Exhibit 10.35
Loan and Security Agreement
by and between
CONGRESS FINANCIAL CORPORATION,
as Lender,
ATLANTIC EXPRESS TRANSPORTATION CORP.,
AND EACH OF THE PARTIES LISTED
ON THE SIGNATURE PAGES HERETO
as Borrowers
Dated: December 22, 2000
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS........................................................1
SECTION 2. CREDIT FACILITIES.................................................15
2.1 Revolving Loans.................................................15
2.2 Letter of Credit Accommodations.................................16
2.3 Availability Reserves...........................................18
2.4 Borrowers' Representative.......................................18
SECTION 3. INTEREST AND FEES.................................................19
3.1 Interest........................................................19
3.2 Closing Fee.....................................................20
3.3 Servicing Fee...................................................20
3.4 Unused Line Fee.................................................20
3.5 Changes in Laws and Increased Costs of Loans....................21
SECTION 4. CONDITIONS PRECEDENT..............................................21
4.1 Conditions Precedent to Initial Loans and Letter
of Credit Accommodations......................................21
4.2 Conditions Precedent to All Loans and Letter of
Credit Accommodations.........................................24
SECTION 5. GRANT OF SECURITY INTEREST........................................24
SECTION 6. COLLECTION AND ADMINISTRATION.....................................25
6.1 Borrowers' Loan Account.........................................25
6.2 Statements......................................................26
6.3 Collection of Accounts..........................................26
6.4 Payments........................................................27
6.5 Authorization to Make Loans.....................................28
6.6 Use of Proceeds.................................................28
SECTION 7. COLLATERAL REPORTING AND COVENANTS................................28
7.1 Collateral Reporting............................................28
7.2 Accounts Covenants..............................................29
7.3 Inventory Covenants.............................................30
7.5 Power of Attorney...............................................31
7.6 Right to Cure...................................................32
7.7 Access to Premises..............................................32
SECTION 8. REPRESENTATIONS AND WARRANTIES....................................33
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TABLE OF CONTENTS
(continued)
Page
8.1 Corporate Existence, Power and Authority; Subsidiaries..........33
8.2 Financial Statements; No Material Adverse Change................33
8.3 Chief Executive Office; Collateral Locations....................34
8.4 Priority of Liens; Title to Properties..........................34
8.5 Tax Returns.....................................................34
8.6 Litigation......................................................34
8.7 Compliance with Other Agreements and Applicable Laws............35
8.8 Employee Benefits...............................................35
8.9 Environmental Compliance........................................36
8.10 Accuracy and Completeness of Information........................37
8.11 Survival of Warranties; Cumulative..............................37
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS................................37
9.1 Maintenance of Existence........................................37
9.2 New Collateral Locations........................................37
9.3 Compliance with Laws, Regulations, Etc..........................38
9.4 Payment of Taxes and Claims.....................................39
9.5 Insurance.......................................................39
9.6 Financial Statements and Other Information......................40
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc.........41
9.8 Encumbrances....................................................42
9.9 Indebtedness....................................................43
9.10 Loans, Investments, Guarantees, Etc.............................44
9.11 Dividends and Redemptions.......................................45
9.12 Transactions with Affiliates....................................46
9.13 Adjusted Net Worth..............................................46
9.14 EBITDA..........................................................46
9.15 Costs and Expenses..............................................46
9.16 Compliance with ERISA...........................................47
9.17 Further Assurances..............................................47
9.18 After Acquired Real Property....................................48
SECTION 10. EVENTS OF DEFAULT AND REMEDIES....................................48
10.1 Events of Default...............................................48
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TABLE OF CONTENTS
(continued)
Page
10.2 Remedies........................................................50
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS;
GOVERNING LAW..................................................51
11.1 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver.............................................51
11.2 Waiver of Notices...............................................52
11.3 Amendments and Waivers..........................................53
11.4 Waiver of Counterclaims.........................................53
11.5 Indemnification.................................................53
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS..................................53
12.1 Term............................................................53
12.2 Notices.........................................................54
12.3 Partial Invalidity..............................................55
12.4 Successors......................................................55
12.5 Entire Agreement................................................55
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LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated December 22, 2000 is entered into
by and between CONGRESS FINANCIAL CORPORATION, a Delaware corporation
("Lender"), ATLANTIC EXPRESS TRANSPORTATION CORP., a New York corporation and
each of the parties listed on the signature pages hereto (each individually, a
"Borrower" and any two or more collectively, "Borrowers").
W I T N E S E T H:
WHEREAS, Borrowers have requested that Lender enter into certain financing
arrangements with Borrowers pursuant to which Lender may make loans and provide
other financial accommodations to Borrowers; and
WHEREAS, Lender is willing to make such loans and provide such financial
accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
section 1. DEFINITIONS
All terms used herein which are defined in Article 1 or Article 9 of the
Uniform Commercial Code of the State of New York shall have the meanings given
therein unless otherwise defined in this Agreement. All references to the plural
herein shall also mean the singular and to the singular shall also mean the
plural. All references to Borrowers, Guarantors, and Lender pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns. The words "hereof",
"herein", "hereunder", "this Agreement" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not any particular
provision of this Agreement and as this Agreement now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced. An
Event of Default shall exist or continue or be continuing until such Event of
Default is waived in accordance with Section 11.3. Any accounting term used
herein unless otherwise defined in this Agreement shall have the meanings
customarily given to such term in accordance with GAAP. For purposes of this
Agreement, the following terms shall have the respective meanings given to them
below:
1.1 "▇▇▇▇" shall mean Atlantic Bus Distributors, Inc., a New York
corporation.
1.2 "▇▇▇▇ Agreement" shall mean the Inventory Financing Agreement
(Security Agreement) dated December 22, 2000, as the same may be amended from
time to time, by and among Lender, ▇▇▇▇ and AETG, as it now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
1.3 "Accounts" of a Borrower shall mean all present and future rights of
such Borrower to payment for goods sold or leased or for services rendered,
which are not evidenced by instruments or chattel paper, and whether or not
earned by performance.
1.4 "Adjusted Eurodollar Rate" shall mean, with respect to each Interest
Period for any Eurodollar Rate Loan, the rate per annum (rounded upwards, if
necessary, to the next one-sixteenth (1/16) of one (1%) percent) determined by
dividing (a) the Eurodollar Rate for such Interest Period by (b) a percentage
equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof,
"Reserve Percentage" shall mean the reserve percentage, expressed as a decimal,
prescribed by any United States or foreign banking authority for determining the
reserve requirement which is or would be applicable to deposits of United States
dollars in a non-United States or an international banking office of Reference
Bank used to fund a Eurodollar Rate Loan or any Eurodollar Rate Loan made with
the proceeds of such deposit, whether or not the Reference Bank actually holds
or has made any such deposits or loans. The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective date of any change in the Reserve
Percentage.
1.5 "Adjusted Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its subsidiaries (if any), the amount
equal to the difference between: (a) the aggregate net book value of all assets
of such Person and its subsidiaries, calculating the book value of inventory for
this purpose on a first-in-first-out basis, after deducting from such book
values all appropriate reserves in accordance with GAAP (including all reserves
for doubtful receivables, obsolescence, depreciation and amortization) and (b)
the aggregate amount of the indebtedness and other liabilities of such Person
and its subsidiaries (including tax and other proper accruals).
1.6 "AETG" shall mean Atlantic Express Transportation Group Inc., a New
York corporation.
1.7 "Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with") shall mean, with respect to any
Person: (i) the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; (ii) in
the case of a corporation, beneficial ownership of 10% or more of any class of
Capital Stock of such Person; and (iii) in the case of an individual, (A)
members of such Person's immediate family (as defined in Instruction 2 of Item
404(a) of Regulation S-K promulgated under the Securities Act of 1933, as
amended, as in effect on the date hereof), and (B) trusts, any trustee or
beneficiary of which is such Person or members of such Person's immediate
family. Notwithstanding the foregoing definitions, none of ▇▇▇▇▇▇▇▇▇ & Company,
Inc. and its Affiliates shall be considered Affiliates of Parent or any of its
Subsidiaries.
1.8 "Asset Sale" shall mean (a) any transfer, other than in the ordinary
course of business, of any assets of Parent or any of its Subsidiaries; or (b)
any direct or indirect issuance
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of any Capital Stock of any Subsidiary of Parent; in the case of either (a) or
(b), to any Person other than Parent or a Subsidiary of Parent and other than
the issuance of directors' qualifying shares. For the purposes of this
definition, (x) any series of transfers that are part of a common plan shall be
deemed a single Asset Sale and (y) the term "Asset Sale" shall not include any
disposition of all or substantially all of the assets of Parent or any of its
Subsidiaries.
1.9 "Atlantic North" shall mean Atlantic North Casualty Company, a Vermont
corporation.
1.10 "Availability Reserves" shall mean, as of any date of determination,
such amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Revolving Loans and Letter of Credit Accommodations which
would otherwise be available to a Borrower under the lending formula(s) provided
for herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Lender in good faith, do or may (i) affect in any material respect
the Collateral or any other property which is security for the Obligations or
its value, (ii) affect in any material respect the assets, business or prospects
of any Borrower individually or of Parent and its Subsidiaries taken as a whole
or (iii) the security interests and other rights of Lender in the Collateral
(including the enforceability, perfection and priority thereof); or (b) to
reflect Lender's good faith belief that any collateral report or financial
information furnished by or on behalf of a Borrower or any Obligor to Lender is
or may have been incomplete, inaccurate or misleading in any material respect or
(c) in respect of any state of facts which Lender determines in good faith
constitutes an Event of Default or can reasonably be expected, with notice or
passage of time or both, to constitute an Event of Default.
1.11 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.12 "Borrower" shall mean each Person identified as such in the caption
of this Agreement and which executes and delivers this Agreement, and each other
Subsidiary of Parent that from time to time hereafter becomes a Borrower
pursuant to a written supplement to this Agreement acceptable in form and
substance to Lender.
1.13 "Borrowers' Representative" shall mean Parent.
1.14 "Business Day" shall mean (a) for the Prime Rate Loans, any day (i)
other than a Saturday, Sunday, or other day on which commercial banks are
authorized or required to close under the laws of the State of New York or the
Commonwealth of Pennsylvania, and (ii) on which the Reference Bank and Lender
are open for the transaction of business, and (b) for all Eurodollar Rate Loans,
any such day as described in (a) above in this definition of Business Day,
excluding any day on which banks are closed for dealings in dollar deposits in
the London interbank market or other applicable Eurodollar Rate market.
1.15 "Capital Stock" shall mean (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interest (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
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1.16 "Cash Equivalent" shall mean (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof); (b) time deposits and
certificates of deposit, and commercial paper issued by the parent corporation,
of any domestic commercial bank of recognized standing having capital and
surplus in excess of $250,000,000 and commercial paper issued by others rated at
least A-2 or the equivalent thereof by Standard & Poor's Corporation or at least
P-2 or the equivalent thereof by ▇▇▇▇▇'▇ Investors Service, Inc. and in each
case maturing within one year after the date of acquisition; and (c) investments
in money market funds substantially all of whose assets comprise securities of
the types described in clauses (a) and (b) above.
1.17 "Central" shall mean Central New York Coach Sales & Service Inc., a
New York corporation.
1.18 "Change of Control" shall mean (a) the transfer (in one transaction
or a series of transactions) of all or substantially all of the assets of Parent
or its Subsidiaries to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) other than to one or more Existing Holders; (b)
the liquidation or dissolution of Parent or the adoption of a plan by the
stockholders of Parent relating to the dissolution or liquidation of Parent; (c)
the acquisition by any Person or group (as such term is used in Section 13(d)(3)
of the Exchange Act), except for one or more Existing Holders, of beneficial
ownership, directly or indirectly, of more than 50% of the aggregate ordinary
voting power of the total outstanding Voting Stock of Parent or AETG; (iv)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of Parent or AETG (together with
any new directors whose nomination for election by the stockholders of Parent or
AETG, as the case may be, was approved by a vote of at least 66-2/3 of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Parent or AETG, as the case may be, then still in office; or (v)
the failure by AETG to own 51% of the voting power of the total outstanding
Voting Stock of Parent.
1.19 "Code" shall mean the Internal Revenue Code of 1986, as the same now
exists or may from time to time hereafter be amended, modified, recodified or
supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.20 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.21 "Disqualified Capital Stock" shall mean any Equity Interest that (i)
either by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) is or upon the happening of an
event would be required to be redeemed or repurchased or is redeemable at the
option of the holder thereof at any time or (ii) is convertible into or
exchangeable at the option of the issuer thereof or any other Person for debt
securities.
1.22 "EBITDA" shall mean, for any period, net income or loss of the Parent
and its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP, plus (a) to the extent deducted in computing such
consolidated net income or loss, without duplication, the sum of (i) income tax
expense, (ii) Interest Expense, (iii) depreciation and
4
amortization expense, and (iv) non-cash extraordinary or nonrecurring losses or
expenses, minus (b) to the extent added in computing such consolidated net
income or loss, without duplication, extraordinary or non-recurring income or
gains.
1.23 "Eligible Accounts" of a Borrower shall mean Accounts created by a
Borrower which are and continue to be acceptable to Lender based on the criteria
set forth below. In general, Accounts shall be Eligible Accounts if:
(a) such Accounts arise from the actual and bona fide sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with all those terms and provisions contained in any documents
related thereto with which such Borrower must comply in order for the account
debtor to be obligated to pay such Accounts;
(b) such Accounts are not unpaid more than ninety (90) days after
the date of the original invoice for them, or more than one hundred twenty (120)
days after the date of the original invoice in the case of Accounts arising from
paratransit services, transportation services funded under Medicaid, or
transportation services for physically or mentally challenged pre-kindergarten
students ("Paratrans/Pre-K/Medicaid Accounts");
(c) such Accounts comply with the terms and conditions contained in
Section 7.2(b) of this Agreement;
(d) such Accounts do not arise from sales on consignment, guaranteed
sale, sale and return, sale on approval, or other terms under which payment by
the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect to
such Accounts is located in the United States of America, or, at Lender's
option, if either: (i) the account debtor has delivered to such Borrower an
irrevocable letter of credit issued or confirmed by a bank satisfactory to
Lender, sufficient to cover such Account, in form and substance satisfactory to
Lender and, if required by Lender, the original of such letter of credit has
been delivered to Lender or Lender's agent and the issuer thereof notified of
the assignment of the proceeds of such letter of credit to Lender, or (ii) such
Account is subject to credit insurance payable to Lender issued by an insurer
and on terms and in an amount acceptable to Lender, or (iii) such Account is
otherwise acceptable in all respects to Lender (subject to such lending formula
with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress ▇▇▇▇▇▇▇▇, ▇▇▇▇ and hold
invoices or retainage invoices (it being understood that Accounts representing
amounts accrued for transportation services provided for a portion of the
current month shall not constitute progress ▇▇▇▇▇▇▇▇ solely because the account
debtor is not billed for such amounts until after the end of such month);
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against such
Accounts;
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(h) there are no facts, events or occurrences which would impair the
validity, enforceability or collectability of such Accounts or reduce the amount
payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee or agent of
or affiliated with such Borrower directly or indirectly by virtue of family
membership, ownership, control, management or otherwise;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, the applicable
Borrower has complied with any Federal, State or local law, compliance with
which is required in order for Lender to have a security interest in the
Accounts owed by such account debtor that is enforceable and perfected against
such account debtor and third parties;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(m) such Accounts of a single account debtor or its Affiliates do
not constitute more than twenty-five (25%) percent (or fifty (50%) percent in
the case of Accounts owed by the New York City Board of Education) of all
otherwise Eligible Accounts, net of retainages included therein (but the portion
of the Accounts not in excess of such percentage may be deemed Eligible
Accounts);
(n) such Accounts are not owed by an account debtor who has Accounts
unpaid more than ninety (90) days (or one hundred twenty (120) days in the case
of Paratrans/Pre-K/Medicaid Accounts) after the date of the original invoice for
them which constitute more than fifty (50%) percent of the total Accounts of
such account debtor;
(o) such Accounts are owed by account debtors whose total
indebtedness to all Borrowers does not exceed the credit limit with respect to
such account debtors as determined by Lender from time to time in its reasonable
judgment (but the portion of the Accounts not in excess of such credit limit may
still be deemed Eligible Accounts);
(p) such Accounts do not represent payments due in respect of the
lease or rental of goods; and
(q) such Accounts are owed by account debtors deemed creditworthy at
all times by Lender, as determined in good faith by Lender.
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General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith. Lender shall give the Borrower's Representative
notice of any new or revised criteria as promptly as practicable after
establishing or revising such criteria. Any Accounts which are not Eligible
Accounts shall nevertheless be part of the Collateral.
