-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, QLSPV/yP2ErE4niaHlNEHp8uK4/SrIXJr35SQlVs6UKr5FkQcH5+JzcGJ5rnJFEJ JbgtYDUHMabZrhlWMtq9wg== 0000950134-95-001693.txt : 19950728 0000950134-95-001693.hdr.sgml : 19950728 ACCESSION NUMBER: 0000950134-95-001693 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19950727 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREYHOUND LINES INC CENTRAL INDEX KEY: 0000813040 STANDARD INDUSTRIAL CLASSIFICATION: LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRAINS [4100] IRS NUMBER: 860572343 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-61331 FILM NUMBER: 95556289 BUSINESS ADDRESS: STREET 1: 15110 N DALLAS PKWY STE 600 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 2147157000 MAIL ADDRESS: STREET 1: P O BOX 660362 CITY: DALLAS STATE: TX ZIP: 75266-0362 S-3 1 FORM S-3 1 As filed with the Securities and Exchange Commission on July 27, 1995. Registration No. 33- ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ____________________ GREYHOUND LINES, INC. (Exact Name of Company as Specified in Its Charter) DELAWARE 86-0572343 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification Number) 15110 N. DALLAS PARKWAY, SUITE 600 MARK E. SOUTHERST, GENERAL COUNSEL DALLAS, TEXAS 75248 15110 NORTH DALLAS PARKWAY, SUITE 600 (214) 789-7000 DALLAS, TEXAS 75248 (Address, Including Zip Code, and Telephone Number, (214) 789-7000 Including Area Code, of Company's Principal (Name, Address, Including Zip Code, and Telephone Executive Offices) Number, Including Area Code, of Agent for Service) Copies to: LAWRENCE D. STUART, JR. HENRY D. KAHN WEIL, GOTSHAL & MANGES PIPER & MARBURY L.L.P. 100 CRESCENT COURT, SUITE 1300 53 WALL STREET DALLAS, TEXAS 75201 NEW YORK, NEW YORK 10005
______________________ Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ___________________ CALCULATION OF REGISTRATION FEE
=========================================================================================================== Proposed Proposed Maximum Maximum Amount Aggregate Aggregate Amount of to be Price Offering Registration Title of Shares to be Registered Registered Per Unit (2) Price Fee - ----------------------------------------------------------------------------------------------------------- Common Stock, $.01 par value(1) 10,004,144 $4.4375 $44,393,389 $15,310 shares ===========================================================================================================
(1) Including associated Rights to purchase Series A Junior Preferred Stock of the Company. (2) Calculated in accordance with Rule 457(c) based on the average of the high and low sale prices of the Common Stock on July 25, 1995, as reported on the American Stock Exchange. _____________________ THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. 2 *************************************************************************** * * * Information contained herein is subject to completion or amendment. * * A registration statement relating to these securities has been filed * * with the Securities and Exchange Commission. These securities may * * not be sold nor may offers to buy be accepted prior to the time the * * registration statement becomes effective. This prospectus shall not * * constitute an offer to sell or the solicitation of an offer to buy * * nor shall there be any sale of these securities in any State in which * * such offer, solicitation or sale would be unlawful prior to * * registration or qualification under the securities laws of any such * * State. * * * *************************************************************************** SUBJECT TO COMPLETION, DATED JULY 27, 1995 PROSPECTUS [LOGO] 10,004,144 SHARES GREYHOUND LINES, INC. COMMON STOCK Of the 10,004,144 shares of common stock, par value $.01 per share (the "Common Stock"), of Greyhound Lines, Inc. (the "Company") offered hereby (the "Offering"), 4,000,000 shares are being sold by the Company and 6,004,144 shares are being sold by the Selling Stockholder. See "Selling Stockholder." The Company will not receive any of the proceeds from the sale of shares by the Selling Stockholder. The Company's Common Stock is traded on the American Stock Exchange under the symbol "BUS." On July 25, 1995, the last reported sale price of the Common Stock on the American Stock Exchange was $4.50 per share. See "Market Price of Common Stock and Dividend Policy." SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY. ___________ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
========================================================================================================= Proceeds to Price to Agent's Proceeds to Selling Public Commission(1) Company (2) Stockholder - --------------------------------------------------------------------------------------------------------- Per Share . . . . . . $ $ $ $ - --------------------------------------------------------------------------------------------------------- Total . . . . . . . . $ $ $ $ =========================================================================================================
(1) The Company and the Selling Stockholder have retained Rothschild Inc. as agent (the "Selling Agent") to act on their behalf to obtain purchasers for the shares of Common Stock offered hereby. The Selling Agent has made no firm commitment and is under no obligation to purchase or sell all or any part of the shares of Common Stock offered hereby, but has agreed to use its best efforts to solicit and receive offers to purchase the Common Stock on terms acceptable to the Company and the Selling Stockholder. The Company and the Selling Stockholder have agreed (i) to pay the Selling Agent a fee in connection with the sale of the Common Stock and (ii) to indemnify the Selling Agent against certain liabilities under the Securities Act of 1933, as amended. See "Plan of Distribution." (2) Before deducting expenses payable by the Company, estimated at $ . The shares of Common Stock are offered by Rothschild Inc. solely as agent for the Company and the Selling Stockholder, subject to the several right of the Company and the Selling Stockholder to reject orders in whole or in part. It is expected that delivery of the certificates representing the shares of Common Stock will be made against payment therefor at the offices of Rothschild Inc., New York, New York, on or about , 1995. ____________ ROTHSCHILD INC. ____________ The date of this Prospectus is , 1995. 3 IN CONNECTION WITH THE OFFERING, THE SELLING AGENT MAY EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-3 (together with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Common Stock offered hereby. This Prospectus does not include all the information set forth in the Registration Statement and the exhibits thereto, to which reference is made for further information with respect to the Company. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations thereunder, and in accordance therewith files periodic reports, proxy and information statements, and other information with the Commission. The Registration Statement and the exhibits thereto and all reports, proxy and information statements, and other information filed by the Company with the Commission may be inspected at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and may also be inspected and copied at the regional offices of the Commission located at 7 World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Stock is listed on the American Stock Exchange and all reports, proxy and information statements, and other information filed by the Company with the Commission also may be inspected at the American Stock Exchange, 86 Trinity Place, New York, New York 10006. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission are incorporated into this Prospectus by reference: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 1994; and (2) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the Offering shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the Prospectus. The Company will provide without charge to each person, including any beneficial owner of Common Stock, to whom a copy of this Prospectus has been delivered, upon the written or oral request of such person, a copy of any and all of the documents which have been or may be incorporated by reference in this Prospectus, except that exhibits to such documents will not be provided unless they are specifically incorporated by reference into such documents. Requests for copies of any such document should be directed to Greyhound Lines, Inc., 15110 N. Dallas Parkway, Suite 600, Dallas, Texas 75248, Attention: Investor Relations, telephone: (214) 789-7577. 2 4 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and consolidated financial statements (including the notes thereto) appearing elsewhere or incorporated by reference in this Prospectus. As used in this Prospectus, unless the context indicates otherwise, the "Company" means Greyhound Lines, Inc. and its consolidated subsidiaries, taken as a whole. Unless otherwise indicated, the information presented in this Prospectus assumes that all shares of Common Stock offered by the Company are sold in the Offering. THE COMPANY Greyhound Lines, Inc. (the "Company") is the only nationwide provider of intercity bus transportation services in the United States. The Company currently provides scheduled passenger service to more than 2,450 destinations with a fleet of approximately 2,000 buses and approximately 1,700 sales outlets. The Company also provides package express delivery service, charter service and, in certain terminals, food service. The Company's executive offices are located at 15110 N. Dallas Parkway, Suite 600, Dallas, Texas 75248, and its telephone number is (214) 789-7000. BUSINESS STRATEGY Following a substantial decline in ridership and revenues, the Company hired a new Chief Executive Officer and Chief Operating Officer, each of whom has substantial experience in the bus industry, as well as a new Chief Financial Officer. In response to a review of the Company's operations, this management team has implemented a "back to basics" strategy focusing on increasing revenues and improving customer service. This strategy seeks to maximize the unique value of the Company's national bus network by serving both long- and short-haul markets, connecting rural and urban America and providing transportation between major cities. To implement its strategy, the Company is increasing operating capacity, telephone answering capacity, and its emphasis on long-haul bus routes. Additionally, the Company is actively managing pricing in individual markets, reducing the use of deeply discounted promotional tickets, and introducing everyday low pricing. The Company's new strategy is supported by a marketing campaign that integrates advertising, public relations, sales promotion and pricing. As part of its revenue enhancement plans, the Company has begun to reestablish relations with regional bus carriers to improve interline service and to increase the use of shared terminals. Management is also developing programs to improve its package express delivery service through system upgrades, localized marketing strategies and price and schedule improvements, and to increase its position in the charter business through targeted local selling in selected markets. Additionally, the Company will continue its efforts to develop markets where it believes there are revenue opportunities, such as those along the U.S.-Mexico border. Many of the Company's operating expenses are fixed costs or costs that cannot be changed rapidly. Accordingly, costs such as depreciation, amortization and lease expenses related to the bus fleet and facilities, maintenance, driver operations and customer service generally do not vary proportionately with short-term changes in demand for the Company's services. Management believes that there are limited opportunities to further reduce the Company's cost structure and that returning the Company to profitability will be dependent on increasing revenues. Moreover, the revenue enhancement strategy, which involves, in part, providing more convenient service over the Company's routes, as well as the addition of new schedules to meet customer travel preferences, will require the Company to incur additional expenses during 1995 and future years compared to 1994. The Company currently uses an automated system ("TRIPS") at approximately 250 terminals to sell tickets, to manage revenue and seat capacity and to quote fare and schedule information. In June 1995, approximately 84% of the tickets sold by the Company were issued using TRIPS compared to 65% in January 1994. Since May 1994 TRIPS has maintained a 99% scheduled system availability and ticketing speed is comparable to the Company's predecessor system. The Company has de-emphasized the reservation portion of its TRIPS system in order to simplify the ticketing process, further reduce ticketing time, and to provide for more 3 5 responsive telephone service. To further improve customer service the Company has modified its telephone answering procedures and opened a new telephone center to provide more telephone-answering capacity. These improvements have resulted in an increase in the number of unique callers reaching the telephone information center from approximately 70% in July 1994 to in excess of 95% in July 1995 and resulted in 10.5 million calls being handled during the first six months of 1995 representing a 15.6% increase from the same period in 1994. Since the beginning of 1993, the Company has acquired 832 new buses and disposed of 1,579 older buses as part of its program to modernize and standardize the fleet. As a result, the average age of the fleet has been reduced from 9.5 years in January 1993 to 6.8 