $5.7 million. The increase in year-to-date Bus Pro sales is, in part, a
result of the greater capacity and operating efficiency brought about by the
business unit's move to its newly-constructed sales, refurbishment and service
facility in 1997.
COST OF SALES AND GROSS PROFIT. Cost of sales increased 7.7% in the third
quarter of 1998 to $18.8 million from $17.5 in the third quarter of 1997. Cost
of sales increased 5.8% in the first nine months of 1998 to $51.2 million from
$48.4 million in the first nine months of 1997. Cost of sales in the third
quarter was adversely affected by production delays, an increase in labor costs,
abnormal materials costs and higher than normal plant overhead. Labor costs in
the third quarter of $1.8 million versus $1.5 million for the prior year quarter
resulted from a higher headcount, a four-percent increase in hourly wage rate
and more frequent use of overtime than in previous quarters. This increase in
labor costs combined with lower sales had a dramatic impact on cost of sales.
Materials costs increased from 30.6% of sales to 34.9% of sales as a result of
price increases awarded numerous key vendors and inefficiencies created by a
change of key personnel in the purchasing and materials control areas without
implementation of succession planning and specialized training. Plant overhead
10
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increased 40% from $1.0 million to $1.4 million due to increased headcount in
engineering, plant maintenance and plant supervisory personnel. Also included in
the plant overhead was extensive training necessary for the conversion of
engineering design software from Auto-cad to the Pro E three-dimensional solid
modeling system.
For the foregoing reasons, the Company's gross profit decreased 65.9% to
$1.4 million for the quarter ended October 4, 1998 from $4.2 million for the
comparable period in 1997. The Company's gross profit for the first nine months
of 1998 decreased 22.4% to $8.0 million from $10.4 million for the first nine
months of 1997. Gross profit as a percent of net revenue was 7.1% during the
third quarter of 1998 versus 19.6% in the third quarter of 1997. Gross profit,
as a percent of net revenue for the nine months ended October 4, 1998 was 13.6%,
down from 17.7% during the first nine months of 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES AND OPERATING INCOME. Selling,
general and administrative expenses ("SG&A") increased 67.5% to $4.0 million in
the third quarter of 1998 from $2.4 million in the third quarter of 1997. SG&A
increased 37.3% in the first nine months of 1998 to $9.8 million from $7.2
million in the first nine months of 1997. SG&A as a percentage of net revenue
increased to 20.0% and 16.6% in the third quarter and first nine months of 1998,
respectively, from 11.2% and 12.2%. Increases in SG&A were due primarily to
increased legal expenses, abnormal expenditures for advertising , promotion and
sales software, abnormal travel expenses, signing bonuses and relocation
expenses for secondary level managers and costs related to the new position of
Chief Operating Officer.
The Company had an operating loss of $2.6 million for the third quarter of
1998 as compared to operating income of $1.8 million in the third quarter of
1997. The Company had an operating loss of $1.8 million for the first nine
months of 1998 as compared to the operating income of $3.2 million in the first
nine months of 1997.
INTEREST EXPENSE. Interest expense of $365,000 in the third quarter of 1998
increased 42.6% from $256,000 for the third quarter of 1997. The increase for
the quarter primarily was the net result of an increase in the average balance
outstanding under the Company's revolving credit facility during the quarter
resulting from higher inventory levels and higher accounts receivable partially
offset by a reduction in the amount of interest paid to Ford Motor Credit
Corporation for chassis held under the consignment pool agreement in excess of
an initial 90-day non-interest bearing period resulting from the institution of
procedures to better control chassis inventory levels.
11
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LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities during the nine months ended October
4, 1998 totaled $6.8 million compared with cash used in operating activities of
$0.3 million in the comparable period in 1997. Increases in accounts receivable
and inventory of $5.3 million and $10.5 million, respectively, offset in part by
a $9.2 million increase in accounts payable, were primarily responsible for the
cash used in operating activities during the period. The increase in inventory
resulted primarily from an increase in finished goods and inventory related to
Irizar sales and production, an increase in work in process, an increase in used
coach inventory related to 1997 lease defaults and litigation settlements, and
an increase in Legacy LJ by Metrotrans demonstrator units. The increases in
inventory levels and in accounts receivable have caused the Company to draw down
substantially all of the available limit on its line of credit. The Company has
initiated steps to reduce inventory levels and to accelerate the collection of
accounts receivable.
In the first half of November 1998, the Company took positive steps to
immediately reduce overhead by an annualized amount in excess of $3.5 million.
Anticipated capital expenditures and increases in working capital are
expected to be financed primarily through internally generated funds and through
the Company's $20.0 million revolving credit facility. The three-year unsecured
credit facility provides interest rate pricing at spreads over LIBOR that vary
based on leverage. At October 4, 1998, the Company had approximately $18.7
million of borrowings outstanding under the revolving credit facility.
Additionally, in accordance with an agreement dated August 21, 1998, between
Mayflower Corporation plc and the Company, an unsecured credit facility of $15.0
million is available to the Company for working capital and capital asset
expenditures; $4.5 million of this facility is scheduled for use in the
Company's 1998 fiscal year.
As a result of the third quarter loss, the Company was not in compliance
with certain financial covenants contained in its unsecured credit facility. The
Company is in discussions with its lender seeking a waiver of the non-compliance
and a forbearance of the lender's rights and remedies under the credit facility
with respect to the non-compliance. Unless the Company obtains the waiver and
forbearance agreement, the lender will be entitled to exercise its rights and
remedies under the credit facility which include ceasing additional advances
under the credit facility and/or demanding payment in full of the outstanding
borrowings under the credit facility. If the lender were to take any of these
actions, the Company's operations and financial condition will be materially and
adversely affected unless it is able to secure new third party financing under
terms and conditions reasonably satisfactory to the Company.
YEAR 2000 ISSUES. Like many other companies, the year 2000 computer issue
creates risks for the Company. If internal systems do not correctly recognize
and process date information beyond the year 1999, there could be an adverse
impact on the Company's operations. There are two other related issues which
could also lead to incorrect calculations or failures; (i) some systems'
programming assigns special meaning to certain dates, such as 9/9/99, and (ii)
the fact that the year 2000 is a leap year. The Company's manufacturing and
distribution operations are not critically dependent on any mainframe, mini-
computer or personal computer-based systems or software
12
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applications. The Company has developed a plan to modify its information
technology for the year 2000. During the past two years, the Company has
implemented a program designed to update its information systems. Although the
implementation of the program primarily is intended to provide better operating
systems and accounting, inventory and production controls, the Company has been
aware of the year 2000 issues in its selection of hardware and software. The
third party vendors that have supplied new hardware and software have informed
the Company that the new systems and software are year 2000 compliant. The
Company has experienced delays in the implementation and integration of the new
systems; however, the Company anticipates that the new systems will be
operational prior to December 31, 1999. The Company also is conducting a review
of other systems, which will be substantially completed by March 31, 1999, at a
cost not material to its business, financial condition, or results of
operations. As of October 4, 1998, the Company anticipates it will incur up to
$50,000 in replacing and converting the Company's data processing and management
information systems. The amount may increase as additional information is
obtained to complete the replacement and conversion process.
The Company believes that its most reasonably likely worst case year 2000
scenarios would relate to problems with the systems of third parties rather than
with the Company's internal systems or its products. It is clear that the
Company has the least ability to assess and remediate the year 2000 problems of
third parties and the Company believes the risks are greatest with
infrastructure (e. g. electricity supply, water and sewer service),
telecommunications, transportation supply chains and suppliers of materials.