1.24 "Eligible Inventory" shall mean Inventory consisting of new and used
buses held by Central or Jersey for sale or lease in the ordinary course of the
business of Central or Jersey and which are acceptable to Lender based on the
criteria set forth below. In general, Eligible Inventory shall not include (a)
components and spare parts held for sale as replacement parts or held for use in
vehicle maintenance or repair; (b) supplies used or consumed in Borrowers'
business; (c) Inventory at premises other than those owned and controlled by
Borrowers, except if Lender shall have received an agreement in writing from the
person in possession of such Inventory and/or the owner or operator of such
premises in form and substance satisfactory to Lender acknowledging Lender's
first priority security interest in the Inventory, waiving security interests
and claims by such person against the Inventory and permitting Lender access to,
and the right to remain on, the premises so as to exercise Lender's rights and
remedies and otherwise deal with the Collateral; (d) Inventory subject to a
security interest or lien in favor of any person other than Lender except those
permitted in this Agreement; (e) ▇▇▇▇ and hold goods; (f) unserviceable,
obsolete or slow moving Inventory; (g) Inventory which is not subject to the
first priority, valid and perfected security interest of Lender; (h) returned,
damaged and/or defective Inventory including, without limitation, buses which
are not in good operating condition or which do not meet all necessary safety
standards for the use for which they are intended; (i) Inventory as to which a
certificate of title or other similar document (other than a dealer's or
comparable certificate or title) has been issued, unless Lender's security
interest in such Inventory has been reflected in accordance with applicable law
on such certificate of title or other document; (j) Inventory on lease or rental
to any Person; (k) Inventory purchased or sold on consignment; (l) Inventory
acquired or held for sale, lease, or other disposition to, or for use in the
operations of, any other Borrower, any Guarantor, or any Affiliate of any
thereof and (m) Inventory for which Borrowers have not sent Lender a copy or, if
requested by Lender, the original of the manufacturer's statement of origin or
certificate of title listing such Borrower's name thereon. General criteria for
Eligible Inventory may be established and revised from time to time by Lender in
good faith. Any Inventory which is not Eligible Inventory shall nevertheless be
part of the Collateral.
1.25 "Eligible Vehicles" shall mean, at any time of determination,
vehicles owned by Borrowers and used by Borrowers in the ordinary course of
Borrowers' business and not held for resale, and which are acceptable to Lender
based on the criteria set forth below. In general, Eligible Vehicles shall not
include (a) vehicles which are not subject to the first priority, valid and
perfected security interest of Lender, (b) damaged and/or defective vehicles,
including without limitation vehicles which are not in good operating condition
or which do not meet all necessary safety standards for the use for which they
are intended, (c) with respect to vehicles having a vehicle year of 1993 or
thereafter, vehicles as to which a certificate of title or other similar
document has been issued, unless Borrower has complied with Section 7.4(i), (d)
vehicles on lease or rental to any other Person, and (e) vehicles which are used
or operated by any Person other than Borrowers. General criteria for Eligible
Vehicles may be established and revised from time to time by Lender in good
faith. Any vehicle which is not an Eligible Vehicle shall nevertheless be part
of the Collateral.
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1.26 "Environmental Laws" shall mean all foreign, Federal, State and local
laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between a Borrower and any
governmental authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety, (b) relating to the exposure to, or the use, storage,
recycling, treatment, generation, manufacture, processing, distribution,
transportation, handling, labeling, production, release or disposal, or
threatened release, of Hazardous Materials, or (c) relating to all laws with
regard to recordkeeping, notification, disclosure and reporting requirements
respecting Hazardous Materials. The term "Environmental Laws" includes (i) the
Federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Federal Superfund Amendments and Reauthorization Act, the Federal
Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal
Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto), the Federal Solid
Waste Disposal and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water
Act of 1974, (ii) applicable state counterparts to such laws, and (iii) any
common law or equitable doctrine that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Materials.
1.27 "Equipment" shall mean all of Borrowers' now owned and hereafter
acquired equipment, machinery, computers and computer hardware and software
(whether owned or licensed), vehicles, tools, furniture, fixtures, all
attachments, accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof, wherever
located.
1.28 "Equity Interests" shall mean Capital Stock or warrants, options, or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
1.29 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as the same now exists or may hereafter from time to time
be amended, modified, recodified or supplemented, together with all rules,
regulations and interpretations thereunder or related thereto.
1.30 "ERISA Affiliate" shall mean any person required to be aggregated
with Parent or any Borrower or any of their Subsidiaries under Sections 414(b),
414(c), 414(m) or 414(o) of the Code.
1.31 "Eurodollar Rate" shall mean with respect to the Interest Period for
a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrowers and approved by Lender) on or
about 9:00 a.m. (New York City time) two (2) Business Days prior to the
commencement of
8
such Interest Period in amounts substantially equal to the principal amount of
the Eurodollar Rate Loans requested by and available to a Borrower in accordance
with this Agreement, with a maturity of comparable duration to the Interest
Period selected by such Borrower.
1.32 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.33 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.34 "Excess Availability" shall mean the amount, as determined by Lender,
calculated at any time, equal to: (a) the lesser of (i) the amount of the
Revolving Loans available to Borrowers as of such time based on the applicable
lending formulas and sublimits set forth in Section 2.1 hereof as determined by
Lender, and subject to the sublimits and Availability Reserves from time to time
established by Lender hereunder and (ii) the Maximum Credit, minus (b) the sum
of: (i) the amount of all then outstanding and unpaid Obligations, plus (ii) the
aggregate amount of all trade payable of Borrowers which are more than sixty
(60) days past due as of such time; provided, however, that solely for the
purposes of Sections 4.1(h) and 6.3(a) hereof, Excess Availability shall be
determined by Lender as if subsection (a) referred only to the amount described
in clause (i) thereof and did not take into consideration the Maximum Credit.
1.35 "Exchange Act" shall mean the Securities Exchange Act of 1934, as the
same now exists or may from time to time hereafter be amended, modified,
recodified, or supplemented, together with all rules, regulations, and
interpretations thereunder or related thereto.
1.36 "Existing Fleet Availability" shall mean an amount equal to
$76,000,000 as reduced on the 1st day of each month hereafter, commencing
February 1, 2001, by $1,333,333.33 per month.
1.37 "Existing Holders" shall mean GSCP II (AE) Holdings, LLC, ▇▇▇▇▇▇▇
▇▇▇▇▇ and Wafra Acquisition Fund.
1.38 "Financing Agreements" shall mean, collectively, this Agreement and
all notes, guarantees, security agreements and other agreements, documents and
instruments now or at any time hereafter executed and/or delivered by any
Borrower or any Obligor in connection with this Agreement, as the same now exist
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
1.39 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.13 and 9.14 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the audited financial statements delivered to Lender
prior to the date hereof.
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1.40 "Guarantors" shall mean each Person (other than a Borrower) that from
time to time hereafter becomes a Guarantor pursuant to a written guarantee of
the Obligations acceptable in form and substance to Lender.
1.41 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including, without limitation, hydrocarbons
(including naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation, radioactive
materials, biological substances, polychlorinated biphenyls, pesticides,
herbicides and any other kind and/or type of pollutants or contaminants
(including, without limitation, materials which include hazardous constituents),
sewage, sludge, industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials or wastes
that are or become regulated under any Environmental Law (including, without
limitation any that are or become classified as hazardous or toxic under any
Environmental Law).
1.42 "Indenture" shall mean the Indenture dated as of February 4, 1997,
among Parent, the Subsidiaries of Parent as guarantors, and The Bank of New
York, as Trustee for the holders of the Senior Notes, pursuant to which Parent
has issued the Senior Notes, as the same has been and may hereafter be amended,
modified, supplemented, extended, renewed, restated, or replaced.
1.43 "Information Certificate" shall mean the Information Certificate of
the Borrowers and Guarantors constituting Exhibit A hereto containing material
information with respect to each Borrower and Guarantor, its business and assets
provided by or on behalf of Borrowers and Guarantors to Lender in connection
with the preparation of this Agreement and the other Financing Agreements and
the financing arrangements provided for herein.
1.44 "Initial Vehicle CapEx Availability" shall mean an amount equal to
$15,800,400.00 as reduced on the first day of each month hereafter, commencing
February 1, 2001, by $277,200.00 per month.
1.45 "Initial Vehicle CapEx Schedule" shall mean Eligible Vehicles
acquired or put into use by Borrowers during the period beginning on June 30,
2000 and ending on October 31, 2000 and which have been identified to Lender in
a written schedule in the form of Schedule 1.45 hereto, to which are attached
copies of the relevant invoice(s) therefor.
1.46 "Intercreditor Agreement" shall mean the Intercreditor Agreement
dated the date hereof between Lender and the collateral agent for the Senior
Notes, as the same may be amended, modified, supplemented, extended, renewed,
restated or replaced, all in form and substance acceptable to Lender.
1.47 "Interest Expense" shall mean, for any period, the interest expense
of Parent and its Subsidiaries in respect of such period, determined on a
consolidated basis in accordance with GAAP.
1.48 "Interest Period" shall mean for any Eurodollar Rate Loan, a period
of approximately one (1), two (2), or three (3) months duration as a Borrower
may elect, the exact duration to be determined in accordance with the customary
practice in the applicable Eurodollar
10
Rate market; provided, that, a Borrower may not elect an Interest Period which
will end after the last day of the then-current term of this Agreement.
1.49 "Interest Rate" shall mean, as to Prime Rate Loans, a rate of
three-quarters of one (3/4%) percent per annum in excess of the Prime Rate and,
as to Eurodollar Rate Loans, a rate of two and three-quarter (2-3/4%) percent
per annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar
Rate applicable for the Interest Period selected by a Borrower as in effect
three (3) Business Days after the date of receipt by Lender of the request of
such Borrower for such Eurodollar Rate Loans in accordance with the terms
hereof, whether such rate is higher or lower than any rate previously quoted to
such Borrower); provided, that, the Interest Rate shall mean the rate of two and
three-quarters (2-3/4%) percent per annum in excess of the Prime Rate as to
Prime Rate Loans and all other non-contingent Obligations (other than Eurodollar
Rate Loans) and the rate of four and three-quarters (4-3/4%) percent per annum
in excess of the Adjusted Eurodollar Rate as to Eurodollar Rate Loans, at
Lender's option, without notice, (a) for the period on and after the date of
termination or non-renewal hereof, or the date of the occurrence of any Event of
Default or event which with notice or passage of time or both would constitute
an Event of Default, and for so long as such Event of Default or other event is
continuing and until such time as all Obligations are indefeasibly paid in full
(notwithstanding entry of any judgment against any Borrower) and (b) on the
Revolving Loans at any time outstanding in excess of the amounts available to
Borrowers under Section 2 (whether or not such excess(es) arise or are made with
or without Lender's knowledge or consent and whether made before or after an
Event of Default).
1.50 "Inventory" of a Borrower shall mean all of such Borrower's now owned
or hereafter existing or acquired raw materials, work in process, finished
goods, and all other inventory of whatsoever kind or nature, wherever located.
1.51 "Jersey" shall mean Jersey Bus Sales, Inc., a New Jersey corporation.
1.52 "Letter of Credit Accommodations" shall mean the standby letters of
credit which are from time to time either (a) issued or opened by Lender for the
account of any Borrower or any Obligor or (b) with respect to which Lender has
agreed to indemnify the issuer or guaranteed to the issuer the performance by
any Borrower of its obligations to such issuer.
1.53 "Loans" shall mean the Revolving Loans and the Loan made pursuant to
Section 2.3.
1.54 "Maximum Credit" shall mean the amount of $125,000,000.
1.55 "Mortgages" shall mean, individually and collectively, each of the
mortgages listed on Schedule 1.55 hereto (as the same now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced).
1.56 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credits, allowances and retainages
of any nature at any time issued, owing, granted, outstanding, available or
claimed with respect thereto.
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1.57 "Net Proceeds" means the aggregate proceeds received in the form of
cash or Cash Equivalents in respect of any Asset Sale (including payments in
respect of deferred payment obligations when received), net of (a) the
reasonable and customary direct out-of-pocket costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions), other than any such costs payable to an Affiliate of
AETG, (b) taxes actually payable directly as a result of such Asset Sale (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), (c) amounts required to be applied to the permanent repayment of
indebtedness in connection with such Asset Sale, and (d) appropriate amounts
provided as a reserve by Parent or any Subsidiary of Parent, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
Parent or such Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations arising from such Asset Sale.
1.58 "Obligations" shall mean any and all Revolving Loans, Letter of
Credit Accommodations and all other obligations, liabilities and indebtedness of
every kind, nature and description owing by any one or more Borrowers to Lender
and/or its affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to a Borrower under the United States Bankruptcy Code or any
similar statute (including, without limitation, the payment of interest and
other amounts which would accrue and become due but for the commencement of such
case), whether direct or indirect, absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured, and however acquired by Lender.
1.59 "Obligor" shall mean any Guarantor, and any endorser, acceptor,
surety or other person liable on or with respect to the Obligations or who is
the owner of any property which is security for the Obligations, other than
Borrowers.
1.60 "Parent" shall mean Atlantic Express Transportation Corp., a New York
corporation.
1.61 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.62 "Person" or "person" shall mean any individual, sole proprietorship,
partnership, corporation (including, without limitation, any corporation which
elects subchapter S status under the Code), limited liability company, business
trust, unincorporated association, joint stock corporation, trust, joint venture
or other entity or any government or any agency or instrumentality or political
subdivision thereof.
1.63 "Prime Rate" shall mean the rate from time to time publicly announced
by First Union National Bank, or its successors, as its prime rate, whether or
not such announced rate is the best rate available at such bank.
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1.64 "Prime Rate Loans" shall mean any Loans or portion thereof on which
interest is payable based on the Prime Rate in accordance with the terms hereof.
1.65 "Public Equity Offering" shall mean an underwritten public offering
of Capital Stock of Parent or AETG (other than Disqualified Capital Stock),
pursuant to a registration statement filed with and declared effective by the
Commission in accordance with the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
1.66 "Purchase Money Indebtedness" shall mean (a) the amount of any
obligations of any Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and (b) indebtedness of
any specified Person representing, or incurred to finance, the cost of acquiring
or improving any assets, or the cost of construction or build-out of
manufacturing, distribution, or administrative facilities (including any such
indebtedness of any Person at the time it is merged with or into or is otherwise
acquired by the specified Person), provided that indebtedness described in this
clause (b) shall not constitute Purchase Money Indebtedness unless (i) the
principal amount of such indebtedness is equal to or less than 100% of the cost
(including construction charges) of the assets or facilities, (ii) any lien
securing such indebtedness does not extend to or encumber any asset or property
other than the asset or property being acquired, improved, constructed, or built
out with the proceeds of such indebtedness, and (iii) such indebtedness is
incurred, and any liens with respect thereto are granted, within 180 days of the
acquisition or improvement of such asset or property.
1.67 "Real Property" shall mean all now owned and hereafter acquired real
property of a Borrower (other than the real property located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, but only
so long as such properties are subject to existing mortgages) together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located, including the
real property and related assets more particularly described in the Mortgages.
1.68 "Records" shall mean all of a Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data relating to the Collateral or any account
debtor, together with the tapes, disks, diskettes and other data and software
storage media and devices, file cabinets or containers in or on which the
foregoing are stored (including any rights of such Borrower with respect to the
foregoing maintained with or by any other person).
1.69 "Reference Bank" shall mean First Union National Bank, or its
successors, or such other bank as Lender may from time to time designate.
1.70 "Revolving Loans" shall mean the loans now or hereafter made by
Lender to or for the benefit of a Borrower on a revolving basis (involving
advances, repayments and readvances) as set forth in Section 2.1 hereof.
1.71 "Senior Notes" shall mean Parent's 10 3/4% Senior Secured Notes due
2004, in the aggregate original principal amount of $150,000,000.
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1.72 "Stockholders Agreement" shall mean the Stockholders Agreement dated
as of February 28, 1994 by and among AETG and the holders party thereto as
amended from time to time.
1.73 "Subsidiary" shall mean with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Voting Stock is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of such Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof);
provided, however, that for the purposes of this Agreement, Atlantic North shall
not be considered a Subsidiary of Parent except as otherwise expressly provided
herein.
1.74 "Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of December __, 2000 between Parent and AETG.
1.75 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lesser of (a) the actual cost determined on a specific
identification basis in accordance with GAAP or, in the case of used buses,
computed in accordance with such other method as is acceptable to Lender in its
sole discretion, and (b) the net realizable value of such Inventory determined
in accordance with GAAP.
1.76 "Vehicle CapEx Availability" shall mean, with respect to each Vehicle
CapEx Schedule an amount equal to eighty percent (80%) of the cost of Eligible
Vehicles included in such Vehicle CapEx Schedule as such amount is reduced
monthly thereafter by an amount equal to one-sixtieth of the amount originally
determined above for such Vehicle CapEx Schedule; provided, that, with respect
to any vehicles purchased by a Borrower from Central or Jersey, the cost of such
vehicles shall be determined from the cost therefor paid by Central or Jersey,
plus standard dealer preparation and shipping charges and sales tax, if
applicable.
1.77 "Vehicle CapEx Schedule" shall mean any group of Eligible Vehicles:
(i) which were acquired by Borrowers after October 31, 2000, (ii) either the
aggregate cost of which was at least $3,000,000 or which were acquired during
the 90-day period ending on the date of such Vehicle CapEx Schedule, (iii) which
have not been included in any other Vehicle CapEx Schedule, and (iv) which have
been identified to Lender in a written schedule in the form of Schedule 1.77
hereto, to which are attached copies of the relevant invoice(s) therefor.
1.78 "Vehicle Disposition Adjustment" shall mean the sum of the following
amounts determined for each vehicle included in calculating Existing Fleet
Availability, Initial Vehicle CapEx Availability, or any Vehicle CapEx
Availability and which is subsequently sold or otherwise disposed of by the
applicable Borrower: (a) the amount originally included in Existing Fleet
Availability, Initial Vehicle CapEx Availability, or Vehicle CapEx Availability
based upon the applicable percentage or the orderly liquidation value or cost of
such vehicle; reduced by (b) the cumulative monthly reductions allocable to such
vehicle which were taken in calculating Existing Fleet Availability, Initial
Vehicle CapEx Availability, or Vehicle CapEx Availability prior to the sale or
disposition of such vehicle.
