<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 April 5, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Transition Period from ______ to ______
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 May 15, 1998
- ----------------------------- ---------------------------
Common Stock, $.01 Par Value 4,084,294 shares
Page 1 of 12
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METROTRANS CORPORATION
Quarterly Report on Form 10-Q
FOR THE QUARTER ENDED APRIL 5, 1998
Table of Contents
-----------------
ITEM PAGE
NUMBER NUMBER
- ------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
1 Financial Statements:
Consolidated Balance Sheets as of April 5, 1998 and
December 31, 1997 3
Consolidated Statements of Income for the three months
ended April 5, 1998 and March 30, 1997 4
Consolidated Statements of Cash Flows for the three months
ended April 5, 1998 and March 30, 1997 5
Notes to Consolidated Financial Statements 6
2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
1 Legal Proceedings 11
4 Submission of Matters to a Vote of Security Holders 11
6 Exhibits and Reports on Form 8-K 11
Signature 12
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>
APRIL 5, DECEMBER 31,
1998 1997
---------------- ---------------
<S> <C> <C>
(UNAUDITED)
ASSETS
CURRENT ASSETS:
CASH.......................................................... $ 50 $ 50
ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR DOUBTFUL
ACCOUNTS OF $98 AND $77 IN 1998 AND 1997, RESPECTIVELY....... 11,281 9,151
CURRENT PORTION OF NET INVESTMENT IN SALES-TYPE LEASES........ 697 877
INVENTORIES................................................... 23,766 20,932
PREPAID EXPENSES AND OTHER.................................... 1,183 1,333
------- -------
TOTAL CURRENT ASSETS......................................... 36,977 32,343
PROPERTY, PLANT AND EQUIPMENT, NET............................. 7,258 6,922
NET INVESTMENT IN SALES-TYPE LEASES............................ 337 405
INTANGIBLES.................................................... 528 536
DEPOSITS AND OTHER............................................. 314 302
------- -------
$45,414 $40,508
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES......................... $ 8,575 $ 7,726
CURRENT PORTION OF LONG-TERM DEBT............................. 907 1,087
CUSTOMER DEPOSITS............................................. 623 238
------- -------
TOTAL CURRENT LIABILITIES.................................... 10,105 9,051
------- -------
LONG-TERM DEBT, NET OF CURRENT PORTION......................... 16,357 11,945
------- -------
OTHER NONCURRENT LIABILITIES 300 300
------- -------
DEFERRED INCOME TAXES.......................................... 183 183
------- -------
COMMITMENTS AND CONTINGENCIES (NOTE 3)
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, NO PAR VALUE; 10,000,000 SHARES AUTHORIZED... 0 0
COMMON STOCK, $.01 PAR VALUE; 20,000,000 SHARES
AUTHORIZED, 4,084,294 SHARES ISSUED AND OUTSTANDING
IN 1998 AND 1997 41 41
ADDITIONAL PAID-IN CAPITAL.................................... 10,577 10,577
DEFERRED COMPENSATION......................................... (184) (210)
RETAINED EARNINGS............................................. 8,035 8,621
------- -------
18,469 19,029
------- -------
$45,414 $40,508
======= =======
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
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<TABLE>
<CAPTION>
METROTRANS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended
---------------------------
April 5, March 30,
1998 1997
----------- ----------
<S> <C> <C>
NET REVENUE $16,018 $15,016
COST OF SALES 13,796 13,328
------- -------
Gross Profit 2,222 1,688
SELLING, GENERAL, AND
ADMINISTRATIVE EXPENSES 2,908 1,881
------- -------
Operating Loss (686) (193)
INTEREST EXPENSE, net 279 423
------- -------
LOSS BEFORE INCOME TAXES (965) (616)
INCOME TAX BENEFIT (379) (242)
------- -------
NET LOSS $ (586) $ (374)
======== =======
LOSS PER SHARE:
Basic $ (0.14) $ (0.09)
======== =======
Diluted $ (0.14) $ (0.09)
======== =======
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 4,084 4,012
======== =======
Diluted 4,084 4,012
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
4
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<TABLE>
<CAPTION>
METROTRANS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
--------------------------------------
APRIL 5, MARCH 30,
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (586) $ (374)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 187 109
Compensation under restricted stock award 26 26
Changes in assets and liabilities:
Accounts receivable (2,130) 2,173
Inventories (2,834) (1,067)
Other assets 138 (211)
Accounts payable and accrued expenses 849 (290)
Customer deposits 385 354
------- -------
Total adjustments (3,379) 1,094
------- -------
Net cash (used in) provided by operating activities (3,965) 720
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (515) (302)