While the Company is taking steps that it believes to be reasonable and prudent
to assess the year 2000 readiness of third parties with whom the Company does
business, the failure of any of these third parties to correct a material year
2000 problem could result in an interruption in, or a failure of, certain normal
business activities or operations. Due to the general uncertainty inherent in
the year 2000 problem, resulting in part from the uncertainty of the year 2000
readiness of third party suppliers and customers, the Company is unable to
determine at this time whether the consequences of year 2000 failures will have
a material impact on the Company's results of operations, liquidity, or
financial condition. Readers are cautioned that forward-looking statements
contained in this year 2000 update should be read in conjunction with the
Company's disclosures regarding forward-looking statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
FOREIGN CURRENCY RISK MANAGEMENT
A third party foreign vendor constructs the Company's newly introduced full-
size Irizar Century motorcoach. Fluctuations in the value of the Spanish Peseta
create
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exposure which can adversely affect the cost of the bus. The Company attempts to
manage its foreign exchange exposure by entering into forward exchange contracts
to hedge firm purchase commitments denominated in Pesetas. The Company does not
enter into foreign currency forward contracts for speculative trading purposes.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in certain other legal matters primarily arising in
the normal course of business. In the opinion of management, the Company's
liability in any of these matters will not have a material adverse effect on its
financial condition or results of operations.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
As a result of the third quarter loss, the Company was not in compliance
with certain financial covenants in its unsecured credit facility. The Company
currently is in discussions with its lender seeking a waiver of the non-
compliance and a forbearance of rights and remedies under the credit facility
with respect to the non-compliance. Unless the Company obtains the waiver and
forbearance agreement the lender will be entitled to exercise its rights and
remedies under the credit facility which include ceasing additional advances
under the credit facility and/or demanding payment in full of the outstanding
borrowings under the credit facility. If the lender were to take any of these
actions, the Company's operations and financial condition will be materially and
adversely affected unless it is able to secure new third party financing under
terms and conditions reasonably satisfactory to the Company.
14
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ITEM 5. OTHER INFORMATION
Recent Events
- -------------
On November 18, 1998, the Company gave notice of termination of Jerry J.
Schweiner's employment as the President and Chief Operating Officer of the
Company.
In an unrelated event in early September 1998, Richard M. Bruno delivered
his resignation as the Chief Financial Officer, Treasurer and Secretary of the
Company effective September 30, 1998. There were no disputes with Mr. Bruno who
resigned to pursue opportunities closer to his residence.
Shareholders' Proposals for Presentation at the 1999 Annual Meeting
- -------------------------------------------------------------------
The Securities and Exchange Commission has made recent changes to the proxy
rules in Regulation 14A under the Securities Exchange Act of 1934, as amended,
including Rule 14a-4 and Rule 14a-5. Shareholders are entitled to submit
proposals on matters appropriate for shareholder action consistent with the
rules and regulations of the Securities and Exchange Commission and with the
Company's Bylaws.
Shareholders who wish to present business at the 1999 Annual Meeting of
Shareholders (1999 Annual Meeting) are required to provide notice to the
Corporate Secretary of their intent to do so on or before December 25, 1998, and
such notice must provide the information set forth in the Company's Amended and
Restated Bylaws. A copy of the Bylaw requirements will be provided upon written
request to the Corporate Secretary, Metrotrans Corporation, 777 Greenbelt
Parkway, Griffin, Georgia 30223. This deadline applies to all shareholder
proposals sought to be considered at the 1999 Annual Meeting (including those
sought to be included in the Proxy Statement for the 1999 Annual Meeting).
15
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report:
3.1 Amended and Restated Bylaws of the Registrant.
10.1 Second Amendment to Loan Agreement dated as of August 21, 1998, by
and between Metrotrans Corporation and NationsBank, N.A.
10.2 Third Amendment to Loan Agreement dated as of September 15, 1998, by
and between Metrotrans Corporation and NationsBank, N.A.
(b) The Company filed the following Current Reports on Form 8-K during the
Quarter ended October 4, 1998:
1) Current Report on Form 8-K dated August 25, 1998 with respect to the
execution of the Agreement (the "Mayflower Agreement") dated August 21, 1998,
between Mayflower Corporation plc ("Mayflower"), Mayflower (U.S. Holdings),
Inc., the Company, D. Michael Walden, Terri B. Hobbs, M. Earl Meck and Randy B.
Stanley, pursuant to which, among other things, Mayflower agreed to purchase
from M. Earl Meck and Randy B. Stanley all of their shares of Metrotrans Common
Stock at a purchase price of $15.00 per share and to loan to the Company up to
$15 million.
2) Current Report on Form 8-K dated September 28, 1998 with respect to the
consummation of the transactions contemplated by the Mayflower Agreement.
16
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
METROTRANS CORPORATION
(Registrant)
Date: November 23, 1998 /s/ D. Michael Walden
---------------------------------
D. Michael Walden
Chairman of the Board and Chief
Executive Officer
(Duly Authorized Officer)
17
<PAGE>
INDEX OF EXHIBITS
EXHIBIT NO.
- -----------
3.1 Amended and Restated Bylaws of the Registrant.
10.1 Second Amendment to Loan Agreement dated as of August 21, 1998, by and
between Metrotrans Corporation and NationsBank, N.A.
10.2 Third Amendment to Loan Agreement dated as of September 15, 1998, by
and between Metrotrans Corporation and NationsBank, N.A.
18
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
--------------------
BYLAWS
------
OF
--
METROTRANS CORPORATION
----------------------
ARTICLE I
SHAREHOLDERS
SECTION 1.1. Annual Meetings. The annual meeting of the shareholders of
---------------
the corporation shall be held each year for the purposes of electing directors
and of transacting such other business as properly may be brought before the
meeting. To be properly brought before the meeting, business, including
nominations for director, must be brought before the meeting (i) by or at the
direction of the board of directors or (ii) by any shareholder of the
corporation who complies with the notice procedures set forth in this Section
1.1; provided, in each case, that such business proposed to be conducted is,
under the law, an appropriate subject for shareholder action. For business to
be properly brought before an annual meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the Secretary of the
corporation. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation, in
accordance with Securities and Exchange Commission Rule 14a-8(a)(3)(i), not less
than 120 calendar days prior to the first anniversary of the date of the
corporation's proxy statement released to shareholders in connection with the
previous year's annual meeting of shareholders, except that if no annual meeting
of shareholders was held in the previous year or if the date of the annual
meeting of shareholders has been changed by more than 30 calendar days from the
date contemplated at the time of the previous year's proxy statement, the notice
shall be received at the principal executive offices of the corporation not less
than 150 calendar days prior to the date of the annual meeting. A shareholder's
notice to the Secretary shall set forth as to each matter such shareholder
proposes to bring before the annual meeting (i) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and address, as
they appear on the corporation's books, of the shareholder proposing such
business, (iii) the class and number of shares of the corporation which are
beneficially owned by such shareholder, (iv) the dates upon which the
shareholder acquired such shares, (v) documentary support for any claim of
beneficial ownership, (vi) any material interest of such shareholder in such
business and (vii) a statement in support of the matter and any other
information required by said Rule 14a-8. In the case of nominations for
director, in addition to the foregoing, a shareholder's notice to the Secretary
shall set forth as to each person whom such shareholder proposes to nominate for
election or reelection as a director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected). The chairman of an annual meeting may, if
the facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Section 1.1, and, if he should so determine, he shall so declare to the meeting
and any such business so determined to be not properly brought before the
meeting shall not be transacted.
SECTION 1.2. Special Meetings. The corporation shall hold a special
----------------
meeting of shareholders on call of the board of directors, the Chairman of the
Board, the President, or, upon delivery to the corporation's Secretary of a
signed and dated written request setting out the purpose or purposes for the
meeting, on call of the holders of 50% of the votes entitled to be cast on any
issue proposed to be considered at the proposed special meeting. Only business
within the purpose or purposes described in the notice of special meeting
required by Section 1.4 below may be conducted at a special meeting of the
shareholders.
SECTION 1.3. Date, Time and Place of Meetings. All meetings of
--------------------------------
shareholders shall be held on such date and at such time and place, within or
without the State of Georgia, as may be fixed from time to time by the board of
directors. The date, time and place of all meetings shall be stated in the
<PAGE>
notice of the meeting or in a duly executed waiver of notice thereof. If no
designation is made, the place of the meeting shall be the principal business
office of the corporation.