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1.79 "Voting Stock" shall mean, with respect to any Person: (a) one or
more classes of the Capital Stock of such Person having general voting power to
elect at least a majority of the board of directors, managers, or trustees of
such Person (irrespective of whether or not at the time Capital Stock of any
other class or classes has or might have voting power by reason of the happening
of any contingency); and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
1.80 "Weighted Average Life to Maturity" shall mean, when applied to any
indebtedness at any date, the number of years (rounded to the nearest
one-twelfth) obtained by dividing (i) the then outstanding principal amount of
such indebtedness into (ii) the total of the products obtained by multiplying
(x) the amount of each then remaining installment, sinking fund, serial maturity
or other required payments of principal, including payment at final maturity, in
respect thereof, by (y) the number of years (calculated to the nearest one
twelfth) that will elapse between such date and the making of such payment.
SECTION 2. CREDIT FACILITIES
2.1 Revolving Loans.
(a) Subject to, and upon the terms and conditions contained
herein, Lender agrees to make Revolving Loans to each Borrower from time to time
in amounts requested by such Borrower or the Borrowers' Representative up to an
amount, which, when taken together with all other Revolving Loans which are
outstanding to Borrowers, does not exceed to the sum of:
(i) eighty-five percent (85%) of the aggregate Net Amount of
Eligible Accounts of all Borrowers, plus
(ii) the lesser of: (A) the sum of (1) eighty percent (80%) of
the aggregate Value of Eligible Inventory of Central and Jersey consisting of
new buses plus (2) the lesser of: (x) $2,000,000 and (y) fifty percent (50%) of
the aggregate Value of Eligible Inventory of Central and Jersey consisting of
used buses; or (B) $10,000,000, plus
(iii) the lesser of (A) $90,000,000 and (B) the sum of (1) the
Existing Fleet Availability plus (2) the Initial Vehicle CapEx Availability plus
(3) the sum of the Vehicle CapEx Availability for all Vehicle CapEx Schedules
minus (4) the Vehicle Disposition Adjustment, less
(iv) any Availability Reserves.
(b) Lender may, in its discretion, from time to time, upon not less
than five (5) Business Days prior telephonic notice to Borrowers' Representative
(which may, in Lender's sole discretion, be confirmed by Lender in writing at
any time thereafter without limiting the effectiveness of the original
telephonic notice), (i) reduce the lending formula with respect to Eligible
Accounts to the extent that Lender determines in good faith that: (A) the
dilution with respect to the Accounts for any period (based on the ratio of (1)
the aggregate
15
amount of reductions in Accounts other than as a result of payments in cash to
(2) the aggregate amount of total revenues) has increased in any material
respect or may be reasonably anticipated to increase in any material respect
above historical levels, or (B) the general creditworthiness of account debtors
has declined or (ii) reduce any of the lending formulas with respect to Eligible
Inventory to the extent that Lender determines that: (A) the number of days of
the turnover of the Inventory for any period has changed in any material respect
or (B) the liquidation value of the Eligible Inventory, or any category thereof,
has decreased, or (C) the nature and quality of the Inventory has deteriorated.
In determining whether to reduce any of the lending formulas, Lender may
consider events, conditions, contingencies or risks which are also considered in
determining Eligible Accounts, Eligible Inventory or in establishing
Availability Reserves.
(c) Except in Lender's discretion, the aggregate amount of the Loans
and the Letter of Credit Accommodations outstanding to all Borrowers at any time
shall not exceed the Maximum Credit, and the Loans made pursuant to Section
2.1(a)(iii) shall not exceed at any one time an amount equal to eight-five
percent (85%) of the orderly liquidation value net of liquidation expenses (as
determined by Lender from appraisals performed pursuant to Section 7.4 by
appraisers acceptable to Lender) of Borrowers' then existing fleet of Eligible
Vehicles. Lender may modify the amount or rate of monthly reductions to Initial
Vehicle CapEx Availability and Vehicle CapEx Availability to the extent that the
average age of used vehicles which are Eligible Vehicles taken as a whole is
more than three years old. In the event that the outstanding amount of any
component of the Loans, or the aggregate amount of the outstanding Loans and
Letter of Credit Accommodations, exceed the amounts available under the lending
formulas, or sublimits determined under this Section 2.1 or the sublimits for
Letter of Credit Accommodations set forth in Section 2.2(c) or the Maximum
Credit, as applicable, such event shall not limit, waive or otherwise affect any
rights of Lender in that circumstance or on any future occasions and Borrowers
shall, upon demand by Lender, which may be made at any time or from time to
time, immediately repay to Lender the entire amount of any such excess(es) for
which payment is demanded.
(d) Whenever any Borrower acquires the assets of any Person, or
Capital Stock of any Person that thereupon becomes a Borrower and a wholly owned
Subsidiary of Parent, the Accounts and buses acquired from such Person, or owned
by the Person the Capital Stock of which was so acquired, may be included as
Eligible Accounts and as Eligible Vehicles on a Vehicle CapEx Schedule, to the
extent satisfying the criteria therefor as determined by Lender, at such advance
rates and subject to such sublimits as are determined by Lender, all based upon
Lender's field examinations and appraisals and such other considerations as
Lender deems appropriate.
2.2 Letter of Credit Accommodations.
(a) Subject to, and upon the terms and conditions contained herein,
at the request of a Borrower or the Borrowers' Representative, Lender agrees to
provide or arrange for Letter of Credit Accommodations for the account of a
Borrower containing terms and conditions acceptable to Lender and the issuer
thereof. Any payments made by Lender to any issuer thereof and/or related
parties in connection with the Letter of Credit Accommodations shall constitute
additional Revolving Loans to such Borrower pursuant to this Section 2.
16
(b) In addition to any charges, fees or expenses charged by any bank
or issuer in connection with the Letter of Credit Accommodations, each Borrower
shall pay to Lender a letter of credit fee at a rate equal to two percent (2%)
percent per annum on the daily outstanding balance of the Letter of Credit
Accommodations for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month; provided, however, that
for the period on and after the date of termination of non-renewal hereof, or
the date of the occurrence of any Event of Default or event which with notice or
passage of time or both would constitute an Event of Default, and for so long as
such Event of Default or other event is continuing as determined by Lender and
until such time as all Obligations (including, without limitation contingent
Obligations with respect to Letter of Credit Accommodations) are indefeasibly
paid or satisfied in full (notwithstanding entry of any judgment against any
Borrower) such letter of credit fee shall accrue at a rate of three percent (3%)
per annum. Such letter of credit fee shall be calculated on the basis of a three
hundred sixty (360) day year and actual days elapsed and the obligation of such
Borrower to pay such fee shall survive the termination or non-renewal of this
Agreement.
(c) No Letter of Credit Accommodations shall be available unless on
the date of the proposed issuance of any Letter of Credit Accommodations, the
Revolving Loans available to the Borrowers (subject to the Maximum Credit and
any Availability Reserves) are equal to or greater than an amount equal to one
hundred (100%) percent of the face amount of such proposed Letter of Credit
Accommodations and all other commitments and obligations made or incurred by
Lender with respect thereto. Effective on the issuance of each Letter of Credit
Accommodation, an Availability Reserve shall be established in the applicable
amount set forth in this Section 2.2(c).
(d) Except in Lender's discretion, the amount of all outstanding
Letter of Credit Accommodations and all other commitments and obligations made
or incurred by Lender in connection therewith, shall not at any time exceed
$20,000,000. At any time an Event of Default exists or has occurred and is
continuing, upon Lender's request, each Borrower will either furnish cash
collateral to secure the reimbursement obligations to the issuer in connection
with any Letter of Credit Accommodations furnished to such Borrower or furnish
cash collateral to Lender for the Letter of Credit Accommodations furnished to
such Borrower, and in either case, the Revolving Loans otherwise available to
such Borrower shall not be reduced as provided in Section 2.2(c) to the extent
of such cash collateral.
(e) Each Borrower shall, jointly and severally with all other
Borrowers, indemnify and hold Lender harmless from and against any and all
losses, claims, damages, liabilities, costs and expenses which Lender may suffer
or incur in connection with any Letter of Credit Accommodations and any
documents, drafts or acceptances relating thereto, including, but not limited
to, any losses, claims, damages, liabilities, costs and expenses due to any
action taken by any issuer or correspondent with respect to any Letter of Credit
Accommodation. Each Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
such Borrower's agent. Each Borrower assumes all risks for, and agrees to pay,
all foreign, Federal, State and local taxes, duties and levies relating to any
goods subject to any Letter of Credit Accommodations or any documents, drafts or
acceptances thereunder. Each Borrower hereby releases and holds Lender harmless
from and against any
17
acts, waivers, errors, delays or omissions, whether caused by such Borrower, by
any issuer or correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation. The provisions of this Section 2.2(e) shall
survive the payment of Obligations and the termination or non-renewal of this
Agreement.
(f) Nothing contained herein shall be deemed or construed to grant
any Borrower any right or authority to pledge the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any Letter of
Credit Accommodation provided by an issuer other than Lender unless Lender has
duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Each Borrower shall be bound by any interpretation made in good faith by Lender,
or any other issuer or correspondent under or in connection with any Letter of
Credit Accommodation or any documents, drafts or acceptances thereunder,
notwithstanding that such interpretation may be inconsistent with any
instructions of any Borrower or Borrowers' Representative with respect to such
Letter of Credit Accommodations or documents. Lender shall have the sole and
exclusive right and authority to, and no Borrower shall: (i) at any time an
Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any instructions
as to acceptance or rejection of any documents or goods or (C) execute any and
all applications for steamship or airway guaranties, indemnities or delivery
orders, and (ii) at all times, (A) grant any extensions of the maturity of, time
of payment for, or time of presentation of, any drafts, acceptances, or
documents, and (B) agree with any third party as to any amendments, renewals,
extensions, modifications, changes or cancellations (which have been requested
or approved by Borrowers' Representative or the applicable Borrower) of any of
the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Lender may take such actions either in its
own name or in a Borrower's name.
(g) Any rights, remedies, duties or obligations granted or
undertaken by a Borrower to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Lender. Any duties
or obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by the applicable
Borrower to Lender and to apply in all respects to such Borrower.
2.3 Non-Revolving Loan. Lender is making a loan to Borrowers in the
original principal amount of $12,000,000. The loan is (a) evidenced by a
Promissory Note in such original principal amount duly executed and delivered by
Borrowers to Lender concurrently herewith; (b) to be repaid, together with
interest and other amounts, in accordance with this Agreement, such Promissory
Note, and the other Financing Agreements and (c) secured by all the Collateral.
2.4 Availability Reserves. All Revolving Loans and Letter of Credit
Accommodation otherwise available to any Borrower pursuant to the lending
formulas and subject to the
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Maximum Credit and other applicable limits hereunder shall be subject to
Lender's continuing right to establish and revise Availability Reserves. Lender
shall give Borrowers' Representative notice of any Availability Reserve as
promptly as practicable after it is established or revised.
2.5 Borrowers' Representative. Each of the Borrowers hereby appoints the
Borrowers' Representative as its agent and representative for the purposes of
all communications and authorizations between such Borrower and Lender under
this Agreement or any of the other Financing Agreements, including, without
limitation: making requests for Loans or Letter of Credit Accommodations; giving
notices to Lender and receiving notices from Lender; and giving any direction or
instruction to Lender contemplated by this Agreement. Each of the Borrowers
hereby authorizes and directs Lender to act in accordance with any and every
authorization, request, notice, instruction, or direction received on such
Borrower's behalf from the Borrower's Representative, without requiring Lender
to confirm such Borrower's authorization therefor, and each Borrower hereby
releases Lender from and indemnifies Lender and holds Lender harmless against
any liability, claim, loss, damages, cost, or expense arising from or relating
in any way to Lender's acting upon such authorization, request, notice,
instruction, or direction. Notwithstanding the foregoing, Lender may require a
Borrower to confirm such request, notice, instruction, or direction, or to
execute personally any agreement or instrument between such Borrower and Lender,
whenever Lender in its sole discretion deems it necessary or desirable to do so.
SECTION 3. INTEREST AND FEES
3.1 Interest.
(a) Each Borrower shall pay to Lender interest on the outstanding
principal amount of the non-contingent Obligations of such Borrower at the
Interest Rate. All interest accruing on and after the date of any Event of
Default or termination or non-renewal hereof shall be payable on demand.
(b) Each Borrower may from time to time request that Prime Rate
Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate
Loans continue for an additional Interest Period. Such request from a Borrower
shall specify the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Lender of
such a request from a Borrower, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case
may be, provided, that, (i) no Event of Default, or event which with notice or
passage of time or both would constitute an Event of Default, exists or has
occurred and is continuing, (ii) no party hereto shall have sent any notice of
termination or non-renewal of this Agreement, (iii) such Borrower shall have
complied with such customary procedures as are established by Lender and
specified by Lender to such Borrower from time to time for requests by a
Borrower for Eurodollar Rate Loans, (iv) no more than four (4) Interest Periods
may be in effect at any one time, (v) the aggregate amount of the Eurodollar
Rate Loans to all Borrowers must be in an amount not less than $1,000,000 or an
integral multiple of $1,000,000 in excess thereof, and (vi)
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Lender shall have determined that the Interest Period or Adjusted Eurodollar
Rate is available to Lender through the Reference Bank and can be readily
determined as of the date of the request for such Eurodollar Rate Loan by such
Borrower. Any request by a Borrower to convert Prime Rate Loans to Eurodollar
Rate Loans or to continue any existing Eurodollar Rate Loans shall be
irrevocable. Notwithstanding anything to the contrary contained herein, Lender
and Reference Bank shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable Eurodollar Rate
market to fund any Eurodollar Rate Loans, but the provisions hereof shall be
deemed to apply as if Lender and Reference Bank had purchased such deposits to
fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to Prime
Rate Loans upon the last day of the applicable Interest Period, unless Lender
has received and approved a request to continue such Eurodollar Rate Loan at
least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice
by Lender to the applicable Borrower, convert to Prime Rate Loans in the event
that (i) an Event of Default, or event which with the notice or passage of time
or both would constitute an Event of Default, shall exist, (ii) this Agreement
shall terminate or not be renewed, or (iii) the aggregate principal amount of
the Prime Rate Loans which have previously been converted to Eurodollar Rate
Loans or existing Eurodollar Rate Loans continued, as the case may be, at the
beginning of an Interest Period shall at any time during such Interest Period
exceed (or would exceed but for such conversion and after giving effect to all
repayments of Revolving Loans during such Interest Period) either (A) the
aggregate principal amount of the Loans then outstanding, or (B) the then
outstanding principal amount of the Revolving Loans then available to Borrowers
under Section 2 hereof. Each Borrower shall pay to Lender, upon demand by Lender
(or Lender may, at its option, charge any loan account of any Borrower) any
amounts required to compensate Lender, the Reference Bank or any participant
with Lender for any loss (including loss of anticipated profits), cost or
expense incurred by such person, as a result of the conversion of Eurodollar
Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations (other than Eurodollar
Rate Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs. In no event shall charges
constituting interest payable by any Borrower to Lender exceed the maximum
amount or the rate permitted under any applicable law or regulation, and if any
part or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.
3.2 Closing Fee. Borrowers shall jointly and severally pay to Lender as a
closing fee the amount set forth in that certain fee letter dated December 22,
2000 among Parent and Lender.
3.3 Servicing Fee. Borrowers shall jointly and severally pay to Lender
monthly a servicing fee in an amount equal to $8,000 in respect of Lender's
services for each month (or part thereof) while this Agreement remains in effect
and for so long thereafter as any of the
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Obligations are outstanding, which fee shall be fully earned as of and payable
in advance on the date hereof and on the first day of each month hereafter.
3.4 Unused Line Fee. Borrowers shall jointly and severally pay to Lender
monthly an unused line fee equal to the sum of (a) a fee at a rate equal to
one-half of one percent (1/2%) per annum calculated upon the amount, if any, by
which $125,000,000 exceeds the average daily principal balance of the
outstanding Revolving Loans and Letter of Credit Accommodations during the
immediately preceding month (or part thereof) while this Agreement is in effect
and for so long thereafter as any of the Obligations are outstanding. Such
unused line fee shall be payable on the first day of each month in arrears.
3.5 Changes in Laws and Increased Costs of Loans.
(a) Notwithstanding anything to the contrary contained herein, all
Eurodollar Rate Loans shall, upon notice by Lender to Borrowers, convert to
Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Lender or the Reference Bank to make or maintain Eurodollar
Rate Loans or to comply with the terms hereof in connection with the Eurodollar
Rate Loans, or (B) shall result in the increase in the costs to Lender of making
or maintaining any Eurodollar Rate Loans by an amount deemed by Lender to be
material, or (C) reduce the amounts received or receivable by Lender in respect
thereof, by an amount deemed by Lender to be material or (ii) the cost to Lender
of making or maintaining any Eurodollar Rate Loans shall otherwise increase by
an amount deemed by Lender to be material. Each Borrower shall pay to Lender,
upon demand by Lender (or Lender may, at its option, charge any loan account of
any Borrower) any amounts required to compensate Lender or the Reference Bank
for any loss (including loss of anticipated profits), cost or expense incurred
by such Person as a result of the foregoing, including, without limitation, any
such loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Person to make or maintain the
Eurodollar Rate Loans or any portion thereof. A certificate of Lender setting
forth the basis for the determination of such amount necessary to compensate
Lender as aforesaid shall be delivered to Borrowers and shall be conclusive,
absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar Rate
Loans are received by Lender other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral, each Borrower
shall pay to Lender upon demand by Lender (or Lender may, at its option, charge
any loan account of any Borrower) any amounts required to compensate Lender or
the Reference Bank for any additional loss (including loss of anticipated
profits), cost or expense incurred by such person as a result of such prepayment
or payment, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Person to make or maintain such Eurodollar Rate Loans or any portion
thereof.