Net (increase) in property held for lease 0 (86)
Net decrease in investment in sales-type leases 248 105
------- -------
Net cash (used in) investing activities (267) (283)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowing under line of credit 0 (246)
Net (decrease) in collateralized borrowings (180) 79
Net borrowing (repayments) of long-term debt 4,412 (238)
------- -------
Net cash provided by (used in)
financing activities 4,232 (405)
------- -------
INCREASE IN CASH 0 32
CASH AT BEGINNING OF PERIOD 50 22
-------- -------
CASH AT END OF PERIOD $ 50 $ 54
======== =======
CASH PAID FOR INTEREST $ 260 $ 350
======== =======
CASH PAID FOR TAXES $ 0 $ 0
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
5
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METROTRANS CORPORATION
Notes to Consolidated Financial Statements
APRIL 5, 1998
(UNAUDITED)
1. Basis of Presentation
---------------------
The financial statements include the accounts of Metrotrans Corporation
and Subsidiaries (the "Company"). In February, 1997, the Company formed a
wholly owned subsidiary BUS PRO, Inc., to conduct refurbishment and sale of
used coaches. 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. Certain reclassifications of
1997 income statement captions have been made to conform with the 1998
presentation. Results presented for the three-month ended April 5, 1998 are
not necessarily indicative of results that may be expected for the full
fiscal year.
6
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2. Inventories
-----------
Inventories consist of (in thousands):
April 5, 1998 December 31, 1997
------------- -----------------
Chassis awaiting conversion.. $ 3,156 $ 3,437
Raw materials................ 4,077 4,549
Work in process.............. 3,404 1,524
Finished goods............... 6,633 6,287
Used vehicles................ 6,496 5,135
------- -------
$23,766 $20,932
======= =======
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 April 5, 1998 and December 31, 1997 was $13.4 million
and $12.0 million, respectively. During the quarter ended April 5, 1998,
the Company purchased additional 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 at or above
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.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Company was incorporated 1982 in for the purpose of designing,
manufacturing and marketing shuttle and mid-size buses. During the period
from its incorporation to the introduction in 1986 of its initial
manufactured product, the Classic(R), the Company focused its efforts on
marketing buses manufactured by other companies. Since the introduction of
the Classic, 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(TM) in 1996 and the Anthem(TM) and Irizar Century in
1997.
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of total revenue, the
relationship of selected items included in the Company's income statement
for the periods indicated.
Three Months Ended
--------------------
April 5, March 30,
1998 1997
--------- ----------
Net revenue........... 100.0% 100.0%
Cost of sales......... 86.1 88.8
----- -----
Gross profit.......... 13.9 11.2
Selling, general and
administrative expenses 18.2 12.5
----- -----
Operating loss........ (4.3) (1.3)
Interest expense...... 1.7 2.8
----- -----
Loss before income taxes (6.0) (4.1)
Income tax benefit.... (2.3) (1.6)
----- -----
Net loss.............. (3.7)% (2.5)%
===== =====
8
<PAGE>
Net Revenue. Net revenue increased 6.7% to $16.0 million for the
three months ended April 5, 1998 from $15.0 million for the comparable
prior year period. The first quarter revenue growth primarily resulted from
the net effect of an increase in sales of Legacy LJ units, higher used
coach sales of BusPro, Inc. and a reduction in Eurotrans sales. Sales of
Eurotrans units declined due to a lack of chassis availability during the
quarter.
Total unit sales and average revenue per unit for the three month
periods ended April 5, 1998 and March 30, 1997, respectively, were:
Period Ended Period Ended
April 5, 1998 March 30, 1997
--------------- ---------------
Average Average
Revenue Revenue
Units Per Unit Units Per Unit
----- -------- ----- --------
Eurotrans 11 $153,000 26 $129,000
Legacy LJ 8 $ 86,000 2 $ 73,000
Classic 191 $ 51,000 194 $ 51,000
--- ---
Total 210 222
=== ===
Production backlog at April 5, 1998 was approximately $33 million,
including approximately $15 million in orders for the new Irizar Century
full-size coach compared with $21 million at the end of the first quarter
of 1997. Sales of used buses by the Company's wholly-owned subsidiary,
BusPro, acquired from trade-ins and lease maturities, in 1998's first
quarter of $2.9 million were over 250% above sales for the prior year's
first quarter of $1.2 million due to both the growth in sales activity
during that time and to the relocation of BusPro to a new facility in the
first quarter of 1997.