years in July 1995. However, 34% of the Company's bus fleet remains in excess of 10 years old. While the Company could continue to use these older buses, the Company intends, over time, to replace these older, less reliable vehicles with new buses. The Company believes that newer buses, as well as older buses with newer engines, are more fuel efficient than buses with older engines. New buses generally require less maintenance and are less costly to maintain, in part because of warranty coverage. The Company also anticipates acquiring new buses to increase the size of the fleet in order to implement its plan to increase revenues by operating additional bus miles. Moreover, due to technical design improvements and governmental regulations, the principal bus engine model used in the Company's fleet will no longer be available after 1997. In anticipation of this change, the Company expects to acquire and begin advance testing of new bus models. The Company expects to acquire up to 300 new buses over the next 18 months. The Company intends to acquire these buses, subject to the availability of financing on suitable terms, through a variety of methods, including borrowings under its credit agreement, operating and capital leases and the possible sale of securities. RECENT DEVELOPMENTS Second Quarter 1995 Results Compared to Second Quarter of 1994 Results Operating revenues for the second quarter of 1995 were $161.4 million representing a $10.3 million or 6.8% increase over revenues of $151.1 million for the second quarter of 1994 as passenger counts increased by approximately 7.1% over the second quarter of 1994. This increase was achieved despite the impact in the second quarter of 1994 of a short advance purchase, deep discount "$68 or Less" fare promotion. The promotion resulted in lower yields (revenue per passenger mile) during the second quarter of last year (9.32 cents per mile) versus this year (9.61 cents per mile). The promotion was discontinued for the second half of 1994. The operating loss for the second quarter of 1995 was $2.8 million compared to a $27.1 million operating loss for the second quarter of 1994. The operating loss for the second quarter of 1994 reflected $20.5 million of certain charges for a number of items including claims from the Company's 1990 bankruptcy, increased cost estimates for environmental remediation, an adjustment to reflect the fair market value of certain properties listed for sale by the Company and an adjustment to depreciation for certain facilities resulting from a change in the estimate of their useful lives. Excluding the impact of these certain charges, the operating loss for the second quarter of 1994 would have been approximately $6.6 million. The net loss for the second quarter of 1995 was $9.9 million compared to a $45.4 million net loss for the second quarter of 1994. In addition to the $20.5 million in certain charges discussed above, net income for the second quarter of 1994 reflected the impact of a $10.6 million adjustment to income taxes to reverse tax benefits recorded in the first quarter of 1994. See "Summary Selected Historical Financial and Operating Data." Financial Forecasts In October 1994, in connection with a prospective tender offer and rights offering, the Company issued Financial Forecasts for 1995 and 1996 (the "Financial Forecast"). Management has recently completed a review of the 1995 Financial Forecast as compared to the Company's performance for the six month period ended June 30, 1995. As a result of this review, management presently believes that both passenger revenues and expenses for 1995 will be higher than those set forth in the 1995 Financial Forecast. 4 6 Under management's "back to basics" strategy, the Company has increased its operating capacity and schedule offerings and, accordingly, is running a greater number of bus miles than were assumed in the Financial Forecast. Due to this increase in operating capacity, the Company will incur in 1995 certain expenses not anticipated in the Financial Forecast, such as hiring and training new bus drivers, adding operating management in the field and opening a new telephone center. Management believes that the expected increase in expenses will be roughly offset by additional revenues. Accordingly, the Company currently expects that it will generate operating income in 1995 in an amount reasonably consistent with the operating income projected in the 1995 Financial Forecast. New Credit Agreement In June 1995, the Company completed the renegotiation of its existing credit facility (the "New Credit Facility"). The New Credit Facility provides for revolving loans, letters of credit and letter of credit guarantees up to a maximum commitment of $73.5 million. Syndication commitments under the New Credit Facility, including Foothill Capital Corporation's ("Foothill") commitment as the lead agent, total $65.0 million at July 25, 1995. Availability under the New Credit Facility is limited to the aggregate of the following: (1) revolving advances of up to $3.5 million based on a formula of certain eligible accounts receivable; (2) revolving advances of up to $35.0 million (subject to increase to $45.0 million under certain circumstances) (the "Fixed Asset Advances") based on the value of certain fixed asset collateral pledged to Foothill; and (3) a bus purchase facility of up to $25.0 million (the "Bus Purchase Facility"). Borrowings under the New Credit Facility mature on May 31, 1998, although availability under the Fixed Asset Advances will be subject to quarterly reductions after April 1996. The New Credit Facility is secured by liens on substantially all the assets of the Company, excluding real estate purchases or new bus purchases unless those buses are specifically pledged to support borrowings under the Bus Purchase Facility. The New Credit Facility allows the Company to dispose of certain non-core real estate properties. In addition, non-bus capital expenditures are limited to $25.0 million annually with no spending limitations on bus purchases as long as financed through debt, or operating or capital leases with maturities of no less than five years. The New Credit Facility is subject to certain financial covenants, including maintenance of a minimum net worth and an agreed ratio of cash flow to interest expense. 5 7 THE OFFERING Common Stock Offered By: The Company . . . . . . . . . . . . . 4,000,000 shares The Selling Stockholder . . . . . . . 6,004,144 shares ---------- Total . . . . . . . . . . . . . . 10,004,144 shares ========== Common Stock to be Outstanding after the Offering . . . . . . . . . . . . . . 58,158,726 shares(1) Use of Proceeds . . . . . . . . . . . . . The Company will use approximately $9.6 million of the net proceeds from its sale of Common Stock to repurchase (the "Senior Note Repurchase") approximately $10.7 million aggregate principal of its 10% Senior Notes due 2001 (the "Senior Notes") which will be applied toward future sinking fund obligations. The Company will use the remaining proceeds for general corporate purposes. See "Use of Proceeds." The Company will not receive any of the proceeds from the sale of shares by the Selling Stockholder. Dividend Policy . . . . . . . . . . . . . The Company has not paid dividends on the Common Stock in the past and does not expect to pay any dividends on the Common Stock in the foreseeable future. American Stock Exchange Symbol . . . . . BUS Risk Factors . . . . . . . . . . . . . . See "Risk Factors" for a discussion of certain information that should be considered by prospective purchasers of the Common Stock.
__________________ (1) Does not include 7,649,446 shares of Common Stock reserved for issuance pursuant to the Company's stock option programs (of which 5,112,536 shares were subject to outstanding options at June 30, 1995 with a weighted average exercise price of $3.47), and 792,242 shares issuable upon conversion of the Company's outstanding 8.5% Convertible Subordinated Debentures due March 31, 2007 (the "Convertible Debentures") at a conversion price of $12.375 per share. 6 8 SUMMARY SELECTED HISTORICAL FINANCIAL AND OPERATING DATA (IN THOUSANDS EXCEPT PER SHARE, OTHER DATA AND OPERATING DATA) The selected financial data presented below for the three years ended December 31, 1992, 1993 and 1994 have been derived from the Company's audited consolidated financial statements. The selected financial data at and for the six- and three-month periods ended June 30, 1994 and 1995 have been derived from the unaudited consolidated financial statements and internal accounting records of the Company which, in the opinion of management, contain all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly the Company's results of operations and financial position for such periods and at such dates. The consolidated results of operations for the six- and three-month periods ended June 30, 1995 are not necessarily indicative of the results to be expected for the full year or for future periods. The selected financial data presented below should be read in conjunction with the Consolidated Financial Statements of the Company and the related notes thereto which are incorporated by reference into this Prospectus.
Six Months Ended Years Ended December 31, June 30, ---------------------------------------------------- ----------------------------- 1992 1993 1994 1994 1995 ---------------- --------------- --------------- -------------- ------------ STATEMENT OF OPERATIONS DATA: Operating revenues . . . . . . . $ 692,981 $ 666,496 $ 616,331 $ 284,925 $ 293,160 Operating expenses Transportation services(a)(b) . 604,094 593,501 645,761 310,842 293,353 Depreciation and amortization . 33,499 33,154 36,046 19,901 14,498 Interest expense . . . . . . . . 35,297 30,832 33,456 15,561 13,881 Income tax provision(b) . . . . . 9,142 6,253 16,862 17 28 Income (loss) before extraordinary items and cumulative effect of a change in accounting principle(b) 10,949 8,594 (115,794) (61,396) (28,600) Extraordinary items (c) . . . . . -- 407 (38,373) -- -- Cumulative effect of a change in accounting principle (d) . . . -- 690 -- -- -- Net income (loss) . . . . . . . . $ 10,949 $ 7,497 $ (77,421) $ (61,396) $ (28,600) Earnings per share of Common Stock (e): Primary Income (loss) before extraordinary items and cumulative effect of a change in accounting principle . . $ 1.10 $ 0.65 $ (7.58) $ (4.19) $ (0.54) Extraordinary items . . . . . -- (0.03) 2.51 -- -- Cumulative effect of a change in accounting principle . . -- (0.05) -- -- -- ------------- ------------- ------------- ------------ ------------ Net income (loss) . . . . . . $ 1.10 $ 0.57 $ (5.07) $ (4.19) $ (0.54) ============ ============ ============ =========== =========== Fully diluted Income (loss) before extraordinary items and cumulative effect of a change in accounting principle . . $ 0.96 $ 0.65 $ (7.58) $ (4.19) $ (0.54) Extraordinary items . . . . . -- (0.03) 2.51 -- -- Cumulative effect of a change in accounting principle . . -- (0.05) -- -- -- ------------- ------------ ------------- ------------ ------------ Net income (loss) . . . . . . $ 0.96 $ 0.57 $ (5.07) $ (4.19) $ (0.54) ============ ============ ============ =========== =========== Weighted average number of shares outstanding:(e) Primary . . . . . . . . . . . 9,911,063 13,209,869 15,284,050 14,651,858 53,061,852 Fully diluted . . . . . . . . 15,666,343 13,209,869 15,784,050 14,651,858 53,061,852
Three Months Ended June 30, ------------------------------- 1994 1995 -------------- -------------- STATEMENT OF OPERATIONS DATA: Operating revenues . . . . . . . $ 151,073 $ 161,367 Operating expenses Transportation services(a)(b) . 165,535 157,137 Depreciation and amortization . 12,610 7,074 Interest expense . . . . . . . . 7,657 7,013 Income tax provision(b) . . . . . 10,656 26 Income (loss) before extraordinary items and cumulative effect of a change in accounting principle(b) (45,385) (9,883) Extraordinary items (c) . . . . . -- -- Cumulative effect of a change in accounting principle (d) . . . -- -- Net income (loss) . . . . . . . . (45,385) (9,883) Earnings per share of Common Stock (e): Primary Income (loss) before extraordinary items and cumulative effect of a change in accounting principle . . $ (3.10) $ (0.18) Extraordinary items . . . . . -- -- Cumulative effect of a change in accounting principle . . -- -- ------------ ------------ Net income (loss) . . . . . . $ (3.10) $ (0.18) ============ ============ Fully diluted Income (loss) before extraordinary items and cumulative effect of a change in accounting principle . . $ (3.10) $ (0.18) Extraordinary items . . . . . -- -- Cumulative effect of a change in accounting principle . . -- -- ------------ ------------ Net income (loss) . . . . . . $ (3.10) $ (0.18) ============ ============ Weighted average number of shares outstanding:(e) Primary . . . . . . . . . . . 14,652,321 53,743,682 Fully diluted . . . . . . . . 14,652,321 53,743,682
7 9
Six Months Ended Years Ended December 31, June 30, ---------------------------------------------------- ----------------------------- 1992 1993 1994 1994 1995 ---------------- --------------- --------------- -------------- ------------ STATEMENT OF FINANCIAL POSITION DATA (AT THE END OF PERIODS:) Total assets . . . . . . . . . . $ 485,936 $ 541,293 $ 511,449 $ 501,857 $ 471,802 Long-term debt (f) . . . . . . . 290,712 260,412 197,125 270,591 186,863 Stockholders' equity (deficit) . 52,262 152,166 153,196 90,783 124,671 OPERATING DATA: Regular service miles operated (millions) . . . . . . . . . . 242 235 236 110 117 Passenger miles (millions) . . . 5,967 5,926 5,392 2,478 2,567 Load factor (% of available seats filled) . . . . . . . . . . . . 54.8 56.0 49.9 49.2 47.6 Yield (Revenue per passenger mile) (cents) . . . . . . . . . . . . 9.73 9.45 9.61 9.57 9.59 Revenue per bus mile (dollars) . 2.40 2.38 2.20 2.15 2.10 Passengers (millions) . . . . . . 16.2 15.4 16.0 7.3 7.7 Average Trip Length (miles) . . . 369 384 338 342 335