SECTION 4. CONDITIONS PRECEDENT
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4.1 Conditions Precedent to Initial Loans and Letter of Credit
Accommodations. Each of the following is a condition precedent to Lender making
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:
(a) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first priority
security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Obligor
in respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements; without limiting the foregoing,
Lender shall have received, in form and substance satisfactory to Lender, all
releases, terminations and such other documents as Lender may request to
evidence and effectuate the termination by the existing lenders to Borrowers and
Guarantors and/or their respective Subsidiaries of such existing lenders'
respective financing arrangements with Borrowers and Guarantors and/or such
Subsidiaries and the termination and release by them, of any interest in and to
any assets and property of each Borrower or Guarantor and its Subsidiaries, duly
authorized, executed and delivered by each such existing lender, including, but
not limited to, (i) UCC termination statements for all UCC financing statements
previously filed by each such existing lender or its predecessors, as secured
party, and any Borrower, any Guarantor, any such Subsidiary or any other
Obligor, as debtor, and (ii) satisfactions and discharges of any mortgages,
deeds of trust or deeds to secure debt by any Borrower or Guarantor, its
Subsidiaries or any other Obligor in favor of such existing lenders, in form
acceptable for recording in the appropriate government office;
(b) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all information and
copies of all documents, including, without limitation, records of requisite
corporate action and proceedings which Lender may have requested in connection
therewith, such documents where requested by Lender or its counsel to be
certified by appropriate corporate officers or governmental authorities;
(c) no material adverse change shall have occurred in the assets,
business or prospects of any Borrower or Guarantor since the date of Lender's
latest field examination and no change or event shall have occurred which would
impair the ability of any Borrower or any Obligor to perform its obligations
hereunder or under any of the other Financing Agreements to which it is a party
or of Lender to enforce the Obligations or realize upon the Collateral;
(d) Lender shall have completed a field review of the Records and
such other information with respect to the Collateral as Lender may require to
determine the amount of Revolving Loans available to Borrowers, the results of
which shall be satisfactory to Lender, not more than three (3) business days
prior to the date hereof;
(e) Lender shall have received, in form and substance satisfactory
to Lender, all consents, waivers, acknowledgments and other agreements from
third persons which Lender may deem necessary or desirable in order to permit,
protect and perfect its security interests in and liens upon the Collateral or
to effectuate the provisions or purposes of this Agreement and the other
Financing Agreements, including acknowledgements by lessors,
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mortgagees and warehousemen of Lender's security interests in the Collateral,
waivers by such persons of any security interests, liens or other claims by such
person to the Collateral and agreements permitting Lender access to, and the
right to remain on, the premises to exercise its rights and remedies and
otherwise deal with the Collateral;
(f) Lender shall have received evidence, in form and substance
satisfactory to it, that AETG has directly or indirectly contributed $10,000,000
to Parent's capital in a manner satisfactory to Lender;
(g) Lender shall have received evidence of insurance required
hereunder and under the other Financing Agreements, in form and substance
satisfactory to Lender;
(h) The Excess Availability as determined by Lender, as of the date
hereof, shall be not less than $25,000,000 after giving effect to the initial
Loans made or to be made and Letter of Credit Accommodations issued or to be
issued in connection with the initial transactions hereunder;
(i) Lender shall have received, in form and substance satisfactory
to Lender, the Initial Vehicle CapEx Schedule.
(j) Lender shall have received, in form and substance satisfactory
to Lender, such opinion letters of counsel to Borrowers and Guarantors with
respect to the Financing Agreements and such other matters as Lender may
request;
(k) Lender shall have conducted such review and due diligence as it
deems appropriate (with the results of such review and due diligence to be
satisfactory to Lender) with respect to (i) contracts pursuant to which any of
the Borrowers render services to its customers, (ii) performance bonds, and any
similar instruments or performance support, which any Borrower has provided to
any of its customers, (iii) all collective bargaining agreement to which any
Borrower or any Subsidiary of a Borrower is a party, and (iv) other matters
pertaining to the business, operations or assets of any of the Borrowers or
their Subsidiaries;
(l) Lender shall have received evidence satisfactory to it that the
requisite number of holders of the Senior Notes have consented, in a manner
acceptable to Lender, to (a) the terms and conditions of this Agreement and the
other Financing Agreements, including, without limitation, to the Lender's
security interest in the Collateral and (b) such supplemental indenture or other
amendments to the Indenture and related documentation as are necessary to permit
the Borrowers and Guarantors to enter into and perform the Financing Agreements
and obtain the Loans and Letter of Credit Accommodations; such supplemental
indenture and other amendments shall have been executed and delivered and all
conditions precedent to the effectiveness thereof shall have been satisfied;
(m) Lender shall have received (i) a guarantee agreement, in form
and substance satisfactory to it, from (A) each Borrower, guaranteeing the
Obligations of all other Borrowers, and (B) each Subsidiary of Parent that is
not a Borrower, guaranteeing the Obligations of all Borrowers and (ii) a
security agreement from each Subsidiary of Parent that is
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not a Borrower, granting Lender a security interest in its personal property of
the same types as the Collateral to secure its guarantee of the Obligations;
(n) Lender shall have received the Intercreditor Agreement, duly
executed by the collateral agent for the holders of the Senior Notes, and in
full force and effect; and
(o) the other Financing Agreements and all instruments and documents
hereunder and thereunder shall have been duly executed and delivered to Lender,
in form and substance satisfactory to Lender.
4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations.
Each of the following is an additional condition precedent to Lender making
Loans and/or providing Letter of Credit Accommodations to any Borrower,
including the initial Loans and Letter of Credit Accommodations and any future
Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in the
other Financing Agreements shall be true and correct in all material respects
with the same effect as though such representations and warranties had been made
on and as of the date of the making of each such Loan or providing each such
Letter of Credit Accommodation and after giving effect thereto; and
(b) no Event of Default and no event or condition which, with notice
or passage of time or both, would constitute an Event of Default, shall exist or
have occurred and be continuing on and as of the date of the making of such Loan
or providing each such Letter of Credit Accommodation and after giving effect
thereto.
SECTION 5. GRANT OF SECURITY INTEREST
To secure payment and performance of all Obligations, each Borrower hereby
grants to Lender a continuing security interest in, a lien upon, and a right of
set off against, and hereby assigns to Lender as security, the following
property and interests in property, whether now owned or hereafter acquired or
existing, and wherever located (collectively, the "Collateral"):
5.1 Accounts;
5.2 subject to the final paragraph of this Section 5, all present and
future contract rights (including, without limitation, all rights under service
contracts pursuant to which any Borrower renders its services to its customers,
which rights shall include any and all rights to all retainages which may arise
thereunder), general intangibles (including, but not limited to, tax and duty
refunds, patents, trade secrets, trademarks, service marks, copyrights, trade
names, applications and registrations for the foregoing, goodwill, processes,
drawings, blueprints, customer lists, licenses, whether as licensor or licensee,
choses in action and other claims and existing and future leasehold interests in
equipment, real estate and fixtures), chattel paper, documents, instruments,
letters of credit, bankers' acceptances and guaranties;
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5.3 all present and future monies, securities, credit balances, deposits,
deposit accounts and other property of a Borrower now or hereafter held or
received by or in transit to Lender or its Affiliates or at any other depository
or other institution from or for the account of a Borrower, whether for
safekeeping, pledge, custody, transmission, collection or otherwise, and all
present and future liens, security interests, rights, remedies, title and
interest in, to and in respect of Accounts and other Collateral, including,
without limitation, (a) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (c) goods described in invoices, documents, contracts
or instruments with respect to, or otherwise representing or evidencing,
Accounts or other Collateral, including, without limitation, returned,
repossessed and reclaimed goods, and (d) deposits by and property of account
debtors or other persons securing the obligations of account debtors;
5.4 Inventory;
5.5 Equipment, including without limitation, all buses and other vehicles,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located;
5.6 Real Property;
5.7 Records; and
5.8 all products and proceeds of the foregoing, in any form, including,
without limitation, insurance proceeds and all claims against third parties for
loss or damage to or destruction of any or all of the foregoing.
In no event shall Lender's security interest in a contract or agreement of any
Borrower be deemed to be a present assignment, transfer, conveyance, subletting
or other disposition (an "Assignment") of such contract or agreement to Lender
within the meaning of any provision in such contract or agreement prohibiting,
or requiring any consent or establishing any other conditions for, an Assignment
thereof by such Borrower. Lender acknowledges that any sale, transfer or
assignment of any such contract or agreement upon the enforcement of Lender's
security interest therein would be subject to the terms of such contract or
agreement governing Assignment, except as otherwise provided in Section 9-318 of
the Uniform Commercial Code. Lender's security interest in each contract or
agreement of a Borrower shall attach from the date hereof to all of the
following, whether now existing or hereafter arising or acquired: (i) all of
such Borrower's Accounts and general intangibles for money due or to become due
arising under such contract or agreement; (ii) all proceeds paid or payable to
such Borrower from any sale, transfer or assignment of such contract or
agreement and all rights to receive such proceeds; and (iii) all other rights
and interests of such Borrower in, to and under such contract or agreement to
the fullest extent that attachment thereto would not be a violation of such
contract or agreement directly or indirectly entitling a party thereto (other
than any Borrower, Guarantor or Affiliate thereof) to a legally enforceable
right to terminate such contract or agreement.
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SECTION 6. COLLECTION AND ADMINISTRATION
6.1 Borrowers' Loan Account. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of each Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Lender's customary practices as in effect from time
to time. In the event that any amounts due from Central or Jersey to ▇▇▇▇ are
not paid directly to Lender or as Lender directs under the ▇▇▇▇ Agreement,
Lender shall have the right to charge the amount so unpaid as a loan to Central
or Jersey, as the case may be, and apply the proceeds of such loan against the
obligations outstanding under the ▇▇▇▇ Agreement.
6.2 Statements. Lender shall render to Borrowers each month a statement
setting forth the balance in Borrowers' loan accounts maintained by Lender for
Borrowers pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by each Borrower and conclusively
binding upon each Borrower as an account stated except to the extent that Lender
receives a written notice from a Borrower's Representative of any specific
exceptions of such Borrower thereto within thirty (30) days after the date such
statement has been mailed by Lender. Until such time as Lender shall have
rendered to a Borrower a written statement as provided above, the balance in
such Borrower's loan account(s) shall be presumptive evidence of the amounts due
and owing to Lender by such Borrower.
6.3 Collection of Accounts.
(a) The Borrowers shall establish and maintain, at their joint and
several expense, such blocked accounts ("Blocked Accounts"), as Lender may
specify, with such banks as Borrower selects and are reasonably acceptable to
Lender, into which each Borrower shall promptly deposit or cause to be deposited
all payments on Accounts and all payments constituting proceeds of other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner; provided, however, that with respect to the
proceeds of Accounts and other Collateral received on a particular day, if, at
all times during the immediately preceding 30 days (i) all accrued interest or
fees that have become due and payable to Lender during such period have been
paid when due, (ii) no Event of Default has occurred and (iii) there has been
Excess Availability on an average daily basis (after giving effect to all
outstanding Letter of Credit Accommodations) of at least $10,000,000, then
Borrowers shall not be required to deposit or transfer the proceeds of Accounts
and other Collateral received on such day to the Blocked Accounts or a Payment
Account. All such proceeds that are not deposited or transferred to a Blocked
Account shall be deposited to bank accounts of the applicable Borrower which
have been identified to Lender in writing, and such proceeds shall be used only
for Borrowers' working capital or other proper corporate purposes not otherwise
prohibited by the terms hereof. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance satisfactory to
Lender, providing that all items received or deposited in the Blocked Accounts
are the property of Lender, that the depository bank has no lien upon, or right
to setoff against, the Blocked Accounts, the items received for deposit therein,
or the funds from
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time to time on deposit therein and that the depository bank will wire, or
otherwise transfer, in immediately available funds, on a daily basis, all funds
received or deposited into the Blocked Accounts to such bank account of Lender
as Lender may from time to time designate for such purpose ("Payment Account").
Each Borrower agrees that all payments made to such Blocked Accounts or other
funds received and collected by Lender, whether on the Accounts or as proceeds
of other Collateral or otherwise shall be the property of Lender.
(b) Payments or other funds received will be applied (conditional
upon final collection) to the Obligations on the Business Day of receipt by
Lender in the Payment Account, if such payments are received within sufficient
time (in accordance with Lender's usual and customary practices as in effect
from time to time) to credit Borrowers' loan account on such day, and if not,
then on the next Business Day.
(c) Each Borrower and all of its affiliates, Subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and immediately upon
receipt thereof, except as otherwise expressly provided in Section 6.3(a), shall
deposit or cause the same to be deposited in the Blocked Accounts, or remit the
same or cause the same to be remitted, in kind, to Lender. Except when Borrowers
are not required to deposit or transfer such payments and proceeds to the
Blocked Accounts as expressly provided in Section 6.3(a), in no event shall the
same be commingled with any Borrower's own funds. Each Borrower agrees to
reimburse Lender on demand for any amounts owed or paid to any bank at which a
Blocked Account is established or any other bank or person involved in the
transfer of funds to or from the Blocked Accounts arising out of Lender's
payments to or indemnification of such bank or person. The obligation of each
Borrower to reimburse Lender for such amounts pursuant to this Section 6.3 shall
survive the termination or non-renewal of this Agreement.
6.4 Payments. All Obligations shall be payable to the Payment Account as
provided in Section 6.3 or such other place as Lender may designate from time to
time. Lender may apply payments received or collected from a Borrower or for the
account of a Borrower (including, without limitation, the monetary proceeds of
collections or of realization upon any Collateral) to such of the Obligations,
whether or not then due, in such order and manner as Lender determines;
provided, however, that when no Event of Default has occurred and is continuing,
all payments shall be applied first to the Obligations other than the principal
of the Eurodollar Rate Loans that are not then due and payable, until there are
no such Obligations outstanding, and then to the principal of such Eurodollar
Rate Loans. At Lender's option, all principal, interest, fees, costs, expenses
and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to any loan account(s) of the applicable
Borrower. Each Borrower shall make all payments to Lender on the Obligations
free and clear of, and without deduction or withholding for or on account of,
any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees,
deductions, withholding, restrictions or conditions of any kind. If after
receipt of any payment of, or proceeds of Collateral applied to the payment of,
any of the Obligations, Lender is required to surrender or return such payment
or proceeds to any Person for any reason, then the Obligations intended to be
satisfied by such payment or proceeds shall be reinstated and continue and this
Agreement shall continue in full force and effect as if such payment or proceeds
had not been received by Lender. Each Borrower shall be liable to pay to
27
Lender, and does hereby indemnify and hold Lender harmless for the amount of any
payments or proceeds surrendered or returned. This Section 6.4 shall remain
effective notwithstanding any contrary action which may be taken by Lender in
reliance upon such payment or proceeds. This Section 6.4 shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
6.5 Authorization to Make Loans. Lender is authorized to make the Loans
and provide the Letter of Credit Accommodations based upon telephonic or other
instructions received from anyone purporting to be an officer of a Borrower or
the Borrower's Representative or other authorized person or, at the discretion
of Lender, if such Loans are necessary to satisfy any Obligations. All requests
for Loans or Letter of Credit Accommodations hereunder shall specify the date on
which the requested advance is to be made or Letter of Credit Accommodations
established (which day shall be a business day) and the amount of the requested
Loan. Requests received after 12:00 noon, New York City time on any day shall be
deemed to have been made as of the opening of business on the immediately
following business day. All Loans and Letter of Credit Accommodations under this
Agreement shall be conclusively presumed to have been made to, and at the
request of and for the benefit of, a Borrower when deposited to the credit of
such Borrower or otherwise disbursed or established in accordance with the
instructions of such Borrower or in accordance with the terms and conditions of
this Agreement.
6.6 Use of Proceeds. All Loans made or Letter of Credit Accommodations
provided by Lender to a Borrower pursuant to the provisions hereof shall be used
by such Borrower only for costs, expenses and fees in connection with the
preparation, negotiation, execution and delivery of this Agreement and the other
Financing Agreements and for general operating, working capital and other proper
corporate purposes of such Borrower not otherwise prohibited by the terms
hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation G
of the Board of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 Collateral Reporting. Each Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) on a weekly basis or
other regular basis as required by Lender, (i) a schedule of sales made, credits
issued and cash received, and (ii) a schedule of sales, deliveries and
dispositions of vehicles made by Central and Jersey (distinguishing between such
sales, deliveries or dispositions to any Borrower, Guarantor or Affiliate of any
thereof on the one hand, and to any non-affiliated third parties on the other
hand) accompanied by a certificate of Central's and Jersey's chief financial
officer certifying that ▇▇▇▇ has been fully reimbursed for any and all vehicles
sold and/or transferred by ▇▇▇▇ to Central and Jersey, (b) on a monthly basis or
more frequently as Lender may request, (i) perpetual inventory reports of
Central and Jersey containing relevant details as to new and used vehicles
(exclusive of inventory owned by ▇▇▇▇), (ii) agings of accounts payable and
accounts receivable separately identifying retainage amounts, (iii) schedules of
sales and other
28
dispositions of Eligible Vehicles, containing the same categories of information
set forth in the Vehicle CapEx Schedules, and (iv) a schedule of acquisitions of
Eligible Vehicles containing the same categories of information set forth in and
otherwise in substantially the same form as the Vehicle CapEx Schedules
(distinguishing between vehicles acquired for sale, delivery or disposition to
any Borrower, Guarantor or Affiliate of any thereof on the one hand, and to any
non-affiliated third parties on the other hand), (c) upon Lender's request, (i)
copies of customer statements and credit memos, remittance advices and reports,
and copies of deposit slips and bank statements, (ii) copies of shipping and
delivery documents, (iii) copies of vehicle maintenance schedules containing
relevant details as to compliance with the maintenance system then in effect and
acceptable to Lender, and (iv) copies of purchase orders, invoices and delivery
documents for Inventory acquired and/or disposed of by Central or Jersey; (d)
copies of, or if requested by Lender, the original manufacturers statement of
origin for each vehicle acquired by Borrowers as Inventory, and (e) such other
reports as to the Collateral as Lender shall request from time to time. If any
of a Borrower's records or reports of the Collateral are prepared or maintained
by an accounting service, contractor, shipper or other agent, such Borrower
hereby irrevocably authorizes such service, contractor, shipper or agent to
deliver such records, reports, and related documents to Lender and to follow
Lender's instructions with respect to further services at any time that an Event
of Default exists or has occurred and is continuing.