SECTION 1.4. Notice of Meetings. The Secretary or an Assistant Secretary
------------------
shall deliver, either personally or by first-class mail, a written notice of the
place, day, and time of all meetings of the shareholders not less than ten (10)
nor more than sixty (60) days before the meeting date to each shareholder of
record entitled to vote at such meeting. Written notice is effective when
mailed, if mailed with first-class postage prepaid and correctly addressed to
the shareholder's address shown in the corporation's current record of
shareholders. In the case of a special meeting, the purpose or purposes for
which the meeting is called shall be included in the notice of the special
meeting. If an annual or special shareholders' meeting is adjourned to a
different date, time, or place, notice of the new date, time, or place need not
be given if the new date, time, or place is announced at the meeting before
adjournment. However, if a new record date for the adjourned meeting is or must
be fixed under Section 1.5 herein, notice of the adjourned meeting must be given
to persons who are shareholders as of the new record date.
SECTION 1.5. Record Date. The board of directors, in order to determine
-----------
the shareholders entitled to notice of or to vote at any meeting of the
shareholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or to receive payment of any dividend or
other distribution or allotment of any rights, or to exercise any rights in
respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, shall fix in advance a record date that may not be more
than seventy (70) days before the meeting or action requiring a determination of
shareholders. Only such shareholders as shall be shareholders of record on the
date fixed shall be entitled to such notice of or to vote at such meeting or any
adjournment thereof, or to receive payment of any such dividend or other
distribution or allotment of any rights, or to exercise any such rights in
respect of stock, or to take any such other lawful action, as the case may be,
notwithstanding any transfer of any stock on the books of the corporation after
any such record date fixed as aforesaid. The record date shall apply to any
adjournment of the meeting except that the board of directors shall fix a new
record date for the adjourned meeting if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
SECTION 1.6. Shareholders' List for Meeting. After fixing a record date
------------------------------
for a meeting, the corporation shall prepare an alphabetical list of the names
of all shareholders who are entitled to notice of the shareholders' meeting.
The list shall be arranged by voting group (and within each voting group by
class or series of shares) and show the address of and number of shares held by
each shareholder. The corporation shall make the shareholders' list available
for inspection by any shareholder, his agent, or his attorney at the time and
place of the meeting.
SECTION 1.7. Quorum. Subject to any express provision of law or the
------
articles of incorporation, a majority of the votes entitled to be cast by all
shares voting together as a group shall constitute a quorum for the transaction
of business at all meetings of the shareholders. Whenever a class of shares or
series of shares is entitled to vote as a separate voting group on a matter, a
majority of the votes entitled to be cast by each voting group so entitled shall
constitute a quorum for purposes of action on any matter requiring such separate
voting. Once a share is represented, either in person or by proxy, for any
purpose at a meeting other than solely to object to holding a meeting or
transacting business at the meeting, it is deemed present for quorum purposes
for the remainder of the meeting and for any adjournment of that meeting unless
a new record date is set for the adjourned meeting.
SECTION 1.8. Adjournment of Meetings. The holders of a majority of the
-----------------------
voting shares represented at a meeting, or the Chairman of the Board or the
President, whether or not a quorum is present, shall have the power to adjourn
the meeting from time to time, without notice other than announcement at the
meeting. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at the adjourned meeting.
SECTION 1.9. Vote Required. When a quorum exists, action on a matter
-------------
(other than the election of directors) by a voting group is approved if the
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<PAGE>
votes cast within the voting group favoring the action exceed the votes cast
opposing the action, unless the articles of incorporation, a bylaw authorized by
the articles of incorporation or express provision of law requires a greater
number of affirmative votes. Unless otherwise provided in the articles of
incorporation, directors are elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present. Shareholders do not have the right to cumulate their votes unless the
articles of incorporation so provide.
SECTION 1.10. Voting Entitlement of Shares. Unless otherwise provided in
----------------------------
the articles of incorporation, each shareholder, at every meeting of the
shareholders, shall be entitled to cast one vote, either in person or by written
proxy, for each share standing in his or her name on the books of the
corporation as of the record date. A shareholder may vote his shares in person
or by proxy. An appointment of proxy is effective when received by the
Secretary of the corporation or other officer or agent authorized to tabulate
votes and is valid for eleven (11) months unless a longer period is expressly
provided in the appointment of proxy form. An appointment of proxy is revocable
by the shareholder unless the appointment form conspicuously states that it is
irrevocable and the appointment is coupled with an interest.
SECTION 1.11. Action by Shareholders Without a Meeting. Any action
----------------------------------------
required or permitted to be taken at a shareholders' meeting may be taken
without a meeting if the action is taken by all the shareholders entitled to
vote on the action, or, if so provided in the articles of incorporation, by
persons who would be entitled to vote at a meeting shares having voting power to
cast not less than the minimum number (or numbers, in the case of voting by
groups) of votes that would be necessary to authorize or take the action at a
meeting at which all shareholders entitled to vote were present and voted. The
action must be evidenced by one or more written consents describing the action
taken, signed by shareholders entitled to take action without a meeting and
delivered to the corporation for inclusion in the minutes or for filing with the
corporate records. No written consent shall be valid unless the consenting
shareholder has been furnished the same material that would have been required
to be sent to the shareholders in a notice of a meeting at which the proposed
action would have been submitted to the shareholders for action, including
notice of any applicable dissenters' right, or the written consent contains an
express waiver of the right to receive the material otherwise required to be
furnished. Action with respect to any election of directors as to which
shareholders would be entitled to cumulative voting may be taken without a
meeting only by written consent of all the shareholders entitled to vote on the
action. Written notice, together with the materials that would have been
required to be sent in a notice of meeting, shall be given within ten (10) days
of the taking of the corporate action without a meeting by less than unanimous
written consent to all persons who are voting shareholders on the date the
consent is first executed and who have not consented in writing.
ARTICLE II.
BOARD OF DIRECTORS
------------------
SECTION 2.1. General Powers. Subject to the articles of incorporation,
--------------
bylaws approved by the shareholders and any lawful agreement between the
shareholders, all corporate powers shall be exercised by or under the authority
of, and the business and affairs of the corporation managed under the direction
of, the board of directors.
SECTION 2.2. Number and Tenure. The board of directors shall consist of
-----------------
eight members, nominated in accordance with Section 2.15 hereof. No decrease in
the number or minimum number of directors, through amendment of the articles of
incorporation or of the bylaws or otherwise, shall have the effect of shortening
the term of any incumbent director. Directors shall be elected at the annual
meeting of shareholders and their terms shall expire at the next annual
shareholders' meeting (unless the board of directors is divided into classes
pursuant to the articles of incorporation in which case each director's term
will expire when the term of such director's class expires); provided, however,
that despite the expiration of a director's term he or she shall continue to
serve until a successor is elected and qualified or until there is a decrease in
the number of directors. The number of directors shall not be increased or
decreased without the approval of (a) a majority of the Non-Mayflower Directors
(as defined in Section 2.15 of these Bylaws) and (b) a majority of the Mayflower
Nominated Directors (as defined in Section 2.15 of these Bylaws). Any amendment
to this Section 2.2 shall require the approval of (y) a majority of the
directors and (z) of a majority of the Mayflower Nominated Directors.
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<PAGE>
SECTION 2.3. Qualifications of Directors. Directors shall be natural
---------------------------
persons who have attained the age of 18 years but need not be residents of the
State of Georgia or shareholders of the corporation.
