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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): September 15, 1998
METROTRANS CORPORATION
(Exact Name of Registrant as Specified in Charter)
GEORGIA 0-23808 58-1393777
(State or Other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation) Identification No.)
777 Greenbelt Parkway, Griffin, Georgia 30223
(Address of Principal Executive Offices) (Zip Code)
(770) 229-5995
(Registrant's telephone number, including area code)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
On September 15, 1998, The Mayflower Corporation plc, a corporation
organized under the laws of the United Kingdom ("Mayflower"), purchased from M.
Earl Meck and Randolph B. Stanley, each of whom were non-management directors of
the Registrant, an aggregate of 1,650,400 shares (the "Shares") of Common Stock
of the Registrant ("Common Stock") at a purchase price of $15.00 per share (or
an aggregate of $24,756,000) pursuant to an Agreement dated as of August 21,
1998 (the "Agreement"), between Mayflower, Mayflower (U.S. Holdings), Inc., the
Registrant, D. Michael Walden, Terri B. Hobbs, M. Earl Meck and Randolph B.
Stanley. As a result of the transaction, Mayflower acquired 40.4% of the
outstanding Common Stock of the Registrant. It is the Registrant's
understanding, based solely upon statements made by Mayflower in its Schedule
13D filed with the Securities and Exchange Commission on September 24, 1998,
with respect to its acquisition of the Shares, that, other than the Shares,
Mayflower does not own any other shares of Common Stock and the source of funds
Mayflower used to purchase the Shares was from available working capital of
Mayflower. Mr. Walden is the Chairman of the Board and Chief Executive Officer
of the Registrant and Ms. Hobbs is the Deputy Chief Executive Officer of the
Registrant. Pursuant to the Agreement, Mr. Meck and Mr. Stanley resigned as
directors of the Registrant effective as of September 15, 1998.
The Agreement also provides, among other things, for the following:
. The Board of Directors of the Registrant will be expanded from six to eight
directors consisting of five directors selected by the current directors of
Metrotrans and three directors designated by Mayflower. Mr. Walden will
continue as Chairman of the Board and Chief Executive Officer of
Metrotrans.
. Mayflower, Mr. Walden and Ms. Hobbs agreed to vote their shares of Common
Stock to maintain the composition and membership of the Board of Directors
of the Registrant as provided above.
. Mayflower agreed to vote its shares of Common Stock in accordance with the
vote of the majority of the Board of Directors of the Registrant with
respect to all matters presented to a vote of the shareholders; provided
that Mayflower may vote its shares of Common Stock as it shall determine in
connection with certain matters set forth in the Agreement, should any such
matter be presented to a vote of shareholders.
. Mayflower agreed to loan to the Registrant up to $15 million (the "Loan")
for a term of 5 years which will be used by the Registrant for working
capital and to finance capital expenditures. If Mr. Walden exercises his
Put (as defined below) or Mayflower exercises its Call (as defined below),
Mayflower will have the right at anytime thereafter to convert the
outstanding principal, interest, fees and other amounts owing under the
Loan into shares of Common Stock. The price per share for such conversion
will be the average of the closing bid and asked price for the Common Stock
reported by the Nasdaq National
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Market (or other exchange or quotation system on which the Common Stock is
then traded) for the 20 trading days immediately prior to the date of the
exercise of the conversion right or, if the Common Stock is not then traded
on an exchange, the appraised value determined by an independent appraiser.
The terms of the Loan are set forth in a Loan Agreement dated as of August
21, 1998, a copy of which is filed as Exhibit 10.2 to this Report and is
incorporated herein by reference.
. Mr. Walden and Ms. Hobbs shall have the right (the "Put"), commencing
December 31, 2000 and expiring 45 days after results of operation are
published by the Registrant for the period ending December 31, 2002 (the
"Option Term"), to tender all of either of their shares of Common Stock to
Mayflower at a price equal to the average of the closing bid and asked
prices reported on the Nasdaq National Market for the 20 trading days
immediately prior to the date that notice of intent to exercise the Put is
given; provided that in no event will the purchase price per share exceed
$40.00 per share, and provided further that the purchase price per share
shall be no less than $10.00 per share for the period from December 31,
2000 to December 31, 2001; no less than $12.50 per share for the period
from January 1, 2002 to September 30, 2002; and no less than $15.00 per
share for the period from October 1, 2002 to December 31, 2002. As of the
date of the Agreement, Mr. Walden beneficially owned 843,950 shares (20.6%)
of Common Stock (including vested options to purchase 18,750 shares of
Common Stock) (the "Walden Shares") and Ms. Hobbs beneficially owned 70,200
shares (1.7%) of Common Stock (including vested options to purchase 18,750
shares of Common Stock, 12,500 restricted shares that are subject to
forfeiture upon certain circumstances and 450 shares owned by her spouse
(which shares are excluded from the Agreement)) (the "Hobbs Shares").
. In the event that the Option Term expires without Mr. Walden and Ms. Hobbs,
or either of them, having exercised the Put or under certain other
circumstances, Mayflower shall have the right to purchase (the "Call"), at
any time prior to December 31, 2004, all of the Walden Shares and the Hobbs
Shares at a purchase price of $15.00 per share.
. Until such time as Mr. Walden has exercised his Put, Mayflower has
exercised its Call with respect to the Walden Shares, or the Option Term
has expired, whichever occurs first (the "Standstill Period"), (i)
Mayflower agreed not to directly or indirectly sell or purchase, contract
to sell or purchase, obtain a right to purchase or sell or otherwise
acquire or sell any shares of Common Stock and (ii) each of Mr. Walden and
Ms. Hobbs covenanted and agreed that he or she will not (A) except with
respect to certain shares of Common Stock owned by Ms. Hobbs, offer for
sale, sell, transfer (including by way of gift), tender, pledge, encumber
or otherwise subject to a lien, assign or otherwise dispose of, or enter
into any contract or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
or other disposition of, or exercise any discretionary powers to
distribute, any of his or her shares of Common Stock, or (B) grant any
proxies or powers of attorney with respect to any of his or her shares of
Common Stock, deposit any of his or her shares of Common Stock
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into a voting trust or enter into a voting agreement with respect to any of
his or her shares. The foregoing does not apply to the exercise by Mr.