COST OF SALES AND GROSS PROFIT. Gross profit improved 31.6% to
$2.2 million in the first quarter of 1998 from $1.7 million in the same
period of 1997. Gross profit as a percent of net revenue increased to
13.9% during this year's first quarter from 11.2% in the prior year
quarter. While gross profit improved both in amount and as a percent of
net revenue from the same period of last year, gross profit in both periods
was substantially below normal levels primarily as a result of the lower
level of sales. The reduction in sales level from the immediately
preceding quarters was at a rate greater than the rate of decline in
manufacturing costs. Spending for manufacturing labor and overhead was
reduced in each of the first quarter periods, but the lower unit sales
levels in those quarters resulted in higher costs per unit.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES AND OPERATING INCOME.
The operating loss in the first quarter of 1998 increased to $686,000 from
$193,000 in the same period in 1997. The operating loss, as a percent of
net revenue, of 4.3% in the first quarter of 1998 exceeded that of 1.3% in
the same prior year period. Selling, general and administrative expenses
("SG&A") for the quarter increased $1.0 million from $1.9 million in 1997's
first quarter to $2.9 million in 1998's first quarter. The increase in
9
<PAGE>
SG&A primarily resulted from a combination of increased expenses for
compensation, recruitment and relocation for senior and key subordinate
management positions, expenses in advance of any revenues for the
introduction of the Company's two new product lines, the Anthem and the
Irizar Century, certain non-recurring restructuring costs of the Company's
sales and sales administration processes, and the relocation and start-up
of some company-owned sales centers.
INTEREST EXPENSE. Interest expense of $279,000 in the first
quarter of 1998 declined 34.0% from $423,000 for the prior year's
comparable quarter. The decrease for the quarter primarily was the net
result of a reduction in the amount of interest paid to Ford Motor Credit
Corporation ("FMCC") for chassis held under its consignment pool agreement
in excess of an initial 90-day noninterest-bearing period in connection
with the institution of procedures to better control chassis inventory
levels, a reduction in the overall rate of interest paid on borrowings
under terms of the revised revolving credit facility established in the
third quarter of 1997, and an increase in the average balance outstanding
under the facility during the quarter.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities during the first quarter of
1998 totaled $4.0 million compared with cash provided by operating
activities of $720,000 in the comparable 1997 period. A net loss of
$586,000, an increase in inventory of $2.8 million, and an increase of
accounts receivable of $2.1 million were primarily responsible for the cash
used for operating activities during the quarter. The increase in
inventory resulted primarily from an increase in used vehicles from the
purchase of approximately $2.0 million of vehicles related to 1997 lease
defaults and litigation settlements.
During May 1998, the Company entered into an amendment to its
revolving credit facility with its primary bank increasing the amount of
the facility to $20 million from $16 million. The three-year unsecured
credit facility provides interest rate pricing at spreads over LIBOR that
vary based on leverage. Anticipated capital expenditures and increases in
working capital are expected to be financed primarily through internally
generated funds and through the Company's revolving credit facility. At
April 5, 1998, the Company had approximately $14.5 million of borrowings
outstanding under the revolving credit facility.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders May 13, 1998 at
which the election of the Company's directors was held. D. Michael Walden,
Randy B. Stanley, M. Earl Meck, William C. Pitt III, George W. Mathews,
Jr., and Patrick L. Flinn were each re-elected as directors with 2,830,894
votes for election of each of the nominees and 13,452 votes withheld as to
each the nominees.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed with this report.
Exhibit Number
--------------
10.2(b) Amendment to Loan Agreement between Metrotrans
Corporation and NationsBank, N.A. dated May 18, 1998.
27 Financial Data Schedule (for SEC use only).
(b) No Current Reports on Form 8-K were filed by Company during the
quarter ended April 5, 1998.
11
<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: May 19, 1998 /s/ Richard M. Bruno
--------------------
Richard M. Bruno
Chief Financial and Accounting
Officer
Duly Authorized Officer
12
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EXHIBIT 10.2(b)
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and
entered into as of this 18th day of May, 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 (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, including (i)
an increase in the amount of the existing revolving credit facility under the
Loan Agreement from $16,000,000 to $20,000,000 and (ii) an extension of the
Maturity Date from September 5, 2000 to May 18, 2001; 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. AMENDMENT TO ARTICLE 1. Section 1.1 of the Loan Agreement is hereby
amended by deleting the definitions of "Commitment," "Letters of Credit,"
---------- -----------------
"Maturity Date," and "Note" in their entirety and substituting in lieu thereof
- -------------- ----
the following new definitions to read as follows:
"'Commitment' shall mean the obligation of the Lender to make Advances
----------
to, or issue Letters of Credit on behalf of, the Borrower from time to
time, pursuant to the terms hereof in the aggregate amount outstanding of
Twenty Million Dollars ($20,000,000.00)."