SECTION 2.4. Vacancy on the Board. Unless the articles of incorporation
--------------------
provide otherwise and subject to the following sentence, if a vacancy occurs on
the board of directors, including a vacancy resulting from an increase in the
number of directors, the vacancy may be filled by the shareholders, board of
directors, or, if the directors remaining in office constitute fewer than a
quorum of the Board, by the affirmative vote of a majority of all directors
remaining in office. In the event any Non-Mayflower Director (as defined in
Section 2.15 of these Bylaws) who is not a Continuing Director (as defined
below) ceases to serve as a director of the corporation, whether as a result of
his or her resignation, removal or otherwise, such Non-Mayflower Director's
successor shall be named by majority vote of the remaining Non-Mayflower
Directors to serve until the next annual meeting of stockholders of the
corporation and such successor shall thereafter be treated as a Non-Mayflower
Director for purposes of Sections 2.2, 2.4 and 2.15. In the event any
Continuing Director ceases to serve as a director of the corporation, whether as
a result of his or her resignation, removal or otherwise, such Continuing
Director's successor shall be named by majority vote of the remaining Continuing
Directors to serve until the next annual meeting of stockholders of the
corporation and such successor shall thereafter be treated as a Continuing
Director for purposes of Sections 2.2, 2.4, 7.4 and 7.5 hereof. In the event
any Mayflower Nominated Director (as defined in Section 2.15 of these Bylaws)
ceases to serve as a director of the corporation, whether as a result of his or
her resignation, removal or otherwise, such Mayflower Nominated Director's
successor shall be named by majority vote of the remaining Mayflower Nominated
Directors to serve until the next annual meeting of stockholders of the
corporation and such successor shall thereafter be treated as a Mayflower
Nominated Director for purposes of this Bylaw. The term "Continuing Directors"
shall mean D. Michael Walden, Patrick L. Flinn, George W. Mathews and William C.
Pitt III, and their successors elected in accordance with this Bylaw. The
Continuing Directors also are deemed to be Non-Mayflower Directors. Any
amendment to this Bylaw shall require the approval of (a) a majority of the
directors and (b) of a majority of the Mayflower Nominated Directors.
SECTION 2.5. Committees. The board of directors may, by resolution,
----------
designate from among its members one or more committees, each committee to
consist of one or more directors, except that committees appointed to take
action with respect to indemnification of directors, directors' conflicting
interest transactions or derivative proceedings shall consist of two or more
directors qualified to serve pursuant to the Georgia Business Corporation Code.
Any such committee, to the extent specified by the board of directors, articles
of incorporation or bylaws, shall have and may exercise all of the authority of
the board of directors in the management of the business affairs of the
corporation, except that it may not (1) approve or propose to shareholders
action that the Georgia Business Corporation Code requires to be approved by
shareholders, (2) fill vacancies on the board of directors or any of its
committees, (3) amend the articles of incorporation, (4) adopt, amend, or repeal
bylaws or (5) approve a plan of merger not requiring shareholder approval. The
creation of, delegation of authority to or action by a committee does not alone
constitute compliance by a director with the standards of conduct described in
Georgia Business Corporation Code Section 14-2-830 or successor provisions
regarding standards for directors.
-4-
<PAGE>
SECTION 2.6. Meetings. The board of directors shall meet annually,
--------
without notice, immediately following and at the same place as the annual
meeting of shareholders. Regular meetings of the board of directors or any
committee may be held between annual meetings without notice at such time and at
such place, within or without the State of Georgia, as from time to time shall
be determined by the Board or committee, as the case may be. Any director may
call a special meeting of the directors at any time by giving each director two
(2) days notice. Such notice may be given orally or in writing. If given in
writing, it is effective when received or five days after its deposit in the
mail if mailed with first-class postage pre-paid and correctly addressed.
Neither the business to be transacted at, nor the purpose of, any regular or
special meeting need be specified in the notice or any waiver of notice.
SECTION 2.7. Quorum and Voting. At all meetings of the board of directors
-----------------
or any committee thereof, a majority of the number of directors prescribed, or
if no number is prescribed, the number in office immediately before the meeting
begins, shall constitute a quorum for the transaction of business. The
affirmative vote of a majority of the directors present at any meeting at which
there is a quorum at the time of such act shall be the act of the Board or of
the committee, except as might be otherwise specifically provided by statute or
by the articles of incorporation or bylaws.
SECTION 2.8. Action Without Meeting. Unless the articles of incorporation
----------------------
or bylaws provide otherwise, any action required or permitted to be taken at any
meeting of the board of directors or any committee thereof may be taken without
a meeting if the action is taken by all members of the Board or committee, as
the case may be. The action must be evidenced by one or more written consents
describing the action taken, signed by each director, and filed with the minutes
of the proceedings of the Board or committee or filed with the corporate
records.
SECTION 2.9. Remote Participation in a Meeting. Unless otherwise
---------------------------------
restricted by the articles of incorporation or the bylaws, any meeting of the
board of directors may be conducted by the use of any means of communication by
which all directors participating may simultaneously hear each other during the
meeting. A director participating in a meeting by this means is deemed to be
present in person at the meeting.
SECTION 2.10. Compensation of Directors. The board of directors may fix
-------------------------
the compensation of the directors for their services as directors. No provision
of these bylaws shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefore.
SECTION 2.11. Removal of Directors by Shareholders. Subject to the
------------------------------------
requirements of Georgia Business Corporation Code for the removal of directors
elected by voting groups or staggered terms, and the articles of incorporation,
any one or more directors may be removed from office, with or without cause, at
any meeting of shareholders with respect to which notice of such purpose has
been given, by the affirmative vote of the holder or holders of a majority of
the outstanding shares of the corporation. A removed director's successor may
be elected at the same meeting or time to serve the unexpired term.
SECTION 2.12 Reserved.
--------
SECTION 2.13 Reserved.
--------
SECTION 2.14 Reserved.
--------
SECTION 2.15. Nomination of Directors. Only persons who are nominated in
-----------------------
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the board of directors of the
corporation may be made at a meeting of shareholders by the board of directors
or at the direction of the Board in accordance with the provisions of this
Section 2.15. Any shareholder of the corporation entitled to vote for the
election of directors may recommend to the Board any person for the Board to
consider as a nominee. For so long as the Agreement dated August 21, 1998,
among The Mayflower Corporation plc ("Mayflower"), Mayflower (U.S. Holdings),
Inc., the corporation, D. Michael Walden, Terri B. Hobbs, Randolph B. Stanley,
and M. Earl Meck remains in force and effect, and Mayflower is not in breach of
its obligations thereunder, Mayflower shall be entitled to nominate three
-5-
<PAGE>
persons for election as directors of the corporation (the "Mayflower Nominated
Directors") at each annual meeting of stockholders. The remaining five
directors of the corporation (the "Non-Mayflower Directors") shall be nominated
by majority vote of the Non-Mayflower Directors then serving as directors of the
corporation. Nominations shall be made by or at the direction of the board of
directors, the Mayflower Nominated Directors, the Non-Mayflower Directors or the
Continuing Directors. A shareholder's recommendation to the board of a proposed
nominee shall be delivered to or mailed and received at the principal executive
offices of the corporation, in the case of an annual meeting, in accordance with
the provisions of Section 1.1 of these bylaws and, in the case of a special
meeting, pursuant to Sections 1.2 and 1.4 of these bylaws. The corporation may
require any proposed nominee to furnish such information as reasonably may be
required by the corporation to determine the eligibility of such proposed
nominee to serve as a director of the corporation. The chairman of the meeting
may, if the facts warrant, determine and declare to the meeting that a
recommendation was not made in accordance with the foregoing procedures, and if
he should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. Any amendment to this Section 2.15 shall
require the approval of (y) a majority of the directors and (z) of a majority of
the Mayflower Nominated Directors.
ARTICLE III
NOTICES
SECTION 3.1. Notice. Whenever, under the provisions of the articles of
------
incorporation or of these bylaws or by law, notice is required to be given to
any director or shareholder, it shall not be construed to require personal
notice, but such notice may be given in writing, by mail, or by telegram, telex
or facsimile transmission and such notice shall be deemed to be effective when
received, or when delivered, properly addressed, to the addressee's last known
principal place of business or residence, or five days after the same shall be
deposited in the United States mail if mailed with first-class postage prepaid
and correctly addressed or on the date shown on the return receipt, if sent by
registered or certified mail, and the receipt is signed by or on behalf of the
addressee. Notice to any director or shareholder may also be oral if oral
notice is reasonable under the circumstances. If these forms of personal notice
are impractical, notice may be communicated by a newspaper of general
circulation in the area where published, or by radio, television, or other form
of public broadcast communication.