Walden or Ms. Hobbs of options to purchase Common Stock granted to either
of them by the Registrant.
. After the Standstill Period, Mayflower may offer to acquire all of the
remaining shares of Common Stock of the Registrant, provided, however, that
in the event that Mayflower shall offer to acquire all of the publicly
traded shares of Common Stock prior to 45 days after publication of results
of operations of the Registrant for the year ended December 31, 2001,
Mayflower shall offer a price of not less than $15.00 per share, subject to
receipt of a fairness opinion satisfactory to the Board of Directors of the
Registrant. Based on the number of shares of Common Stock currently
outstanding, Mayflower would acquire in excess of 61% of the outstanding
Common Stock upon exercise of the Put or Call.
. Mayflower has agreed to provide various technical services to the
Registrant, at the request of Mr. Walden. These shall include, but not be
limited to, Mayflower arranging for its affiliated company, Walter
Alexander, to second Mr. Nigel McGaughey or such other person(s) designated
by Mayflower and approved by the Registrant (which approval may not be
unreasonably withheld) on behalf of the Registrant for a period of up to
two years. Mayflower and the Registrant will also select various
specialized industry consultants, satisfactory to both Mayflower and the
Registrant, which will be retained by the Registrant. The Registrant will
pay the base salary while Mr. McGaughey or such other person(s) are
assigned to the Registrant not to exceed $150,000 per year. The Registrant
will also pay the fees of any consultants which may be retained to provide
technical services to the Registrant.
. Mayflower agreed to enter into a separate agreement with Mr. Walden and Ms.
Hobbs, which will contain a non-competition provision effective following
exercise of the Put or the Call in consideration for the payment upon the
exercise of the Put or Call of $1,500,000.00 to Mr. Walden and $500,000.00
for Ms. Hobbs.
A copy of the Agreement is filed as Exhibit 10.1 to this Report and is
incorporated herein by reference. The foregoing is not a complete description
of the terms of the Agreement, the Loan or the transactions contemplated thereby
and is subject to and qualified in its entirety by reference to the Agreement
and the Loan Agreement.
This report includes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements involve known
and unknown risks, uncertainties and other factors that could cause the actual
results of the Registrant to differ materially from the results expressed or
implied by such statements, including general economic and business conditions,
conditions affecting the Registrant's customers and suppliers, competitor
responses to the Registrant's products and services, the overall market
acceptance of such product and services, the costs and availability of
components, product scheduling, and other factors disclosed in the Registrant's
last filed Annual Report.
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ITEM 7. EXHIBITS
10.1 Agreement dated August 21, 1998, among The Mayflower Corporation plc,
Mayflower (U.S. Holdings), Inc., Metrotrans Corporation, D. Michael
Walden, Terri B. Hobbs, Randolph B. Stanley and M. Earl Meck (filed
as Exhibit 10 to the Registrant's Current Report on Form 8-K dated
August 21, 1998 and incorporated herein by reference).
10.2 Loan Agreement dated August 21, 1998, between The Mayflower
Corporation plc and Metrotrans Corporation.
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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 hereunto duly authorized.
METROTRANS CORPORATION
(Registrant)
/s/ Richard M. Bruno
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Richard M. Bruno
Chief Financial and Accounting Officer
Duly Authorized Officer
Date: September 28, 1998
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EXHIBIT INDEX
Exhibit No. Description
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10.1 Agreement dated August 21, 1998, among The Mayflower Corporation
plc, Mayflower (U.S. Holdings), Inc., Metrotrans Corporation, D.
Michael Walden, Terri B. Hobbs, Randolph B. Stanley and M. Earl
Meck (filed as Exhibit 10 to the Registrant's Current Report on
Form 8-K dated August 21, 1998 and incorporated herein by
reference).
10.2 Loan Agreement dated August 21, 1998, between The Mayflower
Corporation plc and Metrotrans Corporation.
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EXHIBIT 10.2
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Loan Agreement") is made as of this 21st day of
August, 1998 between METROTRANS CORPORATION, a Georgia corporation, as borrower
("Borrower") and THE MAYFLOWER CORPORATION PLC or an Affiliate thereof,
("Lender").
W I T N E S S E T H:
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WHEREAS, Borrower has requested that Lender make available to Borrower a
revolving credit facility permitting advances of up to Fifteen Million Dollars
($15,000,000) at any one time outstanding; and
WHEREAS, Lender is willing to extend such financing to Borrower subject to
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged by the parties hereto, Borrower and Lender hereby agree
as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Defined Terms. When used herein the following terms shall
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have the following meanings (terms in the singular to have the same meaning when
used in the plural and vice versa) and capitalized terms used herein and not
otherwise defined herein shall have the meanings given to such terms in the
NationsBank Loan Agreement:
"Advance" or "Advances" shall mean the amount advanced by Lender to
Borrower pursuant to Article 2 hereof on the occasion of any borrowing.
"Agreement" shall mean this Agreement.
"Agreement Date" shall mean the date as of which this Agreement is dated.
"Available Commitment" shall mean, at any time, the difference between (a)
the commitment in effect on such date minus (b) the aggregate principal amount
of all Loans outstanding on such date.
"Borrower" shall mean Metrotrans Corporation, a Georgia corporation.
"Borrower Common Stock" shall mean the common stock par value $0.01 of
Borrower.
"Business Day" shall mean a day on which banks are open for the transaction
of business required for this Agreement in London, England and Atlanta, Georgia.