"'Letters of Credit'" shall mean either Standby Letters of Credit or
-----------------
Commercial Letters of Credit issued from time to time by the Lender for
the account of the Borrower; provided that the sum of (i) the aggregate
amount of all Letters of Credit issued for the account of Borrower,
including, without limitation, those issued prior to the date of the First
Amendment to this Agreement and listed on Schedule 1 hereto, together with
----------
any renewals or extensions thereof, plus (ii) the aggregate amount
----
outstanding under the Loans, does not exceed the Commitment."
"'Maturity Date' shall mean May 18, 2001 or such earlier date as
-------------
payment of the remaining outstanding principal amount of the Loans or of
all remaining
<PAGE>
outstanding Obligations shall be due (whether by acceleration or
otherwise)."
"'Note' shall mean that certain promissory note dated as of May 18,
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."
3. AMENDMENTS TO ARTICLE 2.
(a) The Loan Agreement is hereby further amended by deleting the chart
in Section 2.3 in its entirety and substituting in lieu thereof the following:
LIBOR Advance
"Leverage Ratio Applicable Margin
-------------- -----------------
Greater than 3.50 1.500%
3.50:1 or less but
greater than 2.75:1 1.375%
2.75:1 or less but
greater than 2.00:1 1.250%
2.00:1 or less but
greater than 1.50:1 1.125%
1.50:1 or less but
greater than 1.00:1 1.000%
1.00:1 or less 0.750%"
(b) The Loan Agreement is hereby further amended by deleting the chart
in Section 2.4 in its entirety and substituting in lieu thereof the following:
"Leverage Ratio Applicable Percentage
-------------- ---------------------
Greater than 3.50 0.325%
3.50:1 or less but
greater than 2.75:1 0.325%
2
<PAGE>
2.75:1 or less but
greater than 2.00:1 0.325%
2.00:1 or less but
greater than 1.50:1 0.275%
1.50:1 or less but
greater than 1.00:1 0.225%
1.00:1 or less 0.175%"
4. AMENDMENTS TO ARTICLE 7.
(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 Leverage Ratio. As of the end of any fiscal quarter, the
--------------
Borrower shall not permit the Leverage Ratio to exceed the ratios set forth
below during the periods indicated:
Period 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 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 the
ratios set forth below during the periods indicated:
Period Fixed Charge Ratio
------ ------------------
March 31, 1998 through June 30, 1998 1.8:1.0
July 1, 1998 and thereafter 2.0:1.0"
3
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5. The Loan Agreement is further amended by (i) deleting Exhibit D in its
---------
entirety and substituting in lieu thereof Exhibit D attached hereto; and (ii)
---------
deleting Schedule 1 in its entirety and substituting in lieu thereof Schedule 1
---------- ----------
attached hereto.
6. 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.
7. 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 6 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 financial
officer of the Borrower certifying that no Default exists both before and after
giving effect to this Amendment;
4
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(c) receipt by the Lender of an amendment fee (the "Amendment Fee") by
wire transfer of immediately available funds in the amount of $10,000.00; 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.
8. 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.
9. 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.
10. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon and inure to
the benefit of the successors and permitted assigns of the parties hereto.
11. 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.
5
<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:
---------------------------------
Richard M. Bruno
Vice President and Chief Financial Officer
[CORPORATE SEAL]
LENDER: NATIONSBANK, N.A.
By:
---------------------------------
Name:
---------------------------
Title:
--------------------------
6
<PAGE>
EXHIBIT D
FORM OF NOTE
$20,000,000.00 As of May 18, 1998
FOR VALUE RECEIVED, the undersigned, METROTRANS CORPORATION, a Georgia
corporation (the "Borrower"), promises to pay to the order of NATIONSBANK, N.A.