SECTION 3.2. Waiver of Notice. Whenever any notice is required to be
----------------
given under provisions of the articles of incorporation or of these bylaws or by
law, a waiver thereof, signed by the person entitled to notice and delivered to
the corporation for inclusion in the minutes or filing with the corporate
records, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting and of all objections to the place or time of
the meeting or the manner in which it has been called or convened, except when
the person attends a meeting for the express purpose of stating, at the
beginning of the meeting, any such objection and, in the case of a director,
does not thereafter vote for or assent to action taken at the meeting. Neither
the business to be transacted at nor the purpose of any regular or special
meeting of the shareholders, directors or a committee of directors need be
specified in any written waiver of notice; provided, however, that any waiver of
notice of a meeting of shareholders required with respect to a plan of merger or
a plan of consolidation shall be effective only upon compliance with Section 14-
2-706(c) of the Georgia Business Corporation Code or successor provisions.
ARTICLE IV
OFFICERS
SECTION 4.1. Appointment. The board of directors at each Annual Meeting
-----------
of directors shall elect such officers as it shall deem necessary, including a
Chairman of the Board, a President, a Secretary, a Treasurer, one or more Vice
President (one or more of whom may be designated Executive Vice President or
Senior Vice President), Assistant
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<PAGE>
Vice Presidents, Assistant Secretaries and Assistant Treasurers, who shall
exercise such powers and perform such duties as shall be determined from time to
time by the board of directors. The board of directors may designate any such
officer as the Chief Executive Officer, Deputy Chief Executive Officer, Chief
Operating Officer or Chief Financial Officer, as from time to time shall be
determined by the board of directors. Any number of offices may be held by the
same person, unless the Articles of Incorporation or these Bylaws otherwise
provide. The appointment of an officer does not itself create contract rights.
SECTION 4.2. Resignation and Removal of Officers. An officer may resign
-----------------------------------
at any time by delivering notice to the corporation and such resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. The board of directors may remove any officer at any time with
or without cause.
SECTION 4.3. Vacancies. Any vacancy in office resulting from any cause
---------
may be filled by the board of directors or by any officer authorized by the
board of directors or these bylaws to appoint such officer.
SECTION 4.4. Powers and Duties. Each officer has the authority and shall
-----------------
perform the duties set forth below or, to the extent consistent with these
bylaws, the duties prescribed by the board of directors or by direction of an
officer authorized by the board of directors to prescribe the duties of other
officers.
(a) Chairman of the Board. The Chairman of the Board shall be the Chief
---------------------
Executive Officer of the corporation, unless otherwise designated by the
board of directors and shall be responsible for the general supervision of
the policies of the Corporation and provide active management of the
business affairs of the corporation. He or she shall preside at all
meetings of the shareholders, meetings of the board of directors and shall
be an ex officio member of any committee of the board of directors. He or
she also shall have such powers and perform such duties as are specifically
imposed by law and as may be assigned, from time to time, by the board of
directors. The Deputy Chief Executive Officer, if so designated, shall
report to the Chief Executive Officer and have such duties and
responsibilities as shall be assigned, from time to time, by the Chief
Executive Officer or the board of directors.
(b) President. The President may be the Chief Operating Officer of the
---------
corporation, if so designated by the board of directors, and shall be
responsible for the administration of the corporation and for general and
active management of the operations of the corporation as well as such
other duties as shall be assigned by the Chairman of the Board and by the
board of directors. He or she shall have the power to make and execute
contracts on behalf of the corporation and to delegate such power to
others. He or she also shall have such powers and perform such duties as
are specifically imposed by law and as may be assigned to him, from time to
time, by the board of directors or the Chief Executive Officer.
(c) Vice Presidents. The Vice Presidents, if any, shall perform such
---------------
duties as vice presidents customarily perform and shall perform such other
duties and shall exercise such other powers as the President or the board
of directors may from time to time designate. The Vice President, in the
absence or disability or at the direction of the President, shall perform
the duties and exercise the powers of the President. If the corporation
has more than one Vice President, the one designated by the board of
directors shall act in lieu of the President, or, in the absence of any
such designation, then the Vice President first elected shall act in lieu
of the President.
-7-
<PAGE>
(d) Secretary. The Secretary shall attend all meetings of the
---------
shareholders and all meetings of the board of directors and shall record
all votes and minutes of all proceedings in books to be kept for that
purpose, and shall perform like duties for the standing committees when
required. He or she shall have custody of the corporate seal of the
corporation, shall have the authority to affix the same to any instrument
the execution of which on behalf of the corporation under its seal is duly
authorized and shall attest to the same by his signature whenever required.
The board of directors may give general authority to any other officer to
affix the seal of the corporation and to attest to the same by his
signature. The Secretary shall give, or cause to be given, any notice
required to be given of any meetings of the shareholders, the board of
directors and of the standing committees when required. The Secretary
shall cause to be kept such books and records as the board of directors,
the Chairman of the Board or the President may require and shall cause to
be prepared, recorded, transferred, issued, sealed and cancelled
certificates of stock as required by the transactions of the corporation
and its shareholders. The Secretary shall attend to such correspondence
and shall perform such other duties as may be incident to the office of a
Secretary of a corporation or as may be assigned to him by the board of
directors, the Chairman of the Board or the President.
(e) Treasurer. The Treasurer shall be charged with the management of
---------
financial affairs of the corporation. He or she shall perform such duties
as treasurers usually perform and shall perform such other duties and shall
exercise such other powers as the board of directors, the Chairman of the
Board or the President may from time to time designate and shall render to
the Chairman of the Board, the President and to the board of directors,
whenever requested, an account of the financial condition of the
corporation.
(f) Assistant Vice President, Assistant Secretary and Assistant Treasurer.
---------------------------------------------------------------------
The Assistant Vice President, Assistant Secretary and Assistant Treasurer,
in the absence or disability of any Vice President, the Secretary or the
Treasurer, respectively, shall perform the duties and exercise the powers
of those offices, and, in general, they shall perform such other duties as
shall be assigned to them by the board of directors or by the person
appointing them. Specifically the Assistant Secretary may affix the
corporate seal to all necessary documents and attest the signature of any
officer of the corporation.
SECTION 4.5. Delegation of Authority. In case of the absence of any
-----------------------
officer of the corporation or for any other reason that the board of directors
may deem sufficient, the board of directors may delegate, for the time being,
any or all of the powers or duties of such officer to any other officer or to
any director.
SECTION 4.6 Appointment by Officers. A duly appointed officer may appoint
-----------------------
one or more officers or assistant officers if authorized by the board of
directors.
ARTICLE V
CAPITAL STOCK
SECTION 5.1. Share Certificates. Unless the articles of incorporation or
------------------
these bylaws provide otherwise, the board of directors may authorize the issue
of some or all of the shares of any or all of its classes or series with or
without certificates. Unless the Georgia Business Corporation Code provides
otherwise, there shall be no differences in the rights and obligations of
shareholders based on whether or not their shares are represented by
certificates.
-8-
<PAGE>
In the event that the board of directors authorizes shares with
certificates, each certificate representing shares of stock of the corporation
shall be in such form as shall be approved by the board of directors and shall
set forth upon the face thereof the name of the corporation and that it is
organized under the laws of the State of Georgia, the name of the person to whom
the certificate is issued, and the number and class of shares and the
designation of the series, if any, the certificate represents. The board of
directors may designate any one or more officers to sign each share certificate,
either manually or by facsimile. In the absence of such designation, each share
certificate must be signed by the President or a Vice President and the
Secretary or an Assistant Secretary. If the person who signed a share
certificate, either manually or in facsimile, no longer holds office when the
certificate is issued, the certificate is nevertheless valid.
SECTION 5.2. Record of Shareholders. The corporation or an agent
----------------------
designated by the board of directors shall maintain a record of the
corporation's shareholders in a form that permits preparation of a list of names
and addresses of all shareholders, in alphabetical order by class or shares
showing the number and class of shares held by each shareholder.