"Commitment" shall mean the obligation of Lender to make Advances to
Borrower from time to time, pursuant to the terms hereof in the aggregate amount
outstanding of Fifteen Million Dollars ($15,000,000.00).
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"Default" shall mean any of the events specified in Section 8.1 hereof,
regardless of whether there shall have occurred any passage of time or giving of
notice, or both, that would be necessary in order to constitute such event an
Event of Default.
"Default Rate" shall mean a simple interest rate per annum equal to the
Default Rate (as defined in the NationsBank Loan Agreement) plus 2.5%.
"Dollars" shall mean lawful currency of the United States of America.
"Event of Default" shall mean any of the events specified in Section 8.1
hereof, provided that any requirement for notice or lapse of time has been
satisfied.
"General Agreement" means the Agreement dated August __, 1998 between
Borrower, Lender and certain shareholders of Borrower.
"Indebtedness" shall mean, with respect to any Person, (a) all items,
except items of partners' equity or capital stock or surplus or general
contingency or deferred tax reserves, which in accordance with GAAP,
consistently applied, would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Person, (b) all direct or
indirect obligations secured by any Lien to which any property or asset owned by
such Person is subject, whether or not the obligation secured thereby shall have
been assumed, (c) to the extent not otherwise included, all obligations of other
Persons which such Person has guaranteed, including but not limited to, all
obligations of such Person consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of by such Person, and (d) to the
extent not otherwise included, all Capitalized Lease Obligations of such Person
and all obligations of such Person with respect to leases constituting part of a
sale and leaseback arrangement.
"Interest Period" shall mean the period beginning on the date such Advance
is made and ending on the last day of the calendar month in which such Advance
is made, provided, however, that if an Advance is made on the last day of any
calendar month, it shall have an Interest Period ending on, and its Payment Date
shall be, the last day of the following calendar month.
"Lender" shall mean The Mayflower Corporation plc or any Affiliate thereof.
"Loans" shall mean, collectively, the amounts advanced by Lender to
Borrower under the Commitment, not to exceed the Commitment, and evidenced by
the Note.
"Loan Documents" shall mean this Agreement, the Note and all other
documents, agreements, certificates, reports, and instruments now or hereafter
executed in connection herewith or contemplated hereby.
"Materially Adverse Effect" shall mean any act, omission, or undertaking
which would, singly or in the aggregate, have a materially adverse effect upon
the business, assets, liabilities, financial condition, results of operations,
or business prospects of Borrower or any of its Subsidiaries or upon the ability
of Borrower or any of its Subsidiaries to perform any material obligations under
this Agreement or any other Loan Document; in any case, whether resulting from
any single act, omission, situation, status, event, or undertaking, together
with other such acts, omissions, situations, statuses, events, or undertakings.
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"Maturity Date" shall mean August 20, 2003 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).
"NationsBank" means NationsBank, N.A.
"NationsBank Consent" means the written consent of NationsBank to the
transactions contemplated by this Agreement in form and substance reasonably
acceptable to Lender.
"NationsBank Loan Agreement" means the Loan Agreement, dated as of
September 5, 1997 between Metrotrans Corporation and NationsBank, N.A., and all
amendments, renewals, extensions, refundings or refinancings thereof.
"NationsBank Loan Agreement Interest Rate" means (i) the interest rate as
in effect from time to time under the NationsBank Loan Agreement or (ii) if the
NationsBank Loan Agreement is no longer in effect, the Prime Rate. A copy of
the NationsBank Loan Agreement, as amended through the Agreement date, is
attached hereto as Exhibit 4.
"Note" shall mean that certain promissory note dated as of the Agreement
Date in the original principal amount of Fifteen Million Dollars
($15,000,000.00) issued to Lender by Borrower, substantially in the form of
Exhibit 1 attached hereto, and any other notes executed and delivered by
Borrower to Lender with respect to the Loan, and any amendments, renewals or
extensions of the foregoing.
"Obligations" shall mean (a) all payment and performance obligations of
every kind, nature and description of Borrower, its Subsidiaries and any other
obligors to Lender under this Agreement and the other Loan Documents (including
any interest, fees and other charges on the Loans or otherwise under the Loan
Documents that would accrue but for the filing of a bankruptcy action with
respect to Borrower or any of its Subsidiaries or any other such obligor,
whether or not such claim is allowed in such bankruptcy action), as they may be
amended from time to time, or as a result of making the Loans, whether such
obligations are direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, arising by operation of law
or otherwise, now existing or hereafter arising and (b) the obligation to pay an
amount equal to the amount of any and all damage which Lender may suffer by
reason of a breach by Borrower, any of its Subsidiaries, or any other obligor,
of any obligation, covenant or undertaking with respect to this Agreement or any
other Loan Document.
"Payment Date" shall mean the last day of any Interest Period.