(hereinafter, together with its successors and assigns, called the "Lender"),
at NationsBank, N.A. at such place as the Lender may designate in writing to
the Borrower, without set-off, counterclaim or reduction of any kind, the
principal sum of TWENTY MILLION AND 00/100s DOLLARS ($20,000.000.00) of United
States funds, or, if less, so much thereof as may from time to time be advanced
by the Lender to the Borrower and is outstanding hereunder, plus interest as
hereinafter provided. Such Advances may be endorsed from time to time on the
grid attached hereto, but the failure to make such notations (or any error in
such notation) shall not affect the obligation of the Borrower to repay unpaid
principal and interest hereunder.
Except as otherwise defined or limited herein, capitalized terms used
herein shall have the meanings ascribed to them in that certain Loan Agreement
dated as of September 5, 1997 (as amended, restated, replaced or otherwise
modified from time to time, the "Loan Agreement") by and between the Borrower
and the Lender.
This Note is given in replacement of a certain note dated September 5, 1997
given pursuant to the Loan Agreement and shall not constitute a novation with
respect to such note or the indebtedness evidenced thereby.
The principal amount of this Note shall be paid in such amounts and at
such times as are set forth herein and in Sections 2.6, 2.7 and 2.9 of the Loan
Agreement and as otherwise provided in the Loan Agreement. A final payment of
all principal amounts and other Obligations then outstanding hereunder shall be
due and payable in full on the Maturity Date.
The Borrower shall be entitled to borrow, repay and reborrow hereunder
pursuant to the terms and conditions of the Loan Agreement. Prepayment of the
principal amount hereof may be made only as provided in the Loan Agreement. The
principal amount of each Advance shall be repaid on its Payment Date.
The Borrower hereby promises to pay interest on the unpaid principal amount
of the Loans outstanding hereunder as provided in the Loan Agreement. Interest
under this Note shall also be due and payable when this Note shall become due
(whether at maturity, by reason of acceleration or otherwise). Overdue principal
and, to the extent permitted by Applicable Law, overdue interest, shall bear
interest at the Default Rate as provided in the Loan Agreement.
No provision of the Loan Agreement or this Note shall require the payment
or permit the collection of interest in excess of that permitted by
Applicable Law. If any excess amount of interest in such respect is provided
for, or shall be adjudicated to be so provided in connection with the Loans
outstanding hereunder, the provisions of this paragraph shall govern and
prevail, and neither the Borrower nor any sureties, guarantors, endorsers,
successors or assigns of the borrower shall be obligated to pay the excess
amount of such interest or any other excess sum paid for the use, forbearance,
or
<PAGE>
detention of sums loaned pursuant hereto. In the event the Borrower ever pays,
or the Lender ever receives, collects or applies as interest, any such sum, such
amount which would be in excess of the maximum amount permitted by Applicable
Law shall be applied as a payment in the reduction of the principal, unless the
Borrower shall notify the Lender in writing that it elects to have such excess
returned forthwith; and, if the principal has been paid in full, any remaining
excess shall forthwith be returned to the Borrower. Because of the variable
nature of the rates of interest applicable to the Loans evidenced by this Note,
the total interest that will accrue hereon cannot be determined in advance.
Neither the Borrower nor the Lender intends for the Lender to contract for,
charge or receive usurious interest and to prevent such an occurrence, any
agreements which may now or hereafter be in effect between the Borrower and the
Lender regarding the payment of fees to the Lender are hereby limited by the
provisions of this paragraph. To the extent not prohibited by Applicable Law,
determination of the legal maximum amount of interest shall at all times be made
by amortizing, prorating, allocating and spreading all interest at any time
contracted for, charged or received from the Borrower in connection with the
portion of the Loans outstanding hereunder until the Maturity Date, so that the
actual rate of interest on account of the Loans outstanding hereunder does not
exceed the maximum amount permitted under Applicable Law. As used in this Note
and for the purposes of Section 7-4-2 of the Official Code of Georgia
Annotated, or any successor thereto, the term "interest" does not include any
fees or other charges imposed on the Borrower in connection with the
indebtedness evidenced by this Note, other than the interest described above.
All parties now or hereafter liable with respect to this Note, whether the
Borrower, any guarantor, surety, endorser or any other person or entities,
hereby waive presentment for payment, demand, notice of non payment or
dishonor, protest and notice of protest.
No delay or omission on the part of the Lender or any holder hereof in
exercising its rights under this Note, or delay or omission on the part of the
Lender in exercising its rights under the Loan Agreement or any other Loan
Documents or course of conduct relating thereto, shall operate as a waiver of
such right or any other right of the Lender or any holder hereof, nor shall any
waiver by the Lender or any holder hereof of any such right or rights on any one
occasion be deemed a bar to, or waiver of, the same right or rights on any
future occasion.