7.2 Accounts Covenants.
(a) Each Borrower shall notify Lender promptly of: (i) any material
delay in such Borrower's performance of any of its obligations to any account
debtor or the assertion of any claims, offsets, defenses or counterclaims by any
account debtor, or any disputes with account debtors, or any settlement,
adjustment or compromise thereof, (ii) all material adverse information relating
to the financial condition of any account debtor and (iii) any event or
circumstance which, to such Borrower's knowledge would cause Lender to consider
any then existing Accounts as no longer constituting Eligible Accounts. No
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor without Lender's consent, except in the
ordinary course of such Borrower's business in accordance with practices and
policies previously disclosed in writing to Lender. So long as no Event of
Default exists or has occurred and is continuing, each Borrower shall settle,
adjust or compromise any claim, offset, counterclaim or dispute with any account
debtor in accordance with such Borrower's business judgment and customary
practices. At any time that an Event of Default exists or has occurred and is
continuing, Lender shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
(b) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof or borrowing base report
delivered to Lender shall be true and complete, (ii) no payments shall be made
thereon except payments immediately delivered to Lender pursuant to the terms of
this Agreement (except as otherwise expressly permitted herein), (iii) no
credit, discount, allowance, extension or retainage or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of the applicable Borrower's
business in accordance with practices and policies previously disclosed to
Lender, (iv) there shall be no setoffs, deductions,
29
retainages, contras, defenses, counterclaims or disputes existing or asserted
with respect thereto except as reported to Lender in accordance with the terms
of this Agreement, and (v) none of the transactions giving rise thereto will
violate in any material respect any applicable State or Federal laws or
regulations, all documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be legally enforceable
in accordance with its terms.
(c) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise. When no Event of Default has
occurred and is continuing, Lender shall give Borrowers' Representative at least
one Business Day's prior telephonic notice of any such verification.
(d) Each Borrower shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to such
Borrower, all chattel paper and instruments which Borrower now owns or may at
any time acquire immediately upon such Borrower's receipt thereof, except as
Lender may otherwise agree.
(e) Lender may, at any time or times that an Event of Default exists
or has occurred and is continuing, (i) notify any or all account debtors that
the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all accounts debtors to make
payment of Accounts directly to Lender or to the Blocked Accounts, (ii) extend
the time of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all Accounts
or other obligations included in the Collateral and thereby discharge or release
the account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations, (iii) demand, collect or
enforce payment of any Accounts or such other obligations, but without any duty
to do so, and Lender shall not be liable for its failure to collect or enforce
the payment thereof nor for the negligence of its agents or attorneys with
respect thereto and (iv) take whatever other action Lender may deem necessary or
desirable for the protection of its interests. At any time that an Event of
Default exists or has occurred and is continuing, at Lender's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Lender and are payable directly
and only to Lender and each Borrower shall deliver to Lender such originals of
documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Lender may require.
7.3 Inventory Covenants. With respect to the Inventory: (a) Central and
Jersey shall at all times maintain inventory records reasonably satisfactory to
Lender, keeping correct and accurate records itemizing and describing the kind,
type, quality and quantity of Inventory, such Borrowers' cost therefor and daily
withdrawals therefrom and additions thereto; (b) Central and Jersey shall
conduct a physical count of the Inventory at least once each year, but at any
time or times as Lender may request on or after an Event of Default, and
promptly following such physical inventory shall supply Lender with a report in
the form and with such specificity as may be reasonably satisfactory to Lender
concerning such physical count; (c) Central and Jersey shall not remove any
Inventory from the locations set forth or permitted herein, without the prior
written consent of Lender, except for sales of Inventory in the ordinary course
of such
30
Borrowers' business and except to move Inventory directly from one location set
forth or permitted herein to another such location; (d) upon Lender's request,
each of Central and Jersey shall, at its expense, no more than once in any
12-month period, but at any time or times as Lender may request on or after an
Event of Default, deliver or cause to be delivered to Lender written reports or
appraisals as to its Inventory in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender, addressed to Lender or upon
which Lender is expressly permitted to rely; (e) if Borrowers maintain any
Inventory at any location at which any inventory of AETG or any Subsidiary of
AETG (other than a Borrower or a Guarantor) is also located, Borrowers shall
take such measures as Lender requests to facilitate the identification of
Borrowers' Inventory; (f) Central and Jersey shall produce, use, store and
maintain the Inventory with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with applicable
laws (including the requirements of the Federal Fair Labor Standards Act of
1938, as amended, and all rules, regulations and orders related thereto); (g)
Central and Jersey assume all responsibility and liability arising from or
relating to the production, use, sale or other disposition of their Inventory;
(h) Central and Jersey shall not sell Inventory to any customer on approval, or
any other basis which entitles the customer to return or may obligate such
Borrower to repurchase such Inventory; (i) Central and Jersey shall keep the
Inventory in good and marketable condition; and (j) Central and Jersey shall
not, without prior written notice to Lender, acquire or accept any Inventory on
consignment or approval.
7.4 Equipment Covenants. With respect to the Equipment: (a) upon Lender's
request (which initial request shall not be made by Lender prior to November 30,
2001, unless an Event of Default shall have occurred and be continuing prior to
such date), Borrowers shall, at its expense, no more than twice in any 12-month
period, and at any other time or times as Lender may request on or after an
Event of Default, deliver or cause to be delivered to Lender written reports or
appraisals as to the Equipment in form, scope and methodology acceptable to
Lender and by an appraiser acceptable to Lender; (b) Borrowers shall maintain
the vehicles in accordance with the maintenance system utilized by Borrowers on
the date hereof and otherwise in a manner acceptable to Lender; each Borrower
shall keep the Equipment in good order, repair, running and marketable condition
(ordinary wear and tear excepted); (d) each Borrower shall use the Equipment
with all reasonable care and caution and in accordance with applicable standards
of any insurance and in conformity with all applicable laws; (e) the Equipment
is and shall be used in Borrowers' business and not for personal, family,
household or farming use; (f) Borrowers shall not remove any Equipment from the
locations set forth or permitted herein, except to the extent necessary to have
any Equipment repaired or maintained in the ordinary course of the business of
Borrowers or to move Equipment directly from one location set forth or permitted
herein to another such location and except for the movement of motor vehicles
used by or for the benefit of Borrowers in the ordinary course of business; (g)
the Equipment is now and shall remain personal property and Borrowers shall not
permit any of the Equipment to be or become a part of or affixed to real
property; (h) each Borrower assumes all responsibility and liability arising
from the use of the Equipment; (i) Borrowers shall deliver or cause to be
delivered to Lender certificates of title or other similar documents for all
vehicles and (j) Borrowers shall cause Lender's security interest in all
vehicles having a vehicle year of 1993 or thereafter to be reflected on the
certificate of title therefor or other similar document in accordance with
applicable law, provided, however, at any time when Excess Availability is less
than $5,000,000, Borrowers shall, at Lender's request, cause Lender's security
interest to be
31
reflected in accordance with applicable law on the certificates of title or
other similar documents for all of Borrowers' vehicles.
7.5 Power of Attorney. Each Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as such Borrower's true
and lawful attorney-in-fact, and authorizes Lender, in such Borrower's or
Lender's name, to: (a) at any time an Event of Default or event which with
notice or passage of time or both would constitute an Event of Default exists or
has occurred and is continuing (i) demand payment on Accounts or proceeds of
other Collateral, (ii) enforce payment of Accounts by legal proceedings or
otherwise, (iii) exercise all of such Borrower's rights and remedies to collect
any Account or other Collateral, (iv) sell or assign any Account upon such
terms, for such amount and at such time or times as the Lender deems advisable,
(v) settle, adjust, compromise, extend or renew an Account, (vi) discharge and
release any Account, (vii) prepare, file and sign such Borrower's name on any
proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the post office authorities to change the address for
delivery of such Borrower's mail to an address designated by Lender, and open
and dispose of all mail addressed to such Borrower, and (ix) do all acts and
things which are necessary, in Lender's determination, to fulfill such
Borrower's obligations under this Agreement and the other Financing Agreements
and (b) at any time to (i) take control in any manner of any item of payment or
proceeds thereof, (ii) have access to any lockbox or postal box into which such
Borrower's mail is deposited, (iii) endorse such Borrower's name upon any items
of payment or proceeds thereof and deposit the same in the Lender's account for
application to the Obligations, (iv) endorse such Borrower's name upon any
chattel paper, document, instrument, invoice, or similar document or agreement
relating to any Account or any goods pertaining thereto or any other Collateral,
(v) sign such Borrower's name on any verification of Accounts and notices
thereof to account debtors and (vi) execute in such Borrower's name and file any
UCC financing statements or amendments thereto. Each Borrower hereby releases
Lender and its officers, employees and designees from any liabilities arising
from any act or acts under this power of attorney and in furtherance thereof,
whether of omission or commission, except as a result of Lender's own gross
negligence or wilful misconduct as determined pursuant to a final non-appealable
order of a court of competent jurisdiction.
7.6 Right to Cure. Lender may, at its option, (a) cure any default by a
Borrower under any agreement with a third party or pay or bond on appeal any
judgment entered against a Borrower, (b) discharge taxes, liens, security
interests or other encumbrances at any time levied on or existing with respect
to the Collateral and (c) pay any amount, incur any expense or perform any act
which, in Lender's judgment, is necessary or appropriate to preserve, protect,
insure or maintain the Collateral and the rights of Lender with respect thereto.
Lender may add any amounts so expended to the Obligations and charge the
applicable Borrower's account therefor, such amounts to be repayable by such
Borrower on demand. Lender shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of any Borrower. Any payment made or other action taken
by Lender under this Section shall be without prejudice to any right to assert
an Event of Default hereunder and to proceed accordingly.
7.7 Access to Premises. From time to time as requested by Lender, at the
cost and expense of each Borrower, (a) Lender or its designee shall have
complete access to all of each
32
Borrower's premises during normal business hours and after reasonable notice to
the Borrowers' Representative, or at any time and without notice to any Borrower
if an Event of Default exists or has occurred and is continuing, for the
purposes of inspecting, verifying and auditing the Collateral and all of
Borrowers' books and records, including, without limitation, the Records, (b)
each Borrower shall promptly furnish to Lender such copies of such books and
records or extracts therefrom as Lender may request, and (c) use during normal
business hours such of such Borrower's personnel, equipment, supplies and
premises as may be reasonably necessary for the foregoing and if an Event of
Default exists or has occurred and is continuing for the collection of Accounts
and realization of other Collateral.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Parent and each Borrower hereby represents and warrants to Lender the
following (which shall survive the execution and delivery of this Agreement),
the truth and accuracy of which are a continuing condition of the making of
Loans and providing Letter of Credit Accommodations by Lender to Borrowers:
8.1 Corporate Existence, Power and Authority; Subsidiaries. Parent,
Atlantic North, each Borrower, and each Subsidiary of a Borrower, is a
corporation duly organized and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and in good
standing in all states or other jurisdictions where the nature and extent of the
business transacted by it or the ownership of assets makes such qualification
necessary, except for those jurisdictions in which the failure to so qualify
would not have a material adverse effect on Parent's, Atlantic North's, such
Borrower's, or such Subsidiary's, financial condition, results of operation or
business or the rights of Lender in or to any of the Collateral. The execution,
delivery and performance of this Agreement, the other Financing Agreements and
the transactions contemplated hereunder and thereunder are all within Parent's,
each Borrower's, and each Subsidiary's corporate powers, have been duly
authorized and are not in contravention of law or the terms of Parent's, each
Borrower's, and each such Subsidiary's certificate of incorporation, by-laws, or
other organizational documentation, or any indenture, agreement or undertaking
to which Parent, any Borrower or any such Subsidiary is a party or by which
Parent, any Borrower or any such Subsidiary or its property are bound. This
Agreement and the other Financing Agreements constitute legal, valid and binding
obligations of Parent, each Borrower and each Subsidiary of a Borrower that is a
party hereto or thereto, enforceable in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting the enforcement of
creditors rights generally, and by general principles of equity (whether
considered at law or in equity). Neither Parent nor any Borrower has any
Subsidiaries except (a) as set forth on the Information Certificate or (b) any
Subsidiary which is created after the date hereof, which has been previously
disclosed to Lender in writing, and which either has become a Borrower
hereunder, or has guaranteed the Obligations and has granted to Lender a first
priority security interest in all of its property of the type that would
constitute Collateral if such Subsidiary was a Borrower hereunder, pursuant to
documentation in form and substance satisfactory to Lender.
8.2 Financial Statements; No Material Adverse Change. All financial
statements relating to AETG, Parent, the Borrowers and their respective
Subsidiaries which have been or
33
may hereafter be delivered by a Borrower or an Obligor to Lender have been or
will have been, when delivered, prepared in accordance with GAAP and fairly
present the financial condition and the results of operation of the Persons
covered thereby and their respective Subsidiaries as at the dates and for the
periods set forth therein. Except as disclosed in any interim financial
statements furnished by any Borrower or an Obligor to Lender prior to the date
of this Agreement, there has been no material adverse change in the assets,
liabilities, properties and condition, financial or otherwise, of any Borrower
or Obligor, since the date of the most recent audited financial statements
furnished by such Borrower or Obligor to Lender prior to the date of this
Agreement.
8.3 Chief Executive Office; Collateral Locations. The chief executive
office of Parent and each Borrower and of Parent's and each Borrower's Records
concerning Accounts are located only at ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ and the only other places of business of Parent or any Borrower and the
only other locations of Collateral, if any, are the addresses set forth in the
Information Certificate, subject to the right of Parent or a Borrower to
establish new locations in accordance with Section 9.2 below. The Information
Certificate correctly identifies any of such locations which are not owned by a
Borrower or Obligor and sets forth the owners and/or operators thereof.
8.4 Priority of Liens; Title to Properties. The security interests and
liens granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral (other than with respect to those vehicles having a
vehicle year of 1992 or earlier with respect to which Lender has not perfected
its security interest pursuant to Section 7.4(j)) subject only to the liens
permitted under Section 9.8 hereof. Each Borrower and each Subsidiary of such
Borrower has good and marketable title to all of its properties and assets
subject to no liens, mortgages, pledges, security interests, encumbrances or
charges of any kind, except those granted to Lender and such others as are
specifically listed on Schedule 8.4 hereto or permitted under Section 9.8
hereof.
8.5 Tax Returns. Each of AETG, Parent, each Borrower, and each Subsidiary
of AETG and each Borrower, has filed, or caused to be filed, in a timely manner
all tax returns, reports and declarations which are required to have been filed
by it (taking into account all proper extensions). All information in such tax
returns, reports and declarations was complete and accurate in all material
respects when they were filed. Each of AETG, Parent, each Borrower and each
Subsidiary of AETG and each Borrower has paid or caused to be paid all taxes due
and payable or claimed due and payable in any assessment received by it, except
(a) taxes the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to AETG, Parent, such Borrower or
such Subsidiary, (b) taxes accrued but not yet due and payable, (c) taxes that
are currently payable without penalty or interest and as to which no lien has
been filed or otherwise created, and (d) taxes where the failure to duly and
timely pay has not had and could not reasonably be expected to have a material
adverse effect on the Collateral or Lender's security interest therein, or
Borrowers' and Guarantors' ability to pay and perform the obligations, or the
business, assets, prospects, or condition (financial or otherwise) of Parent,
Borrowers, and Parent's other Subsidiaries, taken as a whole, and as to which no
lien has been filed or otherwise created. As to all such unpaid taxes, adequate
reserves have been set aside on the applicable Person's books. Adequate
provision has
34
been made for the payment of all accrued and unpaid Federal, State, county,
local, foreign and other taxes whether or not yet due and payable and whether or
not disputed.
8.6 Litigation. Except as set forth on the Information Certificate, there
is no present investigation by any governmental agency pending, or to the best
of Parent's and each Borrower's knowledge threatened, against or affecting AETG,
Parent, or any Borrower or any other Subsidiary of Parent, its assets or
business and there is no action, suit, proceeding or claim by any Person
pending, or to the best of Parent's and each Borrower's knowledge threatened,
against AETG, Parent, or any Borrower or any other Subsidiary of Parent, or its
assets or goodwill, or against or affecting any transactions contemplated by
this Agreement, which if adversely determined against AETG, Parent, or such
Borrower or Subsidiary would result in any material adverse change in the
assets, business or prospects of Parent, such Borrower or Subsidiary or would
impair the ability of Parent, such Borrower or such Subsidiary to perform its
obligations hereunder or under any of the other Financing Agreements to which it
is a party or of Lender to enforce any Obligations or realize upon any
Collateral. 8.7 Compliance with Other Agreements and Applicable Laws. None of
Parent, Borrowers and the Subsidiaries of any Borrower is in default in any
material respect under, or in violation in any material respect of any of the
terms of, any agreement, contract, instrument, lease or other commitment to
which it is a party or by which it or any of its assets are bound, and Parent,
each Borrower and each of the Subsidiaries of Borrower is in compliance in all
material respects with all applicable provisions of laws, rules, regulations,
licenses, permits, approvals and orders of any foreign, Federal, State or local
governmental authority.