"Permitted Liens" shall mean, as applied to any Person:
(a) Any Lien in favor of Lender given to secure the Obligations;
(b) (i) Liens on real estate for real estate taxes not yet delinquent
and (ii) Liens for taxes, assessments, judgments, governmental charges or
levies or claims the non-payment of which is being diligently contested in
good faith by appropriate proceedings and for which adequate reserves have
been set aside on such Person's books in accordance with GAAP, but only so
long as no foreclosure, distraint, sale or similar proceedings have been
commenced with respect thereto and remain unstayed for a period of thirty
(30) days after their commencement;
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(c) Liens of carriers, warehousemen, mechanics, laborers and
materialmen incurred in the ordinary course of business for sums not yet
due or being diligently contested in good faith, if reserves or appropriate
provisions shall have been made therefor;
(d) Liens incurred in the ordinary course of business in connection
with worker's compensation and unemployment insurance;
(e) Easements, rights-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person, or Liens incidental to the
conduct of the business of such Person or to the ownership of its
properties which were not incurred in connection with Indebtedness or other
extensions of credit and which do not in the aggregate materially detract
from the value of such properties or materially impair their use in the
operation of the business of such Person;
(f) Purchase money security interests, which are perfected
automatically by operation of law, only for the period (not to exceed
twenty (20) days) of automatic perfection under the law of the applicable
jurisdiction, and limited to Liens on assets so purchased;
(g) Liens reflected by Uniform Commercial Code financing statements
filed in respect of Capitalized Lease Obligations permitted hereunder and
true leases of Borrower or any of its Subsidiaries;
(h) Liens incurred in the ordinary course of business reflected by
Uniform Commercial Code financing statements filed in respect of vehicles
on which Borrower is reflected as the owner but the lease and related title
have been assigned or otherwise conveyed to a third party;
(i) Other Liens outstanding on the Agreement Date;
(j) Other Liens in an amount not to exceed $500,000 in the aggregate
at any time outstanding;
(k) Liens on any asset of any corporation, partnership or other Person
existing at the time such Person is merged or consolidated with or into
Borrower or a Subsidiary in accordance with this Agreement and not created
in contemplation of such event; and
(l) Liens existing on any asset prior to the acquisition thereof by
Borrower or a Subsidiary in accordance with this Agreement and not created
in contemplation of such acquisition.
"Person" shall mean an individual, corporation, partnership, limited
liability company trust, or unincorporated organization, or a government or any
agency or political subdivision thereof.
"Prime Rate" shall mean, at any time, the fluctuating and floating rate per
annum equal to the rate of interest announced by NationsBank as its reference
rate for the determination of interest rates for loans of varying maturities in
Dollars to United States residents of varying degrees of creditworthiness and
being quoted by NationsBank as its "prime rate". The Prime Rate in effect as of
the close of business of each day shall be the applicable Prime Rate for that
day and each succeeding non-business day of NationsBank, in determining the
applicable Prime Rate. If NationsBank shall cease announcing a
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Prime Rate, the parties hereto shall mutually agree on a comparable reference
rate for purposes of this Agreement.
"Request for Advance" shall mean a certificate designated as a "Request for
Advance," signed by an Authorized Signatory requesting an Advance hereunder,
which shall, among other things, (a) specify the date of the Advance, which
shall be a Business Day and the amount of the Advance, (b) state that there
shall not exist, on the date of the requested Advance and after giving effect
thereto, a Default, as of the date of such Advance and after giving effect
thereto, (c) as to Advances which will increase the principal amount of the
Loans then outstanding, state that the proceeds of the Advance are needed by
Borrower to provide working capital and/or to fund capital expenditures of
Borrower approved by the Board of Directors of Borrower and (d) state the
NationsBank Loan Agreement Interest Rate as in effect on the date of the Request
for Advance, as certified to by an Authorized Signatory of Borrower in the
Request for Advance.
"Schedule of Permitted Advances" means the schedule attached hereto as
Exhibit 2 which sets forth the amount of permitted Advances.
"Senior Indebtedness" shall mean all Indebtedness of Borrower outstanding
from time to time under the NationsBank Loan Agreement, subject to a maximum
amount of $25,000,000.00.
"Subsidiary Guaranty" shall mean each Subsidiary Guaranty in favor of
Lender, given by a Subsidiary of Borrower, each substantially in the form of
Exhibit 3 attached hereto.
Section 1.2 Interpretation. Each definition of an agreement in this
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Article 1 shall, unless otherwise specified, include such agreement as modified,
amended, restated or supplemented from time to time in accordance herewith, and
except where the context otherwise requires, the singular shall include the
plural and vice versa. Except where otherwise specifically restricted,
reference to a party to this Agreement or any other Loan Document includes that
party and its successors and assigns. All capitalized terms used herein which
are defined in Article 9 of the Uniform Commercial Code in effect in the State
of Georgia on the date hereof and which are not otherwise defined herein shall
have the same meanings herein as set forth therein.
Section 1.3 General Cross References. Unless otherwise specified,
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references in this Agreement and in each other Loan Document to any Article or
Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section or definition to any clause are references to
such clause in such Article, Section or definition.
Section 1.4 Cross References to NationsBank Loan Agreement. Each cross
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reference to the NationsBank Loan Agreement shall be deemed a reference to (i)
the NationsBank Loan Agreement, or (ii) if the NationsBank Loan Agreement shall
no longer be in effect, such reference shall automatically be deemed a reference
to substantially similar provisions contained in any new agreement that replaces
the NationsBank Loan Agreement or (iii) if the NationsBank Loan Agreement shall
no longer be in effect and there shall be no agreement in effect which replaces
the NationsBank Loan Agreement, such references shall be deemed references to
additional terms provisions to be mutually agreed upon by Borrower and Lender at
such time, which provisions will be incorporated into this Agreement.
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ARTICLE 2
LOANS
Section 2.1 The Loans. Lender agrees, upon the terms and subject to the
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conditions of this Agreement, to lend and relend to Borrower from time to time
from the Agreement Date until the Maturity Date amounts which do not exceed in
the aggregate at any one time outstanding the amount of the Available Commitment
as in effect from time to time, provided, however, that such amounts are
permitted by the Schedule of Permitted Advances.
Section 2.2 Manner of Borrowing and Disbursement. Within two (2)
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Business Days of receipt by Lender of a Request for Advance, Lender shall,
subject to the satisfaction of the conditions set forth in Article 3, disburse
the amounts of the requested Advance in like funds by transferring the amounts
by wire transfer pursuant to Borrower's instructions.
Section 2.3 Interest.
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(a) Interest on each Advance shall be computed on the basis of a 360-day
year for the actual number of days elapsed and shall be payable at the
NationsBank Loan Agreement Interest Rate as in effect on the date of the
applicable Request for Advance plus 0.50%, in arrears on each applicable Payment
Date. Interest on Advances then outstanding shall also be due and payable on
the applicable Maturity Date.