SECTION 5.3. Lost Certificates. In the event that a share certificate is
-----------------
lost, stolen or destroyed, the board of directors may direct that a new
certificate be issued in place of such certificate. When authorizing the issue
of a new certificate, the board of directors may require such proof of loss as
it may deem appropriate as a condition precedent to the issuance thereof,
including a requirement that the owner of such lost, stolen or destroyed
certificate, or his legal representative, advertise the same in such manner as
the Board shall require and/or that he give the corporation a bond in such sum
as the Board may direct as indemnity against any claim that may be made against
the corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
SECTION 5.4. Transfers of Shares.
-------------------
(a) Transfers of shares of the capital stock of the corporation shall be
made only upon the books of the corporation by the registered holder thereof, or
by his duly authorized attorney, or with a transfer clerk or transfer agent
appointed as provided in Section 5.5 hereof, and, in the case of a share
represented by certificate, on surrender of the certificate or certificates for
such shares properly endorsed and the payment of all taxes thereon.
(b) The corporation shall be entitled to recognize the exclusive right of
a person registered on its books as the owner of shares to receive dividends, to
vote as such owner, and for all other purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by law.
SECTION 5.5. Transfer Agents and Registrars. The board of directors may
------------------------------
establish such other regulations as it deems appropriate governing the issue,
transfer, conversion and registration of stock certificates, including
appointment of transfer agents, clerks or registrars.
ARTICLE VI
INDEMNIFICATION
SECTION 6.1. Indemnification of Officers, Employees and Agents. The
-------------------------------------------------
corporation may indemnify and advance expenses to an officer, employee or agent
who is not a director to the extent permitted by the articles of incorporation,
the bylaws or by law.
SECTION 6.2. Insurance. The corporation may purchase and maintain
---------
insurance, at its expense, on behalf of an individual who is or was a director,
officer, employee or agent of the corporation or who, while a director, officer,
employee or agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee, or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
-9-
<PAGE>
employee benefit plan, or other enterprise, against liability asserted against
or incurred by him or her in any such capacity or arising from his status as a
director, officer, employee or agent, whether or not the corporation would have
power to indemnify him or her against the same liability under this Article.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.1. Seal. The corporation may have a seal, which shall be in
----
such form as the board of directors may from time to time determine. In the
event that the use of the seal is at any time inconvenient, the signature of an
officer of the corporation, followed by the word "Seal" enclosed in parenthesis,
shall be deemed the seal of the corporation.
SECTION 7.2. Voting Shares in Subsidiaries. In the absence of other
-----------------------------
arrangements by the board of directors, shares of stock issued by another
corporation and owned or controlled by the corporation, whether in a fiduciary
capacity or otherwise, may be voted by the President or any Vice President, in
the absence of action by the President, in the same order as they preside in the
absence of the President, or, in the absence of action by the President or any
Vice President, by any other officer of the corporation, and such person may
execute the aforementioned powers by executing proxies and written waivers and
consents on behalf of the corporation.
SECTION 7.3. Amendment of Bylaws. These bylaws may be amended or repealed
-------------------
and new bylaws may be adopted by the board of directors at any regular or
special meeting of the board of directors unless the articles of incorporation
or the Georgia Business Corporation Code reserve this power exclusively to the
shareholders in whole or in part or the shareholders, in amending or repealing
the particular bylaw, provide expressly that the board of directors may not
amend or repeal that bylaw.
Unless the shareholders have fixed a greater quorum or voting requirement,
these bylaws also may be altered, amended or repealed and new bylaws may be
adopted by a majority vote of all shares voted at any annual or special meeting
of the shareholders. A bylaw limiting the authority of the board of directors
or establishing staggered terms for directors may only be adopted, amended, or
repealed by the shareholders. Except as provided in Sections 14-2-1113 and -
1133 of the Georgia Business Corporation Code, a bylaw that fixes a greater
quorum or voting requirement for shareholders may be adopted, amended or
repealed only by the shareholders. A bylaw that fixes a greater quorum or
voting requirement for the board of directors may be adopted only by the
affirmative vote of holders of a majority of the shares entitled to be cast or
by a majority of the entire board of directors.
SECTION 7.4 Fair Price Requirements. All of the requirements of Sections
-----------------------
14-2-1110 to 14-2-1113, inclusive, of the Georgia Business Corporation Code, as
now in effect and as hereafter from time to time amended, shall be applicable to
the corporation and to any business combination approved or recommended by the
board of directors.
SECTION 7.5 Business Combinations. All of the requirements of Section 14-
---------------------
2-1131 to 14-2-1133, inclusive, of the Georgia Business Combination Code, as now
in effect and as hereafter from time to time amended, shall be applicable to the
corporation and to any business combination with an interested shareholder.
ARTICLE VIII
EMERGENCY BYLAWS
SECTION 8.1. Emergency Bylaws. This Article shall be operative during any
----------------
emergency resulting from some catastrophic event that prevents a quorum of the
board of directors or any committee thereof from being readily assembled (an
"emergency"), notwithstanding any different or conflicting provisions set forth
-10-
<PAGE>
elsewhere in these bylaws or in the articles of incorporation. To the extent
not inconsistent with the provisions of this Article, the bylaws set forth
elsewhere herein and the provisions of the articles of incorporation shall
remain in effect during such emergency, and upon termination of such emergency,
the provisions of this Article shall cease to be operative.
SECTION 8.2. Meetings. During any emergency, a meeting of the board of
--------
directors or any committee thereof may be called by any director, or by the
President, any Vice President, the Secretary or the Treasurer (the "Designated
Officers") of the corporation. Notice of the time and place of the meeting
shall be given by any available means of communication by the person calling the
meeting to such of the directors and/or designated officers as may be feasible
to reach. Such notice shall be given at such time in advance of the meeting as,
in the judgement of the person calling the meeting, circumstances permit.
SECTION 8.3 Quorum. At any meeting of the board of directors or any
------
committee thereof called in accordance with this Article, the presence or
participation of two directors, one director and a designated officer, or two
designated officers shall constitute a quorum for the transaction of business.
SECTION 8.4. Bylaws. At any meeting called in accordance with this
------
Article, the board of directors or committee thereof, as the case may be, may
modify, amend or add to the provisions of this Article so as to make any
provision that may be practical or necessary for the circumstance of the
emergency.
SECTION 8.5. Liability. Corporate action taken in good faith in
---------
accordance with the emergency bylaws may not be used to impose liability on a
director, officer, employee or agent of the corporation.
SECTION 8.6. Repeal or Change. The provisions of this Article shall be
----------------
subject to repeal or change by further action of the board of directors or by
action of shareholders, but no such repeal or change shall modify the provisions
of the immediately proceeding Section of this Article with regard to action
taken prior to the time of such repeal or change.
-11-
<PAGE>
EXHIBIT 10.1
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and
entered into as of this 21st day of August, 1998, by and between METROTRANS
CORPORATION, a Georgia corporation, as borrower (the "Borrower"), and
NATIONSBANK, N.A., a national banking association, as lender (the "Lender").
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower and the Lender are parties to that certain Loan
Agreement, dated as of September 5, 1997, as amended by First Amendment to Loan
Agreement dated as of May 18th, 1998 (as amended, the "Loan Agreement"),
pursuant to which the Lender extended certain financial accommodations to the
Borrower; and
WHEREAS, the Borrower has requested, and the Lender has agreed, subject to
the terms hereof, to amend certain provisions of the Loan Agreement, to permit
the Borrower to incur $15,000,000 of subordinated debt; and
NOW, THEREFORE, in consideration of the premises, the terms and conditions
contained herein, and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS. All capitalized terms used herein and not expressly defined
herein shall have the same respective meanings given to such terms in the Loan
Agreement.
2. AMENDMENTS TO ARTICLE 1.
(a) Section 1.1 of the Loan Agreement is hereby amended by deleting the
definitions of "Leverage Ratio," "Maturity Date" and "Note" in their entirety
-------------- -------------
and substituting in lieu thereof the following definitions to read as follows:
"'Maturity Date' shall mean December 31, 2000 or such earlier date as
-------------
payment of the remaining outstanding principal amount of the Loans or of
all remaining outstanding Obligations shall be due (whether by acceleration
or otherwise)."