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Three Months Ended June 30, ------------------------------- 1994 1995 -------------- -------------- STATEMENT OF FINANCIAL POSITION DATA (AT THE END OF PERIODS:) Total assets . . . . . . . . . . $ 501,857 $ 471,802 Long-term debt (f) . . . . . . . 270,591 186,863 Stockholders' equity (deficit) . 90,783 124,671 OPERATING DATA: Regular service miles operated (millions) . . . . . . . . . . 58 63 Passenger miles (millions) . . . 1,355 1,422 Load factor (% of available seats filled) . . . . . . . . . . . . 51.1 49.4 Yield (Revenue per passenger mile) (cents) . . . . . . . . . . . . 9.32 9.61 Revenue per bus mile (dollars) . 2.19 2.18 Passengers (millions) . . . . . . 3.8 4.1 Average Trip Length (miles) . . . 358 351
- ---------------------- (a) Transportation services includes bus operating lease payments of $27.8 million, $20.0 million and $22.7 million for the years ended December 31, 1992, 1993 and 1994, respectively, $10.7 million and $11.4 million for the six-month periods ended June 30, 1994 and 1995, respectively, and $5.7 million and $5.6 million for the three-month periods ended June 30, 1994 and 1995, respectively. (b) The loss for the year ended December 31, 1994 and the six months and three months ended June 30, 1994 reflected $61.9 million, $21.0 million and $20.5 million, respectively, in certain operating charges, including increases in insurance and legal reserves to recognize the pre-bankruptcy claims previously barred by the bankruptcy court, adverse claims development in 1994, and certain litigation exposure; write-downs of real estate and other assets; costs associated with an operational restructuring. The Company also recorded in the second quarter of 1994, a $10.6 million income tax provision to reverse a deferred tax benefit recognized in the first quarter of 1994. For the full year 1994, the Company recorded a $17.0 million increase in the income tax provision reversing a deferred tax benefit recognized in prior years. (c) For the year ended December 31, 1994, the Company recorded an extraordinary loss of $3.6 million related to the write-off of debt issuance costs on the Company's previous credit agreement. The Company also recorded an extraordinary gain of $41.9 million for the year ended December 31, 1994, related to the conversion of $89.0 million principal amount of 8.5% Convertible Debentures due 2007 (the "Convertible Debentures") into Common Stock in December 1994. The Company recorded an extraordinary loss of $407,000 for the year ended December 31, 1993, on the write-off of debt issuance costs related to the replacement of the Company's then existing credit agreement. (d) The net impact from adoption of Statement of Financial Accounting Standards No. 109 Accounting for Income Taxes was $690,000 and is reported as a charge to earnings as the cumulative effect of a change in accounting principle for the year ended December 31, 1993. (e) The completion of the Company's financial restructuring plan pursuant to which the Company converted approximately $89.0 million of Convertible Debentures into Common Stock in December 1994 resulted in the issuance of approximately 22.8 million shares of Common Stock. In January 1995, the Company issued an additional 16.3 million shares of Common Stock in connection with the consummation of a related rights offering. (f) The Company's long-term debt was reduced by $89.0 million related to the conversion of the Convertible Debentures into Common Stock. 8 10 RISK FACTORS Prospective purchasers of the Common Stock offered hereby should carefully consider all of the information contained in this Prospectus (including information incorporated by reference herein), especially the considerations described or referred to in the following paragraphs. RECENT LOSSES The Company had an operating loss of $14.7 million for the six months ended June 30, 1995, compared to an operating loss of $45.8 million for the comparable 1994 period, and anticipates that it will have a net loss for the year ending December 31, 1995. The decreased loss for the first half of 1995 resulted from a 2.9% increase in operating revenue and a 6.9% decrease in operating expenses. However, there can be no assurance that these trends will continue. Although the Company has implemented new strategic and operational initiatives intended to enhance revenues, the Company's operations generally are subject to financial, economic, legal and other factors, many of which are beyond its control. Accordingly, there can be no assurance that the Company will be able to implement these initiatives without delay or that these initiatives will return the Company to profitability. CAPITAL RESOURCES AND LIQUIDITY The Company requires significant cash flows to meet its debt service and other continuing obligations. Assuming that the Senior Note Repurchase had been consummated using a portion of the proceeds of the Offering, at June 30, 1995 the Company would have had, on a pro forma basis, $182.4 million in long-term debt outstanding (excluding $16.4 million of issued and undrawn standby letters of credit), consisting primarily of the Senior Notes. After giving effect to the Senior Note Repurchase, the Company will have semi-annual interest payments (each January 31 and July 31) of $7.6 million due on the Senior Notes. The Company will also require $13.5 million in the aggregate for other debt service and $18.4 million for bus, real estate and other operating lease obligations during the remainder of 1995. The 1996 sinking fund payment of $8.0 million will be met through the Senior Note Repurchase. Additionally, assuming the Company completes the Senior Note Repurchase the Company will have sinking fund payments on the Senior Notes, initially in the amount of approximately $7.3 million and increasing annually thereafter, beginning July 31, 1997. The Company's operations also require significant annual capital and maintenance expenditures related to the Company's bus fleet, properties and systems software. Approximately 34% of the Company's bus fleet is more than 10 years old. The Company's experience indicates that as the age of its fleet increases, the dependability and quality of service declines, which may make the Company less competitive. To replace these buses and to support the planned increase in the size of the bus fleet, the Company expects to acquire up to 300 new buses over the next 18 months at an aggregate cost of approximately $70 to $80 million. Management believes that a delay in acquiring these new buses could adversely affect future operations due to the higher operating costs associated with operating older buses and the inability to implement fully the Company's plans to increase total bus miles. The Company's ability to finance these and other capital expenditures and to meet its other financial obligations will depend on the Company's future operating performance, which will be subject to financial, economic, legal and other factors affecting the business and operations of the Company, many of which are beyond its control. Although the New Credit Facility and cash flows from operating activities will be sufficient to make a portion of the Company's planned expenditures, the Company's operating strategy will depend on the availability of additional sources of financing, such as operating and capital lease financing or funds provided through sales of assets or sales of securities. There can be no assurance that the Company will be able to obtain financing on suitable terms for these purposes. 9 11 COMPETITION The transportation industry is highly competitive. The Company's primary sources of competition for passengers are low cost air travel from both regional and national airlines, automobile travel and, in certain markets, regional bus companies and Amtrak. Regional airlines are increasing their penetration in intermediate-haul markets (400 to 1,000 miles), forcing the Company and the bus industry generally to reduce prices in these markets in order to compete. Additionally, airline discount programs attract long-haul passengers from the Company. Because price is the primary method of meeting airline competition, the Company has adopted everyday low pricing to respond to these market changes. Competition from regional bus companies has increased materially during the past several years. Price, frequency of service and convenient scheduling are the current strategies of the Company to meet this competition. Regional bus companies currently service more routes in direct competition with the Company than in the recent past. These competitors also possess operating authority over numerous routes potentially competitive to the Company that they do not currently operate. Based on market and competitive conditions, the regional bus companies could operate such routes in the future. The Company also expects significant competition from Mexican bus carriers beginning in 1996 when barriers to entry into the U.S. market are phased out under the North American Free Trade Agreement. SEASONALITY The Company's business is seasonal in nature and generally follows the pattern of the travel industry as a whole, with peaks during the summer months and the Thanksgiving and Christmas holiday periods. Historically, the Company has experienced substantial seasonal variances in cash flow. IMPORTANCE OF SELF-INSURANCE AUTHORITY AND AVAILABILITY OF INSURANCE The Interstate Commerce Commission (the "ICC") has granted the Company authority to self-insure its automobile liability exposure for interstate passenger service up to a maximum level of $5.0 million per occurrence. To maintain self-insurance authority, the ICC requires the Company to maintain a tangible net worth of $10.0 million (as of June 30, 1995, the Company's tangible net worth was $104.9 million) and to maintain a $15.0 million trust fund (currently fully funded) to provide security for payment of claims. Subsequent to the ICC grant, thirty-eight states and the District of Columbia granted the Company the authority to self-insure its intrastate automobile liability exposure. The ICC maintains continuing oversight of the Company's self-insurance authority, and the ability of the Company to continue as an authorized self-insurer is dependent upon its future financial performance. If the ICC were to revoke the Company's self-insurance authority or require substantial additional contributions to the trust fund, such action would have a material adverse effect on the Company's financial condition and results of operations. LITIGATION The Company is a party to various lawsuits the outcome of which, if adverse to the Company, could have a material adverse effect on the results of operations and financial position of the Company. See "Legal Proceedings" in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 and "Management - Legal Challenge to Appointment of Directors" herein. ABSENCE OF DIVIDENDS ON COMMON STOCK The Company has not paid any dividends on the Common Stock in the past and does not anticipate paying dividends on the Common Stock in the foreseeable future. Moreover, the Company's indenture governing the 10 12 Senior Notes restricts, and the New Credit Facility prohibits, the Company from declaring or paying cash dividends on the Common Stock. See "Market Price of Common Stock and Dividend Policy." ANTITAKEOVER EFFECTS OF CERTAIN INSTRUMENTS AND AGREEMENTS OF THE COMPANY The Company's certificate of incorporation and bylaws, the New Credit Facility, the Senior Note Indenture, the Shareholder Rights Plan (as defined), certain other contracts to which the Company is a party, and the Delaware General Corporation Law contain provisions that could have the effect of delaying or preventing a transaction that results in a change of control (as defined) of the Company. USE OF PROCEEDS The net proceeds to the Company from the sale of the 4,000,000 shares of Common Stock being offered by the Company are estimated to be $16.7 million (based on the last reported sale price of the Common Stock on the American Stock Exchange on July 25, 1995 of $4.50 per share). The Company intends to use $9.6 million of the net proceeds received by it to repurchase $10.7 million aggregate principal amount of Senior Notes pursuant to a put/call agreement in principle with one of the Company's principal stockholders. The purchase price for the Senior Notes was based on arms-length negotiations. By repurchasing the Senior Notes, the Company will satisfy in full its 1996 sinking fund obligations on the Senior Notes and will reduce its 1997 sinking fund obligation to approximately $7.3 million from $10 million. The Company will use its remaining net proceeds for general corporate purposes. Pending use, the net proceeds to the Company from the Offering will be invested in short-term, interest-bearing securities. The Company will not receive any portion of the net proceeds from the sale of the shares of Common Stock by the Selling Stockholder. 11 13 CAPITALIZATION The following table sets forth the capitalization of the Company as of June 30, 1995, and as adjusted to give effect to the sale of 4,000,000 shares of Common Stock by the Company (based on the last reported sale price of the Common Stock on the American Stock Exchange on July 25, 1995 of $4.50 per share) and the Senior Note Repurchase, as though those transactions had occured at June 30, 1995. The following information should be read in conjunction with the Consolidated Financial Statements of Greyhound Lines, Inc. and Subsidiaries incorporated by reference into this Prospectus.