(b) Interest Upon Default. Immediately upon the occurrence of an Event of
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Default, the outstanding principal balance of the Loans shall bear interest at
the Default Rate. Such interest shall be payable on demand, and shall accrue
until the earliest of (a) waiver or cure of the applicable Default, (b)
agreement by Lender to rescind the charging of interest at the Default Rate, or
(c) payment in full of the Obligations. Lender shall not be required to (x)
accelerate the maturity of any of the Loans, or (y) exercise any other rights or
remedies under the Loan Documents in order to charge interest hereunder at the
Default Rate.
Section 2.4 Prepayment. The principal amount of any Advance may be
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prepaid in full or in part at any time, without premium or penalty and without
regard to the Payment Date for such Advance. A notice of prepayment shall be
irrevocable.
Section 2.5 Repayment. The principal balance of all Loans shall be due
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and payable on the Maturity Date.
Section 2.6 Manner of Payment.
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(a) Each payment (including prepayments) by Borrower on account of the
principal of or interest on the Loans, fees, and any other amount owed to Lender
under this Agreement or the Note shall be made not later than 9:00 a.m.
(Atlanta, Georgia time) on the date specified for payment under this Agreement
to Lender in Dollars in immediately available funds. Any payment received by
Lender after 11:00 a.m. (Atlanta, Georgia time) shall be deemed received on the
next Business Day.
(b) If any payment under this Agreement or the Note shall be specified to
be made upon a day which is not a Business Day, it shall be made on the next
succeeding day which is a Business Day, and such extension of time shall in such
case be included in computing interest and fees, if any, in connection with such
payment.
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(c) Borrower agrees to pay principal, interest, fees and all other amounts
due hereunder or under the Note or under any other Loan Document without set-off
or counterclaim or any deduction whatsoever and free and clear of all taxes,
levies and withholding.
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Initial Advance. The obligation of
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Lender to make the initial Advance is subject to the fulfillment of each of the
following conditions prior to or contemporaneously with the making of such
Advance:
(a) Lender shall have received each of the following, in form and substance
satisfactory to Lender:
(i) duly executed Note;
(ii) duly executed Subsidiary Guaranty executed and delivered by
each Subsidiary of Borrower;
(iii) legal opinion of Long, Aldridge & Norman LLP, as general
counsel to Borrower and its Subsidiaries, addressed to Lender, and dated as
of the Agreement Date on such matters as Lender may reasonably request;
(iv) the NationsBank Consent and any other required consents to
the closing of this Agreement or to the execution, delivery and performance
of this Agreement and the other Loan Documents, each of which shall be in
form and substance satisfactory to Lender;
(v) a true, complete and correct copy of the resolutions of
Borrower authorizing it to execute, deliver and perform this Agreement and
the other Loan Documents;
(vi) copy of the duly executed General Agreement;
(vii) evidence that the Closing Date of the Purchase of Shares
(each as defined in the General Agreement) shall have occurred; and
(viii) all such other documents as Lender may reasonably request,
certified by an appropriate governmental official or an Authorized
Signatory if so requested.
Section 3.2 Conditions Precedent to Each Advance. The obligation of
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Lender to make each Advance, including but not limited to the initial Advance,
is subject to the fulfillment of each of the following conditions immediately
prior to or contemporaneously with such Advance:
(a) No Default shall then exist or be caused thereby;
(b) Lender shall have received a duly executed Request for Advance;
(c) There shall have occurred no Materially Adverse Effect and no
event which, in the reasonable opinion of Lender, may be expected to have a
Materially Adverse Effect;
7
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(d) The amount of the Advance shall be permitted by the Schedule of
Permitted Advances; and
(e) Lender shall have received all such other certificates, reports,
statements, opinions of counsel or other documents as Lender may reasonably
request.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties. Each of Borrower and its
------------------------------
Subsidiaries hereby represents and warrants to Lender that:
(a) Organization; Power; Qualification. Borrower is a corporation duly
----------------------------------
organized, validly existing, is in good standing under the laws of the state of
its incorporation. Borrower has had the power and authority, corporate and
otherwise, to own or lease and operate its properties and to carry on its
business as now being and hereafter proposed to be conducted. Each Subsidiary
of Borrower is a corporation or partnership, as applicable, duly organized,
validly existing and in good standing under the laws of the state of its
formation and has the corporate or partnership power (as applicable) and
authority to own or lease and operate its properties and to carry on its
business as now being and hereafter proposed to be conducted. Borrower and each
of its Subsidiaries are duly qualified and is in good standing as a foreign
corporation, and authorized to do business, in each jurisdiction in which given
the character of its properties or the nature of its business the failure to so
qualify or obtain such authorization would have a Materially Adverse Effect.
(b) Authorization; Enforceability. Borrower has the power and has taken
-----------------------------
all necessary action to authorize it to execute, deliver, and perform this
Agreement and each of the other Loan Documents to which it is a party in
accordance with the terms thereof and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by Borrower, and is, and each of the other Loan Documents to which
Borrower is a party is, a legal, valid, and binding obligation of Borrower,
enforceable 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 Borrower).
(c) Compliance with Other Loan Documents and Contemplated Transactions.
------------------------------------------------------------------
The execution, delivery and performance, in accordance with their respective
terms, by Borrower of this Agreement and the Note, and by Borrower and its
Subsidiaries of each of the other Loan Documents to which they are respectively
party, and the consummation of the transactions contemplated hereby and thereby,
do not and will not (i) require any consent or approval, governmental or
otherwise not already obtained, (ii) violate any material Applicable Law
respecting Borrower or any Subsidiary of Borrower, (iii) conflict with, result
in a breach of, or constitute a default under the certificate or articles of
incorporation or by-laws, as amended, of Borrower or of any Subsidiary of
Borrower, or under any material indenture, agreement, or other instrument to
which Borrower or any of its Subsidiaries is a party or by which any of them or
any of their respective properties may be bound, or (iv) result in or require
the creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by Borrower or any of its Subsidiaries, except for
Permitted Liens.