"'Note' shall mean that certain promissory note dated as of August 21,
----
1998 in the original principal amount of Twenty Million Dollars
($20,000,000.00) issued to the Lender by the Borrower, substantially in the
form of Exhibit D attached hereto, and any other notes executed and
---------
delivered by the Borrower to the Lender with respect to the Loan, and any
amendments, renewals or extensions of the foregoing."
"'Senior Leverage Ratio' shall mean, as of any date, the ratio of (a)
---------------------
Senior Debt on such date to (b) EBITDA for the most recently completed four
(4) fiscal quarter period."
<PAGE>
(b) Section 1.1 of the Loan Agreement is hereby amended by adding the
following new definitions in appropriate alphabetical order:
"'Mayflower" shall mean Mayflower Corporation plc or its
---------
Affiliates.
"Mayflower Purchase Agreement" shall mean that certain Agreement
----------------------------
between Mayflower, the Borrower, D. Michael Walden, Terri B. Hobbs,
Randolph B. Stanley and M. Earl Meck.
"Mayflower Subordinated Loan Documents" shall mean that certain
-------------------------------------
Loan Agreement dated as of August 21, 1998 between the Borrower and
Mayflower and any notes, security agreements, deeds to secure debt, loan
agreements, or other instruments previously, simultaneously or hereafter
executed and delivered by the Borrower to Mayflower.
"Mayflower Subordinated Debt" shall mean the unsecured
---------------------------
subordinated revolving credit loans in a maximum principal amount not to
exceed $15,000,000 made Mayflower to the Borrower pursuant to the Mayflower
Subordinated Loan Documents.
"Senior Debt" shall mean, with respect to the Borrower and the
-----------
Subsidiaries on a consolidated basis as of any calculation date, the sum,
without duplication, of Indebtedness for Money Borrowed other than
Subordinated Debt, all as determined in accordance with GAAP.
"Subordinated Debt" shall mean, for the Borrower and the
-----------------
Subsidiaries on a consolidated basis as of any calculation date, all
Indebtedness for Money Borrowed permitted hereunder which is expressly
subordinated by its terms to the Obligations pursuant to subordination
terms satisfactory to the Lender, including, without limitation, the
Mayflower Subordinated Debt.
"Total Leverage Ratio" shall mean, as of any date, the ratio of
--------------------
(a) Indebtedness for Money Borrowed with respect to the Borrower and the
Subsidiaries on a consolidated basis on such date to (b) EBITDA for the
most recently completed four (4) fiscal quarter period.
(c) The Loan Agreement is hereby further amended by deleting all
references to "Leverage Ratio" wherever they appear and substituting in lieu
thereof "Senior Leverage Leverage."
3. AMENDMENTS TO ARTICLE 7.
(a) The Loan Agreement is hereby further amended by deleting Section 7.3
in its entirety and substituting in lieu thereof the following to read as
follows:
2
<PAGE>
"Section 7.3 Amendment and Waiver. The Borrower shall not, and shall
--------------------
not permit any of its Subsidiaries to, enter into any amendment of, or
agree to or accept or consent to any waiver of any of the material
provisions of its articles or certificate of incorporation, by-laws or
partnership agreement, as appropriate, which amendment or waiver is adverse
to the interest of the Lender, or any amendment of the Mayflower
Subordinated Loan Documents, the Mayflower Purchase Agreement, or any other
document relating to any Subordinated Debt."
(a) The Loan Agreement is hereby further amended by deleting Section
7.9 in its entirety and substituting in lieu thereof the following to read as
follows:
"Section 7.9 Senior Leverage Ratio. As of the end of any fiscal
---------------------
quarter, the Borrower shall not permit the Senior Leverage Ratio to exceed
the ratios set forth below during the periods indicated:
Period Senior Leverage Ratio
------ ---------------------
March 31, 1998 through 4.25:1.0
September 30, 1998
October 1, 1998 through 3.75:1.0
December 31, 1998
January 1, 1999 and thereafter 2.50:1.0"
(b) The Loan Agreement is hereby further amended by adding a new
Section 7.15 to read as follows:
"Section 7.15 Total Leverage Ratio. As of the end of any fiscal
--------------------
quarter, the Borrower shall not permit the Total Leverage Ratio to exceed
the ratios to be mutually agreed upon by the Borrower and the Lender on or
before September 15, 1998."
4. AMENDMENT TO ARTICLE 8. The Loan Agreement is hereby further amended by
deleting Section 8.1(k) in its entirety and substituting in lieu thereof the
following to read as follows:
"(k) There shall occur (i) any default under any other document,
instrument or agreement relating to any Indebtedness of the Borrower or any
of the Borrower's Subsidiaries having an aggregate principal amount
exceeding $500,000; or (ii) any event which directly or indirectly causes
the Borrower or any of its Subsidiaries to be required to offer to prepay
any Indebtedness or which directly or indirectly gives any holder of any
Indebtedness of the Borrower or any of its Subsidiaries the right to
require the Borrower or any of its Subsidiaries to prepay any such
Indebtedness under any other document, instrument or agreement relating to
any Indebtedness of the Borrower or any
3
<PAGE>
of the Borrower's Subsidiaries having an aggregate principal amount
exceeding $500,000; or (iii) any default under any Interest Rate Hedge
Agreement having a notional principal amount of $250,000 or more; or (iv)
any default under any of the Mayflower Subordinated Loan Documents, the
Mayflower Purchase Agreement or any other document relating to Subordinated
Debt; or"
5. EXHIBIT. The Loan Agreement is further amended by deleting Exhibit D in
its entirety and substituting in lieu thereof Exhibit D attached hereto.
---------
6. CONSENT. Subject to the terms and conditions hereof, the Lender hereby
consents to the Mayflower Subordinated Debt, the Mayflower Purchase Agreement,
the Mayflower Subordinated Loan Documents and the transactions contemplated by
all of the foregoing (collectively, the "Mayflower Transactions"). On or prior
to consummation of the Mayflower Transactions, the Borrower shall provide to the
Lender form and substance satisfactory to the Lender (i) certification to the
Lender of the Borrower's compliance with Sections 7.9, 7.10, 7.11, 7.12 and 7.14
of the Loan Agreement both before and after giving effect to the Mayflower
Transactions; (ii) pro forma projections both before and after giving effect to
the Mayflower Transactions; (iii) certification to the Lender that a Default
does not exist and will not be caused by the Mayflower Transactions, (iv)
evidence that the documentation evidencing the Mayflower Transactions shall be
on substantially the same terms and conditions set forth in the drafts reviewed
by the Lender on August 20, 1998, (v) execution and delivery of the
Subordination Agreement dated as of even date herewith (the "Subordination
Agreement") and (vi) prior to any funding of the Mayflower Subordinated Debt, an
opinion of counsel as to the due authorization, execution and delivery by
Mayflower of the Subordination Agreement.
7. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to and in favor of the Lender as follows:
(a) Each representation and warranty set forth in Article 4 of the Loan
Agreement, as amended hereby, is hereby restated and affirmed as true and
correct in all material respects as of the date hereof, except to the
extent previously fulfilled in accordance with the terms of the Loan
Agreement, as amended hereby, and to the extent relating specifically to
the Agreement Date or otherwise inapplicable;
(b) The Borrower has the corporate power and authority (i) to enter
into this Amendment, and (ii) to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by it;
(c) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrower, and
constitutes the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with its terms, subject, as
to enforcement of remedies, to the following qualifications: (i) an order
of specific performance and an injunction are discretionary remedies and,
in particular, may not be available where damages are considered an
adequate remedy at law, and (ii) enforcement may be
4
<PAGE>
limited by bankruptcy, insolvency, liquidation, reorganization,
reconstruction and other similar laws affecting enforcement of creditors'
rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Borrower); and
(d) The execution and delivery of this Amendment and performance by the
Borrower under the Loan Agreement, as amended hereby, does not and will not
require the consent or approval of any regulatory authority or governmental
authority or agency having jurisdiction over the Borrower which has not
already been obtained, nor be in contravention of or in conflict with the
Certificate of Incorporation or By-Laws of the Borrower, or any provision
of any statute, judgment, order, indenture, instrument, agreement, or
undertaking, to which the Borrower is party or by which the Borrower's
assets or properties are bound.
8. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT. The effectiveness of
this Amendment is subject to:
(a) all of the representations and warranties of the Borrower under
Section 7 hereof which are made as of the date hereof, shall be true and
correct in all material respects;
(b) receipt by the Lender of a certificate of the chief executive
officer of the Borrower certifying that no Default exists both before and
after giving effect to this Amendment;
(c) receipt by the Lender of a the duly executed Note, substantially in
the form of Exhibit D attached hereto; and
---------
(d) receipt of any other documents or instruments that the Lender may
reasonably request, certified by an officer of the Borrower if so
requested.
9. EFFECT OF AMENDMENT; NO NOVATION. Except as expressly set forth herein,
the Loan Agreement shall remain in full force and effect and shall constitute
the legal, valid, binding and enforceable obligation of Borrower to the Lenders,
and Borrower hereby restates, ratifies and reaffirms each and every term and
condition set forth in the Loan Agreement, as amended hereby. The terms of this
Amendment are not intended to and do not serve as a novation as to the Loan
Agreement or the Notes or the indebtedness evidenced thereby. The parties hereto
expressly do not intend to extinguish any debt or security interest created
pursuant to the Loan Agreement or any document executed in connection therewith.
Instead it is the express intention to affirm the Loan Agreement and the
security created thereby.
10. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
instrument.
5
<PAGE>
11. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and inure
to the benefit of the successors and permitted assigns of the parties hereto.
12. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
12. MEDIATION. The Lender and Borrower agree that any and all disputes
arising out of or related to the execution of this Amendment, or the performance
thereunder shall be submitted to non-binding mediation. The cost of the
mediation is to be shared equally by the Lender and Borrower. The parties
further agree as follows:
(a) They each will make a good faith effort to resolve any and all
disputes pursuant to the mediation provision.
(b) They each will have parties present at the mediation session who
have authority to resolve any pending disputes between the
parties.
(c) That they will devote and set aside whatever time is needed to
seek a resolution of any disputes between the parties.
[Remainder of page intentionally left blank]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment under
seal as of the day and year first above written.
BORROWER: METROTRANS CORPORATION
By: /s/ D. Michael Walden
____________________________________
D. Michael Walden
Chairman and Chief Executive Officer
[CORPORATE SEAL]
LENDER: NATIONSBANK, N.A.
By: /s/ Scot Turner
---------------------------------
Scot Turner
Assistant Vice President
7
<PAGE>
EXHIBIT 10.2
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and
entered into as of this 15th day of September, 1998, by and between METROTRANS
CORPORATION, a Georgia corporation, as borrower (the "Borrower"), and
NATIONSBANK, N.A., a national banking association, as lender (the "Lender").
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower and the Lender are parties to that certain Loan
Agreement, dated as of September 5, 1997, as amended by First Amendment to Loan
Agreement dated as of May 18th, 1998 and by Second Amendment to Loan Agreement
dated as of August 21st, 1998 (as amended, the "Loan Agreement"), pursuant to
which the Lender extended certain financial accommodations to the Borrower; and
WHEREAS, the Borrower has requested, and the Lender has agreed, subject to the
terms hereof, to amend certain provisions of the Loan Agreement; and
NOW, THEREFORE, in consideration of the premises, the terms and conditions
contained herein, and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS. All capitalized terms used herein and not expressly defined
herein shall have the same respective meanings given to such terms in the Loan
Agreement.
2. AMENDMENTS TO ARTICLE 1.
(a) Section 1.1 of the Loan Agreement is hereby amended by deleting the
definition of "Total Leverage Ratio."
---------------------
(b) The Loan Agreement is hereby further amended by deleting all
references to "Total Leverage Ratio" wherever they appear.
3. AMENDMENTS TO ARTICLE 7.
(a) The Loan Agreement is hereby further amended by deleting Section 7.12
in its entirety and substituting in lieu thereof the following to read as
follows:
"Section 7.12 Fixed Charge Ratio. As of the end of any fiscal quarter, the
------------------
Borrower shall not permit the Fixed Charge Ratio to be less than 1.9:1.0"
(b) The Loan Agreement is hereby further amended by deleting Section 7.15
in its entirety.
<PAGE>
4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to and in favor of the Lender as follows:
(a) Each representation and warranty set forth in Article 4 of the Loan
Agreement, as amended hereby, is hereby restated and affirmed as true and
correct in all material respects as of the date hereof, except to the
extent previously fulfilled in accordance with the terms of the Loan
Agreement, as amended hereby, and to the extent relating specifically to
the Agreement Date or otherwise inapplicable;
(b) The Borrower has the corporate power and authority (i) to enter into
this Amendment, and (ii) to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by it;
(c) This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrower, and constitutes
the legal, valid and binding obligations of the Borrower, enforceable against
the Borrower in accordance with its terms, subject, as to enforcement of
remedies, to the following qualifications: (i) an order of specific performance
and an injunction are discretionary remedies and, in particular, may not be
available where damages are considered an adequate remedy at law, and (ii)
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Borrower); and
(d) The execution and delivery of this Amendment and performance by the
Borrower under the Loan Agreement, as amended hereby, does not and will not
require the consent or approval of any regulatory authority or governmental
authority or agency having jurisdiction over the Borrower which has not
already been obtained, nor be in contravention of or in conflict with the
Certificate of Incorporation or By-Laws of the Borrower, or any provision
of any statute, judgment, order, indenture, instrument, agreement, or
undertaking, to which the Borrower is party or by which the Borrower's
assets or properties are bound.
5. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT. The effectiveness of
this Amendment is subject to:
(a) all of the representations and warranties of the Borrower under
Section 4 hereof which are made as of the date hereof, shall be true and correct
in all material respects;
(b) receipt by the Lender of a certificate of the chief executive officer
of the Borrower certifying that no Default exists both before and after giving
effect to this Amendment; and
(c) receipt of any other documents or instruments that the Lender may
reasonably request, certified by an officer of the Borrower if so requested.
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6. EFFECT OF AMENDMENT; NO NOVATION. Except as expressly set forth herein,
the Loan Agreement shall remain in full force and effect and shall constitute
the legal, valid, binding and enforceable obligation of Borrower to the Lenders,
and Borrower hereby restates, ratifies and reaffirms each and every term and
condition set forth in the Loan Agreement, as amended hereby. The terms of this
Amendment are not intended to and do not serve as a novation as to the Loan
Agreement or the Notes or the indebtedness evidenced thereby. The parties
hereto expressly do not intend to extinguish any debt or security interest
created pursuant to the Loan Agreement or any document executed in connection
therewith. Instead it is the express intention to affirm the Loan Agreement and
the security created thereby.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
instrument.
8. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and inure to
the benefit of the successors and permitted assigns of the parties hereto.
9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
12. MEDIATION. The Lender and Borrower agree that any and all disputes
arising out of or related to the execution of this Amendment, or the performance
thereunder shall be submitted to non-binding mediation. The cost of the
mediation is to be shared equally by the Lender and Borrower. The parties
further agree as follows:
(a) They each will make a good faith effort to resolve any and all
disputes pursuant to the mediation provision.
(b) They each will have parties present at the mediation session who
have authority to resolve any pending disputes between the parties.
(c) That they will devote and set aside whatever time is needed to
seek a resolution of any disputes between the parties.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal
as of the day and year first above written.
BORROWER: METROTRANS CORPORATION
By: /s/ Richard M. Bruno
_________________________________
Richard M. Bruno
Vice President and Chief Financial Officer
[CORPORATE SEAL]
LENDER: NATIONSBANK, N.A.
By: /s/ Scot Turner
_________________________________
Scot Turner
Assistant Vice President
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