June 30, 1995 ---------------------------------- As Actual Adjusted ---------------- ---------------- (in thousands) Long-term debt: New Credit Facility (a) . . . . . . . . . . . . . . . . . . . . . $ 2,518 $ 2,518 Other secured indebtedness . . . . . . . . . . . . . . . . . . . 34,501 34,501 Senior Notes (b) . . . . . . . . . . . . . . . . . . . . . . . . 144,397 134,960 Convertible Debentures . . . . . . . . . . . . . . . . . . . . . 9,804 9,804 Other long-term debt . . . . . . . . . . . . . . . . . . . . . . 642 642 ------------- ------------ Total long-term debt . . . . . . . . . . . . . . . . . . . 191,862 182,425 Less current maturities . . . . . . . . . . . . . . . . . . . . . 4,999 4,999 ------------- ------------ Long-term debt, net . . . . . . . . . . . . . . . . . . . . . . . 186,863 177,426 ------------- ------------ Stockholders' equity: Preferred stock (10,000,000 shares authorized; par value $.01, none issued) Series A junior preferred stock (500,000 shares authorized; par value $.01; none issued) . . . . . . . . . . . -- -- Common stock (100,000,000 shares authorized; par value $.01; 53,852,874 shares issued; 100,000,000 shares authorized, as adjusted; par value $.01, as adjusted; 57,852,874 shares issued, as adjusted (c)) . . . . . . . . . . . . . . . . . . . 538 578 Capital in excess of par value . . . . . . . . . . . . . . . . . 212,085 228,780 Retained deficit . . . . . . . . . . . . . . . . . . . . . . . . (85,415) (85,674) Unfunded accumulated pension obligation . . . . . . . . . . . . . ( 1,499) ( 1,499) Treasury stock, at cost (109,192 shares) . . . . . . . . . . . . ( 1,038) ( 1,038) --------------- -------------- Total stockholders' equity . . . . . . . . . . . . . . . . 124,671 141,147 --------------- -------------- Total Capitalization . . . . . . . . . . . . . . . . . . . . . . . . $ 316,533 $ 323,572 =============== =============
___________________________ (a) Does not reflect issued and undrawn letters of credit in the aggregate amount of $16.4 million. As of July 25, 1995, the New Credit Facility provides for revolving loans and letters of credit and/or letter of credit guarantees of up to $65 million at any time outstanding. (b) The Senior Notes are net of original issue discount of $18.9 million and $17.7 million, as adjusted. (c) Does not include 7,649,446 shares of Common Stock reserved for issuance pursuant to the Company's stock option programs (of which 5,112,536 shares were subject to outstanding options at June 30, 1995 with a weighted average exercise price of $3.47), and 792,242 shares issuable upon conversion of the Convertible Debentures at a conversion price of $12.375 per share. 12 14 MARKET PRICE OF COMMON STOCK AND DIVIDEND POLICY The Common Stock of the Company is listed on the American Stock Exchange under the symbol BUS." The following table sets forth the high and low sale prices for the Company's Common Stock during the periods indicated as reported by the American Stock Exchange:
High Low ---------------- ----------------- First Quarter 1993 . . . . . . . . . . . . . . . . . . . . . . . . . 18 1/2 10 7/8 Second Quarter 1993 . . . . . . . . . . . . . . . . . . . . . . . . . 22 3/4 16 3/4 Third Quarter 1993 . . . . . . . . . . . . . . . . . . . . . . . . . 22 11 1/8 Fourth Quarter 1993 . . . . . . . . . . . . . . . . . . . . . . . . . 15 3/8 11 1/8 First Quarter 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 12 1/2 9 1/2 Second Quarter 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 11 6 1/4 Third Quarter 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 6 7/8 1 3/4 Fourth Quarter 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 3 1 5/8 First Quarter 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 2 3/4 1 1/4 Second Quarter 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 5 11/16 2 5/16 Third Quarter to July 25, 1995 . . . . . . . . . . . . . . . . . . . 5 5/16 3 7/8
The Company has not paid any dividends on the Common Stock in the past and does not expect to pay any dividends on the Common Stock in the foreseeable future. The indenture governing the Senior Notes restricts the Company's ability to pay, and the New Credit Facility prohibits the Company from paying, cash dividends on the Common Stock. In the event the Company were not contractually prohibited from paying dividends, the holders of Common Stock would be entitled to receive dividends only when and as declared by the Board of Directors of the Company, subject to the prior rights and preferences, if any, of holders of preferred stock. MANAGEMENT During late 1994 and early 1995 the Company, in response to declines in ridership and revenue, hired a new senior management team with significant experience in both the bus industry specifically, and the transportation industry in general. The Company's senior management team consists of the following individuals. Craig R. Lentzsch was elected to the Board of Directors on August 26, 1994. Effective November 15, 1994, Mr. Lentzsch became President and Chief Executive Officer of the Company. Mr. Lentzsch previously served as Executive Vice President and Chief Financial Officer of Motor Coach Industries International, Inc. where he had been employed since 1992; as President and Chief Executive Officer of Continental Asset Services, Inc. from 1991 to 1992; as a private consultant to, and investor in, Storehouse, Inc. from 1983 to 1991 and Communications Partners, Ltd. from 1989 to 1991; as Vice Chairman, Executive Vice President and a director of the Company from March 1987 to December 1989; and as Co-founder and President of BusLease, Inc. from 1980 to 1989. Mr. Lentzsch also serves as a director of Hastings Books, Records and Tapes and Enginetech, Inc. Jack W. Haugsland joined the Company on May 15, 1995 as Executive Vice President and Chief Operating Officer. From 1992 to 1995 Mr. Haugsland was President and Chief Executive Officer of Gray Line Worldwide. From 1991 to 1992 Mr. Haugsland held the position of Senior Vice President of Operations for the Company; and from 1986 to 1990 Mr. Haugsland served as President of Greyhound Travel Services, Inc., a former subsidiary of the Company. Mr. Haugsland began employment with the Company's predecessor in 1964. Steven L. Korby joined the Company as Executive Vice President and Chief Financial Officer on April 13, 1995. Prior to joining the Company, Mr. Korby was President of Armstrong Capital Corporation from 13 15 1994 to 1995 and served as Executive Vice President, Chief Financial Officer and Chief Technology Officer of Neodata Corporation and its predecessors from 1983 to 1993. Bradley T. Harslem joined the Company in December 1993 and serves as Senior Vice President - Information Services and Chief Information Officer. He is responsible for all of the corporation's computer systems and for the operation of the telephone sales centers. Prior to joining the Company, Mr. Harslem worked for American Airlines, Inc. for eighteen years in various engineering, finance, planning, marketing and technology roles. He served as Vice President - Sabre Travel Information Network from 1991 to 1993; as Vice President - Sabre Computer Services from 1988 to 1991 and as Managing Director - - Marketing Administration from 1987 to 1988. J. Floyd Holland has served as Senior Vice President - Operations since September 1994 and is responsible for equipment maintenance, engineering, driver and bus operations, scheduling and capacity planning. From October 1992 to September 1994, he served as Vice President - Maintenance of the Company. From July 1987 to September 1992, he was Vice President - Fleet Operations and was responsible for fleet allocations. From October 1979 to July 1987, Mr. Holland served as Vice President of Operations and Transportation of Trailways. From April 1984 to December 1991, Mr. Holland served as a director of Trailways Commuter Transit, Inc., a former affiliate of the Company. Mr. Holland has been a member of the Board of Directors and Executive Committee of the National Bus Traffic Association since 1991. Legal Challenge to Appointment of Directors In connection with its December 1994 financial restructuring, the Company stated that a majority of tendering holders of Convertible Debentures willing to participate in the selection would be entitled to nominate two qualified persons reasonably acceptable to the Company to serve on its Board of Directors. In March 1995, the former Convertible Debentureholders submitted the names of six prospective director nominees to the Company, including Messrs. Stephen M. Peck, Ernest P. Werlin, Chriss W. Street and Mark M. Glickman. After a balloting process, the Company's Board of Directors determined that Messrs. Peck and Werlin were the two most highly ranked nominees who were qualified to serve as directors of the Company and were reasonably acceptable to the Company. Messrs. Peck and Werlin were appointed to vacancies on the Board of Directors on May 31, 1995. On June 12, 1995, Chriss Street & Company, Inc. and James R. Moriarty ("Plaintiffs"), former holders of Convertible Debentures, filed a lawsuit against the Company and Messrs. Peck and Werlin (the "Defendants"), seeking to invalidate the appointment of Messrs. Peck and Werlin to the Company's Board of Directors. The suit also seeks to have Messrs. Street and Glickman appointed to the Board of Directors or, alternatively, seeks an order establishing a new nomination and appointment process to fill the two board positions currently held by Messrs. Peck and Werlin. The suit seeks no monetary damages other than plaintiffs' costs, including reasonable attorneys' fees. The Defendants have filed an answer to the Plaintiffs' complaint denying the Plaintiffs' allegations. The trial is scheduled to begin on August 30, 1995 and the parties are currently engaged in discovery. The defendants are vigorously defending the suit, which the Company believes to be without merit. 14 16 SELLING STOCKHOLDER The following table sets forth the name of the Selling Stockholder, the aggregate number of shares of Common Stock identified by the Selling Stockholder as being beneficially owned by it as of July 25, 1995, and the aggregate number of shares of Common Stock being sold by it in the Offering.
Number of Number of Number of Percent of Common shares of shares of shares of Stock Outstanding Common Stock Common Stock Common Stock -------------------------- Name and Address of Owned Before to be Sold in to be Owned Before After Beneficial Owner Offering Offering after Offering Offering Offering -------------------------------- ---------------- --------------- ---------------- ------------ ----------- Motor Coach Industries Limited 6,004,144 6,004,144 0 11.2% 0% 1850 N. Central Avenue Mail Station 910 Phoenix, Arizona 85004
The Selling Stockholder acquired all of its shares of Common Stock in January 1995 pursuant to a standby purchase agreement entered into in connection with the Company's rights offering in December 1994. The Selling Stockholder also is an affiliate of the Company's principal supplier of buses. 15 17 PLAN OF DISTRIBUTION The Company and the Selling Stockholder will enter into a Selling Agency Agreement with Rothschild Inc. (the "Selling Agent"), a copy of which will be filed with the Securities and Exchange Commission as an Exhibit to the Registration Statement of which this Prospectus is a part. Under the terms of the Selling Agency Agreement, the Company and the Selling Stockholder have retained the Selling Agent, and the Selling Agent has agreed to use its best efforts to obtain purchasers for the 10,004,144 shares of the Company's Common Stock being offered by the Company and the Selling Stockholder, at the purchase price set forth on the cover page of this Prospectus. The Selling Agent has made no firm commitment and is under no obligation to purchase or sell all or any part of the shares offered hereby, but has agreed to use its best efforts to find purchasers for all of the shares. The Selling Agent may authorize certain other members of the National Association of Securities Dealers, Inc. ("NASD") and foreign members not eligible for membership in the NASD but who agree to abide by the NASD's Rules of Fair Practice (the "Soliciting Dealers") to solicit purchasers for the shares of Common Stock offered by this Prospectus. The Company and the Selling Stockholder have agreed to pay the Selling Agent a commission equal to $ per share ( % of the offering price), and the Selling Agent will pay the Soliciting Dealers a concession equal to $ per share sold by any Soliciting Dealer. It is expected that shares will be offered by the Selling Agent and any Soliciting Dealers primarily to institutional investors. The Company has also agreed to reimburse the Selling Agent for its out of pocket expenses, including fees and disbursements of counsel to the Selling Agent. The Selling Agent Agreement provides that the obligations of the Selling Agent are subject to certain conditions precedent and may be terminated upon material adverse changes affecting the Company, outbreak or escalation of war, hostilities or other emergencies or calamities, suspension or limitation of trading on national securities exchanges, banking moratoria, changes in law, and other market-related developments. All payments for shares purchased pursuant to this Offering will be made by the purchasers to the Selling Agent for the account of the Company and the Selling Stockholder at the closing. Under the terms of the Selling Agency Agreement, the offering will conclude 5 business days after the date of this Prospectus (or earlier if all 10,004,144 shares are sold), subject to an extension of up to 10 business days by agreement of the Company, the Selling Stockholder and the Selling Agent. The Selling Agency Agreement contains covenants of indemnity and contribution among the Selling Agent, the Company, and the Selling Stockholder against certain civil liabilities, including liabilities under the Securities Act of 1933, as amended. The Selling Agent may be deemed to be an "underwriter" within the meaning of the Securities Act of 1933, as amended. The Company, its officers and directors, the Selling Stockholder, and certain other holders who in the aggregate own approximately shares of the Company's Common Stock have agreed not to offer, sell, or otherwise dispose of any additional shares of Common Stock for a period of 120 days after the date of this Prospectus (180 days in the case of the Company) without the prior written consent of the Selling Agent, except that the Company may issue, and grant options to purchase, shares of Common Stock under its existing stock plans and the Company may issue shares of Common Stock upon the exercise of any currently outstanding convertible securities. The Selling Agent acted as the Company's financial advisor in connection with its 1994 financial restructuring, including the tender offer and conversion of the Convertible Debentures and the rights offering in which an aggregate of 39.1 million shares of Common Stock were issued. The Selling Agent also advised the Company on the structuring and negotiation of the credit facility in October 1994 and the renegotiation and expansion of this facility in June 1995. The Company has applied to the American Stock Exchange for approval of the listing of the portion of the shares of Common Stock to be sold by it, subject to official notice of issuance. 16 18 LEGAL MATTERS Certain legal matters with respect to the Common Stock offered hereby will be passed upon for the Company by Weil, Gotshal & Manges (a partnership including professional corporations), Dallas, Texas. Certain legal matters in connection with the sale of the Common Stock offered hereby will be passed upon for the Selling Agent by Piper & Marbury L.L.P., New York, New York. EXPERTS The audited consolidated financial statements and schedules of Greyhound Lines, Inc., incorporated by reference into this Prospectus and elsewhere in the Registration Statement, to the extent and for the periods indicated in their reports, have been audited by Arthur Andersen LLP, independent public accountants, and are included herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports. 17 19 ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN, OR INCORPORATED BY REFERENCE IN, THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE 10,004,144 SHARES COMPANY, THE SELLING STOCKHOLDER OR THE SELLING AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS [LOGO] PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE GREYHOUND LINES, INC. FACTS SET FORTH IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. COMMON STOCK --------------------- P R O S P E C T U S --------------------- --------------------------------- TABLE OF CONTENTS PAGE ROTHSCHILD INC. ---- Available Information . . . . . . . . . . . 2 Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . 2 Prospectus Summary . . . . . . . . . . . . 3 Risk Factors . . . . . . . . . . . . . . . 9 Use of Proceeds . . . . . . . . . . . . . . 11 Capitalization . . . . . . . . . . . . . . 12 Market Price of Common Stock and Dividend Policy . . . . . . . . . . . . 13 Management . . . . . . . . . . . . . . . . 13 Selling Stockholder . . . . . . . . . . . . 15 Plan of Distribution . . . . . . . . . . . 16 Legal Matters . . . . . . . . . . . . . . . 17 Experts . . . . . . . . . . . . . . . . . . 17 , 1995 ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- -----------------------------------------------
20 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the expenses payable in connection with the offering of the securities to be registered and offered hereby. All of such expenses are estimates, other than the registration fee payable to the Securities and Exchange Commission. Securities and Exchange Commission Registration Fee . . . . . . . . . . . . . . . . . . . . . $ 15,310 NASD Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,940 American Stock Exchange Additional Listing Fee . . . . . . . . . . . . . . . . . . . . . . . Blue Sky Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Printing and Engraving Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------- TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ===============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Company is incorporated in Delaware. Under Section 245 of the General Corporation Law of the State of Delaware, a Delaware corporation has the power, under specified circumstances, to indemnify its directors, officers, employees and agents in connection with actions, suits or proceedings brought against them by a third party or in the right of the corporation, by reason of the fact that they were or are such directors, officers, employees or agents, against expenses incurred in any such action, suit or proceeding. Article Sixth of the Restated Certificate of Incorporation of the Company provides for mandatory indemnification of directors and officers to the fullest extent permitted by the General Corporation Law of the State of Delaware. Reference is made to the Restated Certificate of Incorporation filed as exhibit 4.1 hereto. Section 102(b)(7) of the General Corporation Law of the State of Delaware provides that a certificate of incorporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 (relating to liability for unauthorized acquisitions or redemptions of, or dividends on, capital stock) of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. Article Seventh of the Restated Certificate of Incorporation of the Company provides that, to the fullest extent permitted by the General Corporation Law of the State of Delaware, a director of the Company shall not be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person thereof in the successful defense of any action, suit or proceeding) is asserted by a director, officer or controlling person in connection with the securities being registered pursuant to this Registration Statement, the Company will, unless in the opinion of counsel the matter has been settled by II-1 21 controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. ITEM 16. EXHIBITS. The following is a list of all exhibits filed as a part of this Registration Statement. 1.1 -- Form of Selling Agency Agreement.+ 4.1 -- Restated Certificate of Incorporation of Greyhound Lines, Inc.(1) 4.2 -- Restated Bylaws of Greyhound Lines, Inc.(1) 4.3 -- Article Fourth of the Restated Certificate of Incorporation of the Company relating to its capital stock.(2) 4.4 -- Certificate of Amendment to the Restated Certificate of Incorporation of the Company amending Article Four thereof.(3) 4.5 -- Certificate of Amendment to the Restated Certificate of Incorporation of the Company amending Article Eight thereof.(4) 4.6 -- Certificate of Designation of Series A Junior Preferred Stock of the Company.(4) 5.1 -- Opinion of Weil, Gotshal & Manges.* 23.1 -- Consent of Weil, Gotshal & Manges. (included in Exhibit 5.1) 23.2 -- Consent of Arthur Andersen LLP.+ 24.1 -- Power of Attorney (included on the Signature Page in Part II of this Registration Statement).