8.8 Employee Benefits.
(a) Except with respect to a delinquency in filing reports with
respect to a 401(k) plan, neither Parent, any Borrower nor any Subsidiary of a
Borrower has engaged in any transaction in connection with which Parent, such
Borrower or such Subsidiary or any of their ERISA Affiliates could be subject to
either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax
imposed by Section 4975 of the Code, including any accumulated funding
deficiency described in Section 8.8(c) hereof and any deficiency with respect to
vested accrued benefits described in Section 8.8(d) hereof.
(b) No liability to the Pension Benefit Guaranty Corporation has
been or is expected by Parent, any Borrower or any Subsidiary of a Borrower to
be incurred with respect to any employee pension benefit plan of Parent, such
Borrower or any such Subsidiary or any of its ERISA Affiliates. There has been
no reportable event (within the meaning of Section 4043(c) of ERISA) or any
other event or condition with respect to any employee pension benefit plan of
Parent, any such Borrower or any such Subsidiary or any of their ERISA
Affiliates which presents a risk of termination of any such plan by the Pension
Benefit Guaranty Corporation.
(c) Full payment has been made of all amounts which Parent, any
Borrower or any Subsidiary of a Borrower or any of their ERISA Affiliates is
required under Section 302 of ERISA and Section 412 of the Code to have paid
under the terms of each employee pension benefit plan as contributions to such
plan as of the last day of the most recent fiscal year of such plan ended prior
to the date hereof, and no accumulated funding deficiency
35
(as defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists with respect to any employee pension benefit plan, including any
penalty or tax described in Section 8.8(a) hereof and any deficiency with
respect to vested accrued benefits described in Section 8.8(d) hereof.
(d) The current value of all vested accrued benefits under all
employee pension benefit plans maintained by Parent, any Borrower or any
Subsidiary of a Borrower that are subject to Title IV of ERISA does not exceed
the current value of the assets of such plans allocable to such vested accrued
benefits, including any penalty or tax described in Section 8.8(a) hereof and
any accumulated funding deficiency described in Section 8.8(c) hereof. The terms
"current value" and "accrued benefit" have the meanings specified in ERISA.
(e) Except for Amboy Bus Co., Inc., which is a party to a
"multiemployer plan" (as defined below) for members of Local 1181-1061 of the
Amalgamated Transit Union, none of Parent, any Borrower or any Subsidiary of a
Borrower or any of their ERISA Affiliates is or has ever been obligated to
contribute to any "multiemployer plan" (as such term is defined in Section
4001(a)(3) of ERISA) that is subject to Title IV of ERISA.
8.9 Environmental Compliance.
(a) Except as set forth on Schedule 8.9 hereto, none of the
Borrowers or any of their respective Subsidiaries has generated, used, stored,
treated, transported, manufactured, handled, produced or disposed of any
Hazardous Materials, on or off its premises (whether or not owned by it) in any
manner which at any time violates in any material respect any applicable
Environmental Law or any license, permit, certificate, approval or similar
authorization thereunder and the operations of each such Borrower and Subsidiary
complies in all material respects with all Environmental Laws and all licenses,
permits, certificates, approvals and similar authorizations thereunder.
(b) Except as set forth on Schedule 8.9 hereto, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any governmental authority or any other person nor is any pending or
to the best of Parent's and each Borrower's knowledge threatened, with respect
to any non-compliance with or violation of the requirements of any Environmental
Law by Parent, any Borrower or any Subsidiary of a Borrower or the release,
spill or discharge, threatened or actual, of any Hazardous Material or the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or any other environmental,
health or safety matter, which affects Parent, such Borrower or any such
Subsidiary or its business, operations or assets or any properties at which
Parent, such Borrower or any such Subsidiary has transported, stored or disposed
of any Hazardous Materials.
(c) None of Parent, the Borrowers or any of Subsidiaries of
Borrowers has any material liability (contingent or otherwise) in connection
with a release, spill or discharge, threatened or actual, of any Hazardous
Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
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(d) Parent, each Borrower and each Subsidiary of Borrowers has all
licenses, permits, certificates, approvals or similar authorizations required to
be obtained or filed in connection with the operations of Parent or such
Borrower or Subsidiary under any Environmental Law and all of such licenses,
permits, certificates, approvals or similar authorizations are valid and in full
force and effect.
8.10 Accuracy and Completeness of Information. All information furnished
by or on behalf of Parent or a Borrower or any of its Subsidiaries in writing to
Lender in connection with this Agreement or any of the other Financing
Agreements or any transaction contemplated hereby or thereby, including, without
limitation, all information on the Information Certificate, is true and correct
in all material respects on the date as of which such information is dated or
certified and does not omit any material fact necessary in order to make such
information not misleading. No event or circumstance has occurred which has had
or could reasonably be expected to have a material adverse affect on the
business, assets or prospects of Parent, any Borrower or any Subsidiary of a
Borrower, which has not been fully and accurately disclosed to Lender in
writing.
8.11 Survival of Warranties; Cumulative. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Parent, any Borrower or any Obligor shall now or hereafter give, or cause to be
given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Maintenance of Existence. Parent and each Borrower shall, and shall
cause Atlantic North and all of their respective Subsidiaries to, at all times
preserve, renew and keep in full, force and effect its corporate existence and
rights and franchises with respect thereto and maintain in full force and effect
all permits, licenses, trademarks, trade names, approvals, authorizations,
leases and contracts necessary to carry on the business as presently or proposed
to be conducted. Parent and each Borrower shall maintain and preserve, and shall
cause each of their respective Subsidiaries and Atlantic North to maintain and
preserve, in good working order and condition, subject to normal wear and tear,
all of the assets and properties necessary to the operation of their respective
businesses. Parent and each Borrower shall give Lender thirty (30) days prior
written notice of any proposed change in its corporate name, which notice shall
set forth the new name and Parent or such Borrower shall deliver to Lender a
copy of the amendment to the Certificate of Incorporation of Parent or such
Borrower providing for the name change certified by the Secretary of State of
the jurisdiction of incorporation of such Borrower as soon as it is available.
9.2 New Collateral Locations. Parent or any Borrower may open any new
location within the continental United States provided Parent or such Borrower
(a) gives Lender twenty (20) days prior written notice of the opening of any
such new location which (i) is in a
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jurisdiction in which Parent or such Borrower does not already have a place of
business or operations or (ii) will be the chief executive office or location of
Records of Parent or such Borrower and (b) executes and delivers, or causes to
be executed and delivered, to Lender such agreements, documents, and instruments
as Lender may deem reasonably necessary or desirable to protect its interests in
the Collateral at such location, including, without limitation, UCC financing
statements.
9.3 Compliance with Laws, Regulations, Etc.
(a) Parent and each Borrower shall, and shall cause all of their
respective Subsidiaries and Atlantic North to, at all times, comply in all
material respects with all laws, rules, regulations, licenses, permits,
approvals and orders applicable to it and duly observe all requirements of any
Federal, State or local governmental authority, including, without limitation,
the Employee Retirement Security Act of 1974, as amended, the Occupational
Safety and Hazard Act of 1970, as amended, the Fair Labor Standards Act of 1938,
as amended, and all statutes, rules, regulations, orders, permits and
stipulations relating to environmental pollution and employee health and safety,
including, without limitation, all of the Environmental Laws.
(b) Parent and each Borrower shall, and shall cause all of their
respective Subsidiaries to, establish and maintain, at its expense, a system to
assure and monitor its continued compliance with all Environmental Laws in all
of its operations, which system shall include annual reviews of such compliance
by employees or agents of Parent or such Borrower or Subsidiary, as the case may
be, who are familiar with the requirements of the Environmental Laws. Copies of
all environmental surveys, audits, assessments, feasibility studies and results
of remedial investigations with respect to Parent or a Borrower or any of their
Subsidiaries or any of their respective properties shall be promptly furnished,
or caused to be furnished, by Parent or the applicable Borrower to Lender.
Parent and each Borrower shall take prompt and appropriate action to respond to
any non-compliance of it or any of its Subsidiaries with any of the
Environmental Laws and shall regularly report to Lender on such response.
(c) Parent and each Borrower shall give both oral and written notice
to Lender immediately upon Parent's or such Borrower's receipt of any notice of,
or Parent or such Borrower otherwise obtaining knowledge of, (i) the occurrence
of any event involving the release, spill or discharge, threatened or actual, of
any Hazardous Material which could result in any material liability for
remediation expenses or fines or penalties or (ii) any investigation,
proceeding, complaint, order, directive, claims, citation or notice with respect
to: (A) any non-compliance with or violation of any Environmental Law by Parent
or a Borrower or any of their respective Subsidiaries or (B) the release, spill
or discharge, threatened or actual, of any Hazardous Material or (C) the
generation, use, storage, treatment, transportation, manufacture, handling,
production or disposal of any Hazardous Materials or (D) any other
environmental, health or safety matter, which affects Parent or a Borrower, any
of their respective Subsidiaries or its business, operations or assets or any
properties at which Parent or a Borrower or Subsidiary transported, stored or
disposed of any Hazardous Materials; provided, however, that notice shall not be
required under clause (ii) of this sentence if such investigation, proceeding,
complaint, order, directive, claim, citation, or notice, if resolved or applied
adversely to Parent, a Borrower, or one of their Subsidiaries, could not
reasonably be expected to result in any material liability to any such Person
for remediation expenses or fines or penalties.
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(d) Without limiting the generality of the foregoing, whenever
Lender reasonably determines that there is non-compliance, or any condition
which requires any action by or on behalf of Parent or a Borrower or any of
their respective Subsidiaries in order to avoid any material non-compliance,
with any Environmental Law, Parent or such Borrower shall, at Lender's request
and at Parent's or such Borrower's expense: (i) cause an independent
environmental engineer acceptable to Lender to conduct such tests of the site
where such non-compliance or alleged non-compliance with such Environmental Laws
has occurred as to such non-compliance and prepare and deliver to Lender a
report as to such non-compliance setting forth the results of such tests, a
proposed plan for responding to any environmental problems described therein,
and an estimate of the costs thereof and (ii) provide to Lender a supplemental
report of such engineer whenever the scope of such non-compliance, or Parent's,
such Borrower's or such Subsidiary's response thereto or the estimated costs
thereof, shall change in any material respect.
(e) Parent and Borrowers shall jointly and severally indemnify and
hold harmless Lender, its directors, officers, employees, agents, invitees,
representatives, successors and assigns, from and against any and all losses,
claims, damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to the
use, generation, manufacture, reproduction, storage, release, threatened
release, spill, discharge, disposal or presence of a Hazardous Material,
including, without limitation, the costs of any required or necessary repair,
cleanup or other remedial work with respect to any property of Parent, a
Borrower or any Subsidiary of a Borrower and the preparation and implementation
of any closure, remedial or other required plans. All representations,
warranties, covenants and indemnifications in this Section 9.3 shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
9.4 Payment of Taxes and Claims. Parent and each Borrower shall, and shall
cause all of their respective Subsidiaries to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to
Parent or such Borrower or Subsidiary, as the case may be, and with respect to
which adequate reserves have been set aside on its books. Each Borrower shall be
liable for any tax or penalties imposed on Lender as a result of the financing
arrangements provided for herein and Borrowers agree jointly and severally to
indemnify and hold Lender harmless with respect to the foregoing, and to repay
to Lender on demand the amount thereof, and until paid by the Borrowers such
amount shall be added and deemed part of the Obligations, provided, that,
nothing contained herein shall be construed to require any Borrower to pay any
income or franchise taxes attributable to the income of Lender from any amounts
charged or paid hereunder to Lender. The foregoing indemnity shall survive the
payment of the Obligations and the termination or non-renewal of this Agreement.
9.5 Insurance. Parent and each Borrower shall, and shall cause all of
their respective Subsidiaries to, at all times, maintain with financially sound
and reputable insurers insurance with respect to the Collateral and Parent's or
such Borrower's or Subsidiary's other property and assets against loss or damage
and all other insurance of the kinds and in the amounts customarily insured
against or carried by corporations of established reputation engaged in the same
or similar businesses and similarly situated. Said policies of insurance shall
be satisfactory to
39
Lender as to form, amount and insurer. Parent and each Borrower shall furnish,
and shall cause their respective Subsidiaries to furnish, certificates, policies
or endorsements to Lender as Lender shall require as proof of such insurance,
and, if Parent or such Borrower or any such Subsidiary fails to do so, Lender is
authorized, but not required, to obtain such insurance at the expense of Parent
or such Borrower. All policies shall provide for at least thirty (30) days prior
written notice to Lender of any cancellation or reduction of coverage and that
Lender may act as attorney for Parent or the applicable Borrower in obtaining,
and at any time an Event of Default exists or has occurred and is continuing,
adjusting, settling, amending and canceling such insurance. If Lender so
requests, Parent and each Borrower shall cause Lender to be named as a loss
payee and an additional insured (but without any liability for any premiums)
under such insurance policies insofar as they relate to any Collateral, and
Parent and each Borrower shall obtain non-contributory lender's loss payable
endorsements to all insurance policies insofar as they relate to any Collateral
in form and substance satisfactory to Lender. Such lender's loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Lender as its interests may appear and further specify that Lender shall be
paid regardless of any act or omission by Parent or such Borrower or any of
their Subsidiaries or affiliates. At its option, Lender may apply any insurance
proceeds received by Lender at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in any
order and in such manner as Lender may determine or hold such proceeds as cash
collateral for the Obligations.
9.6 Financial Statements and Other Information.
(a) Parent and each Borrower shall, and shall cause their respective
Subsidiaries to, keep proper books and records in which true, current and
complete entries shall be made of all dealings or transactions of or in relation
to the Collateral and the business of Parent or such Borrower and its
Subsidiaries in accordance with GAAP, and Parent and each Borrower shall furnish
or cause to be furnished to Lender: (i) within forty five (45) days (or fifty
(50) days if Parent or Borrowers have received a filing extension from the
Securities and Exchange Commission (the "SEC")) after the end of each fiscal
month, monthly unaudited consolidated financial statements (including in each
case balance sheets, statements of income and loss and statements of
shareholders' equity), all in reasonable detail, fairly presenting the financial
position and the results of the operations of Parent and its Subsidiaries as of
the end of and through such fiscal month and (ii) within ninety (90) days (or
one hundred five (105) days if Parent or Borrowers have received a filing
extension from the SEC) after the end of each fiscal year, audited consolidated
financial statements of Parent and its Subsidiaries (including in each case
balance sheets, statements of income and loss, statements of cash flow and
statements of shareholders' equity), and the accompanying notes thereto, all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Parent and its Subsidiaries as of the end of and for such
fiscal year, together with the opinion of independent certified public
accountants, which accountants shall be an independent accounting firm selected
by Parent and reasonably acceptable to Lender, that such financial statements
have been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Parent and its Subsidiaries as of the end
of and for the fiscal year then ended.
(b) Parent and each Borrower shall promptly notify Lender in writing
of the details of (i) any loss, damage, investigation, action, suit, proceeding
or claim relating to
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any Collateral or other property which is security for the Obligations, if the
Collateral or other property affected had a fair value in excess of $500,000, or
which would result in any material adverse change in Parent's or such Borrower's
or any of their respective Subsidiaries' business, properties, assets, goodwill
or condition, financial or otherwise and (ii) the occurrence of any Event of
Default or event which, with the passage of time or giving of notice or both,
would constitute an Event of Default.
(c) Parent shall, and shall cause each Subsidiary to, promptly after
the sending or filing thereof, furnish or cause to be furnished to Lender copies
of all reports which Parent or any Borrower or other Subsidiary sends to its
stockholders generally and copies of all reports and registration statements
which Parent, any Borrower or any other Subsidiary files with the Securities and
Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(d) Parent and each Borrower shall furnish or cause to be furnished
to Lender such budgets, forecasts, projections and other information respecting
the Collateral and the business of Parent, such Borrower and/or their respective
Subsidiaries, as Lender may, from time to time, reasonably request. Parent and
each Borrower hereby irrevocably authorizes and directs all accountants or
auditors to deliver to Lender, at Parent's or such Borrower's expense, copies of
the financial statements of Parent or such Borrower and/or their respective
Subsidiaries and any reports or management letters prepared by such accountants
or auditors on behalf of Parent and such Borrower or any of their respective
Subsidiaries and to disclose to Lender such information as they may have
regarding the business of such Borrower or any such Subsidiary. Any documents,
schedules, invoices or other papers delivered to Lender may be destroyed or
otherwise disposed of by Lender one (1) year after the same are delivered to
Lender, except as otherwise designated by Parent or the applicable Borrower to
Lender in writing.
(e) Except as set forth below, Lender will not disclose to any
Person any information provided to Lender regarding AETG, Parent, any Borrower,
any Guarantor, or and other Subsidiary of Parent. Lender's agreement in the
preceding sentence shall not apply (i) to disclosures to Lender's directors,
officers, employees, and legal and other advisors in connection with the
administration, interpretation, or enforcement of the Financing Agreements, (ii)
if such information has become generally available to the public other than
through disclosure by Lender, (iii) if such information was independently
developed by Lender without violating its agreement herein or if such
information was made available to Lender by a third party having no obligation
of confidentiality to AETG, Parent, any Borrower or Guarantor, or any such other
Subsidiary, (iv) to the extent Lender is required to disclose such information
to comply with law or legal process, (v) as part of normal reporting or review
procedures to governmental authorities, (vi) to Lender's parent company or their
respective accountants and auditors, or (vii) to any participant or assignee or
prospective participant or assignee pursuant to Section 12.4.