8
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(d) Necessary Authorizations. Borrower and its Subsidiaries have secured
------------------------
all Necessary Authorizations, and all such Necessary Authorizations are in full
force and effect. None of said Necessary Authorizations are the subject of any
pending or, to the best of Borrower's knowledge, threatened attack or
revocation, by the grantor of the Necessary Authorization. Neither Borrower nor
any Subsidiary is required to obtain any additional Necessary Authorizations in
connection with the execution, delivery, and performance, in accordance with the
terms of this Agreement or any other Loan Document and the borrowing hereunder.
(e) No Senior Indebtedness. Except with respect to $2,000,000.00 of
----------------------
Indebtedness owed by Borrower in connection with certain Industrial Development
Revenue Bonds originally issued by Spaulding County Development Authority, the
Indebtedness of Borrower hereunder ranks and will rank at least equal with all
other present and future Indebtedness of Borrower other than Senior
Indebtedness.
ARTICLE 5
GENERAL COVENANTS
So long as any of the Obligations are outstanding and unpaid or Borrower
shall have the right to borrow hereunder (whether or not the conditions
precedent to borrowing have been or can be fulfilled), and unless Lender shall
otherwise consent in writing:
Section 5.1 Visits and Inspections. Borrower will, and will cause each
----------------------
of its Subsidiaries to, permit representatives of Lender to (a) visit and
inspect the properties of Borrower or any of its Subsidiaries during normal
business hours, (b) inspect and make extracts from and copies of its books and
records, and (c) discuss with its principal officers its businesses, assets,
liabilities, financial positions, results of operations, and business prospects.
Borrower and each of its Subsidiaries will also permit representatives of Lender
to discuss with their respective auditors their respective businesses, assets,
liabilities, financial condition, results of operations and business prospects.
Section 5.2 Use of Proceeds. Borrower will use the proceeds from the
---------------
Advances only for working capital and/or to fund capital expenditures approved
in advance by the Board of Directors of Borrower.
Section 5.3 Indemnity. Borrower for itself and on behalf of each of its
---------
Subsidiaries jointly and severally agrees to indemnify and hold harmless the
Lender and their Affiliates, employees, representatives, shareholders, officers,
directors and counsel (any of the foregoing shall be an "Indemnitee") from and
against any and all claims, liabilities, losses, damages, actions, reasonable
attorneys' fees of external counsel and expenses (as such fees and expenses are
incurred) and demands by any party, including the costs of investigating and
defending such claims, whether or not the Borrower, any Subsidiary or the Person
seeking indemnification is the prevailing party (a) resulting from any breach or
alleged breach by the Borrower or any Subsidiary of the Borrower of any
representation or warranty made hereunder; or (b) otherwise arising out of (i)
the Commitments or otherwise under this Agreement, any Loan Document or any
transaction contemplated hereby or thereby, including, without limitation, the
use of the proceeds of Loans hereunder in any fashion by the Borrower or the
performance of their respective obligations under the Loan Documents by the
Borrower or any of its Subsidiaries, (ii) allegations of any participation by
the Lender in the affairs of the Borrower or any of its Subsidiaries, or
allegations that the Lender has any joint liability with the Borrower or any of
its Subsidiaries for any reason, (iii) any claims against the Lender by any
shareholder or other
9
<PAGE>
investor in or lender to the Borrower or any Subsidiary, by any brokers or
finders or investment advisers or investment bankers retained by the Borrower or
by any other third party, arising out of the Commitments or otherwise under this
Agreement; or (c) in connection with taxes (not including federal or state
income taxes or other taxes based solely upon the revenues of such Persons),
fees, and other charges payable in connection with the Loans, or the execution,
delivery, and enforcement of this Agreement, the other Loan Documents, and any
amendments thereto or waivers of any of the provisions thereof; unless the
Person seeking indemnification hereunder is determined to have acted with gross
negligence or willful misconduct. The obligations of the Borrower and the
Subsidiaries under this Section 5.3 are in addition to, and shall not otherwise
limit, any liabilities which the Borrower might otherwise have in connection
with any warranties or similar obligations of the Borrower or any of its
Subsidiaries in any other Loan Document.
Section 5.4 Further Assurances. Borrower will promptly cure, or cause to
------------------
be cured, defects in the creation and issuance of the Note and the execution and
delivery of the Loan Documents (including this Agreement), resulting from any
act or failure to act by Borrower or any employee or officer thereof. Borrower
at its expense will promptly execute and deliver to Lender, or cause to be
executed and delivered to Lender, all such other and further documents,
agreements, and instruments in compliance with or accomplishment of the
covenants and agreements of Borrower in the Loan Documents, including this
Agreement, or to correct any omissions in the Loan Documents, or more fully
state the obligations set out herein or in any of the Loan Documents, or to make
any recordings, to file any notices, or to obtain any consents, all as may be
necessary or appropriate in connection therewith as may be reasonably requested.
Section 5.5 Miscellaneous. Borrower will comply with each and all of the
-------------
covenants contained in Article 5 of the NationsBank Loan Agreement.
ARTICLE 6
INFORMATION COVENANTS
So long as any of the Obligations are outstanding and unpaid or Borrower
has a right to borrow hereunder (whether or not the conditions precedent to
borrowing have been or can be fulfilled), Borrower will, upon request from
Lender, furnish or cause to be furnished to Lender at the address provided in
Section 9.1 hereof, all of the information, documents, certificates, notices,
reports and other items contained in Article 6 of the NationsBank Loan
Agreement.