_________________________ (1) Incorporated by reference from the Registration Statement on Form S-1 (File Nos. 33-45060-01 and 33-45060-02) regarding the Company's 8 1/2% Convertible Subordinated Debentures due 2007. (2) Incorporated by reference from the Company's Registration Statement on Form S-3 (File No. 33-61044). (3) Incorporated by reference from the Company's Registration Statement on Form S-8 (File No. 33-63506) regarding the Company's 1991 and 1993 Management Stock Option Plans. (4) Incorporated by reference from the Company's Quarterly Report in Form 10-Q for the quarter ended June 30, 1994. * To be filed by amendment. + Filed herewith. II-2 22 ITEM 17. UNDERTAKINGS. (a) See Item 15. (b) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of the Registration Statement as of the time it was declared effective. (c) For the purpose of determining any liabilities under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (d) For purposes of determining any liability under the Securities Act of 1933, each filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 23 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on the 26th day of July, 1995. GREYHOUND LINES, INC. By: /s/ CRAIG R. LENTZSCH ------------------------------------------- Craig R. Lentzsch President and Chief Executive Officer Each person whose signature to this Registration Statement appears below hereby appoints Craig R. Lentzsch and Steven L. Korby, and each of them, any one of whom may act without the joinder of the other, as his agent and attorney- in-fact to sign on his behalf individually and in the capacity stated below and to file all pre- and post-effective amendments to this Registration Statement (and, in addition, any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the offering to which this Registration Statement relates), which amendments may make such changes in and additions to this Registration Statement as such agent and attorney-in-fact may deem necessary or appropriate. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ THOMAS G. PLASKETT Chairman of the Board and July 26, 1995 ---------------------------------------------------- Director Thomas G. Plaskett /s/ CRAIG R. LENTZSCH Director, President and July 26, 1995 ---------------------------------------------------- Chief Executive Officer Craig R. Lentzsch (Principal Executive Officer) /s/ STEVEN L. KORBY Executive Vice President, July 26, 1995 ---------------------------------------------------- Chief Financial Officer and Steven L. Korby Treasurer (Principal Financial and Accounting Officer)
II-4 24
Signature Title Date --------- ----- ---- /s/ RICHARD J. CALEY Director July 26, 1995 ---------------------------------------------------- Richard J. Caley /s/ ALFRED E. OSBORNE, JR. Director July 26, 1995 ---------------------------------------------------- Alfred E. Osborne, Jr. /s/ HERBERT ABRAMSON Director July 26, 1995 ---------------------------------------------------- Herbert Abramson /s/ FRANK L. NAGEOTTE Director July 26, 1995 ---------------------------------------------------- Frank L. Nageotte /s/ STEPHEN M. PECK Director July 26, 1995 ---------------------------------------------------- Stephen M. Peck /s/ ERNEST P. WERLIN Director July 26, 1995 ---------------------------------------------------- Ernest P. Werlin
II-5 25 EXHIBIT INDEX
Sequentially Exhibit No. Description Numbered Page ----------- ----------- ------------- 1.1 Form of Selling Agency Agreement.+ 4.1 Restated Certificate of Incorporation of Greyhound Lines, Inc.(1) 4.2 Restated Bylaws of Greyhound Lines, Inc.(1) 4.3 Article Fourth of the Restated Certificate of Incorporation of the Company relating to its capital stock.(2) 4.4 Certificate of Amendment to the Restated Certificate of Incorporation of the Company amending Article Four thereof.(3) 4.5 Certificate of Amendment to the Restated Certificate of Incorporation of the Company amending Article Eight thereof.(4) 4.6 Certificate of Designation of Series A Junior Preferred Stock of the Company.(4) 5.1 Opinion of Weil, Gotshal & Manges.* 23.1 Consent of Weil, Gotshal & Manges. (included in Exhibit 5.1) 23.2 Consent of Arthur Andersen LLP.+ 24.1 Power of Attorney (included on the Signature Page in Part II of this Registration Statement). - -------------------------
(1) Incorporated by reference from the Registration Statement on Form S-1 (File Nos. 33-45060-01 and 33-45060-02) regarding the Company's 8 1/2% Convertible Subordinated Debentures due 2007. (2) Incorporated by reference from the Company's Registration Statement on Form S-3 (File No. 33-61044). (3) Incorporated by reference from the Company's Registration Statement on Form S-8 (File No. 33-63506) regarding the Company's 1991 and 1993 Management Stock Option Plans. (4) Incorporated by reference from the Company's Quarterly Report in Form 10-Q for the quarter ended June 30, 1994. * To be filed by amendment. + Filed herewith. II-6 EX-1.1 2 EXHIBIT 1.1 SELLING AGENCY AGREEMENT 1 DRAFT #4 -- JULY 26, 1995-- 5:30PMCDT 10,004,144 Shares GREYHOUND LINES, INC. Common Stock SELLING AGENCY AGREEMENT __________________, 1995 ROTHSCHILD INC. 1251 AVENUE OF THE AMERICAS NEW YORK, NEW YORK Gentlemen: Greyhound Lines, Inc., a Delaware corporation (the "Company"), and Transportation Manufacturing Operations, Inc., a Delaware corporation or a wholly-owned subsidiary (the "Selling Shareholder"), propose to sell to a limited number of institutional purchasers an aggregate of 10,004,114 shares of Common Stock of the Company(the "Shares"). The respective amounts of the Shares to be sold by the Company and the Selling Shareholder are set forth opposite their names in Schedule I hereto. You have advised the Company and the Selling Shareholder (a) that you are authorized to enter into this Agreement and (b) that you agree to use your best efforts, as the exclusive selling agent of the Company and the Selling Shareholder (the "Selling Agent"), to solicit purchasers for the Shares among a limited number of institutional and other sophisticated investors acceptable to the Company and the Selling Shareholder, in their sole discretion, and, as the Company's and the Selling Shareholder's broker, to effect and confirm purchases of the Shares. In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows: 1. Representations and Warranties of the Company and the Selling Shareholder. 2 (a) The Company represents and warrants to the Selling Agent and the Selling Shareholder as follows: (i) A registration statement on Form S-3 (File No. 33-_____) with respect to the Shares has been carefully prepared by the Company in conformity with the requirements of the Securities Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") promulgated thereunder and has been filed with the Commission under the Act. The Company has complied with the conditions for the use of Form S-3. Copies of such registration statement, including any amendments thereto, the preliminary prospectuses (meeting the requirements of Rule 430A of the Rules and Regulations) contained therein and the exhibits, financial statements and schedules, as finally amended and revised, have heretofore been delivered by the Company to you. Such registration statement, herein referred to as the "Registration Statement", which shall be deemed to include all information omitted therefrom in reliance upon Rule 430A and contained in the Prospectus referred to below, has been declared effective by the Commission under the Act and no post-effective amendment to the Registration Statement has been filed as of the date of this Agreement. The form of prospectus first filed by the Company with the Commission pursuant to its Rule 424(b) and Rule 430A is herein referred to as the "Prospectus". Each preliminary prospectus included in the Registration Statement prior to the time it becomes effective is herein referred to as a "Preliminary Prospectus". Any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein, as of the date of such Preliminary Prospectus or Prospectus, as the case may be, and, in the case of any reference herein to any Prospectus, also shall be deemed to include any documents incorporated by reference therein, and any supplements or amendments thereto, filed with the Commission after the date of filing of the Prospectus under Rules 424(b) and 430A, and prior to the termination of the offering of the Shares by the Selling Agent. (ii) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Registration Statement; the Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification. Each of the subsidiaries of the Company identified in Schedule A hereto (each, a "Subsidiary"), has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with corporate power and authority to own or lease its properties and conduct its business as described in the Registration Statement; each Subsidiary is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification; the outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company free and clear of all liens, encumbrances and - 2 - 3 security interests; and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into shares of capital stock or ownership interests in any Subsidiary are outstanding. (iii) The outstanding shares of Common Stock of the Company, including all shares to be sold by the Selling Shareholder, have been duly authorized and are validly issued and are fully paid and non-assessable; the portion of the Shares to be issued and sold by the Company have been duly authorized and when issued and paid for as contemplated herein will be validly issued, fully-paid and non-assessable; and no preemptive rights of stockholders exist with respect to any of the Shares or the issue and sale thereof. Neither the filing of the Registration Statement nor the offering or sale of the Shares as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares of Common Stock. (iv) The Shares conform with the statements concerning them in the Registration Statement. The certificates representing the Shares are genuine, and the Company has no knowledge of any fact that would impair the validity thereof. (v) The Commission has not issued an order preventing or suspending the use of any Preliminary Prospectus relating to the proposed offering of the Shares nor instituted proceedings for that purpose and each Preliminary Prospectus, at the time of filing thereof, did not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. The Registration Statement contains and the Prospectus and any amendments or supplements thereto will contain all statements which are required to be stated therein by, and in all respects conform or will conform, as the case may be, to the requirements of, the Act and the Rules and Regulations. The documents incorporated by reference in the Prospectus, at the time filed with the Commission, conform in all respects to the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the Act, as applicable, and the Rules and Regulations of the Commission thereunder. Neither the Registration Statement nor any amendment thereto, and neither the Prospectus nor any supplement thereto, including any documents incorporated by reference therein, contains or will contain, as the case may be, any untrue statement of a material fact or omits or will omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement or the Prospectus, or any such amendment or supplement, or any documents incorporated by reference therein, in reliance upon, and in conformity with, written information furnished to the Company by the Selling Agent, specifically for use in the preparation thereof. - 3 - 4 (vi) The consolidated financial statements of the Company and its subsidiaries, together with related notes and schedules as set forth or incorporated by reference in the Registration Statement, present fairly the financial position and the consolidated results of operations of the Company, at the indicated dates and for the indicated periods. Such financial statements have been prepared in accordance with generally accepted principles of accounting, consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of results for such periods have been made. The selected and summary financial and statistical data included or incorporated by reference in the Registration Statement present fairly the information shown therein and have been compiled on a basis consistent with the financial statements presented therein. (vii) There is no action, suit, claim or proceeding pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary before any court or administrative agency or otherwise which might result in any material adverse change in the business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and the Subsidiaries taken as a whole or to prevent the consummation of the transactions contemplated hereby, except as set forth in the Registration Statement. (viii) The Company and the Subsidiaries have good and marketable title to all of the properties and assets reflected in the financial statements hereinabove described (or as described in the Registration Statement), subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those reflected in such financial statements (or as described in the Registration Statement) or which are not material in amount. The Company and each Subsidiary occupies its leased properties under valid and binding leases conforming in all material respects to the description thereof set forth in the Registration Statement. (ix) The Company and the Subsidiaries have filed all Federal, State, local and foreign income tax returns which have been required to be filed and have paid all taxes indicated by said returns and all assessments received by them or any of them to the extent that such taxes have become due. All federal and state tax liabilities are adequately provided for on the books of the Company and the Subsidiaries and properly reflected in the Company's consolidated financial statements (x) Since the respective dates as of which information is given in the Registration Statement, as it may be amended or supplemented, there has not been any material adverse change or any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, of the Company and the Subsidiaries or the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise), or prospects of the Company, and the Subsidiaries taken as a whole, whether or not occurring in the ordinary course of business, and there - 4 - 5 has not been any material transaction entered into by the Company or any Subsidiary, other than transactions in the ordinary course of business and changes and transactions contemplated by the Registration Statement, as it may be amended or supplemented. The Company and the Subsidiaries have no material contingent obligations which are not disclosed in the Registration Statement, as it may be amended or supplemented. (xi) Neither the Company nor any Subsidiary is or, with the giving of notice or lapse of time or both, will be in violation of or in default under its articles of organization or By-Laws or under any agreement, lease, contract, indenture or other instrument or obligation to which it is a party or by which it or any of its properties is bound and which default is of material significance in respect of the business or financial condition of the Company and the Subsidiaries taken as a whole. The consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company or any Subsidiary is a party, or of the Charter or by-laws of the Company or any Subsidiary or any order, rule or regulation applicable to the Company or any Subsidiary of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction. (xii) Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation of the transactions herein contemplated (except such additional steps as may be required by the National Association of Securities Dealers, Inc. (the "NASD") or may be necessary to qualify the Shares for public offering by the Selling Agent under State securities or Blue Sky laws) has been obtained or made and is in full force and effect. (xiii) The Company and the Subsidiaries hold all material licenses, certificates and permits from governmental authorities which are necessary to the conduct of their respective businesses; and the Company and the Subsidiaries have not infringed any patents, patent rights, trade names, trademarks or copyrights, which infringement is material to the business of the Company and the Subsidiaries taken as a whole. (xiv) Arthur Andersen