9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. None of
Parent or Borrowers shall, nor shall they permit or suffer any of their
respective Subsidiaries to, directly or indirectly:
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(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it unless
Parent or such Borrower is the surviving corporation, such merger or
consolidation is permitted under Section 9.10, and no Event of Default has
occurred and is then continuing (after giving effect to such merger or
consolidation);
(b) sell, transfer, or otherwise dispose of all or substantially all
of its assets;
(c) make any Asset Sale unless (i) Parent or such Borrower or
Subsidiary receives consideration at the time of such Asset Sale at least equal
to the fair market value (as determined in good faith by Parent's Board of
Directors) of the assets subject to such Asset Sale, (ii) subject to the proviso
to this clause (ii), at least 85% of the consideration for such Asset Sale is in
the form of cash, Cash Equivalents, or liabilities of Parent, any Borrower, or
any such Subsidiary (other than liabilities that are by their terms subordinated
to the Obligations) that are assumed by the transferee of such assets (so long
as following such Asset Sale there is no further recourse to Parent, any
Borrower, or any other Subsidiary of Parent with respect to such liabilities),
provided, however, that in the case of any Asset Sale of Accounts or general
intangibles for money due or to become due, or chattel paper or instruments
related thereto, 100% of the consideration therefor shall be in the form of
cash, (iii) upon receipt of any Net Proceeds from an Asset Sale of Collateral,
such Net Proceeds of Collateral are paid to Lender to the extent of and for
application to the then outstanding principal balance of the Revolving Loans,
and (iv) at the time of such Asset Sale and after giving effect thereto, no
Event of Default has occurred and is continuing; or
(d) form or acquire any Subsidiaries not in existence on the date
hereof (unless each such Subsidiary has complied with the requirements set forth
Section 9.10(d)); or
(e) wind up, liquidate or dissolve or
(f) agree to do any of the foregoing.
9.8 Encumbrances. Neither Parent nor any Borrower shall, nor shall it
permit or suffer any of its Subsidiaries to, create, incur, assume or suffer to
exist any security interest, mortgage, pledge, lien, charge or other encumbrance
of any nature whatsoever on any of its assets or properties, including, without
limitation, the Collateral, except: (a) liens and security interests of Lender;
(b) liens securing the payment of taxes, either not yet overdue or the validity
of which are being contested in good faith by appropriate proceedings diligently
pursued and available to Parent or such Borrower or Subsidiary and with respect
to which adequate reserves have been set aside on its books; (c) non-consensual
statutory liens (other than liens securing the payment of taxes) arising in the
ordinary course of Parent's or such Borrower's or Subsidiary's business to the
extent: (i) such liens secure indebtedness which is not overdue or (ii) such
liens secure indebtedness relating to claims or liabilities which are fully
insured and being defended at the sole cost and expense and at the sole risk of
the insurer or being contested in good faith by appropriate proceedings
diligently pursued and available to Parent or such Borrower or Subsidiary, as
the case may be, in each case prior to the commencement of foreclosure or other
42
similar proceedings and with respect to which adequate reserves have been set
aside on its books; (d) zoning restrictions, easements, licenses, covenants and
other restrictions affecting the use of real property which do not interfere in
any material respect with the use of such real property or ordinary conduct of
the business of Parent or such Borrower or Subsidiary, as the case may be, as
presently conducted thereon or materially impair the value of the real property
which may be subject thereto; (e) liens on property (other than property that
would constitute Collateral hereunder if it were property of a Borrower) of a
Person existing at the time such Person is acquired by, merged into or
consolidated with Parent or such Borrower or Subsidiary, provided that such
liens were not created in contemplation of such acquisition and do not extend to
assets other than those subject to such liens immediately prior to such
acquisition; (f) liens on property (other than property that would constitute
Collateral hereunder if it were property of a Borrower) existing at the time of
acquisition thereof by Parent or such Borrower or Subsidiary, provided that such
liens were not created in contemplation of such acquisition and do not extend to
assets other than those subject to such liens immediately prior to such
acquisition; (g) liens incurred in the ordinary course of business in respect of
obligations incurred to fix the interest rate on any variable rate indebtedness
permitted hereunder; (h) liens incurred in the ordinary course of business to
secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature (exclusive of
obligations constituting indebtedness), including, without limitation, cash
retainages; (i) liens incidental to the conduct of business or the ownership of
properties incurred in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, bids, and government
contracts and leases and subleases; (j) liens for any interest or title of a
lessor under any operating lease permitted to be incurred hereunder, provided
that such liens do not extend to any property or asset that is not property
subject to such lease, and liens to secure Purchase Money Indebtedness permitted
hereunder; (k) any extension, renewal, or replacement (or successive extensions,
renewals or replacements), in whole or in part, of liens described in clauses
(a) through (j) or (l) through (n); (l) Liens in addition to those permitted
otherwise by this Section 9.8, which in the aggregate are secured by assets with
a fair market value not in excess of $100,000 at any time; (m) liens and
security interests in the Collateral or in the Capital Stock of Parent and its
Subsidiaries for the benefit of the holders of the Senior Notes but only so long
as such liens and security interests are subject to the Intercreditor Agreement,
and provided that none of Parent, any Borrower, or any other Subsidiary of
Parent shall grant any lien or security interest for the benefit of the holders
of the Senior Notes in any other property or assets unless Lender is granted a
lien or security interest in such property or assets that is prior to the lien
or security interest for the benefit of the holders of the Senior Notes to the
same extent as Lender's security interests in the Collateral, and the respective
liens or security interests of Lender and such holders or their agent are
otherwise subject to the Intercreditor Agreement; and (n) the security interests
and liens existing on the date hereof and set forth on the Information
Certificate.
9.9 Indebtedness. Neither Parent nor any Borrower shall, nor shall it
permit or suffer any of its Subsidiaries to, incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any obligations or
indebtedness, except (a) the Obligations; (b) obligations and indebtedness that
Parent, such Borrower, or such Subsidiary is permitted to incur at the time
under Section 4.9(a) of the Indenture; (c) trade obligations and normal accruals
in the ordinary course of business not yet due and payable, or with respect to
which Parent or such Borrower or Subsidiary, as the case may be, is contesting
in good faith the amount or validity thereof by
43
appropriate proceedings diligently pursued and available to Parent or such
Borrower or Subsidiary, and with respect to which adequate reserves have been
set aside on its books; (d) Purchase Money Indebtedness in an aggregate amount
not to exceed $10,000,000 outstanding at any time, provided, however, that
Borrowers shall not incur Purchase Money Indebtedness to any Person other than
Lender on or after the date hereof unless Excess Availability would be less than
$5,000,000 after giving effect to the incurrence of such Purchase Money
Indebtedness; (e) the Senior Notes and guarantees thereof, provided, that, (i)
Parent may, and shall cause its Subsidiaries to, only make regularly scheduled
payments of interest in respect of such indebtedness in accordance with the
terms of the agreement or instrument evidencing or giving rise to such
indebtedness as in effect on the date hereof, (ii) Parent shall, and shall cause
its Subsidiaries to, not directly or indirectly, (A) amend, modify, alter or
change the terms of such indebtedness or the terms of the Indenture or any other
agreement, document or instrument related thereto as in effect on the date
hereof, or (B) redeem, retire, defease, purchase or otherwise acquire such
indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose, provided that Parent may (x) purchase or redeem Senior Notes prior to
their stated maturity (under the terms thereof as in effect on the date hereof)
pursuant to clause (k) below or with the net cash proceeds of a Public Equity
Offering, and (y) purchase or redeem for cash up to $30,000,000 aggregate
principal amount of its Senior Notes pursuant to the terms of its Offer to
Purchase and Consent Solicitation Statement dated November 23, 2000, and (iii)
Parent and each Borrower shall furnish to Lender all notices or demands in
connection with such indebtedness either received by Parent or such Borrower or
any of its Subsidiaries or on its behalf, promptly after the receipt thereof, or
sent by Parent or such Borrower or any of its Subsidiaries or on its behalf,
concurrently with the sending thereof, as the case may be; (f) performance
bonds, appeal bonds, surety bonds, insurance obligations, insurance premium
financing or bonds and other similar bonds or obligations incurred in the
ordinary course of business and not in connection with borrowing money; (g)
obligations incurred to fix the interest rate on any variable rate indebtedness
otherwise permitted hereunder; (h) indebtedness owed by (i) a Borrower or any
other Subsidiary of Parent to Parent or to another Borrower or Subsidiary of
Parent or (ii) Parent to a Borrower or other Subsidiary of Parent; (i)
indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary course of
business; provided, that such indebtedness is extinguished within three Business
Days of incurrence; (j) other indebtedness in addition to any described above
which is in existence on the date hereof and is set forth on the Information
Certificate; and (k) indebtedness issued in exchange for, or the proceeds of
which are contemporaneously used to extend, refinance, renew, replace, or refund
(collectively, "Refinance") indebtedness referred to in clause (e) or (j) above
or this clause (k) ("Refinancing Indebtedness"); provided, that (i) the
principal amount of such Refinancing Indebtedness does not exceed the principal
amount of indebtedness so Refinanced (plus the premiums required to be paid, and
the out-of-pocket expenses (other than those payable to an Affiliate of Parent)
reasonably incurred, in connection therewith), (ii) the Refinancing Indebtedness
has a final scheduled maturity that exceeds the final stated maturity, and a
Weighted Average Life to Maturity that is equal to or greater than the Weighted
Average Life to Maturity, of the indebtedness being Refinanced and (iii) the
Refinancing Indebtedness ranks, in right of payment, no more favorable to the
Obligations than the indebtedness being Refinanced.
9.10 Loans, Investments, Guarantees, Etc. Neither Parent nor any Borrower
shall, nor shall it permit its Subsidiaries to, directly or indirectly, make any
loans or advance money or
44
property to any person, or invest in (by capital contribution, dividend or
otherwise) or purchase or repurchase the stock or indebtedness or all or a
substantial part of the assets or property of any person, or guarantee, assume,
endorse, or otherwise become responsible for (directly or indirectly) the
indebtedness, performance, obligations or dividends of any Person or agree to do
any of the foregoing, except: (a) the endorsement of instruments for collection
or deposit in the ordinary course of business; (b) investments in Cash
Equivalents; provided, that, as to any Cash Equivalents that are of a type
constituting Collateral, unless waived in writing by Lender, a Borrower or
Guarantor shall take such actions as are deemed necessary by Lender to perfect
the security interest of Lender in such investments; (c) the guarantees set
forth in the Information Certificate and guarantees of the Obligations or the
Senior Notes; (d) acquisitions of or investments in (i) Subsidiaries of Parent
which are Borrowers or Guarantors on the date hereof or (ii) any Person which is
to become a Subsidiary of Parent as a result of such acquisition or investment,
provided that any such acquisition is permitted under clause (e) of this Section
and in connection with such acquisition or investment, such new Subsidiary
either becomes a Borrower hereunder or guarantees the Obligations and grants to
Lender a first priority security interest in all of its property of the type
that would constitute Collateral if such Subsidiary were a Borrower hereunder,
pursuant to documentation in form and substance satisfactory to Lender, provided
that no Event of Default shall have occurred and be continuing after giving
effect to such acquisition of or investment in such Subsidiary; (e) any
acquisition of assets from a Person engaged in the business of providing
transportation services, or any acquisition of the Capital Stock of such Person
if such Person becomes a Borrower or Guarantor as provided in clause (d) above,
if Borrowers shall have Excess Availability of not less than $7,500,000 on the
date such acquisition or investment is made and after giving effect thereto no
Event of Default shall have occurred and be continuing or would occur after
giving effect to such acquisition; (f) obligations incurred to fix the interest
rate on any variable rate indebtedness permitted hereunder; (g) investments in
securities of customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such customers; (h)
investments as a result of consideration received in an Asset Sale permitted
under Section 9.7; (i) investments in Atlantic North but only to the extent
necessary under applicable law to permit such entity to provide insurance
policies to Parent and its Subsidiaries; (j) loans and advances to employees in
an aggregate outstanding amount not to exceed $100,000 at any time and (k)
investments existing on the date hereof.
9.11 Dividends and Redemptions. Neither Parent nor any Borrower shall, or
and shall permit its Subsidiaries to, directly or indirectly, declare or pay any
dividends on account of any shares of class of Capital Stock of Parent or any
Borrower or any of its Subsidiaries now or hereafter outstanding, or set aside
or otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of such Capital
Stock (or set aside or otherwise deposit or invest any sums for such purpose) or
apply or set apart any sum, or make any other distribution (by reduction of
capital or otherwise) in respect of any such shares or agree to do any of the
foregoing, except: (a) dividends or distributions payable in Equity Interests
(other than Disqualified Capital Stock) of Parent or such Borrower or
Subsidiary; (b) dividends or distributions payable to Parent or a wholly owned
Subsidiary of Parent; (c) purchases or redemptions of Equity Interests owned by
Parent or a wholly owned Subsidiary of Parent; (d) payments by Parent to AETG
pursuant to the Tax Sharing Agreement; (e) distributions, loans, and advances to
AETG in an aggregate amount not to exceed during any fiscal year the sum of (i)
the Management Fees required to be paid by AETG under and as
45
defined in the Stockholders Agreement during such fiscal year; and (ii) $122,000
for the fiscal year ending June 30, 2001, and for each fiscal year thereafter,
105% of the amount permitted under this subclause (ii) during the immediately
preceding fiscal year, provided, that the amounts permitted under this clause
(e) are used by AETG only to pay ordinary operating expenses and Management Fees
under the Stockholder's Agreement or the Financing Services Agreement, dated
November 4, 1998 among Parent, AETG and GSCP, Inc.; (f) transactions permitted
under Section 9.12; and (g) redemption, repurchase, retirement, or other
acquisition of Equity Interests of Parent in exchange for Equity Interests of
Parent (other than Disqualified Capital Stock).
9.12 Transactions with Affiliates. Neither Parent nor any Borrower shall,
or permit its Subsidiaries to, enter into any transaction for the purchase, sale
or exchange of property or the rendering of any service to or by any affiliate,
except (a) in the ordinary course of and pursuant to the reasonable requirements
of Parent's or such Borrower's or Subsidiary's business and upon fair and
reasonable terms no less favorable to Parent or such Borrower or Subsidiary than
it would obtain in a comparable arm's length transaction with an unaffiliated
person; (b) existing and future employment agreements entered into by Parent or
any Subsidiary of Parent in the ordinary course of business with the approval of
a majority of the disinterested members of Parent's Board of Directors; (c)
transactions between or among Parent, Borrowers, and Guarantors; (d) reasonable
and customary fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Parent or any Subsidiary of
Parent as determined in good faith by a majority of the disinterested directors
of Parent's Board of Directors or, if none, unanimously by such Board of
Directors; (e) the "Park & Ride Lease" between Showplace Bowling Center Inc., as
lessor, and Atlantic Express Coachway Inc., as lessee, and the lease between Dom
Rich Associates, Inc., as lessor, and Staten Island Bus Inc., as lessee, in each
case as in effect of the date hereof; and (f) annual premiums paid to Atlantic
North in the ordinary course of business for insurance, provided, that such
premiums do not exceed the annual aggregate deductibles on Parent's insurance
policies then in effect.
9.13 Adjusted Net Worth. Parent shall, at all times, maintain Adjusted Net
Worth of not less than $42,000,000.
9.14 EBITDA. At the end of each calendar quarter, beginning with the
quarter ending December 31, 2000, Parent and its Subsidiaries shall maintain
EBITDA of not less than $37,000,000 for the 12-month period then ending.
9.15 Costs and Expenses. Each Borrower shall jointly and severally pay to
Lender on demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including, but not limited to: (a) all costs and expenses of filing or
recording (including Uniform Commercial Code financing statement filing taxes
and fees, documentary taxes, intangibles taxes and mortgage recording taxes and
fees, if applicable); (b) all costs and expenses and fees for title insurance
and other insurance premiums, environmental audits, surveys, assessments,
engineering reports and inspections, appraisal fees and search fees; (c) costs
and expenses of remitting loan proceeds, collecting
46
checks and other items of payment, and establishing and maintaining the Blocked
Accounts, together with Lender's customary charges and fees with respect
thereto; (d) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (e) costs and expenses of
preserving and protecting the Collateral; (f) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including, without limitation, preparations for and consultations concerning
any such matters); (g) when an Event of Default has occurred and is continuing,
all out-of-pocket expenses and costs incurred by Lender during the course of
field examinations of the Collateral and Borrowers' operations, plus a per diem
charge at the rate of $650 per person per day for Lender's examiners in the
field and office; and (h) the fees and disbursements of counsel (including legal
assistants) to Lender in connection with any of the foregoing.
9.16 Compliance with ERISA. Neither Parent nor any Borrower shall, and
shall not permit or suffer any of its Subsidiaries to, with respect to any
"employee pension benefit plans" maintained by Parent or such Borrower or
Subsidiary or any of their ERISA Affiliates:
(a) (i) terminate any of such employee pension benefit plans so as
to incur any liability to the Pension Benefit Guaranty Corporation established
pursuant to ERISA, (ii) allow or suffer to exist any prohibited transaction
involving any of such employee pension benefit plans or any trust created
thereunder which would subject Parent, such Borrower, such Subsidiary or such
ERISA Affiliate to a tax or penalty or other liability on prohibited
transactions imposed under Section 4975 of the Code or ERISA, (iii) fail to pay
to any such employee pension benefit plan any contribution which it is obligated
to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such
plan, (iv) allow or suffer to exist any accumulated funding deficiency, whether
or not waived, with respect to any such employee pension benefit plan, (v) allow
or suffer to exist any occurrence of a reportable event or any other event or
condition which presents a material risk of termination by the Pension Benefit
Guaranty Corporation of any such employee pension benefit plan that is a single
employer plan, which termination could result in any liability to the Pension
Benefit Guaranty Corporation or (vi) incur any withdrawal liability with respect
to any multiemployer pension plan.
(b) As used in this Section 9.14, the term "employee pension benefit
plans," "employee benefit plans", "accumulated funding deficiency" and
"reportable event" shall have the respective meanings assigned to them in ERISA,
and the term "prohibited transaction" shall have the meaning assigned to it in
Section 4975 of the Code and ERISA.