ARTICLE 7
NEGATIVE COVENANTS
So long as any of the Obligations are outstanding and unpaid or Lender has
any obligation to make Advances hereunder, and unless Lender shall otherwise
consent in writing Borrower hereby agrees that:
Section 7.1 Indebtedness. Borrower shall not, and shall not permit any
------------
of its Subsidiaries to, create, assume, incur, or otherwise become or remain
obligated in respect of, or permit to be outstanding, any Indebtedness or
liability on account of deposits or advances for borrowed money or for the
deferred purchase price of any property or services, except: (a) the
Obligations; (b) Trade or accounts payable and/or similar obligations, and
accrued expenses, incurred in the ordinary course of business, other than
10
<PAGE>
for borrowed money; (c) Indebtedness expressly subordinated to the Obligations
upon terms approved in advance by Lender, in writing; (d) Indebtedness existing
on the date of this Agreement which is reflected in the financial statements
delivered to Lender in connection herewith; (e) Indebtedness secured by
Permitted Liens; (f) Indebtedness of Borrower or any of the Subsidiaries to
Borrower or any other Subsidiary so long as such Indebtedness is unsecured; (g)
Capitalized Lease Obligations to leasing companies incurred in the ordinary
course of business, related to sales-type leases for vehicles sold; (h) Other
Capitalized Lease Obligations not included in Section 7.1(g) hereof in an
aggregate principal amount outstanding at any time not to exceed $500,000; (i)
Indebtedness under deferred compensation plans in an aggregate principal amount
outstanding at any time not to exceed $1,000,000; (j) Other unsecured
Indebtedness of Borrower in an aggregate principal amount outstanding at any
time not to exceed $1,000,000; (k) Indebtedness in the form of Guaranties
permitted by Section 7.5 of the NationsBank Loan Agreement and (l) Indebtedness
outstanding from time to time under the NationsBank Loan Agreement in an
aggregate principal amount at any one time outstanding not to exceed $25.0
million.
Section 7.2 Limitation on Liens. Borrower shall not, and shall not
-------------------
permit any of its Subsidiaries to, create, assume, incur or permit to exist or
to be created, assumed, incurred or permitted to exist, directly or indirectly,
any Lien on any of its properties or assets, whether now owned or hereafter
acquired, except for Permitted Liens.
Section 7.3 Miscellaneous. Borrower shall comply with Sections 7.3
-------------
through and including 7.14 of the NationsBank Loan Agreement.
ARTICLE 8
DEFAULT
Section 8.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule, or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement or any
other Loan Document shall prove incorrect or misleading in any adverse
material respect when made or deemed to be made pursuant to Section 4.1
hereof; or
(b) Borrower shall default in the payment of (i) any interest under
the Note or fees or other amounts, unremedied for fifteen (15) days,
payable to Lender under any of the Loan Documents, or any of them, when
due, or (ii) any principal under the Note when due; or
(c) Borrower shall default in the performance or observance of any
agreement or covenant contained in Article 6 or 7 hereof;
(d) Borrower shall default in the performance or observance of any
other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 8.1, and such Default shall not be
cured to Lender's satisfaction within a period of thirty (30) days from the
occurrence of such Default;
(e) There shall occur any default in the performance or observance of
any agreement or covenant or breach of any representation or warranty
contained in any of the Loan Documents
11
<PAGE>
(other than this Agreement or as otherwise provided in Section 8.1 of this
Agreement) by Borrower, any of its Subsidiaries, or any other obligor
thereunder, which shall not be cured within a period of thirty (30) days
from the occurrence of such default; or
(f) There shall occur an Event of Default (as defined in the
NationsBank Loan Agreement and subject to any applicable cure periods
provided therein or any waivers provided by NationsBank) under the
NationsBank Loan Agreement and the principal of and interest on the loans
thereunder shall have been accelerated in accordance with the provisions of
the NationsBank Loan Agreement.
Section 8.2 Remedies. Subject to the provisions of Article 12, if an
--------
Event of Default shall have occurred and shall be continuing, Lender shall have
the right and option to take any of the actions provided in Section 8.2 of the
NationsBank Loan Agreement as if such actions were set forth herein and
applicable hereto.
ARTICLE 9
[INTENTIONALLY DELETED]
ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices.
-------
(a) All notices and other communications required or permitted under this
Agreement shall be in writing and, if mailed by prepaid first-class mail or
certified mail, return receipt requested, at any time other than during a
general discontinuance of postal service due to strike, lockout or otherwise,
shall be deemed to have been received on the earlier of the date shown on the
receipt or three (3) Business Days after the official postmarked date thereof
and, if telecopied, shall be followed forthwith by letter and shall be deemed to
have been received on the next Business Day following dispatch and
acknowledgment of receipt by the recipient's telecopy machine. In addition,
notices hereunder may be delivered by hand or overnight courier, in which event
the notice shall be deemed effective when delivered. All notices and other
communications under this Agreement shall be given to the parties hereto at the
following addresses:
(i) If to Borrower, to it at:
Metrotrans Corporation
777 Greenbelt Parkway
Griffin, Georgia 30223
Attn: Richard M. Bruno
Telecopy: (770) 229-1422
12
<PAGE>
with a copy to:
Long, Aldridge & Norman
One Peachtree Center
Suite 5300
303 Peachtree Street, N.E.
Attn: William Floyd
Telecopy: (404) 527-4198
(ii) If to Lender, to it at:
The Mayflower Corporation plc
Mayflower House
London Road, Loudwater
High Wycombe, Buckinghamshire
HP10 9RF
Telecopy: 011-44-1494 450607
Attn: Mr. Terry Clapp
with copies to:
Philippe Schreiber, Esq.
26 Sheep Pond Road
Nantucket, MA 02553
Telecopy: (508) 325-5157
Gibson, Dunn & Crutcher LLP
200 Park Avenue, 48th Floor
New York, NY 10166
Telecopy: (212) 351-4035
Attn: Steven P. Buffone, Esq.