L.L.P.., who have certified certain of the financial statements filed with the Commission as part of the Registration Statement or incorporated by reference therein, are independent public accountants as required by the Act and the Rules and Regulations. (xv) The portion of the Shares to be sold by the Company have been approved for listing upon notification of issuance by the American Stock Exchange. - 5 - 6 (xvi) To the Company's knowledge, there are no affiliations or associations between any member of the NASD and any of the Company's officers, directors or 5% or greater security holders, except as set forth in the Registration Statement or as otherwise disclosed in writing to the Selling Agent. (xvii) Neither the Company, nor to the Company's knowledge, any of its affiliates, has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock to facilitate the sale or resale of the Shares. (b) The Selling Shareholder represents and warrants as follows: (i) The Selling Shareholder has good and marketable title to the Shares to be sold by it, free of any liens, encumbrances, equities and claims, and full right, power and authority to effect the sale and delivery of such Shares; and upon the delivery against payment for such Shares pursuant to this Agreement, the purchasers thereof will acquire good and marketable title thereto, free of any liens, encumbrances, equities and claims. (ii) The Selling Shareholder has full right, power and authority to execute and deliver this Agreement and the Custody Agreement referred to below and to perform its obligations under such Agreements. The consummation by the Selling Shareholder of the transactions herein contemplated and the fulfillment by the Selling Shareholder of the terms hereof will not result in a breach of any of the terms and provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Selling Shareholder is a party, or of any order, rule or regulation applicable to the Selling Shareholder of any court or of any regulatory body or administrative agency or other governmental body having jurisdiction. (iii) The Selling Shareholder has not taken and will not take, directly or indirectly, any action designed to, or which has constituted, or which might reasonably be expected to cause or result in stabilization or manipulation of the price of the Common Stock of the Company. (iv) No offering, sale or other disposition of any Common Stock of the Company, any options or warrants to purchase shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock will be made for a period of 90 days after the date of this Agreement, directly or indirectly, by the Selling Shareholder otherwise than hereunder or with the prior written consent of Rothschild Inc. (v) The sale of the Shares by the Selling Shareholder pursuant hereto is not prompted by any material information concerning the Company which is not set forth in the Registration Statement or the documents incorporated by reference therein. The - 6 - 7 information pertaining to the Selling Shareholder under the caption "Selling Shareholder" in the prospectus does not contain any untrue statement of a material fact or any omission of a material fact required to be disclosed in the Prospectus. In order to document the Selling Agent's compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with respect to the transactions herein contemplated, each of the Selling Shareholder agrees to deliver to the Selling Agent prior to or at the Closing Date a properly completed and executed United States Treasury Department Form W-9 (or other applicable from or statement specified by Treasury Department regulations in lieu thereof). 2. Solicitation by the Selling Agent of Offers to Purchase. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Selling Agent will use its best efforts to solicit offers to purchase the Shares upon the terms and conditions set forth in the Prospectus. The Selling Agent's appointment is exclusive; provided, however, that such appointment by the Selling Shareholder is exclusive only through October 31, 1995 Subject to the right of the Company, the Selling Shareholder or the Selling Agent to reject offers in whole or in part, the Company and the Selling Shareholder agree severally to sell Shares, on an any or all basis, to each purchaser whose offer is accepted at a price of at least $____ per share. The Company and the Selling Shareholder agree severally to pay the Selling Agent a commission equal to _______percent (__%) of the selling price for each of their respective Shares so sold. The Selling Agent shall communicate to the Company and to the Selling Shareholder each offer to purchase the Shares by a prospective buyer. The Company shall have the right to accept offers to purchase the Shares and may reasonably reject any offer in whole or in part so long as the Company shall provide the Selling Agent with a reasonable explanation of its reason for such rejection. Regardless of whether the Company rejects any or all offers to purchase its Shares, the Selling Shareholder may accept any offers to purchase its Shares, and the Selling Agent shall continue to solicit offers to purchase the Shares of the Selling Shareholder. The Selling Agent shall continue to make offers to sell the Shares for 5 business days after the date of this Agreement, subject to extension of up to 10 business days by agreement of the Company or the Selling Shareholder and the Selling Agent. In seeking purchasers for the Shares, it is understood and agreed that (1) the Selling Agent may select other dealers to act as its sub-agent who are members of the NASD or foreign dealers who are not eligible for NASD membership and who agree not to solicit purchasers for the Shares in the United States or purchasers they have reason to believe are residents of the United States, and (2) the Selling Agent may pay any such dealers a commission for Shares sold to purchasers obtained by such dealers, which commission shall be paid by the Selling Agent from the commission paid to the Selling Agent by the Company. - 7 - 8 In the event the Selling Agent is not able to solicit offers to purchase all of the Shares being offered by the Company and the Selling Shareholder, the number of Shares to be sold by the Company and the Selling Shareholder shall be reduced pro rata. + 3. Closing. Closing on the sale of the Shares shall be held at the office of Piper & Marbury L.L.P., 53 Wall Street, New York, New York 10005, at 10:00 a.m., New York time, on _________, 1995, or such later date (which shall not be later than [September 31,], 1995), time or place as the Selling Agent, the Selling Shareholder and the Company, with the consent of the purchasers, may agree upon, such date and time being referred to herein as the "Closing Date." On the Closing Date, the Company and the Selling Shareholder shall deliver certificates for the Shares to the several purchasers against payment therefor to the Selling Agent on behalf of the Company and the Selling Shareholder, and the Selling Agent shall remit the proceeds, after deduction of the commission referred to above and, in the case of the Company only, after provisions for estimated reimbursable expenses incurred to the Closing Date, subject to adjustment upon final billing by the Selling Agent. 4. Covenants of the Company and the Selling Shareholder. (a). The Company covenants and agrees with the Selling Agent and the Selling Shareholder that: (i) The Company will (i) use its best efforts to cause the Registration Statement to become effective or, if the procedures in Rule 430A of the Rules and Regulations is followed, to prepare and timely file with the Commission under Rule 424(b) of the Rules and Regulations a Prospectus in the form approved by the Selling Agent containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rule 430A of the Rules and Regulations and (ii) not file any amendment to the Registration Statement or any document incorporated by reference therein or supplement to the Prospectus of which the Selling Agent shall not previously have been advised and furnished with a copy or to which the Selling Agent shall have reasonably objected in writing or which is not in compliance with the Rules and Regulations. (ii) The Company will advise the Selling Agent promptly when the Registration Statement or any post- effective amendment thereto shall have become effective, of receipt of any comments from the Commission, of any request of the Commission for amendment of the Registration Statement or for supplement to the Prospectus or for any additional information, or of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus or of the institution of any proceedings for that purpose, and the Company will use its best efforts to prevent the issuance of any such stop order preventing or suspending the use of the Prospectus and to obtain as soon as possible the lifting thereof, if issued. - 8 - 9 (iii) The Company will cooperate with the Selling Agent in endeavoring to qualify the Shares for sale under the securities laws of such jurisdictions as the Selling Agent may reasonably have designated in writing and will make such applications, file such documents, and furnish such information as may be reasonably required for that purpose, provided the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent. The Company will, from time to time, prepare and file such statements, reports, and other documents, as are or may be required to continue such qualifications in effect for so long a period as the Selling Agent may reasonably request for distribution of the Shares. (iv) The Company will deliver to, or upon the order of, the Selling Agent, from time to time, as many copies of any Preliminary Prospectus as the Selling Agent may reasonably request. The Company will deliver to, or upon the order of, the Selling Agent during the period when delivery of a Prospectus is required under the Act, as many copies of the Prospectus in final form, or as thereafter amended or supplemented, as the Selling Agent may reasonably request. The Company will deliver to the Selling Agent at or before the Closing Date, two signed copies of the Registration Statement and all amendments thereto including all exhibits filed therewith, and will deliver to the Selling Agent such number of copies of the Registration Statement, but without exhibits, and of all amendments thereto, including documents incorporated by reference, as the Selling Agent may reasonably request. (v) The Company will comply, to the best of its ability, with the Act and the Rules and Regulations and the Exchange Act, and the rules and regulations of the Commission promulgated thereunder, so as to permit the completion of the distribution of the Shares as contemplated in this Agreement and the Prospectus. If during the period in which a prospectus is required by law to be delivered by the Selling Agent or any dealer any event shall occur as a result of which, in the reasonable judgment of the Company or of the Selling Agent, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances existing at the time the Prospectus is delivered to a purchaser, not misleading, or, if it is necessary at any time to amend or supplement the Prospectus to comply with any law, the Company promptly will either (i) prepare and file with the Commission an appropriate amendment to the Registration Statement or supplement to the Prospectus, or (ii) prepare and file with the Commission an appropriate filing under the Exchange Act which shall be incorporated by reference in the Prospectus so that the Prospectus as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply with law. - 9 - 10 (vi) The Company will make generally available to its security holders, as soon as it is practicable to do so, but in any event not later than 15 months after the effective date of the Registration Statement, an earnings statement (which need not be audited) in reasonable detail, covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement, which earning statement shall satisfy the requirements of Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will advise the Selling Agent in writing when such statement has been so made available. (vii) The Company will, for a period of five years from the Closing Date, deliver to the Selling Agent copies of annual reports and copies of all other documents, reports and information furnished by the Company to its stockholders or filed with any securities exchange pursuant to the requirements of such exchange or with the Commission pursuant to the Act or the Securities Exchange Act of 1934, as amended. The Company will deliver to the Selling Agent similar reports with respect to any significant Subsidiary, as that term is defined in the Rules and Regulations, which are not consolidated in the Company's financial statements. (viii) No offering, sale, short sale or other disposition of any Common Stock of the Company or other securities convertible into or exchangeable or exercisable for Common Stock or derivative of Common Stock will be made for a period of 180 days after the date of this Agreement, directly or indirectly, by the Company otherwise than hereunder or with the prior written consent of Rothschild Inc., except that the Company may, without such consent, issue options and shares pursuant to the stock option plans described in the Registration Statement; provided that each recipient of such shares agrees in writing to be subject to the transfer restrictions imposed pursuant to this Section 4(h) to the extent the 180 day period following the date of this Agreement has not expired. (ix) The Company will use its best efforts to have the Shares approved for listing upon notice of issuance on the American Stock Exchange ("AMEX"). (x) The Company shall cause each officer and director of the Company and each holder of [__%] or more of the Company's outstanding Common Stock to furnish to you, on or prior to the date of this Agreement, a letter or letters, in form and substance satisfactory to the Selling Agent, pursuant to which each such person shall agree not to offer, sell, sell short or otherwise dispose of any shares of Common Stock of the Company or other capital stock of the Company, or any securities convertible, exchangeable or exercisable for Common Shares or derivative of Common Shares owned by such person (or as to which such person has the right to direct the disposition of) for a period of 120 days after the date of this Agreement, except with the prior written consent of Rothschild Inc. - 10 - 11 (xi) The Company shall apply the net proceeds of the sale of the Shares as set forth in the Prospectus and shall file such reports with the Commission with respect to the sale of the Shares and the application of the proceeds therefrom as may be required in accordance with Rule 463 under the Act. (xii) The Company shall not invest, or otherwise use the proceeds received by the Company from the sale of the Shares offered by it in such manner as would require the Company to register as an investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). (xiii) The Company will maintain a transfer agent and, if necessary under the jurisdiction of incorporation of the Company or if required for AMEX listing, a registrar for its Common Shares. (xiv) The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Shares. (b) The Selling Shareholder covenants and agrees with the Selling Agent and the Company that: (i) No offering, sale, short sale, other disposition of any Common Stock of the Company or other securities convertible, exchangeable, or exercisable for Common Shares or derivative of Common Shares owned by the Selling Shareholder (or as to which the Selling Shareholder has the right to direct the disposition ) will be made for a period of 120s after the date of this Agreement, directly or indirectly, by such Selling Shareholder otherwise than hereunder or with the prior written consent of Rothschild Inc. (ii) In order to document the Selling Agent's compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with respect to the transaction herein contemplated, the Selling Shareholder agrees to deliver to the Selling Agent prior to or at the Closing Date a properly completed and executed United States Treasury Department Form W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof). (iii) The Selling Shareholder will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company., other than as contemplated by this Agreement. - 11 - 12 5. Costs and Expenses. The Company will pay all costs, expenses and fees incident to the performance of the obligations of the Company and the Selling Shareholder under this Agreement, including, without limiting the generality of the foregoing, the following: accounting fees of the Company; the fees and disbursements of counsel for the Company; the fees and disbursement of counsel for the Selling Agent; the cost of printing and delivering to, or as requested by, the Selling Agent copies of the Registration Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the Selling Agent's Selling Memorandum, the Listing Application, the Blue Sky Survey and any supplements or amendments thereto; the filing fees of the Commission; the filing fees of the NASD; all expenses agreed by the Company to be borne by it pursuant to the Registration Rights Agreement dated as of December 29, 1994 between the Company and the Selling Shareholder; and the expenses, including the fees and disbursements of counsel for the Selling Agent, incurred in connection with the qualification of the Shares under State securities or Blue Sky laws. To the extent, that the Selling Shareholder engages special legal counsel to represent it in connection with this offering, the fees and expenses of such counsel shall be borne by the Selling Shareholder. Any transfer taxes imposed on the sale of the Shares to the purchasers will be paid by the respective parties selling the Shares. 