9.17 Further Assurances. At the request of Lender at any time and from
time to time, Parent and each Borrower shall, at its expense, duly execute and
deliver, or cause to be duly executed and delivered, such further agreements,
documents and instruments, and do or cause to be done such further acts as may
be necessary or proper to evidence, perfect, maintain and enforce the security
interests and the priority thereof in the Collateral and to otherwise effectuate
the provisions or purposes of this Agreement or any of the other Financing
Agreements. Lender may at any time and from time to time request a certificate
from an officer of a Borrower
47
representing that all conditions precedent to the making of Loans and providing
Letter of Credit Accommodations contained herein are satisfied. In the event of
such request by Lender, Lender may, at its option, cease to make any further
Loans or provide any further Letter of Credit Accommodations until Lender has
received such certificate and, in addition, Lender has determined that such
conditions are satisfied. Where permitted by law, each Borrower hereby
authorizes Lender to execute and file one or more UCC financing statements
signed only by Lender.
9.18 After Acquired Real Property. If a Borrower hereafter acquires any
Real Property, fixtures or any other property that is of the kind or nature
described in the Mortgages, without limiting any other rights of Lender, or
duties or obligations of such Borrower, upon Lender's request, such Borrower
shall execute and deliver to Lender a Mortgage, deed of trust or deed to secure
debt, as Lender may determine, in form and substance substantially similar to
the Mortgages and as to any provisions relating to specific state laws
satisfactory to Lender and in form appropriate for recording in the real estate
records of the jurisdiction in which such Real Property or other property is
located granting to Lender a first and only lien and mortgage on and security
interest in such Real Property, fixtures or other property (except as such
Borrower would otherwise be permitted to incur hereunder or under the Mortgages
or as otherwise consented to in writing by Lender) and such other agreements,
documents and instruments as Lender may require in connection therewith.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 Events of Default. The occurrence or existence of any one or more of
the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) Any Borrower fails to pay when due any of the Obligations or
(ii) any Borrower or Obligor fails to perform any of the terms, covenants,
conditions or provisions contained in this Agreement or any of the other
Financing Agreements to which it is a party other than as described in Section
10.1(a)(i) and such failure shall continue for five (5) Business Days; provided,
that, such five (5) Business Day period shall not apply in the case of: (A) any
failure to observe any such term, covenant, condition or provision which is not
capable of being cured at all or within such five (5) Business Day period or
which has been the subject of a prior failure within a six (6) month period or
(B) an intentional breach by a Borrower or any Obligor of any such term,
covenant, condition or provision, or (C) the failure to observe or perform any
of the covenants or provisions contained in Section 6.3, 6.6, 7.1(a), 7.1(b),
7.2, 7.3, 7.4 or 7.6, the first sentence of Section 9.1, or Section 9.2, 9.4, or
9.7 through 9.12 of this Agreement or any covenants or agreements covering
substantially the same matter as such sections in any of the other Financing
Agreements;
(b) any representation, warranty or statement of fact made by any
Borrower, any Subsidiary of a Borrower or any Obligor to Lender in this
Agreement, the other Financing Agreements or any other agreement, schedule,
confirmatory assignment or otherwise shall when made or deemed made be false or
misleading in any material respect;
48
(c) any Obligor revokes, terminates or fails in any material respect
to perform any of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such party in favor of Lender;
(d) (i) any judgment for the payment of money is rendered against
any Borrower, any Subsidiary of a Borrower or any Obligor in excess of $500,000
in any one case or in excess of $1,000,000 in the aggregate, which judgments are
not discharged, vacated, bonded, or stayed within a period of thirty (30) days,
or execution shall at any time not be effectively stayed, or (ii) any judgment
other than for the payment of money, or injunction, attachment, garnishment or
execution is rendered against any Borrower, any such Subsidiary or any Obligor
or any of their assets, if it would materially affect the business, assets,
prospects, or condition (financial or otherwise) of Parent or any Borrower;
(e) any Borrower or any Obligor, which is a partnership or
corporation, dissolves or suspends or discontinues doing business;
(f) any Borrower or any Obligor makes an assignment for the benefit
of creditors, makes or sends notice of a bulk transfer or calls a meeting of its
creditors or principal creditors; or any Borrower or Parent becomes insolvent
(however defined or evidenced);
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower, any Subsidiary of a Borrower or any
Obligor or all or any part of its properties and such petition or application is
not dismissed within thirty (30) days after the date of its filing or any
Borrower, any such Subsidiary or any Obligor shall file any answer admitting or
not contesting such petition or application or indicates its consent to,
acquiescence in or approval of, any such action or proceeding or the relief
requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower, any Subsidiary of a Borrower or any Obligor
or for all or any part of its property; or
(i) any Event of Default, or event which with notice or the passage
of time or both, would become an Event of Default, under and as defined in the
Indenture, or any agreement securing or guaranteeing payment of the Senior
Notes, or (ii) default by any Borrower, any Subsidiary of a Borrower or any
Obligor under any agreement, document or instrument relating to any other
indebtedness for borrowed money owing to any person other than Lender, or any
capitalized lease obligations, contingent indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of instrument in favor of
any person other than Lender, in any case in an amount in excess of $500,000,
which default continues for more than the applicable cure period, if any, with
respect thereto, or any default by any Borrower, any such Subsidiary or any
Obligor under any material contract, lease, license or other obligation to
49
any person other than Lender, which default continues for more than the
applicable cure period, if any, with respect thereto;
(j) any Change of Control shall occur;
(k) the indictment of any Borrower, any Subsidiary of a Borrower or
any Obligor under any criminal statute, or commencement of criminal or civil
proceedings against any Borrower, any such Subsidiary or any Obligor, pursuant
to which statute or proceedings the penalties or remedies sought or available
include forfeiture of any of the property of such Borrower, Subsidiary or
Obligor;
(l) there shall be a material adverse change in the business, assets
or prospects of the Borrowers and the other Subsidiaries of Parent taken as a
whole;
(m) there shall be an event of default under any of the other
Financing Agreements or the Inventory Financing Agreement (Security Agreement)
dated December 22, 2000 among Lender, ▇▇▇▇ and AETG or any of the other
financing agreements referred to therein.
10.2 Remedies.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by any Borrower or any Obligor, except as such notice or consent
is expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by any Borrower of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against any Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an Event of Default
exists or has occurred and is continuing, Lender may, in its discretion and
without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (provided, that, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require any Borrower, at such Borrower's
expense, to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (iv) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (v) remove
any or all of the Collateral from any premises on or in which the same may be
located for the purpose of effecting the sale,
50
foreclosure or other disposition thereof or for any other purpose, (vi) sell,
lease, transfer, assign, deliver or otherwise dispose of any and all Collateral
(including, without limitation, entering into contracts with respect thereto,
public or private sales at any exchange, broker's board, at any office of Lender
or elsewhere) at such prices or terms as Lender may deem reasonable, for cash,
upon credit or for future delivery, with the Lender having the right to purchase
the whole or any part of the Collateral at any such public sale, all of the
foregoing being free from any right or equity of redemption of any Borrower,
which right or equity of redemption is hereby expressly waived and released by
each Borrower and/or (vii) terminate this Agreement. If any of the Collateral is
sold or leased by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefor is
finally collected by Lender. If notice of disposition of Collateral is required
by law, five (5) Business Days prior notice by Lender to a Borrower designating
the time and place of any public sale or the time after which any private sale
or other intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and each Borrower waives any other notice. In the
event Lender institutes an action to recover any Collateral or seeks recovery of
any Collateral by way of prejudgment remedy, each Borrower waives the posting of
any bond which might otherwise be required.
(c) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Each Borrower shall remain liable
to Lender for the payment of any deficiency with interest at the highest rate
provided for herein and all costs and expenses of collection or enforcement,
including attorneys' fees and legal expenses.
(d) Without limiting the foregoing, upon the occurrence of an Event
of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or arranging for Letter of Credit Accommodations or reduce
the lending formulas or amounts of Revolving Loans and Letter of Credit
Accommodations available to any Borrower and/or (ii) terminate any provision of
this Agreement providing for any future Loans or Letter of Credit Accommodations
to be made by Lender to any Borrower.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver.
(a) The validity, interpretation and enforcement of this Agreement
and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
(b) Each Borrower and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the Supreme Court of the State of New York for New
York County and the United States District Court for the Southern District of
New York and waive any
51
objection based on venue or forum non conveniens with respect to any action
instituted therein arising under this Agreement or any of the other Financing
Agreements or in any way connected with or related or incidental to the dealings
of the parties hereto in respect of this Agreement or any of the other Financing
Agreements or the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether in contract, tort, equity or
otherwise, and agree that any dispute with respect to any such matters shall be
heard only in the courts described above (except that Lender shall have the
right to bring any action or proceeding against any Borrower or its property in
the courts of any other jurisdiction which Lender deems necessary or appropriate
in order to realize on the Collateral or to otherwise enforce its rights against
any Borrower or its property).
(c) Each Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Lender's option, by service upon such Borrower in any other manner provided
under the rules of any such courts. Lender shall send a copy of any such service
to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., but the delivery of
such copy shall not be a condition to the effectiveness of service upon any
Borrower. Within thirty (30) days after such service, such Borrower shall appear
in answer to such process, failing which such Borrower shall be deemed in
default and judgment may be entered by Lender against such Borrower for the
amount of the claim and other relief requested.
(d) EACH BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. EACH BORROWER AND
LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER
OR LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to any Borrower (whether in
tort, contract, equity or otherwise) for losses suffered by any Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement, or any act, omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct. In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it
52
acted in good faith and with the exercise of ordinary care in the performance by
it of the terms of this Agreement.
11.2 Waiver of Notices. Each Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on any Borrower which Lender may elect to give shall entitle any
Borrower to any other or further notice or demand in the same, similar or other
circumstances.
11.3 Amendments and Waivers. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender. Lender shall not, by any act, delay, omission or otherwise be deemed to
have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.
11.4 Waiver of Counterclaims. Each Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.
11.5 Indemnification. Each Borrower shall jointly and severally indemnify
and hold Lender, and its directors, agents, employees and counsel, harmless from
and against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel (provided, that Borrowers shall not be liable for
such indemnification with respect to any loss that is determined by a final and
non-appealable judgment or court order binding on Lender to have resulted from
Lender's gross negligence or wilful misconduct). To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may be
unenforceable because it violates any law or public policy, each Borrower shall
pay the maximum portion which it is permitted to pay under applicable law to
Lender in satisfaction of indemnified matters under this Section. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
53
12.1 Term.
(a) This Agreement and the other Financing Agreements shall become
effective as of the date set forth on the first page hereof and shall continue
in full force and effect for a term ending on the date three (3) years from the
date hereof (the "Renewal Date"), and from year to year thereafter, unless
sooner terminated pursuant to the terms hereof. Lender or Borrowers may
terminate this Agreement and the other Financing Agreements effective on the
Renewal Date or on the anniversary of the Renewal Date in any year by giving the
other party at least sixty (60) days prior written notice of such termination;
provided, that, this Agreement and all other Financing Agreements must be
terminated simultaneously and must be terminated as to all and not less than all
of the Borrowers. Upon the effective date of termination or non-renewal of the
Financing Agreements, Borrowers shall jointly and severally pay to Lender, in
full, all outstanding and unpaid Obligations and shall jointly and severally
furnish cash collateral to Lender in such amounts as Lender determines are
reasonably necessary to secure Lender from loss, cost, damage or expense,
including attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Lender has not yet received final and indefeasible payment. Such cash
collateral shall be remitted by wire transfer in Federal funds to such bank
account of Lender, as Lender may, in its discretion, designate in writing to
Borrowers for such purpose. Interest shall be due until and including the next
business day, if the amounts so paid by a Borrower to the bank account
designated by Lender are received in such bank account later than 12:00 noon,
New York City time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Lender's continuing security interest in the Collateral and the rights and
remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid.
(c) If for any reason this Agreement is terminated prior to the
Renewal Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits as a result thereof, Borrowers
shall jointly and severally pay to Lender, upon the effective date of such
termination, an early termination fee in the aggregate amount equal to $625,000.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and each Borrower
agrees that it is reasonable under the circumstances currently existing. The
early termination fee provided for in this Section 12.1 shall be deemed included
in the Obligations. Notwithstanding the foregoing, if this Agreement is
terminated prior to the then current term or renewal term of this Agreement and
the Obligations are repaid in full (i) in connection with, and such Obligations
are repaid with the net cash proceeds of, an initial Public Equity Offering by
Parent, (ii) with the proceeds of any credit facility or debt or equity
financing provided or arranged by First Union National Bank or one of its
affiliates, or (iii) pursuant to a Change of Control, Lender shall waive the
applicable termination fee that would otherwise be due and owing to Lender
hereunder.
54
12.2 Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to each
Borrower at its chief executive office set forth below, or to such other address
as either party may designate by written notice to the other in accordance with
this provision, and (b) deemed to have been given or made: if delivered in
person, immediately upon delivery; if by telex, telegram or facsimile
transmission, immediately upon sending and upon confirmation of receipt; if by
nationally recognized overnight courier service with instructions to deliver the
next business day, one (1) business day after sending; and if by certified mail,
return receipt requested, five (5) days after mailing. A copy of any notice
given to a Borrower shall be sent to ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, Esq.
12.3 Partial Invalidity. If any provision of this Agreement is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.4 Successors. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrowers and their respective
successors and assigns, except that no Borrower may assign any of its rights
under this Agreement, the other Financing Agreements and any other document
referred to herein or therein without the prior written consent of Lender.
Lender may, after notice to Borrowers, assign its rights and delegate its
obligations under this Agreement and the other Financing Agreements and further
may assign, or sell participations in, all or any part of the Loans, the Letter
of Credit Accommodations or any other interest herein to another financial
institution or other person, in which event, the assignee or participant shall
have, to the extent of such assignment or participation, the same rights and
benefits as it would have if it were the Lender hereunder, except as otherwise
provided by the terms of such assignment or participation.
12.5 Entire Agreement. This Agreement, the other Financing Agreements, any
supplements hereto or thereto, and any instruments or documents delivered or to
be delivered in connection herewith or therewith represents the entire agreement
and understanding concerning the subject matter hereof and thereof between the
parties hereto, and supersede all other prior agreements, understandings,
negotiations and discussions, representations, warranties, commitments,
proposals, offers and contracts concerning the subject matter hereof, whether
oral or written.
55
IN WITNESS WHEREOF, Lender and each of the Borrowers have caused these
presents to be duly executed as of the day and year first above written.
LENDER BORROWERS
------ ---------
CONGRESS FINANCIAL CORPORATION ATLANTIC EXPRESS
TRANSPORTATION CORP.
AMBOY BUS CO., INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ATLANTIC-CHITTENANGO REAL
--------------------------- PROPERTY CORP.
Title: Executive Vice President ATLANTIC-CONN. TRANSIT, INC.
ATLANTIC EXPRESS COACHWAYS,
INC.
ATLANTIC-▇▇▇▇▇▇, INC.
Address: ATLANTIC MEDFORD INC.
1133 Avenue of the Americas ATLANTIC PARATRANS, INC.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ATLANTIC PARATRANS OF
KENTUCKY, INC.
BLOCK 7932, INC.
ATLANTIC EXPRESS OF MISSOURI
INC.
ATLANTIC EXPRESS OF
PENNSYLVANIA, INC.
BROOKFIELD TRANSIT, INC.
COURTESY BUS CO., INC.
GVD LEASING, INC.
180 JAMAICA CORP.
▇. ▇▇▇▇, INC.
JERSEY BUSINESS LAND CO., INC.
MERIT TRANSPORTATION, CORP.
METRO AFFILIATES, INC.
METROPOLITAN ESCORT SERVICE,
INC.
MIDWAY LEASING, INC.
▇▇▇▇▇▇▇ BUS SERVICE, INC.
▇▇▇▇▇▇▇ CAPITAL CORP.
▇▇▇▇▇▇▇ EQUITY CORP.
STATEN ISLAND BUS, INC.
ATLANTIC EXPRESS OF L.A., INC.
CENTRAL NEW YORK COACH SALES
AND SERVICE, INC.
JERSEY BUS SALES, INC.
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, INC.
ATLANTIC PARATRANS OF
PENNSYLVANIA, INC.
ATLANTIC EXPRESS OF
NEW JERSEY, INC.
ATLANTIC PARATRANS OF
ARIZONA, INC.
TEMPORARY TRANSIT SERVICE,
INC.
201 WEST ▇▇▇▇▇▇▇ REALTY, INC.
ATLANTIC TRANSIT, CORP.
AIRPORT SERVICES, INC.
ATLANTIC EXPRESS NEW ENGLAND,
INC.
ATLANTIC EXPRESS OF
CALIFORNIA, INC.
ATLANTIC EXPRESS OF
ILLINOIS, INC.
ATLANTIC EXPRESS OF
SOUTH CAROLINA, INC.
▇▇▇▇▇ BUS SERVICE, INC.
GROOM TRANSPORTATION, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇ LIMO SERVICE,
INC.
▇▇▇▇▇▇▇▇ TRANSPORTATION, INC.
MOUNTAIN TRANSIT, INC.
▇. ▇▇▇▇▇ BUS SERVICE, INC.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ & SON, INC.
T-NT BUS SERVICE, INC.
TRANSCOMM, INC.
WINSALE, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: Chief Financial Officer of
each of the Companies
Listed above
Chief Executive ▇▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
57
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate
Schedule 1.45 Initial Vehicle CapEx
Schedule 1.55 Mortgage Agreements
Schedule 1.77 Vehicle CapEx
Schedule 8.4 Existing Liens
Schedule 8.9 Environmental Matters
iv