The Borrower promises to pay all costs of collection, including reasonable
attorneys' fees, should this Note be collected by or through an attorney-at-law
or under advice therefrom.
Time is of the essence of this Note.
This Note evidences the Loans made under the Commitment under, and is
entitled to the benefits and subject to the terms of, the Loan Agreement which
contains provisions with respect to the acceleration of the maturity of this
Note upon the happening of certain stated events, and provisions for prepayment.
This Note is secured by and is also entitled to the benefits of the Security
Documents.
The Borrower, any indorser or guarantor hereof, or any other party hereto
(individually an "Obligor" and collectively "Obligors") and each of them jointly
and severally (a) waive presentment, demand, protest, notice of demand, notice
of intent to accelerate, notice of acceleration of maturity, notice of protest,
notice of nonpayment, notice of dishonor, and any other notice required to be
given under the law to any Obligor in connection with the delivery, acceptance,
performance, default or enforcement of this Note or any other Loan Documents;
(b) consent to all delays, extensions, renewals or other
2
<PAGE>
modifications of this Note or the Loan Documents, or waivers of any term
hereof or of the Loan Documents, or release or discharge by the Lender of any of
Obligors, or release, substitution or exchange of any security for the payment
hereof, or the failure to act on the part of the Lender, or any indulgence shown
by the Lender (without notice to or further assent from any of Obligors), and
agree that no such action, failure to act or failure to exercise any right or
remedy by the Lender shall in any way affect or impair the obligations of any
Obligors or be construed as a waiver by the Lender of, or otherwise affect, any
of the Lender's rights under this Note or under any of the Loan Documents, and
(c) agree to pay, on demand, all costs and expenses of collection or defense of
this Note or of any indorsemcnt or guaranty hereof and/or the enforcement or
defense of the Lender's rights with respect to, or the administration,
supervision, preservation, or protection of, or realization upon, any property
securing payment hereof, including, without limitation, reasonable attorney's
fees, including fees related to any suit, mediation or arbitration proceeding,
out of court payment agreement, trial, appeal, bankruptcy proceedings or other
proceeding, in such amount as may be determined reasonable by any arbitrator or
court, whichever is applicable.
This Note and the rights and obligations of the Borrower and the Lender
shall be governed by and interpreted in accordance with the law of the State of
Georgia. In any litigation in connection with or to enforce this Note or any
other Loan Document, the Borrower irrevocably consents to and confers personal
jurisdiction on the courts of the State of Georgia or the United States located
within the State of Georgia and expressly waives any objections as to venue in
any such courts. Nothing contained herein shall, however, prevent the Lender
from bringing any action or exercising any rights within any other state or
jurisdiction or from obtaining personal jurisdiction by any other means
available under Applicable Law.
Mediation. The Lender and Borrower agree that any and all disputes arising
---------
out of or related to the execution of this Agreement or other Loan Documents
arising from this Agreement, 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:
1. They each will make a good faith effort to resolve any and all
disputes pursuant to the mediation provision.
2. They each will have parties present at the mediation session who
have authority to resolve any pending disputes between the parties.
3. That they will devote and set aside whatever time is needed to
seek a resolution of any disputes between the parties.
3
<PAGE>
IN WITNESS WHEREOF, the duly authorized officers of the Borrower have
executed this Note as of the day and year first above written.
METROTRANS CORPORATION, a Georgia corporation
By:
------------------------------------------
Name:
---------------------------------
Title:
--------------------------------
[CORPORATE SEAL]
Attest:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
4
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<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> APR-05-1998
<CASH> 50
<SECURITIES> 0
<RECEIVABLES> 11,379
<ALLOWANCES> 98
<INVENTORY> 23,766
<CURRENT-ASSETS> 36,977
<PP&E> 11,528
<DEPRECIATION> 4,270
<TOTAL-ASSETS> 45,414
<CURRENT-LIABILITIES> 10,105
<BONDS> 0
0
0
<COMMON> 41
<OTHER-SE> 18,428
<TOTAL-LIABILITY-AND-EQUITY> 45,414
<SALES> 0
<TOTAL-REVENUES> 16,018
<CGS> 13,796
<TOTAL-COSTS> 16,605
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 279
<INCOME-PRETAX> (965)
<INCOME-TAX> (379)
<INCOME-CONTINUING> (587)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (587)
<EPS-PRIMARY> (.142)
<EPS-DILUTED> 0
</TABLE>