6. Conditions of Obligations of the Selling Agent. The obligation of the Selling Agent to solicit purchasers of the Shares, and the obligation of such purchasers to consummate the purchase of the Shares, is subject to the accuracy, as of the date of this Agreement and as of the Closing Date, as the case may be, of the representations and warranties of the Company and the Selling Shareholder contained herein, and to the performance by the Company and the Selling Shareholder of their respective obligations hereunder and to the following additional conditions: (a) The Registration Statement and all post-effective amendments thereto shall have become effective and any and all filings required by Rule 424 and Rule 430A of the Rules and Regulations shall have been made, and any request of the Commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed to the Selling Agent and complied with to the Selling Agent's reasonable request. No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been initiated or, to the knowledge of the Company or the Selling Shareholder, shall be contemplated by the Commission. (b) The Selling Agent shall have received on the Closing Date the opinion of Weil, Gotshal & Manges, counsel for the Company, as to the matters set forth in paragraphs (i) through (xii) below and the opinion of , counsel for the Selling Shareholder acceptable to the Selling Agent (which may be in-house counsel), as to the matters set forth in paragraphs (xiii) through (xvi), each dated the Closing Date, addressed to the Selling Agent to the effect that: - 12 - 13 (i) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Prospectus; to such counsel's knowledge, the Company is duly qualified to transact business in all jurisdictions in which the conduct of their business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of the Company. Each Subsidiary has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with corporate power and authority to own its properties and conduct its business as described in the Prospectus; the Company and the Subsidiaries are duly qualified to transact business in all jurisdictions in which the conduct of their business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of the Company and the Subsidiaries taken as a whole; the outstanding shares of capital stock of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company; and, to the best of such counsel's knowledge, the outstanding shares of capital stock of the Subsidiary are owned free and clear of all liens, encumbrances and security interests, and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into any shares of capital stock or of ownership interests in the Subsidiaries are outstanding. (ii) The Company has authorized and outstanding capital stock as set forth under the caption "Capitalization" in the Prospectus; the authorized shares of its Common Stock have been duly authorized; the outstanding shares of its Common Stock have been duly authorized and validly issued and are fully paid and non- assessable; all of the Shares conform to the description thereof contained in the Prospectus; the certificates for the Shares are in due and proper form; the shares of Common Stock to be sold by the Company and the Selling Shareholder pursuant to this Agreement have been duly authorized and will be validly issued, fully paid and non-assessable when issued and paid for as contemplated by this Agreement; and no preemptive rights of stockholders exist with respect to any of the Shares or the issue and sale thereof. (iii) Except as described in or contemplated by the Prospectus, to the knowledge of such counsel, there are no outstanding securities of the Company convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of capital stock of the Company and there are no outstanding or authorized options, warrants or rights of any character obligating the Company to issue any shares of its capital stock or any securities convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of such stock; and except as described in the Prospectus, to the knowledge of such counsel, there is no holder of any securities of the Company or any other person who has the right, contractual or otherwise, to cause the Company to sell or otherwise issue to them, or to permit them to underwrite the sale of, any of the Shares or - 13 - 14 the right to have any Common Shares or other securities of the Company included in the Registration Statement or the right, as a result of the filing of the Registration Statement, to require registration under the Act of any Common Shares or other securities of the Company. (iv) The Registration Statement has become effective under the Act and, to the best of the knowledge of such counsel, no stop order proceedings with respect thereto have been instituted or are pending or threatened under the Act. (v) The Registration Statement, all Preliminary Prospectuses, the Prospectus and each amendment or supplement thereto and document incorporated by reference therein comply as to form in all material respects with the requirements of the Act and the applicable rules and regulations thereunder (except that such counsel need express no opinion as to the financial statements, schedules and other financial information included or incorporated by reference therein). (vi) The statements under the captions _____________ in the Prospectus and the Description of Capital Stock contained in the Company's Registration Statement on Form ___, as amended on _________, insofar as such statements constitute a summary of documents referred to therein or matters of law, are accurate summaries and fairly and correctly present the information called for with respect to such documents and matters. (vii) Such counsel does not know of any contracts or documents required to be filed as exhibits to the Registration Statement or incorporated by reference therein or described in the Registration Statement or the Prospectus which are not so filed, incorporated or described as required, and such contracts and documents as are summarized in the Registration Statement or the Prospectus or any documents incorporated by reference therein are fairly summarized in all material respects. (viii) After due inquiry, such counsel knows of no material legal or governmental proceedings pending or threatened against the Company or any Subsidiary which might result in any material adverse change in the business or financial conditions of the Company and the Subsidiaries taken as a whole, except as set forth in the Prospectus. (ix) The execution and delivery of this Agreement and the consummation of the transactions herein contemplated do not and will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, the Charter or by-laws of the Company, or any agreement or instrument known to such counsel to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary may be bound. - 14 - 15 (x) This Agreement has been duly authorized, executed and delivered by the Company. (xi) No approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body is necessary in connection with the execution and delivery of this Agreement and the consummation of the transactions herein contemplated (other than as may be required by the NASD or as required by State securities and Blue Sky laws as to which such counsel need express no opinion) except such as have been obtained or made, specifying the same. (xii) The Company is not, and will not become as a result of the consummation of the transactions contemplated by this Agreement, required to register as an investment company under the 1940 Act. (xiii) This Agreement has been duly authorized, executed and delivered on behalf of the Selling Shareholder. (xiv) The Selling Shareholder has full legal right, power and authority, and has obtained any approval required by law (other than as required by State securities and Blue Sky laws as to which such counsel need express no opinion), to sell, assign, transfer and deliver the portion of the Shares to be sold by such Selling Shareholder. (xv) The Custodian Agreement executed and delivered by the Selling Shareholder is an irrevocable instrument that is valid, binding and enforceable. (xvi) The purchasers (assuming that they are bona fide purchasers within the meaning of the Uniform Commercial Code) will acquire good and marketable title to the Shares being sold by the Selling Shareholder, free and clear of all claims, liens, encumbrances and security interests whatsoever. In rendering such opinion, Weil, Gotshal & Manges and counsel for the Selling Shareholder may rely as to matters governed by the laws of states other than the States of Delaware, Texas and Arizona or Federal laws on local counsel in such jurisdictions, provided that in each case such counsel shall state that they believe that they and the Selling Agent are justified in relying on such other counsel. Furthermore, in rendering an opinion as to the matters set forth in subparagraphs (xiii), (xiv), (xv) and (xviv counsel for the Selling Shareholder may rely, as to matters of fact with respect to the Selling Shareholder, upon the representations of the Selling Shareholder contained in this Agreement, the Custodian Agreement and the Power of Attorney of the Selling Shareholder. In addition to the matters set forth above, the opinion of Weil, Gotshal & Manges shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that the Registration Statement, as of the time it became effective under the Act, the Prospectus or any amendment or supplement thereto, - 15 - 16 on the date it was filed pursuant to Rule 424(b) or any of the documents incorporated by reference therein, as of the date of effectiveness of the Registration Statement or, in the case of documents incorporated by reference in the Prospectus after the date of effectiveness of the Registration Statement, as of the respective dates when such documents were filed with the Commission and the Registration Statement and the Prospectus, or any amendment or supplement thereto, as of the Closing Date contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (except that such counsel need express no view as to financial statements, schedules and other financial information included or incorporated by reference therein). With respect to such statement, Weil, Gotshal & Manges may state that their belief is based upon the procedures set forth therein, but is without independent check and verification. (c) The Selling Agent shall have received from Piper & Marbury L.L.P., counsel for the Selling Agent, an opinion dated the Closing Date substantially to the effect specified in subparagraphs (ii), (iii), (iv), (x) and (xiii) of Paragraph (b) of this Section 6, and that the Company is a validly organized and existing corporation under the laws of the State of Delaware. In rendering such opinion Piper & Marbury L.L.P. may rely as to all matters governed other than by the laws of the State of Maryland or Federal laws and Delaware corporate laws on the opinion of counsel referred to in paragraph (b) of this Section 6. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that the Registration Statement, as of the time it became effective under the Act, the Prospectus or any amendment or supplement thereto, on the date it was filed pursuant to Rule 424(b) or any of the documents incorporated by reference therein, as of the date of effectiveness of the Registration Statement or, in the case of documents incorporated by reference in the Prospectus after the date of effectiveness of the Registration Statement, as of the respective dates when such documents were filed with the Commission and the Registration Statement and the Prospectus, or any amendment or supplement thereto, as of the Closing Date contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (except that such counsel need express no view as to financial statements, schedules and other financial information included or incorporated by reference therein). With respect to such statement, Piper & Marbury L.L.P. may state that their belief is based upon the procedures set forth therein, but is without independent check and verification. (d) The Selling Agent shall have received at or prior to the Closing Date from Piper & Marbury L.L.P. a memorandum or summary, in form and substance satisfactory to the Selling Agent, with respect to the qualification for offering and sale by the Selling Agent under the State securities or Blue Sky laws of such jurisdictions as the Selling Agent may reasonably have designated to the Company. (e) You shall have received, on each of the dates hereof and the Closing Date, a letter dated the date of delivery thereof or the Closing Date, as the case may be, in form and substance - 16 - 17 satisfactory to you, of Arthur Andersen & Co. L.L.P., confirming that they are independent public accountants within the meaning of the Act and the applicable published Rules and Regulations thereunder and stating that in their opinion the financial statements and schedules examined by them and included or incorporated by reference in the Registration Statement comply in form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations; and containing such other statements and information as is ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained or incorporated by reference in the Registration Statement and Prospectus. (f) The Selling Agent shall have received on the Closing Date a certificate or certificates of the Chief Executive Officer and the Chief Financial Officer of the Company to the effect that, as of the Closing Date, each of them severally represents as follows: (i) The Registration Statement has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for such purpose have been initiated or are, to his knowledge, contemplated by the Commission. (ii) The representations and warranties of the Company contained in Section 1 hereof are true and correct as of the Closing Date.. (iii) All filings required to have been made pursuant to Rules 424 or 430A under the Act have been made. (iv) Such officer has carefully examined the Registration Statement and the Prospectus and, in such officer's opinion, as of the effective date of the Registration Statement, the statements contained in the Registration Statement, including any document incorporated by reference therein, were true and correct, and such Registration Statement and Prospectus or any document incorporated by reference therein did not omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading and, in such officer's opinion, since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement to or an amendment of the Prospectus which has not been so set forth in such supplement or amendment; and (v) Since the respective dates as of which information is given in the Registration Statement and Prospectus, there has not been any material adverse change or any development involving a prospective adverse change in or affecting the condition, financial or otherwise, of the Company and its Subsidiaries taken as a whole or the earnings, business affairs, management or business prospects of the Company and the subsidiaries taken as a whole, whether or not arising in the ordinary course of business. - 17 - 18 (g) The Company and the Selling Shareholder shall have furnished to the Selling Agent such further certificates and documents confirming the representations and warranties contained herein and related matters as the Selling Agent may reasonably have requested. (h) The portion of the Shares to be sold by the Company shall have been approved for listing, subject to notice of issuance, on the American Stock Exchange. The opinions and certificates mentioned in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in all material respects satisfactory to the Selling Agent and to Piper & Marbury L.L.P., counsel for the Selling Agent. If any of the conditions hereinabove provided for in this Section 6 shall not have been fulfilled when and as required by this Agreement to be fulfilled, the obligations of the Selling Agent and the purchasers may be terminated by notifying the Company and the Selling Shareholder of such termination in writing or by telegram at or prior to the Closing Date. In such event, the Selling Shareholder, the Company and the Selling Agent shall not be under any obligation to each other (except to the extent provided in Sections 5 and 8 hereof). 