(b) Any party hereto may change the address to which notices shall be
directed under this Section 10.1 by giving ten (10) days' written notice of such
change to the other parties.
Section 10.2 Expenses. Borrower will promptly pay all reasonable costs
--------
and reasonable out-of-pocket expenses of obtaining performance under this
Agreement or the other Loan Documents and all reasonable costs and reasonable
out-of-pocket expenses of collection if default is made in the payment of the
Note, which in each case shall include reasonable fees and expenses of external
counsel for Lender actually incurred by Lender.
Section 10.3 Waivers. The rights and remedies of Lender under this
-------
Agreement and the other Loan Documents shall be cumulative and not exclusive of
any rights or remedies which it would otherwise have. No failure or delay by
Lender in exercising any right shall operate as a waiver of it. Lender
expressly reserves the right to require strict compliance with the terms of this
Agreement in connection with any funding of a request for an Advance. In the
event Lender decides to fund a request for an Advance at a time when Borrower is
not in strict compliance with the terms of this Agreement, such decision by
Lender shall not be deemed to constitute an undertaking by Lender to fund any
further requests for Advances or preclude Lender from exercising any rights
available to Lender under the Loan
13
<PAGE>
Documents or at law or equity. Any waiver or indulgence granted by Lender shall
not constitute a modification of this Agreement, except to the extent expressly
provided in such waiver or indulgence, or constitute a course of dealing by
Lender at variance with the terms of this Agreement such as to require further
notice by Lender of Lender's intent to require strict adherence to the terms of
this Agreement in the future. Any such actions shall not in any way affect the
ability of Lender, in its sole discretion, to exercise any rights available to
it under this Agreement or under any other agreement, whether or not Lender is a
party, relating to Borrower.
Section 10.4 [Intentionally Deleted]
Section 10.5 Assignment.
----------
(a) Borrower may not assign or transfer any of its rights or obligations
hereunder or under the Note without the prior written consent of Lender.
(b) Nothing in this Agreement or the Note, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy, or other claim
under this Agreement or the Note.
Section 10.6 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
Section 10.7 GOVERNING LAW. THE PARTIES HEREBY ACKNOWLEDGE AND AGREE
-------------
THAT (A) THIS LOAN AGREEMENT AND THE NOTES HAVE, IN PART, BEEN NEGOTIATED IN,
EXECUTED AND DELIVERED IN, AND WILL PARTIALLY BE PERFORMED IN, THE STATE OF
GEORGIA, AND (B) ALL ADVANCES UNDER THE LOAN WILL BE MADE IN GEORGIA, AND (C)
THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF GEORGIA.
Section 10.8 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 10.9 [Intentionally Deleted]
Section 10.10 Headings. Headings used in this Agreement are for
--------
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 10.11 Pronouns. The pronouns used herein shall include, when
--------
appropriate, either gender and both singular and plural, and the grammatical
construction of sentences shall conform thereto.
Section 10.12 Entire Agreement; Amendments. This Agreement and the other
----------------------------
Loan Documents represent the entire agreement between Borrower and Lender with
respect to the Loan and this Agreement and supersede all prior and
contemporaneous agreements relating to the subject matter hereof. No amendment
or modification of the terms and provisions of this Agreement shall be effective
unless in writing and signed by Lender and Borrower.
14
<PAGE>
ARTICLE 11
CONVERSION
Section 11.1 If (i) Michael Walden exercises the Put (as defined in the
General Agreement) in accordance with the terms of the General Agreement or (ii)
Lender exercises the Call (as defined in the General Agreement) in accordance
with the terms of the General Agreement, Lender or its Affiliate shall have the
right at any time thereafter, upon notice to Borrower (the "Conversion Notice")
-----------------
to convert the outstanding principal, interest, fees and other amounts owing
under this Agreement into Borrower Common Stock. The price per share for such
conversion shall be the average of the closing bid and asked prices for Borrower
Common Stock reported on the Nasdaq National Market, such other exchange or
system on which the shares may then be trading for the twenty (20) trading days
immediately prior to the date of Lender's or its Affiliate's exercise of its
conversion rights or the appraised fair value by an independent appraiser if the
Borrower Common Stock is not traded on an exchange.
ARTICLE 12
SUBORDINATION
Section 12.1 Agreement to Subordinate. Borrower agrees, and Lender by
------------------------
accepting the Note agrees, that the Indebtedness evidenced hereby and by the
Note is subordinated in right of payment to all Senior Indebtedness to the
extent and on the terms set forth in the Subordination Agreement, dated the date
hereof, by and among Lender, Borrower and NationsBank, a copy of which is
attached hereto as Exhibit 5.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed under seal by their duly authorized officers, all as of
the day and year first above written.
METROTRANS CORPORATION
By: /S. D. MICHAEL WALDEN
--------------------------
Name: D. Michael Walden
Title: Chief Executive Officer
THE MAYFLOWER CORPORATION PLC
By /s/ JOHN FLEMING
---------------------------
Name: John Fleming
Title: Director
16
<PAGE>
Exhibit 1
Form of Note
17
<PAGE>
Exhibit 2
SCHEDULE OF PERMITTED ADVANCES
DATE MAXIMUM AMOUNT OF NOTE PERMITTED
TO BE OUTSTANDING
August 20, 1998 through $ 4,500,000.00
December 31, 1998
January 1, 1999 through $10,000,000.00
June 30, 1999
July 1, 1999 and thereafter $15,000,000.00
18
<PAGE>
Exhibit 3
FORM OF SUBSIDIARY GUARANTY
19
<PAGE>
Exhibit 4
NATIONSBANK LOAN AGREEMENT
20
<PAGE>
Exhibit 5
SUBORDINATION AGREEMENT
21