7. Conditions of the Obligations of the Company and the Selling Shareholder. The obligations of the Company and the Selling Shareholder to sell and deliver the portion of the Shares required to be delivered as and when specified in this Agreement are subject to the conditions that at the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and in effect or proceedings therefor initiated or threatened. 8. Indemnification (a) The Company agrees to indemnify and hold harmless the Selling Agent and each person, if any, who controls the Selling Agent within the meaning of the Act against any losses, claims, damages or liabilities to which the Selling Agent or such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained or incorporated in the Registration Statement, any Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Selling Agent and each such controlling person for any legal or other expenses reasonably incurred by the Selling Agent or such controlling person in connection with investigating or defending any such loss, claim, damage or liability, action or proceeding and expenses reasonably incurred in responding to a subpoena or governmental inquiry whether or not such - 18 - 19 Selling Agent or controlling person is a party to any action or proceeding; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission made or incorporated in the Registration Statement, any Preliminary Prospectus, the Prospectus, or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by the Selling Agent specifically for use in the preparation thereof; provided further, that the indemnity agreement contained in this Section with respect to any Preliminary Prospectus will not inure to the benefit of the Selling Agent (or of any person controlling the Selling Agent) on account of any loss, claim, damage, liability, action or proceeding arising out of or based upon an untrue statement or alleged untrue statement of a material fact, or omission or alleged omission of a material fact, made therein, with respect to the sale of the Shares by the Selling Agent to any person if a copy of a Preliminary Prospectus or Prospectus or any amendment or supplement thereto (if any amendment or supplement thereto shall have been furnished to the Selling Agent) correcting such untrue statement or alleged untrue statement or omission or alleged omission shall not have been given or sent to such person by or on behalf of the Selling Agent with or prior to the written confirmation of the sale involved. . This indemnity agreement will be in addition to any liability which the Company may otherwise have and shall not affect any such indemnity agreement, including any indemnity agreement between the Company and the Selling Shareholder, which is intended to remain in full force and effect. (b) The Selling Shareholder will indemnify and hold harmless the Selling Agent and each person, if any, who controls the Selling Agent within the meaning of the Act, against any losses, claims, damages or liabilities to which the Selling Agent or any such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained or incorporated in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made; and will reimburse any legal or other expenses reasonably incurred by the Selling Agent or such controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that the Selling Shareholder will be liable to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made or incorporated in the Registration Statement, any Preliminary Prospectus, the Prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by the Selling Shareholder specifically for use in the preparation thereof. This indemnity agreement will be in addition to any liability which the Selling Shareholder may otherwise have. - 19 - 20 (c) The Selling Agent will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, the Selling Shareholder, and each person, if any, who controls the Company or the Selling Shareholder within the meaning of the Act, against any losses, claims, damages or liabilities to which the Company or any such director, officer, Selling Shareholder or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained or incorporated in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made; and will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, Selling Shareholder or controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that the Selling Agent will be liable to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made or incorporated in the Registration Statement, any Preliminary Prospectus, the Prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by the Selling Agent specifically for use in the preparation thereof. This indemnity agreement will be in addition to any liability which the Selling Agent may otherwise have. (d) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 8, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing. No indemnification provided for in Section 8(a) or (b) shall be available to any party who shall fail to give notice as provided in this Section 8(c) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability which it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 8(a),(b) or (c). In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense. Notwithstanding the foregoing, the indemnifying party shall pay as incurred the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the - 20 - 21 indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm for all such indemnified parties. Such firm shall be designated in writing by the Selling Agent in the case of parties indemnified pursuant to Section 8(a) or 8(b) and by the Company and the Selling Shareholder in the case of parties indemnified pursuant to Section 8(c). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. In addition, the indemnifying party will not, without the prior written consent of the indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding of which indemnification may be sought hereunder (whether or not any indemnified party is an actual or potential party to such claim, action or proceeding) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action or proceeding. (e) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under Section 8(a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Shareholder on the one hand and the Selling Agent on the other from the offering of the Shares as well as the relative fault of the Company and the Selling Shareholder on the one hand and the Selling Agent on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Shareholder on the one hand and the Selling Agent on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Shareholder bear to the total selling commissions received by the Selling Agent, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company the Selling Shareholder, or the Selling Agent on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Selling Shareholder and the Selling Agent agree that it would not be just and equitable if contributions pursuant to this Section 8(e) were determined by pro rata - 21 - 22 allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8(). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 8(e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), (i) the Selling Agent shall not be required to contribute any amount in excess of the selling commissions received by it, (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation, and (iii)Selling Shareholder shall not be required to contribute any amount in excess of the lesser of (A) that proportion of the total of such losses, claims, damages or liabilities indemnified or contributed against equal to the proportion of the total Shares sold hereunder which is being sold by such Selling Shareholder, or (B) the proceeds received by such Selling Shareholder in the offering. (f) In any proceeding relating to the Registration Statement, any Preliminary Prospectus, the Prospectus or any supplement or amendment thereto, each party against whom contribution may be sought under this Section 8 hereby consents to the jurisdiction of any court having jurisdiction over any other contributing party, agrees that process issuing from such court may be served upon him or it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join him or it as an additional defendant in any such proceeding in which such other contributing party is a party. 9. Notices. All communications hereunder shall be in writing and, except as otherwise provided herein, will be mailed, delivered or sent by facsimile transmission with proof of delivery and confirmed as follows: if to the Selling Agent, to Rothschild Inc., 1251 Avenue of the Americas, New York, New York 10020, Attention: David L. Wax, Managing Director; if to the Company, to Greyhound Lines, Inc., 15110 North Dallas Parkway, Dallas, Texas 75246, Attention: Steven L. Korby, Executive Vice President and Chief Financial Officer; and if to the Selling Shareholder, to Motor Coach Industries International, Limited; 907 Dial Corporate Center, 1850 N. Central Avenue, Phoenix, AZ 85004, Attention: General Counsel. 10. Termination. This Agreement may be terminated by the Selling Agent by notice to the Company or the Selling Shareholder as follows: (a) at any time prior to the earlier of (i) the time the Selling Agent begins to confirm sales of the Shares, and (ii) 11:30 A.M. on the first business day following the date of this Agreement; (b) at any time after the date hereof if any of the following has occurred: (i) since the respective dates as of which information is given in the Registration Statement and the Prospectus (including any document incorporated by reference), any material adverse change or - 22 - 23 any development involving a prospective material adverse change in or affecting the condition, financial or otherwise, of the Company and the Subsidiaries taken as a whole or the earnings, business affairs, management or business prospects of the Company and the Subsidiaries taken as a whole, whether or not arising in the ordinary course of business, (ii) any outbreak of hostilities or declaration or war or national emergency or other national or international calamity or crisis or change in economic or political conditions if the effect of such outbreak, escalation, declaration, emergency, calamity, crisis or change on the financial markets of the United States would, in the Selling Agent's reasonable judgment, make the offering or delivery of the Shares impracticable or inadvisable, (iii) suspension of trading in securities on the New York Stock Exchange or the American Stock Exchange or limitation on prices (other than limitations on hours or numbers of days of trading) for securities on either such Exchange, (iv) the enactment, publication, decree or other promulgation of any federal or state statute, regulation, rule or order of any court or other governmental authority which in the Selling Agent's reasonable opinion materially and adversely affects or will materially or adversely affect the business or operations of the Company, (v) declaration of a banking moratorium by either United States or New York State authorities, (vi) any downgrading in the rating of the Company's debt securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Exchange Act, (vii) the suspension of trading of the Company's Common Stock by the American Stock Exchange, or (viii) the taking of any action by any federal, state or local government or agency in respect of its monetary or fiscal affairs which in the Selling Agent's reasonable opinion has a material adverse effect on the securities markets in the United States or elsewhere; or (c) as provided in Section 6 of this Agreement. 11. Successors. This Agreement has been and is made solely for the benefit of the Selling Agent, the Company and the Selling Shareholder and their respective successors, executors, administrators, heirs and assigns, and the officers, directors and controlling persons referred to herein, and no other person will have any right or obligation hereunder. The term "successors" shall not include any purchaser of the Shares merely because of such purchase. 12. Information Provided by the Selling Agent and the Selling Shareholder. The Company, the Selling Shareholder and the Selling Agent acknowledge and agree that: (i) the only information furnished or to be furnished by the Selling Agent to the Company for inclusion in any Prospectus or the Registration Statement consists of the information set forth in the last paragraph on the front cover page (insofar as such information relates to the Selling Agent), information provided in connection with Item 502(d) of Regulation S-K under the Act and under the caption "Plan of Distribution" in the Prospectus; and (ii) the only information furnished by the Selling Shareholder consists of the information set forth under the caption "Selling Shareholder" in the Prospectus. 13. Miscellaneous. The reimbursement, indemnification and contribution agreements contained in this Agreement and the representations, warranties and covenants in this Agreement - 23 - 24 shall remain in full force and effect regardless of (a) any termination of this Agreement, (b) any investigation made by or on behalf of the Selling Agent or controlling person thereof, or by or on behalf of the Company or its directors or officers and (c) delivery of and payment for the Shares under this Agreement. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. If the foregoing letter is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement among the Selling Shareholder, the Company and the Selling Agent in accordance with its terms. Any person executing and delivering this Agreement as Attorney-in-Fact for the Selling Shareholder represents by so doing that he has been duly appointed as Attorney-in-Fact by the Selling Shareholder pursuant to a validly existing and binding Power of Attorney which authorized such Attorney-in-Fact to take such action. Very truly yours, GREYHOUND LINES, INC. By____________________________________ Authorized Officer TRANSPORTATION MANUFACTURING OPERATIONS, INC. By____________________________________ Attorney-in-Fact The foregoing Selling Agency Agreement is hereby confirmed and accepted as - 24 - 25 of the date first above written. ROTHSCHILD INC. By___________________________________ Authorized Officer - 25 - 26 SCHEDULE I Schedule of Shares to be Sold
Selling Party Shares to be Sold ------------- ----------------- Greyhound Lines, Inc. 4,000,000 Transportation Manufacturing Operations, Inc. 6,004,114
- 26 - 27 SCHEDULE II Schedule of Subsidiaries - 27 - EX-23.2 3 EXHIBIT 23.2 CONSENT OF ARTHUR ANDERSEN 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our reports dated February 14, 1995, except with respect to the matters discussed in Note 20, as to which the date is March 30, 1995, included in Greyhound Lines, Inc.'s Form 10-K for the year ended December 31, 1994, and to all references to our Firm included in this registration statement. Arthur Andersen LLP Dallas, Texas July 26, 1995 -----END PRIVACY-ENHANCED MESSAGE-----